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John Skvarla

John Skvarla

Sharon Decker

Sharon Decker

North Carolina Governor Pat McCrory announced a major change in his cabinet today. Commerce Secretary Sharon Decker is out and Secretary of Environment and Natural Resources John Skvarla will take her place. No word yet on who will head DENR after Skvarla.

Though it’s hardly unprecedented for a Governor to, in effect, transfer secretaries from one agency to another, in a normal/sane world this particular switch would raise eyebrows. After all, it’s one thing to be the state’s top environmental protection chief and it’s quite another to be it’s top business schmoozer.

Or at least it ought to be.

Unfortunately, under the present regime in Raleigh, such an idea is perfectly logical and consistent. That’s one of the main reasons that today’s announcement produced a unanimous yawn from state political observers: No one ever had any illusion that Skvarla was doing anything other than serving the state’s big business community at DENR. By all appearances, the new gig will simply allow him to do essentially the same thing he’s been doing  — just with a different title.

 

News

North Carolina’s privatized economic development group already has a new leader, less than two months after the group officially launched in October.

Christopher Chung,  38, an experienced economic developer from Missouri, will begin Jan. 12 leading North Carolina’s job recruitment efforts.

Christopher Chung

Christopher Chung

He will replace Richard “Dick” Lindenmuth, 62, a business executive hired last January to help shift North Carolina’s job recruitment efforts from the state Commerce Department to the new privatized set-up.

Chung, who has led Missouri’s version of the privatized economic development efforts since 2007, was announced Monday through a press release from the economic development group, and came as a bit of a surprise.

An Ohio native, Chung holds a bachelor’s degree in economics and Japanese from Ohio State University and oversaw $80 million in financial incentives when leading Missouri’s public-private partnership.

UPDATE: Details were released Monday evening about Chung’s compensation. He will make an annual salary of $225,000, and can earn additional bonuses of up to 25 percent of his salary if he meets benchmarks that the economic development partnership board will make in January. Public money will be used for $120,000 of his salary, in line with the legislation that created the partnership. Chung’s moving expenses will also be covered, and he’ll be given a car once he arrives in North Carolina.

The new 17-member board for North Carolina’s economic development partnership held its first meeting on Nov. 15 at its Cary headquarters and made no mention about the potential hire during the open session of the public meeting.

Lindenmuth, who made $120,000 a year as the CEO of the partnership, will continue working with the group on a contract basis working on projects that will include expansion of high-speed internet services to rural parts of the state, data analysis and recruitment of veterans to the state, according to Monday’s press release from the economic development partnership.

Richard Lindenmuth

Richard Lindenmuth

With most of his career spent managing or consulting for troubled companies, Lindenmuth came to the job with no economic development or public sector experience. An N.C Policy Watch investigation published earlier this year found that he’d been scrutinized by a federal bankruptcy judge for padding his expenses to a company in bankruptcy proceedings.

N.C. Commerce Secretary Sharon Decker applauded Chung’s hire.

“The Partnership is off to a strong start and is working closely with us to bring in new jobs,” Decker said, according to a news release from the partnership. “They have enjoyed strong leadership from day one, and now have in place a CEO and Board of Directors that will help ensure an excellent first year of economic growth in 2015.”

N.C. Policy Watch requested, but was not immediately provided, information about Chung’s salary , as well as details about Lindenmuth’s proposed contract work and his pay. (See update above for details about Chung’s salary)

North Carolina, through legislation passed this summer, shifted its tourism, marketing and business recruitment divisions in October to a the newly-created Economic Development Partnership of North Carolina. A central piece of Gov. Pat McCrory’s jobs plan, the public-private partnership is funded with $16 million in public funds and less than $500,000 in private donations. The quasi-public method of economic development has had mixed results in other states. Supporters say moving economic development efforts outside of state government allows for more effective recruitment of new employers while detractors point out that other states have seen conflicts of interest and a pay-to-play culture emerge.

News

The Economic Development Partnership of North Carolina released the names of the 17 board members Friday that will oversee the state’s new privatized job recruitment system.

The partnership officially launched in October when the state contracted out much of its job recruitment and tourism division to a private group. A central piece of Republican Gov. Pat McCrory’s jobs platform, the public-private partnership approach to economic development has had mixed results in a handful of other states.

