Commerce shift to NC nonprofit OK'd by House panel

RALEIGH, N.C. (AP) -- A House committee recommended a bill on Wednesday that lays the groundwork for a private nonprofit corporation to take over many economic development duties of North Carolina's Commerce Department.

The panel used a voice vote to approve the legislation enabling Gov. Pat McCrory's administration to begin the process to shift department responsibilities for travel and tourism, international trade and economic recruitment to the yet-created corporation.

Modeled on organizations in other states, the public-private partnership is designed to help the state respond more nimbly to companies that want to relocate or expand in the state. The bill also would end state support for the seven current regional economic development commissions in January, replacing them with eight geographic "prosperity zones" where counties would work together on common economic goals.

With 20 counties struggling with double-digit unemployment, the current economic recruitment methods aren't working, Commerce Secretary Sharon Decker told the committee. The bill essentially gives state officials six months to work out details for the corporation.

"We've got to change the way we do business to help our existing businesses grow and help new businesses relocate to our state to expand, grow and create jobs," said Rep. Tom Murry, R-Wake, who is shepherding the proposed North Carolina Economic Development Partnership through the legislature. The bill next goes to another House committee.

The corporation has yet to be created, but top state officials will be closely linked to the entity. An oversight committee comprised of Cabinet officials and appointees of legislative leaders will ensure the corporation, which would enter into a contract with the Department of Commerce, is carrying out its goals and being audited.

A private15-member corporation governing board appointed by the governor and legislative leaders from various business fields would hire the board's top executive. The McCrory administration envisions outside companies or investors giving to the partnership to further its work. The state would still make final decisions on awarding economic incentives using public funds, as it currently does for projects.

"We need our ... economic development activities to move at the speed of business, not the speed of government," Murry said.

Three weeks ago, members of the same House committee loaded Decker with questions, many about the end of the regional economic commissions and the reduction of funds for other nonprofits that work on minority economic development. On Wednesday, they sounded more on board with the idea that McCrory, a Republican, had made one of his top priorities this year.

"I am intrigued by your plans. I am beginning to place my confidence in what you're going to be able to with these prosperity zones," said Rep. Susan Fisher, D-Buncombe. Still, Fisher told Decker, she was uneasy that decision-making on economic development issues would be too centralized from Raleigh.

Decker said she and McCrory economic adviser Tony Almeida would begin traveling across the state next month to meet with regional commissions and chambers of commerce and strategize on the best way to market the region and recruit business. The bill also would require each "prosperity zone" to contain an office where employees from state commerce, environment and transportation department will work to provide technical assistance for economic development.

Murry said the proposal would require the corporation to conduct business in a transparent manner, and board members would be barred from taking actions that would benefit them, their family, or businesses. Decker said there would be a firewall between the activities of the state and the corporation.

But Rep. Chris Millis, R-Pender, who voted against the bill, said in committee he was still worried about how the corporation would avoid conflicts of interest when making recommendations to state officials about who should receive public tax breaks.

"This establishment of this nonprofit has me seriously concerned," he said.

The Commerce Department that remains would still manage workforce training and the unemployment insurance benefit program, among other responsibilities. The bill says legislators would have at least 45 days before the department enters into the contract with the private nonprofit corporation to scrutinize the details.