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NACA lowers its Charlotte investment - CharlotteObserver.comBusiness
In June 2009, N.C. Gov. Bev Perdue and other officials came to Charlotte for a much-needed economic development announcement.
The Neighborhood Assistance Corporation of America, a Boston-based foreclosure prevention specialist, planned to hire 1,014 new workers in Charlotte over five years and spend $4 million on the expansion. In return, NACA would be eligible for up to $1 million in state job-creation incentives, plus on-the-job training grants.
Months later, before the agreement was finalized in January, NACA asked the state for a number of changes: It wanted to reduce its planned investment to $1.2 million and lower the minimum required wages by 10 percent. The N.C. Commerce Department agreed to the lowered investment but denied the other requests, documents reviewed by the Observer show.
The eleventh-hour haggling is the latest wrinkle in an economic development agreement that included a mix-up last August over how much the state planned to provide in incentives.
The newly requested documents show how behind-the-scenes changes can occur between the time an economic development project is announced and when an agreement is finalized.
N.C. Commerce Department spokesman Tim Crowley said such changes happen from "time to time" but not often. Investments can change for a variety of reasons, including adjustments in the price of land or the cost of upfitting a building, he said.
NACA chief executive Bruce Marks said the organization asked for a lower investment because it rents office space, instead of buying buildings. That meant it would spend less on property and equipment. Marks emphasized the nonprofit still plans to meet the 1,014-job requirement. "It's always been about the jobs," he said.
In other changes requested in October, NACA asked the state to count employees hired before the June 2009 announcement toward the 1,014 jobs it agreed to hire, documents show. The state also denied that request.
Marks said the proposed changes were "non-issues" because they never took effect. "In the end, it was fine," he said.
Proponents of job-creation incentives say they are crucial to producing new jobs, especially in difficult economic times. Opponents such as Robert Orr, executive director of the N.C. Institute for Constitutional Law, say it's unfair to hand taxpayer dollars to businesses that he suspects were likely to expand in the state anyway.
Orr said taxpayers should be informed of changes in agreements, especially since the initial announcements are made with such fanfare.
"I think the public has the right to know when changes are made like this," he said.
The Observer discovered the alterations in a review of e-mails and other documents obtained as part of a public records request.
Under the finalized agreement, NACA is eligible to receive $1 million over five years from the One North Carolina Fund if it hires and maintains the 1,014 workers and retains 102 existing workers.
NACA is required to pay a minimum average wage of $624 per week, keeping with the original terms. The state expects wages to be a little higher, an average of about $36,000 per year. In 2009, private-sector workers in Mecklenburg County earned an average of $52,000 per year.
The group hasn't asked for any payments from the One North Carolina Fund, but Marks said NACA is working on its request. Under the agreement, NACA can receive the first installment - $200,000 - if it can show it created and retained 203 new jobs by Dec. 31, 2009.
NACA has hired more than 550 employees so far, Marks said. He said he expects to hire 2,000 in Charlotte over time - more than the agreement with the state requires.
In addition to boosting staff for foreclosure prevention and loan modification services, Marks is also adding workers who help borrowers obtain NACA's low-interest, no down-payment loans to buy homes. Those are higher-paying jobs, he said.
"We will exceed the average salary," Marks said.
NACA is also eligible for about $2.5 million in on-the-job training grants over three years. Initially, officials said the group was eligible for $1million in on-the-job training assistance. But last August, the Observer reviewed documents that showed NACA had been promised $2.5 million. Commerce Secretary Keith Crisco vowed to fulfill the state's initial obligation.
So far, NACA has received about $833,000 from the state for on-the-job training, about one-third of the $2.5 million.
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