AP Exclusive: Price tag of North Carolina's LGBT law: $3.76B

Posted March 27

— Despite Republican assurances that North Carolina's "bathroom bill" isn't hurting the economy, the law limiting LGBT protections will cost the state more than $3.76 billion in lost business over a dozen years, according to an Associated Press analysis.

Over the past year, North Carolina has suffered financial hits ranging from scuttled plans for a PayPal facility that would have added an estimated $2.66 billion to the state's economy to a canceled Ringo Starr concert that deprived a town's amphitheater of about $33,000 in revenue. The blows have landed in the state's biggest cities as well as towns surrounding its flagship university, and from the mountains to the coast.

North Carolina could lose hundreds of millions more because the NCAA is avoiding the state, usually a favored host. The group is set to announce sites for various championships through 2022, and North Carolina won't be among them as long as the law is on the books. The NAACP also has initiated a national economic boycott.

The AP analysis (http://apne.ws/2n9GSjE ) compiled through interviews and public records requests represents the largest reckoning yet of how much the law, passed one year ago, could cost the state. The law excludes gender identity and sexual orientation from statewide antidiscrimination protections, and requires transgender people to use restrooms corresponding to the sex on their birth certificates in many public buildings.

Still, AP's tally ( http://bit.ly/2o9Dzdd ) is likely an underestimation of the law's true costs. The count includes only data obtained from businesses and state or local officials regarding projects that canceled or relocated because of House Bill 2. A business project was counted only if AP determined through public records or interviews that House Bill 2 was why it pulled out.

Some projects that left, such as a Lionsgate television production that backed out of plans in Charlotte, weren't included because of a lack of data on their economic impact.

The AP also tallied the losses of dozens of conventions, sporting events and concerts through figures from local officials. The AP didn't attempt to quantify anecdotal reports that lacked hard numbers, or to forecast the loss of future conventions.

Gov. Roy Cooper, a staunch opponent of House Bill 2, said the economic analysis demonstrates the need for the General Assembly to repeal the law.

"North Carolina’s economy stands to lose nearly $4 billion because of House Bill 2. That means fewer jobs and less money in the pockets of middle-class families," Cooper said in a statement. "We need to fix this now. I remain ready to support a compromise that works to end discrimination and brings jobs and sports back to North Carolina."

Bank of America CEO Brian Moynihan, who leads the largest company based in North Carolina, said he's spoken privately to business leaders who went elsewhere with projects or events because of the controversy, and he fears more decisions like that are being made quietly.

"Companies are moving to other places because they don't face an issue that they face here," he told a World Affairs Council of Charlotte luncheon last month. "What's going on that you don't know about? What convention decided to take you off the list? What location for a distribution facility took you off the list? What corporate headquarters consideration for a foreign company — there's a lot of them out there — just took you off the list because they just didn't want to be bothered with the controversy? That's what eats you up."

Other measures show the country's ninth most populous state has a healthy economy. By quarterly gross domestic product, the federal government said, North Carolina had the nation's 10th fastest-growing economy six months after the law passed. The vast majority of large companies with existing operations in the state — such as American Airlines, with its second-largest hub in Charlotte — made no public moves to financially penalize North Carolina.

Shortly after he signed the law, Republican then-Gov. Pat McCrory issued a statement assuring residents it wouldn't affect North Carolina's status as "one of the top states to do business in the country."

House Bill 2 supporters say its costs have been tiny compared with an economy estimated at more than $500 billion a year, roughly the size of Sweden's. They say they're willing to absorb those costs if the law prevents sexual predators posing as transgender people from entering private spaces to molest women and girls – acts the law's detractors say are imagined.

Lt. Gov. Dan Forest, one of the strongest supporters, accused news organizations of creating a false picture of economic upheaval. A global equestrian competition that's coming to North Carolina in 2018 despite House Bill 2 is projected to have an economic impact bigger than the sporting events that have canceled, Forest said. The Swiss-based group behind the event estimated its spending poured about $250 million into the French region of Normandy in 2014, the last time it was held. The organization said the figure came from a study by consulting and accounting firm Deloitte, but the Federation Equestre Internationale declined to release the report.

Forest declined a request for an interview based on AP's analysis.

"The effect is minimal to the state," Forest told Texas legislators considering a similar law. "Our economy is doing well. Don't be fooled by the media. This issue is not about the economy. This issue is about privacy, safety and security in the most vulnerable places we go."

Tami Fitzgerald, executive director of North Carolina Values Coalition, which backs House Bill 2 agreed that the dire economic impact projections are overstated.

