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House | March 18, 2015 | Committee Room | Commerce and Job Development Committee Meeting

Full MP3 Audio File

I'll be whatever you need me to be, whatever gets us through this. [SPEAKER CHANGES] We have one page here today and his name is Bryson Hill. How are you, Mr. Hill? [SPEAKER CHANGES] Good. [SPEAKER CHANGES] Where are you from Holden Beach, Brunswick County. [SPEAKER CHANGES] Oh, man. [SPEAKER CHANGES] What year are you in high school? [SPEAKER CHANGES] I'm in tenth grade at West Brunswick High School. [SPEAKER CHANGES] Do you have plans to go to college? [SPEAKER CHANGES] Yes sir, maybe UNC State. [SPEAKER CHANGES] There's hope yet. [SPEAKER CHANGES] We have a sergeant at arms, it's Barry Moore, B.H. Powell, and David Lippum. We have two bills for today and one of them is involving my seatmate, Julia Howard, if you can sit right there and explain the bill. I don't think it's that controversial. We have a PCS. It's a motion by Representative Arp to have the PCS before us. All in favor say aye, those no, and the aye's have it. Ms. Howard, you're recognized. [SPEAKER CHANGES] Thank you, Mr. Chairman. Davie County has a rather unique situation. The folks that have been preparing the meals for our inmates have retired and so their contract was terminating anyway and they are no longer available. The county commissioner's went out to bid and we only received one bid back and that was also that we would have to spend about $200,000 to upgrade for commercial kitchen. Since we don't own the land where the jail is, it's owned by the state and we're only leasing it, and of course that's a big expenditure, we didn't feel that was a very good option. We also asked four non-profits, different non-profits if they would be willing to prepare the meals and it's seven days a week, three meals a day. So the agreement now is that the Davie County school system will prepare the meals for the inmates for the county. It's just a unique situation and, Mr. Chairman, I've talked to everybody I know. It is not in Mr. Riddell's bill, and I hope it don't get [??] in that twist, but we just have a unique situation and at the appropriate time I would move for a favorable report, Mr. Chairman. [SPEAKER CHANGES] Any que4stions of Ms. Howard? If not, I have a motion for a favorable report. Any further questions? If not, all in favor of the motion let it be known by saying aye, those no, and aye's have it. Thanky ou, Ms. Howard. [SPEAKER CHANGES] Thank you, sir. [SPEAKER CHANGES] Next one is Representative Lambeth has a bill. Representative Arp, moves to have the PCS before us, all in favor say aye, opposed no, and Mr. Lambeth, you're recognized. [SPEAKER CHANGES] Thakn you, Mr. Chairman, and the PCS cleans up the bill some, so there's nothing material in that. Actually this is a very simple bill but it has generated lots of discussions and interest in this bill, just to remind you that an advanced directive is also known as a living will, in which a person specifies what actions are to be taken regarding their health if they are no longer able to make those decisions on their own. Because these documents are central to effective planning for healthcare and end-of-life decisions, North Carolina, like many states, has statutory forms for advanced directives which can be completed by laypersons. North Carolina is one of only four states that require both a notary and two witnesses to execute the documents. Those states, South Carolina, West Virginia, and Missouri. In North Carolina, among other conditions, a qualified witness may not be a relative of the person signing the document, a member of the signer's medical team, or an employee of a treatment provider or nursing facility where the signer resides. Because conversations regarding health care planning often occur

while it is in House bill 117, which is $20 million for primarily big projects. It's a grant. It's not a loan. This is completely different. This would be available all throughout the state, not just a few, particular states. The terms of the loan, depending on your tier, is 0 or 1 or 2% interest, secured by first lien by the state. Now it also has a provision suggested to us by some bankers that in some cases banks might be willing to lend, in these relatively depressed areas, if they had equal priority with the state's loan. Not higher priority, not lower priority, but just equal priority. So that's a provision that was put in at the suggestions of bankers, of one of the high muckety-muck bankers. This was endorsed by the Governor's Economic Development Board, which expired last summer. But they did endorse this concept, and I have here a letter from the Governor that he likes the concept, and he had seen a draft of it. It's not the exact draft here, but it's very close to it. So with that, I'd like to ask the chairman to recognize very briefly the other two primary sponsors, and then four witnesses, and then be glad to take questions from anybody else, or hear from anybody else, or amendments or whatever. