EDITORIAL: A sale is a safer way to incentivize

Published 4:33 pm Thursday, May 1, 2014

We all love a good sale.

When you plan on spending money and find out that item’s on sale, it feels like nothing short of free money.

At its meeting Monday night, the Luverne City Council informally decided that it would like to sell the Omni building in the industrial park to Dongwon Autopart Technology.

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But there was a catch.

No vote was taken, but councilmembers unanimously agreed that selling the facility is in the council’s best interest… if the sale would allow for an expansion and more jobs brought to Luverne and Crenshaw County.

Currently the building is being rented to the company and is used for warehousing.

Mayor Rex Sport said he isn’t sure what the company wants to do with the building and eight accompanying acres if it were to be sold, but that the use would be a critical factor in the potential transaction.

Councilmembers said they would consider the sale, but would drive a much stiffer bargain with the company if it says it wants to continue using the space for industrial storage.

If Dongwon promises jobs, however, all that will change, and councilmen heartily added they would likely be willing to part with the land for less than its actual value – Sport said the appraised worth of the entire site is more than half a million dollars.

Essentially, what such an arrangement boils down to is a fiscally safer way of offering business incentives.

We understand that this is a divisive subject.

Especially in red states like our own, monetary incentives from public bodies to private ones are scrutinized as being an overstep of governmental responsibility.

It’s “big government,” it’s “meddlesome” and it’s a disruption of the laissez faire/invisible hand brand of capitalism we know, love and trust.

But there’s a harsh reality in today’s market: businesses require incentives to locate.

That companies now more than ever have the freedom to operate from offices anywhere in the world makes that matter all the more apparent. Cities, counties and regions are now in direct competition with one another to secure productive industries and provide work for their citizens.

And for every area that won’t offer incentives, there are three more that will.

South Korea-based Dongwon is an especially obvious example of an industry with the ability to locate anywhere.

Luverne’s council recognizes this.

The auto parts manufacturer is the third largest industrial employer in Crenshaw County, behind Smart and Sister Schubert’s, making it a vital member of the local economy and a partner Luverne would love to see expand within city limits, providing even more jobs for local residents.

And we share that hope.

What the council has opted to do is take a safer approach to incentives – rather than offering large sums of money it doesn’t have, it’s offering land and a building cheaper than the company could find elsewhere.

Either way it mitigates costs to Dongwon, but under the latter method, it also keeps the city from bonded indebtedness.

And the economic impact of new jobs only goes so far when those tax dollars go straight to an outside purse.

So we applaud the council’s decision.

If Dongwon wants to continue to use the space for holding surplus items, there’s no need for the city to sell and waste a valuable asset that could later be used in attracting another industrial occupant.

But if the company intends the building to hold new employees, then we would tell Mayor Sport to cut Dongwon a deal it can’t refuse.
After all, everybody loves a good sale.