By Michael Kozlarek, attorney
The Upstate is a huge economic-development engine for not only South Carolina but also the entire Interstate 85 corridor in the Southeast. There are many pieces that help to power that engine, and one of them is the strong partnership in our region between economic developers and lawyers.
“Legal services are a key component to any economic-development project,” says John Lummus, CEO of Upstate SC Alliance, the economic-development organization representing the 10-county region. “Throughout our discussions, we call upon the expertise of lawyers and other private-sector partners to help answer companies’ questions, mitigate risk, and convey our state’s laws and standard practices.”
Risk management is a big part of the equation — it helps drive sustainable development. One simple way to think about the role of lawyers in the process is that they take two or more parties and create a set of private laws that essentially control the relationship between those parties. Fundamentally, that kind of counsel is forward-looking; prospective rather than retrospective. Done well, it can keep the parties from getting into a dispute 10 years later. This is win-win law, where each party gets something out of it and the community benefits.
Another area where economic development and law intersect is navigating complexity. There are myriad federal, state and local regulations that impact deals. They govern environmental impacts, tax structures, curb cuts, and everything in between. In addition, they are constantly evolving.
“From an economic development perspective, it can be rather complex to initiate development agreements with various projects,” says Ed Driggers, city administrator of Greer. “There’s a number of regulations out there. We’re familiar with those, but we may not know all the legal intricacies. It’s extremely important when we’re looking at development agreements that we have that expert advice.”
Driggers says lawyers can also help break down all the tools available to accomplish a project, including different types of bonds and tax credits. He says that gives local governments the ability to “look in the toolbox and handpick those things that would work best for us.”
“And the complete opposite of that is when we have a project that comes to us and they’re proposing using certain tools — there may be parts of that we’re not completely familiar with,” Driggers says. “We have to rely on legal expertise to wade through that and determine if it is in our best interest.”
An example is a fee-in-lieu of taxes (FILOT) agreement. Todd Lumpkin, the chief financial officer of Anderson Hydra Platforms in York, says it was “absolutely critical” to have legal assistance navigating a FILOT agreement as part of his company’s expansion.
“When you’re a small, growing business, you don’t have time to try to figure out all the ins and outs and nuances of something like a fee-in-lieu agreement,” Lumpkin says. “The requirements to even start this process are so large that you need legal guidance just to know what parts to pull together, let alone navigate it. You need the legal knowledge to be able to attain the economic benefits.”
Upstate SC Alliance’s Lummus says there are a variety of additional reasons his organization will link prospects with legal counsel.
“Incentive agreements in South Carolina between companies and state and local governments require significant legal work,” Lummus says. “Also, many international companies need help with visas, incorporation, and other questions that law firms can assist with.”
In sum, he says law firms are “an integral part of the economic-development landscape in the Upstate.”
City Administrator Driggers agrees, and he says that role — at its best — goes beyond the purely legal aspects of crossing all the t’s and dotting all the i’s.
“The other side of this component is developing a partnership like we believe we’ve developed with some of our outside counsel,” Driggers says. “In working with that team, they immerse themselves and get to know us. There’s a relationship that develops there. And by knowing us and understanding what we’re trying to accomplish, it helps us bring the right people to the table.”
That is where the intersection of economic development and law is at its best.
Michael Kozlarek is a public finance attorney and a South Carolina Certified Economic Developer (SCCED).