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Commerce reorganization and privatization on legislature’s busy agenda today

Among the many, many things going on at the state legislature today, lawmakers of both parties will be meeting to discuss overhauling the state Commerce Department and shifting the agency’s economic development duties to a new public-private group.

The privatization proposal is a central piece of McCrory’s economic agenda, and the move could shift up to $18 million to a nonprofit group headed by a board of directors appointed by political and business leaders. The setup has had mixed results in the dozen other states that have the public-private partnerships (sometimes referred to as PPPs) with criticism in several states over unrealized job numbers, pay-to-play scenarios and other conflicts of interest.

Supporters of the groups say that moving economic development functions outside of state government, the state could respond more quickly and effectively to

N.C. Commerce Sec. Sharon Decker

N.C. Commerce Sec. Sharon Decker

businesses looking to grow or move to the state.

The House is expected to take up their version of the legislation at an 11 a.m. hearing, in room 544 of the Legislative Office Building while the Senate will discuss their version at a 2:30 p.m. committee meeting in room 1027/1128 in the Legislative Building on Jones Street.

(I’ll be at both meetings, and giving updates via my Twitter account, @SarahOvaska)

Both legislative houses are working off of draft legislation (click here to read) that requires the new nonprofit to raise $10 million from private donors, a dollar amount that many involved with or watching the process say is too high. Decisions about the often-controversial financial incentives offered to incoming companies would state with state commerce officials.

State lawmakers have also previously said they want the public-private group to comply with transparency measures (the state’s public records, open meetings and state ethics laws) that Commerce officials have been wary about endorsing completely, arguing that strict disclosure rules could undermine the group’s primary mission of recruiting companies to North Carolina.

In related news, I published this investigative report yesterday about Richard “Dick” Lindenmuth, the Raleigh businessman hired by the McCrory administration on a $120,000 annual contract to transition and head the proposed setup.

The investigative report found that Lindenmuth, who has no background in economic development, came under significant scrutiny in 2010 for inappropriate billing practices to a company undergoing bankruptcy that he consulted for,. A federal judge who reviewed the situation said the violations could amount to crimes, though no charges were ever pursued and Lindenmuth denied any wrongdoing but agreed to pay back $250,000 to the company.

Richard Lindenmuth

Richard Lindenmuth

He had also declared bankruptcy for his own Raleigh-based consulting company after his work was questioned. Click here to read the entire article.

Commerce Secretary Sharon Decker told reporters when Lindenmuth was hired that, although he had the title of interim CEO of the Economic Development Partnership of North Carolina, he is “clearly our candidate for the long-term leadership of the partnership.”

On Monday, Decker told N.C. Policy Watch via a written statement that she had known about the bankruptcies before hiring Lindenmuth and did not have concerns about how he handled the situation.

She noted that she was “appreciative of his willingness to take on an interim assignment during this critical time in North Carolina.”

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