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] Thank you, Mr. Chair. I think Representative Stam said it perfectly. This is about helping some of the parts of the state that so desperately need it. Providing shell buildings so that we can provide opportunities for businesses and the much needed jobs. This is about loaning it to local governments, not private businesses. And I give no better example of this is where economic development would make a lot of sense. I was a primary sponsor on House bill 117. Skip was probably the most forceful opponent to the bill. But yet we both agree this is the correct path forward. I think it's a great bill. We certainly hope you'll support it. [SPEAKER CHANGES] Representative Martin. [SPEAKER CHANGES] Thank you, Mr. Chair. I thought this was a great idea last session when it came forward, and I guess it just needed a little more work. And I reached out to the economic development directors in both communities that I represent, Wilson and Pick Counties, and last year you recall that we did away with the eastern region. And they had had a unique situation where they had the license plate funds that had been collected and then were to be distributed out to the different counties for economic development purposes. So that was unique and not everyone had that, but both of my counties, their top priority for economic development was to have a shell building. And they took those funds and created a shell building and used it very successfully. And support that it's not as easy for every community, and the more rural who don't have funds available would most benefit from this, and it would help all across the state. So I got a lot of input from folks, and am very supportive and excited to bring this forward. Thank you. [SPEAKER CHANGES] Thank you, Representative Stam. Representative Stam. [SPEAKER CHANGES] If I could just give you a brief introduction first of Bob Leek who, while he's coming to the microphone, managed North Carolina's recruitment program for 12 years, managed South Carolina's recruitment program for 8 years, served as president of Research Triangle Park, and he has worked in over 40 states with companies looking for sites or new and expanded, basically he's had 45 years of experience. [SPEAKER CHANGES] Thank you, Representative Stam. Mr. Chairman, members of the General Assembly, I'm proud to be here as a supporter of bill 108, because after almost 50 years now, Skip, I have noticed many, many, many times that the lack of ready-to-go sites and/or buildings has been a real detriment to the attraction of business and industry to this state. And I want to just go back a little bit. I started my career with North Carolina in 1959 when Luther Hodges was governor. And as you may recall, Luther Hodges was a real champion for economic development. And later on, when I got my feet wet working with prospects that were looking at North Carolina, I realized that many of the companies that were looking here were not happy with the way our communities did not have ready sites or buildings. So I've grown up with that, and therefore I'm very, very supportive of this concept that you're dealing with today.

I think that it’s gonna be told many times that the local communities are desparate to have product as Skip says on the shelf when an industry comes to visit. When we started a program in North Carolina back in the Scott Administration called the Governor’s Award Time Program, it was to help the small rural communities get ready for industry and it was a very successful program, more than 300 small communities under 20,000 population entered and won the governor’s trophy for that program. In dealing with the small communities, though, it became quite apparent that even though one of the requirements was that they have sanctioned buildings available most of them didn’t have enough money to make that happen in their small communities so this bill would go a long way I think to addressing that problem and I know it continues to exist today in many of our smaller communities so I’m very much in favor of this bill. I hope it will pass and it will help the smaller towns, particularly and all towns in North Carolina in the attraction of business and industry and I leave you with one thought, when a industry comes to look at your community, if you don’t have a site ready you cannot hang that industry on a skyhook. It has to have a place to locate, so thank you very much. [SPEAKER CHANGES] Thank you. Representative Stam next speaker. [SPEAKER CHANGES] Well Steve Yost is coming up. He serves as Co-Chair of the North Carolina Economic Developers Association. He’ll speak on behalf of that group. He has lots of experience. He’s also the President of the Southeast Economic Development Region and Steve, you specifically speak about the need for buildings as opposed to sites. [SPEAKER CHANGES] Okay, thank you Chairman Ross and Representative Stam and the committee here this morning. I’m Steve Yost and I’m President of the Southeastern Regional Partnership. We are a regional economic development organization of 14 counties in the Southeast region and for those legislators who are here this morning on the committee from the Southeast region you know that we go from Wilmington to Wadesboro and Fairmont to Fayetteville, so we have a big swath of Southeastern North Carolina, particularly rural areas, rural counties in Southeastern North Carolina and the, I’m also a member of the Board of Directors for the North Carolina Economic Developers Association and also a Legislative Co-Chair of NCDA and we have several of our NCDA members here today who are also local regional economic developers, and we’re here to express our support for House Bill 108. We think this is a very, very important piece of legislation to support our efforts to be as competitive as we possibly