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The original item was published from 5/21/2014 2:26:01 PM to 5/21/2014 10:53:12 PM.

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Posted on: May 21, 2014

[ARCHIVED] Novartis Investment Paying Benefits for Town

The announcement eight years ago that Novartis Vaccines and Diagnostics would build a flu vaccine manufacturing facility here was seen by Town officials as proof that Holly Springs was on the “path of progress.”

The recent announcement that Novartis plans to sell the facility as part of a major transformation of the company’s portfolio has prompted citizens to ask how that might affect Holly Springs.

Chris McDonald, head of the Holly Springs facility, told the Town Council on May 20 that Novartis employees remain busy working on licensure and on the first batch of seasonal flu vaccine. The workforce in Holly Springs continues to grow and is approaching 800.

"The bottom line is this facility is growing, and I'm excited about the future here in Holly Springs," he said. "But there's still a little bit of uncertainty about whose name will be on the building."

Eight years down the road, Novartis has exceeded original projections on the scale of its investment in Holly Springs, both in tax base and jobs.

Beyond that, Town officials say Novartis has been a good corporate partner and integral part of the community, benefitting Holly Springs in ways that go beyond the bottom line.

“Novartis has transformed and elevated our brand,” Town Manager Charles Simmons said. “They validated our vision.”

Novartis hopes to find the right buyer for its Holly Springs facility during the first half of 2015.

Novartis officials say the facility’s leadership role in the national response to a potential pandemic flu outbreak make it an attractive asset. The Holly Springs facility has a contract with the U.S. Department of Health and Human Services to produce 150 million doses of pandemic flu vaccine within six months of a pandemic declaration.

“The site is fully committed to delivering on its promises to the U.S. government and its customers,” said Tori Panetta, a spokesperson for Novartis in Holly Springs.

Questions in the community about the facility's future led Town officials to invite McDonald to brief the Town Council on where things stand.

McDonald said he could not speculate on the outcome of the bidding process that is under way. However, he said the facility continues to grow.

Novartis is by far the largest taxpayer in Holly Springs and the fifth largest in Wake County.

Last year, the company paid more than $1.5 million in Town property taxes. That was more than 10 times the amount of the second largest taxpayer, Holly Springs Towne Center. Since 2009-2010, Novartis has generated $6.5 million total in Town property taxes.

Simmons said the facility’s effect on the Town’s bottom line was particularly beneficial during the recent nationwide economic downturn.

A Beautiful Day

Novartis’ selection of Holly Springs was announced by the governor in July 2006 during a ceremony at the State Capitol.

The competition for the manufacturing facility, with its promise of hundreds of jobs and millions in tax revenue, involved several states. Novartis' selection of Holly Springs followed an intensive two-year effort by Town officials with assistance from state and county agencies.

Proximity to Research Triangle Park and years of groundwork in economic development put Holly Springs on the "path of progress," Jenny Mizelle, the Town’s Economic Development director, said the day of the announcement.

"It's exactly what we've been working for," she told the Town Council. "So this is a beautiful day in Holly Springs."

Convincing Novartis to locate here required $8.3 million in direct incentives to Novartis from the Town. That included $7.3 million to buy 167 acres in Holly Springs Business Park plus $1 million for clearing the site.

The Town took out a 15-year loan on the land purchase. The annual loan payment currently is about $579,000, but declines over time until repaid in 2021.

In addition to direct incentives to Novartis, the Town committed to improvements in public infrastructure. Mostly, they were road and utility system improvements that Town officials had cited as long-term needs even before Novartis entered the picture. To land Novartis, the Town agreed to fast-track those improvements.

The improvements included upgrading a sewage pumping station that serves all of Holly Springs Business Park plus a four-lane Green Oaks Parkway through the business park. The Town also agreed to purchase a fire truck suitable for fighting blazes in multi-story structures - equipment that the Fire Department would have needed by now with or without Novartis.

The combination of direct incentives to Novartis and public infrastructure improvements totaled approximately $15.6 million. Currently, the Town’s annual debt payments on borrowing for the Novartis incentives and related public infrastructure improvements total approximately $900,000. That is about $600,000 less than what Novartis currently pays yearly in Town property taxes.

Bringing Novartis to Holly Springs was a priority not only for Town officials, but for county and state officials as well. As a result, the Town succeeded in securing $6.5 million in grants for Green Oaks Parkway and sewer system upgrades, considerably offsetting the Town’s investment in such infrastructure improvements.

The grants included $3.45 million from the state Department of Transportation; $1 million in federal economic development grants; and more than $2 million from the Golden LEAF Foundation, which the state Legislature created to administer money from the nationwide settlement with tobacco companies.

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