NC jobs plan calls for special 'closing fund' to recruit companies

by Patrick Gannon, The Insider, News and Observer, January 24, 2014.

A 10-year jobs plan unveiled by state leaders Friday recommends changes to some state economic incentives programs, including film incentives, and the creation of a special “closing fund” for Gov. Pat McCrory to help reel companies in.

The closing fund would be a “nimble” pot of money for the executive branch to use to “aggressively compete” with other states to attract companies, according to the broad “North Carolina Jobs Plan” adopted Friday by the N.C. Economic Development Board at a luncheon at the Executive Mansion.

John Lassiter, Economic Development Board chairman, said some of the most competitive states – South Carolina, Tennessee, Texas, Florida – have closing funds. Such a fund, he said, would give the state greater ability to close deals, including those involving megasites or corporate headquarters. “And because those have such a lasting impact in an economy, we want to make sure we don’t lose that because we didn’t have $1 million, or $2 million, $3 million to make that deal work in North Carolina,” Lassiter said.

Commerce Secretary Sharon Decker gave another example. In rural North Carolina, she said, there are old buildings that aren’t suitable for redevelopment, but the state doesn’t have a way today to remove the old structure and prepare the site for a prospective employer.

“(The closing fund) would give us a flexibility to have funds, very defined, with a limit on them, that could be used for those kind of unusual circumstances,” Decker said. “Today, there is no flexibility.”

Few details provided

The jobs plan comes as the state is in the process of moving the job recruiting and marketing functions of the state Commerce Department into a new private economic development agency called the Economic Development Partnership of North Carolina. Lassiter, a Charlotte businessman and former member of McCrory’s transition team, will serve on the partnership’s five-member board.

The jobs plan also recommends changes to the state’s film incentives program, which expires at the end of 2014, but it doesn’t give details. Lassiter told reporters the state shouldn’t be simply a location for filming, but rather a “host for filming activity and production.”

He cited the long-running Showtime series “Homeland,” which films in North Carolina, as an example of the type of film business that generates long-term employment and investment in an area. The fact that a film company, under the current system, can come in, produce a film, then take their incentive money to other states isn’t the best use of taxpayer money, Lassiter said.

“So how do we do the things that cause long-playing series, long-scale TV contracts, post-production activities, sound stages that employ people long-term?” he said.

Exactly how that would be accomplished isn’t clear. Decker, who has repeatedly expressed her support for the film industry, said officials are waiting for the release of an industry-funded study by N.C. State University researchers before finalizing film recommendations. The study is expected in about a month.

“We think there are a number of ways to go about it,” Decker said. “We’ve taken a careful review at what other states are doing.”

Debate expected

Changes to the current film incentives program are expected to be debated during the 2014 short legislative session that begins in May. Critics of the existing program, which gives companies a 25 percent tax credit on certain expenses in North Carolina, argue that the state pays out tens of millions of dollars to film companies each year and may not realize the same benefit. Proponents argue that if it weren’t for the incentives, productions wouldn’t come to the state, spend money and hire workers.

The jobs plan also calls for more funding for two other incentives programs – the Job Development Investment Grants, or JDIG grants, and the One North Carolina Fund.

The 37-member Economic Development Board advises the General Assembly and the governor on economic issues. The board touted its plan as a 10-year road map for the state’s economic development efforts. The plan has been under development for about six months and is the first of its kind in about a decade. Lassiter said the plan “provides the strategic direction that North Carolina has needed for a long time.”

Among many other recommendations, the 26-page plan calls for targeting 38 different industries in 10 different “clusters,” including manufacturing, the military, agriculture and forestry, bio pharma, hospitality and energy. It supports the development of a new statewide branding strategy and continued tax and regulatory changes.

McCrory deemed the plan a “very clear, upfront assessment of our state’s strengths and weaknesses.” He said it gives him a direction and strategy to move forward with creating jobs.

“Ladies and gentleman, we can’t wing it anymore. … A business or a government that constantly tries to wing it is a business or government that’s going to fall behind,” the governor said.