Forsyth County is in Tier 2, the middle category, in the N.C. Commerce Department’s ranking of economic health in the state’s counties. Above, the majority of the buildings in Wake Forest Innovation Quarter sprang from revamped tobacco factories and warehouses.

Forsyth and Guilford counties will remain in the middle tier of the state for economic health in 2020, according to the N.C. Commerce Department.

State law requires Commerce officials to annually rank the economic health of all 100 counties, with the 20 most prosperous counties as Tier 3, the next 40 counties as Tier 2 and the 40 most distressed counties as Tier 1.

“This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state,” Commerce said.

It is the third time Forsyth has not been a Tier 3 county since the rankings began in 2007. Guilford is a Tier 2 county for the fourth consecutive year.

Davie and Watauga counties are the only Tier 3 counties among the 14 that make up the Triad and Northwest N.C.

Tier designations determine eligibility for Commerce grant programs that include building reuse, water and sewer infrastructure, and the downtown revitalization Main Street program.

For example, in October 2018 Forsyth received a $200,000 state Rural Infrastructure Authority grant toward assisting The Grass America Inc. with a 74,000-square-foot expansion project in Kernersville.

“The advantage of remaining at Tier 2 is that we will have access to a larger pool of state incentives for projects we are working on,” said Bob Leak Jr., president of Winston-Salem Business Inc.

Mark Owens, president and chief executive of the Winston-Salem Chamber of Commerce, said that “anytime we can bring more resources to the table, we can become a more attractive location.”

There were two tier changes within the region: Surry County improved from Tier 1 to Tier 2, while Wilkes County dropped from Tier 2 to Tier 1.

“I am happy to hear that our economic metrics have improved enough to move us up in the tier system,” said Todd Tucker, president of Surry County Economic Development Partnership Inc. “We just need to keep the momentum moving in a positive direction so we can continue to see the results over a period of years.”

Tucker cautioned that moving to a higher tier “can also be a double-edged sword for some of our local governments and agencies” because of lower state funding as a Tier 2.

“Our economy needs to continually improve so that this side effect becomes less of an issue for our communities,” Tucker said.

Tier rankings are based primarily on an assessment of each county’s unemployment rate, median household income, population growth and assessed property valuation per capita. The Republican-controlled legislature eliminated in 2018 considering any additional “adjustment factors” for tier rankings.

The adjusted valuation per capita on vacation properties is a major reason why some coastal and mountain counties have a higher ranking than their neighbors.

“The Tier 2 designation is generally reflective of the entire Triad region, which has been under-performing relative to the other major population centers of the Research Triangle and Charlotte,” said Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University.

The state’s top economic-recruitment tool, the Job Development Investment Grant, was adjusted during the 2015 legislative session with the tiers in mind.

For Tier 1 counties, the state provides $3 for every $1 in local economic financing. Tier 2 counties get $2 for every $1 provided locally, and Tier 3 counties continue to get a $1 for $1 match.

Companies adding jobs in a Tier 2 county are eligible for a tax credit of $5,000 for each job, while in Tier 3 counties companies are eligible for just a $750 tax credit for each job.

Michael Walden, an economics professor at N.C. State University, said research shows the tier designations are important. “But they are trumped by such basic factors as education and training of the workforce, the transportation network, land and construction costs and the location of supportive cluster firms,” Walden said.

A state Senate bill introduced in April 2019 would have increased from three to five the number of economic tiers.

Senate Bill 597 would create the following tiers: the top-20 counties; counties 21 to 40; 41 to 60; 61 to 80; and 81 to 100. The bill was not heard in committee.

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