Local officials expressed confidence yesterday that their incentive-laden contract with Dell Inc. would be found constitutional in court.

But they are worried that, as word spreads about the lawsuit filed by the N.C. Institute for Constitutional Law, the ability of the community and state to recruit businesses could be hampered.

Officials on both sides of the lawsuit said that it could take 1 1/2 to 2 years before the lawsuit filed yesterday in Wake County could be resolved in the court system.

"We have been very meticulous with putting together this agreement,"said Allen Joines, the mayor of Winston-Salem. "We have followed the General Statutes to the letter, so we believe the agreement is constitutional.

"We're concerned that North Carolina could be put into an extremely disadvantageous place because of this lawsuit if there are concerns that the state's economic-incentive policies are being challenged."

Dell is building a $100 million plant at Alliance Science and Technology Park in southeastern Forsyth County. It plans to hire its first 200 workers by mid-August and ship computers from the plant by Sept. 18.

The lawsuit challenges the legislation that came from the General Assembly, which granted more than $242 million in tax credits and other economic subsidies to lure Dell to North Carolina. It also challenges the local resolutions adopted by the Winston-Salem City Council and the Forsyth County Board of Commissioners that provided an additional $37 million.

Joines and Gayle Anderson, the president of the Greater Winston-Salem Chamber of Commerce, said that the institute's lawsuit evokes memories of the 1996 lawsuit brought by local lawyer William Maready.

In the Maready case, the N.C. Supreme Court upheld cash grants from the city and county to new employers. The court found that the creation of jobs meets the state constitution's requirement that tax dollars must be spent for a public purpose.

"While the other (Maready) lawsuit was being heard, Winston-Salem was put into a disadvantageous place," Joines said. "Essentially, we were dead in the water in our recruitment efforts until the state Supreme Court reached its decision."

One of the plaintiffs in the suit, Bill Dowe, is a longtime promoter of small business in Winston-Salem. He said yesterday that such incentive deals are unfair to small businesses that pay their taxes.

Dowe questioned whether taxpayers will reap any benefit from the tax breaks offered to Dell.

"As a taxpayer, it comes ultimately out of us," he said. "At my age (76), I doubt I'll be alive to see the first penny come back to our city and county as a benefit."

Scott Millar, the president of the N.C. Economic Developers Association, said that the N.C. Supreme Court's ruling in the Maready case "confirmed the constitutionality of economic-development incentives."

"Incentives are a reflection of the aggressive times that we live in and North Carolina must also compete or risk being left behind," Millar said. "The act of filing this lawsuit does not in any way change the validity of incentives."

Alice Garla