can be in our economic development recruitment efforts. The site building and development fund I think would be a really important, useful tool, particularly for our local rural counties in their efforts to attract and market their areas for industry. I think all of you know that there’s a lot of factors that go into recruiting industry. I won’t get into all of those but among those is having really good quality industrial buildings to market. It’s very, very important for counties to have that capability in order to get recommendations, in order to get looks from prospective companies in industries. In product development and particularly in developing industrial buildings or shell buildings is one of the most challenging aspects of economic development. It is, it’s an expensive endeavor to do that but it’s a very necessary endeavor for us to be competitive and I think what we’re looking for out of this bill is another tool that we can use to help develop that product and those buildings that we need. I’ve been a local, state, regional economic developer for 21 years. I’ve worked with hundreds of industry projects, all in Southeastern North Carolina and I can tell you what I’ve seen during that time working with all of those projects, that product is absolutely critical for us to be competitive and companies just are not going to consider areas without available industrial buildings that are marketable, have infrastructure

Sure. And that make the parameters and criteria that companies look for. We all know how competitive it is in business and industry recruitment and so I think with this particular idea, this bill, we’d have another tool to kinda add to our toolbox to recruit to industry. As mentioned earlier by Bob Leek this program would help all counties but I think it would be especially helpful to rural counties who have the vision and leadership to develop industrial buildings and sites and product but don't necessarily have all of the capacity and the financing and funding that they need to be able to do that successfully. And so we see that as behind a key part of this particular bill and being able to help them do that. I do want to say that we have several rural counties in the southeast region, I know of others across the state, who have had success in developing industrial buildings and sites and they have some unique very proactive programs. If you had a program like this fund, it would only enhance their abilities on what theyre able to do but I do want to site one county in my region its Bladen county, its a rural county, tier 1 county of 32000 people, that several years ago had no product, no buildings and sites really to offer to industry and so they developed their own regional, their own nonprofit real estate corporation to develop those buildings and sites because they knew no one else would come in and do that. Its been a successful program. It can be even better with access to this sort of program. Last thing I will say that I think is really good about this bill, we are not asking the state in providing this loan program to be 100% responsible for helping our local areas develop product but we're asking you to be a partner, and to be a trigger in helping us to leverage other resources in helping to develop this product and we think that product development at least in general is most successfully done when you do leverage multiple resources to get the job done. NCDA and my organization the Southeastern Partnership is very very supportive of house bill 108 and I will tell you we will put this program to good use if it were approved and implemented. So we appreciate your time this morning. (faintly) Thank you ?? CHANGE SPEAKER Thank you. Representative ?? I'd like to remind the speakers let's try to keep it to two minutes if we can. CHANGE SPEAKER While repr-, while Crystal ?? is coming up Ill note that she is the president of the Wayne county developer- development alliance and has been head of Lincoln county economic development as well. CHANGE SPEAKER Good morning. Again, Crystal ?? with Wayne county development alliance. I appreciate you giving me the opportunity to present before you. What I want to speak about is just an experiences on both ends of the spectrum. Coming out of Lincoln county, North Carolina, just a suburb of Charlotte region, we experienced in that community back in the late 80s, early 90s developing an industrial park from private citizens who got together, collected their money, build a speck building, and actually build a couple of them in that park. It took quite a while to fill those buildings and get that park rolling along. Fast forward to the end of the 90s, early 2000, we had a private developer come in. We had 650 acres of land, a private developer saw the opportunity there and decided to invest their money and purchase over half of that acreage. They came in, developed that land. It was a great situation for us. We were a rural county. We had great transportation between two major metropolitan areas but we had no funds to develop a park or market in competition with the people around us or the counties around us. This developer was a great example of how that works. Fast forward again, we filled that park up very quickly. Within 12-13 years. That 650 acre park was narrowed down to only 45 acres left at the end of 2014 with 17 industries in there. When we went to develop a second park, the private sector was not willing to do that.