"All indicators point to the state’s economy as one of the healthiest and one of the most business-friendly states in the nation," Fitzgerald said in a statement. "Not one company has left North Carolina because of HB2. In fact, it’s just the opposite: Bank of America, Apple, Google, Corning, CSX, Lance, LendingTree, Pepsi, Yokohama Tire, Braeburn Pharmaceuticals are among hundreds of businesses that expanded, moved or reinvested in their operations here despite some of their CEOs voicing angst over HB2.

"The AP's 12-year estimate equates to tiny fraction of North Carolina's estimated GDP of $6.8 trillion over the next 12 years and fails to account for events and businesses that will choose the state because of our privacy protections," she said.

But AP's analysis shows the economy could be growing faster if not for projects that have already canceled.

Those include PayPal canceling a 400-job project in Charlotte, CoStar backing out of negotiations to bring 700-plus jobs to the same area, and Deutsche Bank scuttling a plan for 250 jobs in the Raleigh area. Other companies that backed out include Adidas, which is building its first U.S. sports shoe factory employing 160 near Atlanta rather than a High Point site, and Voxpro, which opted to hire hundreds of customer support workers in Athens, Georgia, rather than the Raleigh area.

"We couldn't set up operations in a state that was discriminating against LGBT" people, Dan Kiely, Voxpro founder and CEO, said in an interview.

All told, the state has missed out on more than 2,900 direct jobs that went elsewhere.

North Carolina Chamber officials declined to comment on the analysis, saying they haven't reviewed it yet.

Supporters are hard-pressed to point to economic benefits from the law, said James Kleckley, of East Carolina University's business college.

"I don't know of any examples where somebody located here because of HB2," he said. "If you look at a law, whether or not you agree with it or don't agree with it, there are going to be positive effects and negative effects. Virtually everything we know about (the law) are the negative effects. Even anecdotally I don't know any positive effects."

An analysis by the state Commerce Department shortly before House Bill 2 was enacted shows state officials expected the PayPal expansion to contribute more than $200 million annually to North Carolina's gross domestic product — an overall measure of the economy. By the end of 2028, the state expected PayPal to have added $2.66 billion to the state economy.

The same analysis of the Deutsche Bank project estimated a total impact of about $543 million by the end of 2027. The economic model has been used for more than a decade — with some updates along the way — when the state offers major discretionary tax breaks to attract jobs.

State officials said they didn't run the same financial analysis for CoStar, Voxpro and Adidas, so losses attributed to them were calculated using payroll numbers and other figures from the companies or state documents.

Meanwhile, canceled conventions, concerts and sporting events ranging from the NBA All-Star Game to a Bruce Springsteen show have deprived the state of more than $196 million. The number was compiled through email exchanges and interviews with local tourism officials.

All told, the state will have missed out on more than $3.76 billion by the end of 2028. The losses are based on projects that already went elsewhere — so the money won't be recouped even if the law is struck down in court or repealed.

By the end of 2017 alone, the lost business will total more than $525 million.

Tourism officials in several cities say the numbers they report represent only a fraction of the damage the law has done. They typically track large conventions but don't have firm numbers for when groups or tourists cancel smaller deals or rule out North Carolina before booking.

"The biggest impact is how many times our phones are not ringing now," said Shelly Green, CEO of the Durham Convention & Visitors Bureau.

When Green's bureau sought to tally cancellations, it was able to count several large sporting events and conventions that backed out, depriving the city of more than $11 million, she said. But officials found hotels and meeting planners were tight-lipped about other events.

"There are a lot more meetings that have canceled, but we don't have data on them," she said.

Elsewhere, tourism setbacks range from an estimated $100 million lost when the 2017 NBA All-Star Game moved out of Charlotte to $36,000 in spending taken elsewhere when the Lutheran Financial Managers Convention backed out of Fayetteville. Seven hundred part-time workers at Raleigh's PNC Arena lost at least $130,000 in wages because of cancellations by Pearl Jam, Cirque Du Soleil and others.

Other financial signals of disapproval have been more symbolic than clearly harmful.

More than two dozen cities and states, from Honolulu to Vermont, have banned taxpayer-funded visits to North Carolina because of House Bill 2. Most said they couldn't estimate the money not spent on business travel. But in Providence, Rhode Island, officials refused to spend even the remaining $495 to send three city employees to a Charlotte conference after sponsors picked up most of the costs, city spokesman Victor Morente said in an email.

Dozens of investment firms have urged North Carolina to repeal House Bill 2, but most of those contacted in recent weeks, such as John Hancock and Morgan Stanley, wouldn't discuss any financial measures they took to penalize the state. Trillium Asset Management, which manages more than $2 billion for wealthy families and foundations, had dozens of clients request that their holdings exclude bonds issued by North Carolina state or municipal governments, Chief Executive Officer Matt Patsky said in an interview.