Proponents of the structure say moving the job recruitment duties and $16.5 million in public funding out of state government allows for more flexible and faster responses to leads in recruiting jobs to the state. Critics of the partnership say that the privatized structure encourages a pay-to-play culture, where campaign supporters of political leaders are rewarded or successes amplified to boost the public profiles of governors.

Final decisions about financial incentives will rest with the state Commerce Secretary.

North Carolina’s economic development partnership had been operating under an interim board headed by John Lassiter, a Charlotte businessman and former city councilman close to the governor. Lassiter also used to be the chairman of Renew North Carolina, a political-action committee that can accept anonymous donations from corporate donors and individuals to trumpet McCrory’s successes. Lassiter resigned from the group in early 2014.

But Bob Singer, a Greensboro attorney appointed by McCrory to serve on the new economic development group, remains the head of Renew North Carolina, according to 2013 documents filed with the N.C. Secretary of State’s office.

Read More

News

N.C. Commerce Secretary Sharon Decker says the $22.5 million fund to recruit business to the state is nearly empty, with enough money left to cover one additional jobs project, according to the Triangle Business Journal.

Decker was speaking to a group of commercial real estate developers at the Umstead Hotel in Cary when she made her comments about the state’s Job Development Investments Grants (JDIG) program.

Lawmakers did not fund the incentive program at levels desired by state commerce leaders, and Gov. Pat McCrory has said he is considering calling lawmakers back to Raleigh before their scheduled start in January for the long session.

From the TBJ article:

“And without JDIG, we will not be competitive,” N.C. Commerce Secretary Sharon Decker told members of Research Triangle chapter of NAIOP at its meeting Nov. 7 at the Umstead in Cary.

The JDIG program, since its inception in 2002, has been used by state economic development recruiters to sweeten the pot for companies that are considering a major investment in North Carolina that would lead to the creation of net new jobs in the state.

JDIG has typically been reserved for the largest new jobs deals, and pay-outs are only made after the company reaches a minimum job creation goal. Local companies that have been awarded JDIG grants include MetLife, Ipreo, Sygenta Biotechnology, Allscripts Healthcare and HCL Technologies.

Decker warns that the state is dangerously close to losing its chance to even negotiate on potentially large job-producing deals, including three big economic development prospects that are considering expansion and relocation options in the Triangle that could add another 4,100 jobs in region

You can read the entire article here.

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Update: Both the Senate and House passed versions of the bill Thursday on second readings, with the House tacking on language placing the economic development partnership back under state ethic rules. The proposals will be back next week for final passage in each chamber.

Parallel bills to privatize pieces of the state’s economic development work is on the path to approval at the state legislature, with changes emerging Tuesday that lower the private fundraising requirements and restrict some of the transparency measures.

The Senate is supposed to consider the bill on the floor today.

N.C. Commerce Sec. Sharon Decker

N.C. Commerce Sec. Sharon Decker

The most reason versions of the 19-page House Bill 1031 and Senate bill 743 would also reduce the required amount the Economic Development Partnership of North Carolina must raise from private funders, leaving the group to raise $6 million from private funders over the next five years.

(To read the entire bill, click here.)

Taxpayers are expected to contribute $90 million over that same period. That’s if Gov. Pat McCrory’s request to transfer 67 positions and an estimated $18 million next year to the new group from the Commerce Department is endorsed by lawmakers in budget negotiations.

Draft legislation had initially put the group on the hook to raise $10 million from private sources immediately, but the language endorsed by House and Senate committees will lower that to $6 million over five years, a move that Republican sponsors is more realistic for a startup group.

The privatization proposal would set North Carolina on a path of its economic development that a dozen other states have embarked on, with mixed results. The public-private partnerships, sometimes referred to as PPPs, have come under fierce criticism in other states with accusations that the private setups have wasted taxpayer money, exaggerated job claims and been used to reward political campaign donors and supporters.

The current form of the bills also remove provisions putting members of the nonprofit’s board and top employees under state ethics rules, which require an annual public disclosure of financial interests as well as put in varied prohibitions on accepting gifts and performing favors. The ethics law also attaches criminal penalties for accepting money or gifts from those looking to s curry favor from public servants. (Click here for a background story). Read More