Speaker changes:they were not going to invest their money and take that risk skills filling back on the local government which did not have ?? to do that and this bill her will certainly help local bills local communities local government economically in the rules sector specially from the Lincoln county specially from the nice part of the state we don't have at anymore we don't have that ?? this bill will provide us ?? toll and other tool box to have the option to use not necessarily to need the objects many options we could possibly have due to the fact we have that challenges anyway we are struggling in north Carolina our communities and the rural Communities are struggling to have product and gin you have project come through they have visible sites had ready ?? they won buildings to ready to move into this will help support to our rural community Speaker changes:thank you Speaker changes:well ?? Speaker changes:thank you Mr.chairman Representative i must be glad firstly how much i appreciate the ?? county competing legislation that come north Carolin ?? i know the ?? county commissioner for twelve years ?? and so that moved into the economic development rule ?? even understood more why product is important ?? will provide you orders to fiber natural gs if we decide to locate ?? as the president of NCB back in 2006 and 2007 i was exposed not only the local county but ?? also to state wide we re hurting all over the state we need the product we need the viability of funds to make these products many people living cross north Carolina re working hard to build north Carolina ?? we know that you have the some desire so please help us ?? to achieve the bill in passing house bill 108 and ?? global economy thank you Speaker changes:before i go to member questions are any other comments from the public are the any other economic developers here having stand up from round the thank you ?? member question and i get three listed so for Representative ?? Speaker changes:?? Speaker changes:?? appropriate Speaker changes:for motion to appropriate Speaker changes:sorry ?? Speaker changes:thank you just a question for bill sponsor on page 2 line 41 from 46 i was just wondering what the thinking was that this consultant ?? must here would be article 3 articles 3 of chapter 143 Speaker changes:believe that ?? in original appropriation we had 400 dollars fro this actually discussed with that with ?? state government ?? and i guess you could make it subject to ?? Speaker changes:thank you follow up Speaker changes:follow up Speaker changes:yes on the next page 3 lines 11 section 805

Behind restricting these business, qualified business entities from not doing a retail or professional office space, etc. [SPEAKER CHANGES] These categories were suggested by the economic developers to strategically limit it to those who have more to do with economic growth. I mean these are all fine things but they’re not the kind of things that multiply other things. These are more the consequence of economic growth rather than the generators of growth. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So what kind of qualified business are they looking for? [SPEAKER CHANGES] Oh, so many. I mean, manufacturing, anything not in that list. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] I mean, if you wanted to delete one of those or two of those it wouldn’t hurt my feelings, but this is on the advice of those folks who are the experts in that area. So it’s not just any building for any purpose, but rather things that will really most strategically make the thing grow, and that’s the reason for the strategic plan, the first thing you asked, so that this is not coming strictly from the local government, just some good idea or some cousin happens to own some land that needs to be improved, you know, but rather it’s a strategic plan that Commerce is trying to locate these in cooperation with cities and counties where it’ll make the most difference. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] I’m for the bill. I think it’s a good bill. I think it’ll help a lot of the rural areas for which I represent quite a few. That’s just a couple of questions. It doesn’t mean that I’m not against it I was just trying to clarify some things. Thank you. [SPEAKER CHANGES] Alright, next I have Representative Hager. [SPEAKER CHANGES] Thank you, Mr. Chairman. Representative Stam, I have a couple questions here for you. One, I’ll just jump down to the bottom of my list. Is it possible at some point in time with this program and with a city and a county creating a shell building could end up being in competition with private industry. [SPEAKER CHANGES] Yes and that’s why that would be coming from Commerce particularly in areas where that is not an issue. Like I’ll just give an example, the district I represent is one of the most prosperous in the state. I would be shocked if they ever did one in my district or Representative Jeeter’s district, but as we went around the state we found a lot of places that just have nothing to offer. Nothing. [SPEAKER CHANGES] Follow up, Mr. Chairman? