Another NC Incentive Deal Falls Through As Bandwidth Pulls Out

By Theresa Opeka
Carolina Journal

North Carolina Department of Commerce’s Economic Investment Committee (NCEIC) officials terminated yet another incentives package recently with a Raleigh-based communications software company after the company said it couldn’t follow through with the required hiring goals.

Bandwidth notified the department earlier this month. The company said the withdrawal would give it greater flexibility for workplace planning.

It was announced in April 2020 that the company, which offers cloud-based software for voice, text messaging, and emergency services for clients like Google, Microsoft, Amazon, Zoom, and Uber, was to create 1,165 jobs with an average wage of over $96,800, creating an annual payroll of nearly $113 million in the state, as part of a $103.4 million expansion project.

In return, Bandwidth was to receive a Job Development Investment Grant (JDIG) of up to $32.3 million in tax breaks over twelve years. The project was estimated to grow the state’s economy by over $2.7 billion.

The company has not received any payments under the grant. The state’s JDIG program requires companies to hit hiring targets before receiving tax breaks and other taxpayer-paid incentives. However, a spat of recent cancelations have prompted calls to end the JDIG program.

Reports say Bandwidth still plans on growing its workforce. The company started in Raleigh in 1999, also has locations in Rochester, NY, and Denver, CO. In addition to Bandwidth, several other companies have terminated similar agreements with the state. 

Last July, Allstate had its JDIG agreement terminated after it failed to add thousands of jobs to its operations center in Charlotte. 

The insurance giant was set to receive a JDIG grant of up to $17.8 million in tax breaks over the span of twelve years, but the state decided to end the 2017 agreement after the company’s pledge to add 2,250 jobs by 2020 didn’t come to fruition. At that time, Allstate had already employed 1,400 people.

Reports said that executives told NCEIC that the new COVID-19 pattern of remote work is to blame and incompatible with the grant rules. While most employees are remote, a little over 200 currently work at the Charlotte campus.

In August 2022, Centene Corporation, a provider of managed health care services, backed out of plans to move its east coast regional headquarters to Charlotte. Its $1 billion Charlotte campus was nearly complete after a year of construction.

In 2020, the Department of Commerce struck a deal with Centene, pulling $338 million in tax incentives through an add-on to the state’s JDIG. JDIG was originally designed to bring companies to poorer areas of the state, but Centene was awarded the first “transformational” JDIG grant to build its hub in urban Charlotte. 

At the time, Centene said they abandoned the campus and the East Coast headquarters plan because of the shift to remote work. Originally, Centene promised to bring more than 6,000 high-paying jobs to Charlotte over the next 12 years, but that promise was later downgraded to 3,200 jobs.

In July 2022, Advance Auto ended its Community Economic Development Agreement (CEDA) with the state, which involved relocating its corporate headquarters from Roanoke, VA, to Raleigh in 2018 and creating over 700 full-time jobs.

Reports say that company officials told the state that they were unable to add the hundreds of jobs agreed upon as part of the agreement. They cited competition for talent and being more flexible with workers, like allowing for remote work due to changes that occurred with the pandemic.

The initial project was slated to grow North Carolina’s economy reportedly by $1 billion.

In March 2022, Microsoft pulled the plug on two state economic incentive grants approved in 2019 that would have been worth $20 million in economic incentives. The company said they were uncomfortable sharing the amount of employee data needed to complete the validation of job creation specified in the previously approved Job Development Investment Grants.

The company planned multi-million-dollar expansions of its operations based in Charlotte and Morrisville in 2019, with the creation of hundreds of jobs at both locations. Approved incentives packages were tied to plans for both locations, including an additional million-dollar incentives deal from Wake County in 2020 on the condition that Microsoft would bring hundreds of jobs with the deal.

Other companies that had their JDIG agreements terminated include Sonic Automotive in February 2022 and Conduent and S&D Coffee in November 2022.

Two other notable projects in progress have been awarded JDIG grants.

One is Apple, awarded $845 million in tax breaks over 39 years, provided the follow-through on creating jobs at its planned billion-dollar campus in Research Triangle Park.

The other is VinFast, the Vietnamese electric vehicle maker. If the company meets hiring goals, it could get up to $316.1 million in reimbursement from the state over three decades. 

Theresa Opeka is the Executive Branch reporter for the Carolina Journal.