What impact did selling off several million dollars of municipal bonds have? Impossible to measure, Patsky said.

In September, despite the law, Asheville's Chamber of Commerce announced that biotech company Avadim was adding 550 jobs. Local officials call it the biggest single job creator in area history.

But House Bill 2 jeopardized another project of similar size for the left-leaning mountain city. Chamber CEO Kit Cramer said last year that another company considering bringing 500 technology jobs was balking because of House Bill 2, adding: "That's a loss that would be incredibly hard to swallow." Cramer said in an email in March that the company hasn't made a decision. She didn't give further details; that potential loss wasn't included in AP's count.

Charlotte, North Carolina's largest city, has lost projects totaling 2,000 jobs because of House Bill 2, Chamber of Commerce research director Chuck McShane said via email. According to separate documents obtained through public records requests, the majority were in the PayPal and CoStar projects.

CoStar, a real-estate research firm, was entering final negotiations to bring 732 jobs to Charlotte in September when its board backed out because of negative publicity over House Bill 2, according to an email between a chamber executive and a city official. When the company picked Virginia, the reversal cost North Carolina at least $250 million in economic impact over the next six years, according to figures from both states.

"I fear this will be an epidemic outcome for many projects we are still in the running for at this time," Jeffrey Edge of the Charlotte Chamber wrote in the September email exchange first reported by The Charlotte Observer.

Economic losses also hit smaller towns, such as those surrounding the University of North Carolina. When the San Francisco Symphony pulled out of two concerts scheduled for April 2017, the move had a ripple effect totaling about $325,000, according to Patty Griffin, of the Chapel Hill/Orange County Visitors Bureau.

"Memorial Hall will be empty those two nights and see no revenue for tickets or concessions, and no employees will work," she said via email. "The attendees for most of them who have dinner, drinks and desserts either before or after the performance will not come out, which impacts local restaurants."

Green, the Durham tourism official, said, "When you think about it, this whole thing is just such a Dumpster fire, and nobody wants to go near it."


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  • Carl Keehn Mar 28, 1:19 p.m.
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    Perhaps you should be more concerned with ministers and politicians. I've seen more articles about them in the past few weeks.

  • Michael Bawden Mar 28, 6:03 a.m.
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    And let's not even get into the XYY "supermales" or the XXYY folks, or those with Klinefelter's Syndrome.

  • Jeffrey Derry Mar 27, 8:13 p.m.
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    only people keeping this alive is the biased #MSM they pump it every day....no one else cares about HB2

  • Rudy Bizzell Mar 27, 6:46 p.m.
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    Well why dont the ncaa punish the sanctuary cities for breaking the law they are harboring criminals. The ncaa needs to go or they need to have some competition.

  • Pat Queen Mar 27, 6:32 p.m.
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    Absolutely none. Foolish waste of time and taxpayer $$$

  • Paul Hutton Mar 27, 6:02 p.m.
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    I don't believe the AP's numbers for a second. They've proven themselves to be an untrustworthy, biased news source for years.

  • Fred Neopolitano Mar 27, 5:22 p.m.
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    I'd like to know where the Associated Liberals Press got this number.

  • William Sherman Mar 27, 5:17 p.m.
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    An idea that has been floated earlier---NCAA and ACC are nonprofit, tax exempt status organizations. They make boat loads of money and pay not one red penny in taxes. How about, since they want to play heavy weight politics--in violation of their tax exempt status requirements, NC removes their tax exempt status. The money collected from their newly paid taxes will more than make up for some of the losses caused by their coercive tactics to force NC to repeal HB2.

  • Michael Bawden Mar 27, 5:05 p.m.
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    The NCAA sure has a convoluted way dealing with transgenders. If a male plays on a female team that team will be "mixed" and play womens teams. Women playing on mens teams, no issue. If you have a "mixed team that affects title IX. Transgender males playing on womens teams create enormous headaches for athletic directors. X or Y chromosome. PERIOD!
    As far as I know there are no "mixed" teams in NCAA.

  • Glenda Hightower Mar 27, 4:01 p.m.
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    No, the democrats in the NC Legislature did not cause this whatsoever. Repeal the law republicans and things will go back to what they were before, and the State will make some money. Didn't you people know there were LBGT out in the world? Do you live in a cave. The only ones being bullied are the LBGT folks. In all the years and years that they have been in our society, how many "bathroom" incidents have there been? These republicans are afraid of everything - except being wrong. They sure aren't afraid of being wrong since they continue to be so.