A $100,000 grant provided by Durham County to semiconductor chip Nitronex is being challenged in court.
The North Carolina Institute for Constitutional Law said Friday that it filed suit in Durham County, calling the grant a “give-away.” The NCICL, which has challenged economic incentives in the past, said the grant was “not for a public purpose” because Nitronex had already planned to move into a facility in Durham.
However, Nitronex officials told WRAL Local Tech Wire in March that the company was considering moving out of state. Founded in Raleigh, Nitronex built a 69,000 square foot facility in Durham several years ago but did not move into the facility.
“For years, governments and business have claimed that corporate subsidies are necessary to encourage economic development. Here we have a case where the government is giving money to a company for doing something it committed to doing five years before it got a subsidy,” said Jeanette Doran, senior staff attorney with NCICL, in a statement. “With this handout, Durham is giving away $100,000 and getting nothing in return. The public deserves better.”
On Thursday, NCICL filed suite against state legislation that provides economic incentives for tire companies Goodyear and Bridgestone Firestone.
Ray Crampton, director of marketing for Nitronex, said he had not seen the lawsuit and could not comment.
In negotiating the grant, Nitronex said it would invest $24 million in the Durham facility and create 200 jobs over five years. Since moving to Durham the company has increased its headcount to more than 60, Crampton said. It employed 55 people before moving.
The grant was to reimburse Nitronex for relocation expenses and employee training, the Durham Herald Sun reported at the time.
Nitronex is venture backed. Investors include Intersouth Partners in Durham.
A developer of radio frequency power transistors, Nitronex landed $21.8 million in funding in June of 2006. That investment set the stage for the firm’s expansion plans and decision to move to Durham from Raleigh.
Nitronex, founded in 1999, utilizes technology first developed at North Carolina State University. It has designed semiconductors for use in high-speed broadband and wireless services.
The company is now manufacturing seven products, has customers and is producing revenue, Crampton said.
“We really have a state of the art manufacturing plant,” he added about the new plant.