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Chinese Textile Manufacturer Finds A Good Deal In South Carolina

Last month, a Chinese textile company announced it would invest $218 million to bring more than 500 jobs to Lancaster County, South Carolina in the next five years.

The Keer Group is building its first facility outside China in Indian Land. But in exchange for bringing jobs to South Carolina, the company will pay less than half of the property tax rate and receive a 7.7 million dollar bond to help pay for construction.  

The property tax rate for South Carolina manufacturers is 10.5 percent. The president of the Lancaster County Economic Development Corporation Keith Tunnell says that's absurdly high.

"If there was no fee agreement, there would be no project," Tunnell says. "Because no company is going to locate in South Carolina and pay 10 and a half percent tax."

Tunnell says fee agreements are common in South Carolina. Manufacturers that invest more than $150 million and create more than 150 jobs can instead pay a 4 percent fee for 30 years.

For the Keer Group, that amounts to about $620,000 a year. In addition, the state is giving Keer Group a $4 million grant and Lancaster county is providing a $7.7 million bond to help pay for construction.

More than half of the annual fee that the company pays the county for the first 10 years will actually be returned to the Keer Group to help pay off the $7.7 million bond. The other 40 percent – about $250,000 a year -- will go to the county and school district.

The 500 textile jobs will pay a starting wage of $13.50 an hour. That might sound like much, but it's what Lancaster County needs, says Brent Lane, who studies incentives as a director of the center for Competitive Economies at UNC Chapel Hill.

"Five hundred jobs that are a good fit for your current workforce and particularly for any workers who may not currently have jobs, is in many ways the best possible outcome," Lane says. 

Over the past 15 years, Lancaster County lost 11,000 textile jobs. And Lane says there's a large base of low-skilled workers in the region. He says a company that employs the existing workforce with modest wages can have a larger economic impact than companies that import high-skilled workers and executives.

Keer Group will begin construction and hiring workers in the next few months. Tunnell says Mecklenburg County was also on the short list of places for this project.