Last month, Durham’s local governments approved economic incentives worth $7.7 million to help turn the Hill Building downtown into a luxury hotel.

Last week, the county commissioners approved $800,000 to lure an electronic data center to Durham County.

This week, the City Council will consider $1 million for a mixed-use project near a proposed transit station.

“The harsh economic reality of our times is, if you don’t do some incentives you’re going to lose out,” said City Councilman Eugene Brown.

That is not to say incentives don’t deserve some reconsideration.

“I’m interested in us thinking carefully about this,” said Councilman Steve Schewel. He also said he doesn’t think the county is “pulling its weight” in helping finance economic development.

In Durham, the city is far more organized and purposeful in using economic incentives than the county. Incentives on the scale of those for the hotel and the mixed-use project are not frequent – the city approved none in fiscal 2011-12. Over the past two fiscal years, though, it has made about $1.6 million worth of incentives, ranging from less than $1,700 to more than $230,000, according to Economic Development Director Kevin Dick.

In 2011, Durham County approved $225,000 for a plant expansion. In 2010, the county approved up to $2 million for an expansion that eventually went to Wake County; and $1 million for a Hill Building-hotel conversion that failed to meet its deadlines.

Durham County incentives are typically cash grants, say Deputy County Manager Marqueta Welton, but recipients must meet specific targets for investment, job creation and/or tax revenue.

The City of Durham imposes similar safeguards.

In Raleigh, incentives are usually annual payments based on a percentage of taxes actually paid, said James Sauls, director of Raleigh Economic Development.

“You have to perform,” Sauls said.

Past experience

Cary doesn’t pay incentives until a business actually goes into operation, said Budget Director Scott Fogleman, and it includes “clawback” provisions that let the city recover some of its money if the business does not perform as promised.

Past experience has taught cities to be careful, Brown said.

“We all learned something from (companies that) got the money first and then just folded their tents and left,” he said.

As of July 1, Cary also began covering development fees to encourage building improvements in a downtown Business Improvement District. Raleigh, stepping up its incentive program, offers grants for sprucing up building facades downtown.

Durham also makes facade improvement grants, as well as giving incentives – conditioned upon the recipients actually doing what they say they will – for renovations and signs downtown and in designated other areas.

“If you want to be in the economic development game, (incentives are) a tool you’ve got to have,” said Ted Conner, economic development director with the Greater Durham Chamber of Commerce. But, “I try not to worry too much about what others are doing.”

Triangle governments don’t usually compete with each other, Conner said. With a regional work force that crosses city limits and county lines between home and work, “There’s no win in that,” he said.

Chapel Hill is a different case. The Town Council approved an incentive in the form of subsidized parking for a downtown business “incubator” this year, but incentives are “something the town rarely does,” said Jason Damweber, assistant to the town manager.

“It has been done,” said town spokeswoman Catherine Lazorko, but it has been “so infrequent I don’t think I can characterize it.”

In Durham, Schewel said the city should reconsider some incentive policies, particularly what it offers downtown. With the city center’s revival, the area has become, in effect, an incentive in itself and it might be time to “wean ourselves away” from luring with taxpayers’ money, he said.