California-based wine giant E&J Gallo approached South Carolina officials last March with a proposal: the company wanted to build its first East Coast facility in Fort Lawn, a small town in Chester County.
By June, the company broke ground and started construction on a facility that will provide bottling, canning, warehousing and distribution. Gallo will have invested $423 million in the project that is estimated to create 496 jobs over the next eight years.
Gallo is the largest family-owned winery in the United States. Officials have predicted this investment will be a game changer for Fort Lawn and Chester County. The areas have struggled economically since the textile industry declined and left mill towns in depression.
The project also could be life-changing for people in neighboring Lancaster county. Fort Lawn sits right on that county’s border.
S.C. Gov. Henry McMaster said it would “transform Chester County and contribute greatly to South Carolina’s economic prosperity.”
The county’s Economic Development Director, Robert Long, called it a “once in a lifetime project.” In economic development, he said, you step up to the plate often. With Gallo, Chester hit a home run, he said.
The company will pay $21 an hour.
Census data from 2018-2019 shows the average person in Chester County made $22,324 that year, which amounts to about $11.63 an hour for a 40-hour week. The new jobs and higher wages will be key.
Gallo is estimated, after incentives, to pay $17.8 million in property taxes over the first 10 years, and $38.5 million within 20 years. And when all 496 jobs are filled, the Fort Lawn site’s payroll will be about $21.7 million a year, Long said.
Chester County certainly stands to gain. But why did Gallo choose this small, rural town? This is what we know.
Fort Lawn sits on the Chester County-Lancaster County border.
“From a talent recruitment perspective, it puts us in a good position,” Long said.
Being able to recruit from neighboring counties is a big part of attracting companies to Chester County, Long said.
Also significant is Chester County’s location about equidistant between Columbia and Charlotte, as well as its proximity to York County, all areas that have seen significant growth in recent years.
Fort Lawn’s location makes it easy to transport goods.
The name “Chester County” is strategically placed on the Lancaster & Chester railroad, nicknamed L&C, which Long says is an incentive.
According to the Gulf and Ohio Railways website — the company that owns the L&C railroad — the railroad “provides South Carolina and the Charlotte region with a strong transportation ally for industrial growth.” The railroad provides dual-rail access to 3000 acres of industrially-zoned property.
The Chester County site also will have easy access to Interstate 77, allowing shipment of products and direct commutes for employees, Long said.
South Carolina Highway 9 also goes directly through Fort Lawn and connects the town directly to North Carolina (where the highway becomes N.C. 9), and extends as far east as North Myrtle Beach.
And, S.C. 9 connects Fort Lawn to the town of Lancaster, where most of the infrastructure for the Gallo project is in place. The project will utilize Lancaster County’s water, electric, gas and sewage services.
The state and county offered Gallo financial incentives.
The state of South Carolina offers discretionary incentive packages — programs designed to persuade investors to come. In Gallo’s case, representatives from the Department of Commerce confirmed that the state is offering incentives in multiple areas.
Projects developed in Chester County qualify for special incentives because Chester is classified as a “Tier IV” county. This is a designation given by the S.C. Department of Revenue; the lower the county’s per capita income and unemployment rate, the higher its ranking.
Being a Tier IV county allows the state to offer more money in “job development credits.”
These credits essentially withhold taxes on new employees to reimburse the company. The Department of Commerce website says job credits are given to companies that “add value to South Carolina.”
Companies who receive these credits must provide their full-time employees with benefits, including a comprehensive health plan, and pay at least 50% of an eligible employee’s health plan premiums.
In a Tier IV county, a company can receive $25,000 per year, per job, for up to five years.
Chester’s ranking as a Tier IV county also means investors in Chester qualify for grants from the Rural Infrastructure Fund.
Rural Infrastructure Fund grants assist “qualified counties in the state’s rural areas,” by providing assistance for economic opportunities. In this case, documents show that Gallo will get a one-time Rural Infrastructure Fund grant in the form of $16,000,000 for “job development and/or product development.”
The Department of Commerce also received approval from the South Carolina Joint Bond Review Committee (which approves spending on capital expenses) to appropriate $8 million in funds for the Gallo project. This money will go to “offset costs of off-site mitigation,” Alex Clark, director of marketing and commerce at the Department of Commerce said.
The state also will give Gallo a one-time investment tax credit to offset the costs of its investment in Chester, as well as an ongoing exemption of up to $19,840,000 in sales tax -- meaning Gallo will not have to pay that. This money must go for infrastructure improvements or paying “rollback taxes” -- which are taxes applied by the state when land that was once used for agricultural purposes is transformed for a new use.
Gallo will receive a “Fee-in-Lieu of Taxes” (FILOT) agreement from the county.
Under a FILOT, the county can reduce the amount of property tax the business will pay. The FILOT agreement is set to last 30 years, early versions of the incentive package show. Over those 30 years, Gallo is estimated to save $178,194,595 in property taxes.
The company also was offered a “special source revenue credit” or SSRC. That credit will further reduce property taxes, but the business has to retain the tax savings to use for local investment or project costs.
Companies must hold up their side of the deal to keep this agreement, Long said. If they do not create the number of jobs promised, they will have to pay back a proportional amount of any tax money saved.
Gallo plans to finish building its facility by October 2022. Long predicts the jobs offered by Gallo probably will be split 50-50 between Lancaster and Chester counties.
Clark said it is difficult to rank this agreement among other incentive packages due to the intricacies involved in each agreement.
However, she said, “this project will be transformational to Chester County and the surrounding community, and will certainly have a significant impact on South Carolina’s economic prosperity.”
This story was originally published August 6, 2021, 5:48 PM.
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Tobie Nell Perkins works for the Herald in partnership with Report For America. She covers Chester County, the Catawba Indian Nation and general assignments. Tobie graduated from the University of Florida and has won a regional Murrow Award as well as awards from the Society of Professional Journalists and the Florida Society of News Editors.