Weighing deal's costs, benefits

The 787 assembly line that Boeing Co. is building in North Charleston could lift some area residents out of poverty while adding $23 million in expansion costs to local school districts.

Those are among the findings of a detailed cost-benefit analysis that state Commerce Department put together as part of the Boeing investment.

Top state officials review the studies while weighing whether to offer tax breaks and other public incentives to companies that invest and create jobs in South Carolina. The goal is to help determine whether the state will make or lose money on a specific deal over the long run.

"We want to make sure the state's getting a positive return on its investment," said Daniel Young, director of Commerce's Coordinating Council, which helps put together incentive packages.

For Boeing, the final number showed South Carolina coming out on top by slightly more than $13.76 million during the next 15 years.

The bulk of the benefits stem from the company's $3.8 billion payroll projected during that period. The capital investment for the 787 Dreamliner assembly line was put at $725 million.

The study estimated that state welfare agencies would pay out roughly $7.6 million less in assistance as the company generates local jobs, either directly or indirectly. And state and local governments will take in $85 million in property taxes from the Boeing campus and from Boeing employees who buy cars and make home purchases.

The public costs of the project include a $263 million in economic development bonds, which will be given upfront to Boeing to offset the cost of building the new assembly line at Charleston International Airport.

Company officials also will be able to claim $25 million in corporate income tax credits for creating jobs. At the same time, school districts will have to pay an additional $23 million to accommodate new students who enroll in the local education system as a result of Boeing's presence.

The 15-year-old cost-benefit analysis model was developed by the state Budget and Control Board's economic advisory arm.

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The state does not specify a cost-benefit figure, nor does it have a policy requiring that the benefits must be positive for the state to offer incentives to an employer. Young noted that in the seven years since he joined Commerce, he can't recall any projected money-losing deals being approved.

"The benefit needs to outweigh the costs," added Commerce spokeswoman Kara Borie.

Reach Katy Stech at kstech@postandcourier.com.