County approves incentives for General Tobacco

By John Barbour
Staff Writer

Rockingham County Commissioners approved their share of more than $3 million in economic incentives meant to lure General Tobacco, Inc. to Mayodan.

Monday night, commissioners unanimously approved $1.73 million for the Miami-based cigarette manufacturer. The company manufactures GT One, Bronco and Silver brand cigarettes and has sales of almost $400 million per year, said Graham Pervier, president of the county Partnership for Economic Development.

“Their products are distributed all over the United States and all over the world,” he said.
If General Tobacco decides to locate in Mayodan, they are expected to bring 200 jobs to the former Unifi Plant No. 5.

Last week, the Mayodan Town Council approved their share of the economic incentives – $1.3 million. The payments by Mayodan and the county will be made in annual installments, beginning in 2010 and lasting for eight years.

“These funds are not money that is paid up front,” said Pervier. “They don’t start until the new investment is in place, the new employees are in place, and until the property has been listed for taxes and taxes have been paid.”

During that same eight-year period, General Tobacco will pay the county about $2.1 million in property taxes, he said.

“In North Carolina, we don’t rebate taxes, but sometimes the incentives are expressed in terms of taxes paid,” Pervier said. The incentives amount to about 80 percent of property taxes, he said, meaning the difference is about $383,000 in the county’s favor.

In order to receive the complete payments, General Tobacco must agree to spend $55 million on machinery and property improvements, and pay salaries at least equal to the county average. “If the investment and job targets aren’t met,” Pervier said, “then the investment payments are reduced proportionately.”

Pervier said wages paid by General Tobacco would be between $36,000 and $40,000 per year – higher than the county average, and the company will offer medical and dental insurance.

“This is very sophisticated and very expensive cigarette-making equipment,” he said. “The folks who will be working on it will have to be well-trained and, I would expect, computer-literate.”

Commissioner Amelia Dallas asked if the company could be required to hire local workers. Pervier said they are not, but added that the county’s history may be why the tobacco company is considering a move here.

“I would hope and believe that one of the reasons they are looking at our area is our history of involvement with the tobacco industry,” he said.

Pervier said he expects a decision from General Tobacco “sooner rather than later,” but said that nothing has been finalized.

“This is not an announcement,” he said. “General Tobacco, we understand, is considering other locations, but we hope the local incentive package and whatever the state provides will induce them to do the project here.”

Source : http://www.edendailynews.com/servlet/Satellite?pagename=EDN/MGArticle/EDN_BasicArticle&c=MGArticle&cid=1173351694919

Tribe to expand tobacco sales

RACHEL LA CORTE; The Associated Press

SQUAXIN ISLAND INDIAN RESERVATION, Mason County – Tens of thousands of cigarettes roll off an assembly line every day at a warehouse on this small reservation, each carton destined for stores around the state of Washington.

By the end of the year, those cartons could be stacked in stores around the nation. The Squaxin Island Tribe, which became the first in the West to manufacture its own tobacco products in 2005, is set to expand its venture from coast to coast.

The Squaxins won’t be the first tribal government to have national reach – the Seneca-Cayugas in Oklahoma have sold their cigarettes in numerous states since 1999. Individual tribal members at other tribes, including the Yakamas in Central Washington, also manufacture their own cigarettes.

For the 1,000-member Squaxin Island Tribe, expanding its tobacco industry outside of Washington is an important step to diversify its economy beyond gambling.
“It’s just a commonsense approach to expanding,” said Bryan Johnson, general manager for Skookum Creek Tobacco.

The tribe has no illusions about taking on Big Tobacco. It is currently manufacturing just 50,000 cartons a month, but can increase that to 250,000 – a goal it hopes to reach within the next three years, but still a drop in the bucket compared to major cigarette brands.

Philip Morris, which has just over 50 percent of the market, doesn’t comment on new players in the business, said spokesman Greg Mathe. But R.J. Reynolds Tobacco Co. spokesman David Howard said he welcomes the competition. Reynolds makes up just under 30 percent of the market, he said.

“Competition is good for adult tobacco consumers. It gives them more choices,” he said, but added “our brands are better.”

Currently, Skookum Creek has three products: Complete and Premis cigarettes and Island Blendz little cigars. It also sells loose tobacco.

This fall the tribe will unveil Winthrop, a brand meant to compete with Marlboro, and Traditions, an additive-free brand meant to take on Natural American Spirit, which is an additive-free brand owned by R.J. Reynolds Tobacco Holdings Inc.

Bob Whitener, CEO of Island Enterprises, the tribe’s development company, expects Skookum Creek to be certified to sell in all 50 states within a year.

For now, its main store is on the reservation, about 20 miles northwest of Olympia. The Kamilche Trading Post, a gas station and convenience store owned by the tribe, has the tribe’s brands prominently displayed in a corner of the store.

Ed Caulfield of Shelton buys a carton of Premis cigarettes about twice a month.

“I like to support local businesses,” he said, saying that he normally smoked Cools, but liked these just as much. “And the price is significantly better.”

A carton of Marlboro Lights costs $39.65. A carton of Premises costs $18.99.

Under a legal exemption, tribes that sell cigarettes they manufacture themselves don’t have to affix the state’s cigarette tax – currently $20.25 a carton, the third-highest in the nation – to products sold on their own reservation.

The Squaxins are expanding their cigarette business at a time when smoking isn’t all that popular. In Washington state, the rate is just 17.5 percent, lower than the national average of 20.9 percent. And in 2005, voters in Washington overwhelmingly passed an initiative prohibiting smoking in bars and restaurants.

Terry Reid, director of the tobacco prevention control program with the state Department of Health, said the department recognizes the right of tribes to include cigarettes as part of their economic engine. But from a public health standpoint, he said they are concerned about “anything that puts more product on the market, and potentially creates new smokers.”

In Washington, about 32 percent of adult Indians and Alaska Natives smoke, nearly double the rate of the rest of the population, state officials say. The tribes use about $900,000 in state money each year to fight tobacco use. But Indian smoking rates have remained about the same, as the total number of smokers in the state dropped by 21 percent since 2000.

Ray Peters, the tribe’s executive director, said that along with money from the state, the tribe spends its own dollars on smoking cessation and prevention programs, and anti-smoking programs geared specifically toward young members. The tobacco operation helps pay for the tribe’s day care program, and provides checks of about $240 a month to the tribe’s elders.

“There’s a lot of evils out there, and it’s our responsibility as a government to educate,” Peters said. “But we are also a government that has to create a tax base to build infrastructure.”

Source : http://www.thenewstribune.com/news/northwest/story/89804.html

R.I. schedules $216M tobacco bond offering

Jun. 18, 2007

PROVIDENCE – Rhode Island this week plans to sell $216 million in bonds backed by the state’s last untapped payments from the 1998 national master settlement with tobacco companies, Bloomberg News said.
The bonds are to be issued by the Tobacco Settlement Financing Corp. They will have a final maturity of 2052 and will not begin paying interest to investors until 2024.

A similar bond offering in 2002, also backed by the national tobacco settlement, brought the state $685 million.
How the state will use the proceeds remains unclear. Gov. Donald L. Carcieri has called for using the money for state transportation projects (READ MORE), while the General Assembly has proposed allocating it to the general fund.

Source : http://www.pbn.com/stories/26005.html