The Business Journal
March 20, 1995
N.C. incentive rules changing
Kelly Greene, Staff Writer
Copyright © 1995, The Business Journal (Charlotte, N.C.)
The N.C. Commerce Department is pitching new guidelines for Gov. Jim Hunt's
discretionary fund to state legislators in hopes of securing another $10
million to snag new and expanding companies.Used with permission.
The proposed rules include complicated formulas to rank employers who say
their projects would create jobs and change the way the state doles out
But in a press conference March 15, much of the talk did not focus on how
the guidelines would work. Instead, commerce officials seized the chance
to defend the fund's $300,000 investment in Seffi Industries Inc., the Charlotte-based
furniture maker that shut earlier this year, three months after renovating
a Sampson County plant and hiring the first 50 of a promised 375 workers.
Just 18 months before commerce officials awarded the company its grant,
Seffi's first chief executive, John Gioioso, was forced to resign as chief
financial officer of C-B/Murray Corp. Inc. when it realized its finances
He was later sued by the grocery distributor's landlord after the company
closed in late 1992, and he has two Chapter 7 bankruptcy cases filed in
But Commerce Secretary S. Dave Phillips says: "It looked pretty impressive
on paper." Commerce officials were impressed with a hefty credit commitment
from Creditanstalt Bankverein, which shut Seffi down when it could not start
paying back $16 million it borrowed.
To try to avoid losing money again, a task force of professors recommends
that the state pay incentive money in installments after the jobs materialize.
It is part of what they've termed a "performance agreement," in
which the companies also agree to keep all their N.C. operations running
and provide employment reports.
The companies also would have to divulge competing offers from other states
-- in writing.
And the guidelines create a ranking system using mathematical formulas to
weigh job quality, industry quality, statewide economic impact and local
Some factors would give the companies a boost in the competition for state
taxpayer dollars, such as locating in distressed counties, creating an unusually
high number of jobs, or bringing "exceptional" technology here.
The verdict so far from House Speaker Harold Brubaker's camp: "It's
astep in the right direction, but there are still many clouds hanging over
the possibility of that fund getting $10 million," says press secretary
"They obviously know they have a problem with their perception, if
nothing else, or they wouldn't have come forward with these guidelines."
Phillips assembled the task force of seven professors a year ago and charged
them with improving the fund's guidelines. He rushed them to finish their
work March 13 so commerce officials could take the guidelines to the General
Assembly along with Hunt's $10 million budget request.
Republican legislators worry that the fund, despite the new guidelines,
"is too loosely construed," he says. "It's taxpayers'money,
not (Democrat) Jim Hunt's money."
Still, Watts Carr III, the state's top recruiter until taking a new commerce
job recently, argues the money has cinched deals the state would have lost.
"We are really hamstrung," he says.
All rights reserved. No part of this article may be
reproduced, translated, or transmitted in any form or by any means without
permission in writing from the The Business Journal.
Copyright © 1995, The Business Journal (Charlotte, N.C.).
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