Brunswick plant deal may enrich Democratic donors
Posted September 30, 2011 3:00 a.m. EDT
Updated September 30, 2011 6:30 p.m. EDT
RALEIGH, N.C. — A state lawmaker and a group of Democratic political donors with ties to Gov. Beverly Perdue are poised to sell land at a handsome profit for a tire plant that's being lured with $100 million in state and local incentives, according to public records reviewed by The Associated Press.
As North Carolina's chief executive, the governor is a key decision maker in large incentives deals involving state money. She also helps appoint the board members of a foundation that's been asked to provide part of the tire plant's package. Perdue's campaign has received more than $52,000 from five men with an ownership stake in the Brunswick County industrial park proposed for the new facility.
The governor's son, Garrett Perdue, is also a lawyer and site-selection consultant for an influential law firm that a county official said was advising the tire company. The firm, Womble Carlyle Sandridge & Rice, does not disclose which projects the younger Perdue works on, citing attorney-client privilege.
Perdue's spokesman stressed Thursday that the company seeking the incentives, not the governor's aides, chose the site. The North Carolina site is competing with sites in two other states.
"Gov. Perdue is focused on bringing 1,300 jobs to North Carolina," said Mark Johnson, Perdue's spokesman. "She doesn't care where in the state the plant goes, who owns the land or who the company hires as its lawyer. She just wants the jobs."
Perdue reiterated that stance Friday while touring areas in eastern North Carolina that were damaged by Hurricane Irene to assess recovery efforts.
"This is a business decision," she said. "The company picks the site. I don't have anything to do with the site."
The proposed location, the Mid-Atlantic Logistics Center, is owned by a group of investors that includes state Sen. Michael P. Walters, a Democrat from Proctorville.
A development company owned by David T. Stephenson III, a Lumberton tobacco farmer, is also listed as having a stake in the center. Stephenson is a major Democratic contributor appointed to the board of Golden LEAF, a foundation created by the state legislature to dole out hundreds of millions of dollars paid by cigarette manufacturers through a legal settlement.
Brunswick County officials have asked Golden LEAF for a grant to help fund an incentives package for the plant, said Jim Bradshaw, director of Brunswick County Economic Development Commission.
The deal is expected to include tax breaks, infrastructure improvements, cash grants and a forgivable loan. It's not clear how much money the foundation might put in. The new facility, code named by economic development officials as "Project Soccer," has been billed as creating up to 1,500 new jobs.
A confidential document outlining the terms of the proposed deal reviewed by The Associated Press indicated that money from the incentives package would be used to buy a large portion of the 1,129 acre site for the tire plant at a price of $6,000 an acre.
Records show the investors bought the site in 2007 for $4.3 million, or about $3,800 an acre.
Stephenson, a tobacco farmer and investor, did not return a message seeking comment Thursday.
Golden LEAF President Dan Gerlach wouldn't say whether the foundation is involved in Project Soccer. But Gerlach said Stephenson came to him at a board meeting months ago and said he may have a conflict of interest if the foundation were to provide a grant for the project.
Gerlach said Stephenson asked that he not be provided any materials provided to the foundation related to Project Soccer because of his potential financial interest in the deal.
Gerlach said Stephenson has gone beyond the foundation's conflict of interest policy by alerting the foundation to potential problems well before they could have reached the board. A board member isn't required to put the potential conflict in writing, but Gerlach said he made a note affirming Stephenson's request.
State lawmakers, who would have to approve the incentives package, have been briefed on the possibility of a special legislative session to be held in the coming weeks to vote on it.
Walters filed a letter with the Senate clerk on Aug. 25 recusing himself from any deliberations on the deal "to avoid any potential conflict of interests or the appearance of impropriety."
He declined to comment further Thursday.
"I've recused myself from that project and that's all I have to say," Walters said.
WRAL News has learned of deep tensions between Republican leadership in the General Assembly, particularly in the Senate, and the Perdue administration over the incentive negotiations. Sources say there are strong concerns about the state fronting a company tens of millions of dollars.
"For goodness sakes, (it's) 1,300 jobs," Perdue said. "We want these jobs, and I pray (that), with all the discussions and lack of ability to make a decision, the people involved will not make the jobs go to another state."
House Speaker Thom Tillis agreed with Perdue that politics should take a back seat to a business matter, but he also said special interests shouldn't get special treatment.
