Jobs, incentives and a mix-up

In a mix-up by state economic development officials, a nonprofit expanding in Charlotte may be in line to get a less lucrative incentive package than it expected, though the amount is more than previously specified.

N.C. Commerce Secretary Keith Crisco told the Observer on Thursday the state is able to give the Neighborhood Assistance Corporation of America up to $1 million in on-the-job training assistance. That's on top of a $1 million state grant tied to its plans to hire 1,014 new workers. NACA helps low-income homeowners prevent foreclosures and get new loans.

NACA chief executive Bruce Marks, however, had been expecting as much as $3.5 million – including up to $2.5 million in on-the-job training assistance as part of his agreement with the state. E-mails and documents obtained by the Observer show Marks had been promised that amount during tense negotiations that resulted in an announcement in June of a much-needed job infusion for Charlotte's financial sector.

Crisco said he mistakenly extrapolated an estimate by state officials further than he should have. After queries by the Observer, he called Marks to apologize and said he wants to “do everything we can to work with him.”

Marks on Thursday said he's still counting on the $2.5 million for on-the-job training.

“We're working this through with them to see where we are,” he said, declining to elaborate on his plans.

The mix-up highlights the fast-moving, secretive nature of economic development negotiations, which can leave details of incentive packages unclear to the public – and even the players involved.

Bob Orr, a prominent opponent of incentives to lure businesses, said the NACA project was another example of a deal with “big giveaways” crafted without public input.

“The public doesn't have the opportunity to voice complaints or support,” said Orr, executive director of the N.C. Institute for Constitutional Law and a former N.C. Supreme Court Justice.

Crisco noted the NACA project came together quickly, with some negotiations taking place while he was on an economic development trip in Europe. But he added: “I have to take responsibility.”

Commerce spokeswoman Kathy Neal said she believed the issue would be resolved to everyone's satisfaction, but said she couldn't confirm an amount.

$1 million over 5 years

When NACA's expansion was announced June 11, the news release said the nonprofit could receive $1 million over five years from the One North Carolina Fund. That's a program controlled by the governor that requires companies to meet certain job creation requirements before receiving any money. The grant was “contingent upon local matches,” the news release said without providing any dollar amount.

A day later an official with the Charlotte-Mecklenburg Workforce Development Board told the Observer the organization was likely to provide NACA with $256,000 in on-the job training covering 100 workers.

But the figure turned out to be higher – $1 million, due to a 100 percent match of the governor's $1 million award. The money is considered “local” because it's distributed by the Charlotte-Mecklenburg board but it's actually federal dollars distributed by the state.

The $256,000 figure for 100 workers started out as an estimate produced by state officials in March and was sent in a letter from Crisco to NACA in April. Later, a Charlotte Chamber official and Crisco totaled the amount for 1,000 workers at $2.5 million. Now, however, the state says $1 million was supposed to be the limit.

Going forward, Commerce will be clearer in its announcements, and will note that the One North Carolina Fund typically requires at least a 100 percent local match, said Neal, the Commerce spokeswoman.

“We certainly want to be as clear as we are able to be,” she said.

Confusion is latest twist

The confusion over the on-the-job training money is the latest twist in a drama that unfolded over more than six months.

Boston-based NACA, founded by Marks in 1988, is known for aggressively protesting banks that it deems to be making predatory loans. But it also partners with lenders, including Charlotte's Bank of America, to make low-interest loans to low-income homebuyers.

In its latest effort, NACA is organizing “Save the Dream” events around the country, where it modifies loans of struggling borrowers on the spot.

According to the documents, NACA appeared ready late last year to add at least 400 jobs in Charlotte without incentives. But on Feb. 6, National Public Radio ran a feature on NACA that was followed by other news outlets. That led to a “stream of incentives offers” from several communities, according to a project summary prepared by Charlotte Chamber official Justin Hunt.

Marks now wanted incentive money for the Charlotte project.

Because NACA was a nonprofit that doesn't pay taxes, the state couldn't offer incentives based on rebates of local property taxes, Hunt wrote in the February summary for Commerce officials. But he raised the possibility of a Job Development Incentive Grant, a type of grant based on the payroll taxes paid for new hires.

In an early estimate by the Chamber, NACA could have received a “modified” JDIG worth up to $1.8 million over seven years if it met certain investment and salary requirements.

As the talks continued, NACA said it was likely to create more than 1,000 jobs, but Hunt said that grant was still unlikely, suggesting a One North Carolina Fund grant instead.

State officials also told NACA that it could be eligible for on-the-job training assistance, which helps companies pay the salaries for displaced workers they hire during a training period. In this case, the state could pay NACA $2,560 per eligible worker – half of their $16-per-hour wage over two months, or $256,000 for 100 workers.

NACA threatens to move

On June 2, Hunt and an N.C. Commerce Department official, Ron Leitch, tried to close the deal, but Leitch reported that Marks was still upset the project didn't warrant a bigger grant.

“He threatened to move the operation to SC or elsewhere,” Leitch wrote. “Says (U.S. Rep. James Clyburn, D-S.C.) would insure they received a more significant incentive package in SC.”

In another e-mail that day, Hunt told state officials that Marks complained that the offer of a $500,000 One North Carolina Fund grant was “unacceptably low.”

“That won't even cover our rent,” Marks said, according to Hunt's e-mail.

Hunt suggested the state increase the One North Carolina Fund grant to $1 million. Combined with about $2.5 million for on-the-job training that would bring the total package to $3.5 million, he wrote in an update to state officials.

He recommended that Perdue announce the project on Thursday June 11, noting that Marks was under “extreme pressure” to begin hiring because he needed more than his existing Charlotte workforce to pull off the Save the Dream events. Hunt emphasized the importance of Perdue's appearance at the event to Marks.

On Sunday June 7, while in Europe, Crisco sent an e-mail saying he had talked to Marks and he was agreeable – on the condition NACA receive the $1 million One North Carolina Fund grant and $2.5 million for on-the-job training.

By Monday, June 8, arrangements were being made for the news conference at NACA's east Charlotte office. Marks suggested 10 a.m. was better than 9 a.m. to give TV crews extra time to set up. Gov. Perdue and former Bank of America Corp. Chairman Hugh McColl Jr., Marks' unlikely ally over the years, confirmed their plans to attend.

Hunt, the Chamber official, said in an interview that the project was one of the most competitive he has worked on. Communities in South Carolina, Connecticut and Florida were interested in NACA's jobs, he said.

“We tried to come up with a creative, out-of-the-box way to support bringing 1,000 jobs to a community that desperately needs them,” he said.

Since its June 12-13 job fair, NACA has hired 452 people in Charlotte, Marks said, and he expects to hire all of the 1,014 workers by year end. Gov. Perdue's presence at the news conference gives him confidence that the state will keep its commitment.

“We're confident she's good to her word,” he said. “We've certainly held up our end.” The (Raleigh) News & Observer contributed.