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you. Is it possible, and have you, and I don’t think you have, I didn’t see it in here, is there a limitation, you say you wouldn’t see this happen in Wake County maybe in Northern Mecklenberg County, or the great state of Mecklenberg County I should say, Representative Jeeter, you say it couldn’t happen, but is there any limitation in this bill that keeps most of this money as we see in JDIG from flowing to tier three counties. [SPEAKER CHANGES] Well, actually there are parts of tier three counties where it might. I was referring to my district not to all of tier three, and if staff could help me find the page and line it does state that it is primarily for, could you all help me fine it? [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Mr. Oni. [SPEAKER CHANGES] Yes there’s a preference in here when the Department goes through and reviews applications for lower, less developed counties. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Okay, Page 2 line 35, right, page 2, line 35. [SPEAKER CHANGES] Follow up, Mr. Chairman? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] You mentioned another program that’s earlier by $20 million for bigger type buildings. Is it possible that this legislation, I guess what I’m trying to say, could you piggyback those two programs? Could someone that’s very smart piggyback these two programs together and get a larger building with this program also. [SPEAKER CHANGES] It’s not intended for that. Is it possible? Yes. This is not in competition with NC, with House Bill 117. Is it theoretically possible, yes, I would hope it wouldn’t be used for that much. [SPEAKER CHANGES] Last but not least, Mr. Chairman. Last question, please. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] At the end of the day you talk about infrastructure, you know, completing infrastructure, these projects. Would this allow you to complete private owned infrastructure such as gas lines or private sewage systems or water lines, these infrastructures, or are you just talking about

municipal systems and infrastructure. It's bringing infrastructure to the site so it could be, I don't see any limitation that it could not be a Duke Energy electric line to the site or a gas company to the site, making private. [SPEAKER CHANGES] Next I have Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman. I just kinda need some clarification in trying to figure out the flow here. Initially I thought this was, and I think, Representative Stam, that you cleared it up, that it was a locally motivated idea that they go to the department and ask for money and it's reviewed and given money. But I gathered from a comment that you made, it's more department-driven as they look statewide for economic development? [SPEAKER CHANGES] I may have misstated that. The strategic plan that would be developed professionally would say what kind of places, what kind of, types of structures and pad-readies??. But I do think it would be, the specific applications would be driven by the local government. [SPEAKER CHANGES] Follow up, please. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] In that case, we have this build it and they will come sort of mentality. Are we talking about that sort of speculative building, or are we talking about things that are a little bit more imminent in terms of being able to find a lessee or a buyer for this municipal or county developed property? [SPEAKER CHANGES] No, not if, it's not primarily designed for something that is already coming. It's designed to attract people to come, and I think, I received an email I think from Mr. Yost, I believe, that 80 to 85% of all inquiries to local economic developers specify that they want to see a building as opposed to a site. And if you don't have a building, they just don't come, and even look at other things. Now is it possible that you will occasionally have a stranded building? Yes, it is possible, but that's possible today where cities and counties can already do this with private financing or gifts. What this is saying is the state will lend the money for the cities and counties if it complies with the state's strategic plan, where it is much less likely to be a stranded building, because then you have Commerce also trying to push it as part of their, all the other tools in the toolbox that they have. [SPEAKER CHANGES] Final question follow up? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] On page one, in section C on line 31, where you talk about the requirements for the non-profit, the issue in number two about a non-binding pledge that the local governments have to enter into, explain exactly who that gets off the hook and how it works and the fact that even though it's non-binding, we're still gonna get our money back. [SPEAKER CHANGES] Realize first, the first line of defense for getting your money back is, unlike almost any other loans that the state does or grants or claw-backs, this is a secured first lien. So the vast majority, if not all the money, will come from the property itself. Then, if that's insufficient in the assets, I mean you have this Economic Development Corporation. In other words, the non-binding pledge is from the city or the county to the lender. It's not from the Economic Development Corporation. And it's hard to get a city or county to appropriate money for the future. You can't bind a future assembly. But it's not as much of a practical problem here for the very reason that I mentioned first. It's secured first lien on real estate and all the improvements. [SPEAKER CHANGES] Next I have Representative