"I'm disappointed that politics has been interjected into what should be a clear and open business decision," said Tillis, R-Mecklenburg. "I remain committed to bringing jobs to North Carolina through this project and others, but I will always defend the best interests of the taxpayers and citizens of this state against those of special interests."
The dispute sets up the possibility of a blame game. If the tire company chooses another state – there are indications that South Carolina might win the plant – both sides are poised to blame the other.
"This does not look like the ethical or transparent style of government that Gov. Perdue promised the people of North Carolina," Robin Hayes, chairman of the North Carolina Republican Party, said in a statement. "It does not appear to pass the credibility test of a fair and clean deal, and one cannot help but be reminded of the real estate deals of Gov. (Mike) Easley."
Democratic Rep. Dewey Hill, who said he's spoken to Commerce Secretary Keith Crisco about Project Soccer, described the company seeking the incentives deal as a "tire manufacturer and distribution company from Germany." Hill's district includes part of Brunswick County.
The German company Continental Tire is in the process of selecting a site for a new plant in the Southeast, spokeswoman Kathryn Blackwell said Thursday, but she wouldn't say whether the company was looking at North Carolina.
"We have not made a decision, though one is coming in the near future," Blackwell said.
In addition to Crisco, Womble Carlyle lobbyist Laura DeVivo has been talking with key lawmakers. A legislator described a meeting in which DeVivo and other Womble lobbyists worked with state officials to gain support for the proposed incentives package. The legislator asked not to be identified because of the sensitive nature of the negotiations.
DeVivo works on Womble's government affairs team, which also includes Perdue's son. In an interview last year, Garrett Perdue described his role with the firm as identifying companies seeking to relocate to the state and helping them find sites to meet their needs.
Two attorneys who lead the firm's government affairs team, former Democratic Gov. Jim Hunt and former state Supreme Court Chief Justice Burley Mitchell, did not return messages seeking comment.
Gov. Perdue has said she doesn't talk to her son about which companies he works for, though she has recused herself from making decisions in at least two economic incentives projects in recent years after her aides became concerned he was working on behalf of the companies involved.
Johnson, the governor's spokesman, said he didn't know whether Womble Carlyle played any role in advising the tire company in considering the proposed Project Soccer site.
Bradshaw said he was the one who first recommended the Mid-Atlantic site for Project Soccer last winter. He said the land was one of 53 sites originally under consideration. That list has now been whittled down to three: the Mid-Atlantic land and sites in South Carolina and Louisiana.
"This was the only site that met requirements," Bradshaw, a Republican, told WRAL News on Friday. "I don't care who owns the property. There was absolutely no foul play."
Some pieces of North Carolina's proposed package are already in place, he said. The state Department of Transportation has pledged $150,000 to extend a rail spur to the site and the state-supported North Carolina Rural Center has awarded the county about $1.5 million toward water and sewer installation.
Gov. Perdue did not personally become involved in the negotiations until after the Mid-Atlantic site was in the running, according to Bradshaw. He said August was the first contact he had with anyone from Womble Carlyle about the county's proposed contributions to the incentives package. He declined to identify the person to whom he spoke.
Bradshaw also said he had no idea the owners of the proposed Project Soccer site have been frequent contributors to the Democratic Party or Gov. Perdue.
"Wouldn't it be a shame if politics came before jobs?" he said. "I don't know who these people are. I don't know who contributes to who. I just want to bring these jobs to Brunswick County."
Campaign finance records show Stephenson and members of his family have donated more than $85,000 to Democratic candidates over the last 20 years, including $14,000 to Perdue since 2004. Records show $8,000 in contributions to former Senate President Pro Tempore Marc Basnight, the Manteo Democrat who appointed Stephenson to the Golden LEAF board.
Walters and his wife have donated more than $34,000 to elected Democrats other than himself, including $14,000 to Perdue.
William E. Musselwhite, a Lumberton lawyer who owns a share of the land, has given more than $22,000 to state Democrats, including $14,500 to Perdue.
Dennis T. Worley, a Tabor City attorney and another of the owners, has given more than $28,000 to Democrats, including $7,700 to Perdue.
Kyle A. Cox, another Tabor City lawyer and part property owner, gave more than $11,000 to Democrats, including $2,000 to Perdue.