Charlotte City Council March 4, 2013 Closed Session Page 1

Charlotte City Council
March 4, 2013
Closed Session
Page 1
The City Council of the City of Charlotte met in closed session on Monday, March 4, 2013 in
Room 267 of the Charlotte-Mecklenburg Government Center at 8:51 p.m. with Mayor Foxx
presiding; Councilmembers Autry; Barnes; Cannon; Cooksey; Dulin; Fallon; Howard; Kinsey;
Mayfield; and Pickering in attendance.
Staff Present During the Closed Session: Stephanie Kelly, City Clerk; Ashleigh Price, Deputy
City Clerk; Julie Burch, Interim City Manager; Eric Campbell, Assistant City Manager; Ruffin
Hall, Assistant City Manager; Bob Hagemann, City Attorney; Brad Richardson, Neighborhood
& Business Services; Ron Kimble, Deputy City Manager; Carol Jennings, City Manager’s
Office; and Pat Mumford, Neighborhood & Business Services Director.
Closed Session
Motion was made by Councilmember Barnes, seconded by Councilmember Mayfield, and
carried unanimously to adopt a motion pursuant to NCGS 143-318.11(a)(4) to go into closed
session to discuss matters relating to the location of an industry or business in the City of
Charlotte, including potential economic development incentives that may be offered in
City Attorney, Bob Hagemann said this is Economic Development and under your policy it
will be recorded and transcribed and at the appropriate time everything that is said will be
publicly released. Also I want to impress upon you the importance of confidentiality until we
have some kind of decision on this deal.
Mayor Foxx said I should state that the Chamber of Commerce played a very active role in this
matter and Bob Morgan and Catie Hines are standing outside waiting. They would like to be a
part of at least the exposition of this opportunity and I just thought you all should be aware. Can
we get a show of hands on chamber in or out?
Council came to a consensus that they would not to invite the Chamber of Commerce to attend
the closed session.
Neighborhood & Business Services, Brad Richardson said this is a proposal for a Business
Investment Grant, quite unusual in size and scope tonight. Thank you for hearing us on a
Monday workshop we don’t normally do this on a Monday, but time is of the essence in this
case. We expect a decision from this company over the next several days. I will go ahead and
tell you in advance the County will be considering this tomorrow night in closed session. Let me
walk you through the details of this project. I will take questions if you have them. I will try to
be as brief as I can but answer any certain questions you have to your satisfaction. We’re talking
about MetLife, a household name familiar to us all you can see on the screen who they are; it’s a
couple of hundred years old almost, 140 years old to be exact. A leading provider 50 countries,
they are doing business in 66,000 global employees. A Fortune 50 company, last time I saw they
were ranked 37 on the list of the Fortune 500. They are looking at reducing costs, consolidating
facilities. They have two states under consideration, Missouri and North Carolina. St. Louis is
the target city; if you know much about St. Louis I think you will know they are a true
competition for this. They are the headquarters of Edward Jones, Stifel Nicolaus, Wells Fargo
Advisors, Scott Trade. We think the competition makes sense in this case I think it’s real they’re
looking. If North Carolina is selected they would do two components of this project. Very large
job numbers in each. In Charlotte they will be looking at 1,386 jobs over three years in the retail
operation of the business. In the Cary, North Carolina area; 1,236 jobs in information
technology. Those jobs have a higher average wage than the jobs they are brining here and that
makes sense too looking at the types of jobs. 350,000 square feet is under negotiations in
Ballantyne, two buildings that are complete and yet unoccupied at North Community House
Road. They would invest $20 some million dollars in up fit of the building, the rest of the $40.6
in equipment and computer technology. The average wage is $58,000 healthy given our average
wage is $44,000 in the region.
Charlotte City Council
March 4, 2013
Closed Session
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This next section you always ask us about so we asked a lot of questions at this point. They only
expect to relocate 20% tops of these jobs. One of the reasons for confidentiality is you know is
there will be a lot of jobs lost in the Northeast. So that means that the majority of 80% of those
jobs will be hired in our local market.
Councilmember Barnes said if you and I owned that company, just the two of us and we were
going to move from New York to Charlotte and we wanted to say that 20% if our folks wouldn’t
necessarily relocate with us, what would stop us from saying you know what guys, feel free to
apply and because you’ve got the experience you know the company, you know how we do
things, we might hire you once we get down south. What sort of assurance would we have that
they would in fact hire 80% of those people locally?
Mr. Richardson said that’s a really good, well thought out question obviously. I don’t know. I
think what you’re saying is the cost reduction is driving this. Mr. Howard made the point that
the lower salary cost probably is driving some of this as well. Nothing is to keep any one of
those employees who may be displaced from moving to our area and applying for a job, very
good point.
Councilmember Dulin said moving cost; they would be able to save in moving costs.
Councilmember Mitchell said Councilmember Barnes asked a good question because if you
could remember Councilmember Barnes said we got bananas last time we were in here, but
because of the bananas; we took a beating in the community because a lot of jobs were promised
to local and we never saw the numbers. But I think it was a great effort. I think some of us are
very timid in the sense of how can we measure to make sure 1,100 jobs will be in the Charlotte
area because we can’t go through that again. Citizens are going to start losing a lot of faith in us
in this program. What can we put in place?
Mr. Richardson said I will answer it in a couple of ways. One is your business investment grant
revisions that we approved in November. We’ve added language in our contracts that give us
now the ability to have conversations with companies about their local hiring, their local
spending. We propose over the next year to phase us into some interview audits if you will of
grant recipients so we can begin to, it’s going to be a challenge, learning the number of local
versus not. I will also make the obvious point and you know this as well. That we have a lot of
homes sitting empty homes to be bought. One of the things that have kept us thriving in our
position is the influx of folks moving into our City. So that’s not altogether a bad thing. I want
to point that out as well. But your question is a good one.
I didn’t say earlier that this is an all or nothing game for the two states. I should have said that if
Charlotte doesn’t win the project, neither does Cary and they would all go to St. Louis let me
point that out as well. To that end the Town of Cary and Wake County have offered incentives
worth 4.6, that’s 3.3 my correction of this slide didn’t make it on my final I apologize, 4.6 over
eight years, not 3.3 over five; but 4.6 over eight, my apologies. Now we have a policy that says
outside of the zone they are eligible for 50% over five years. The net of that is about a million
dollars, City and County combined. Looking and talking to the company about estimates and
competing with St. Louis, they’ve asked us to match similar numbers to Cary and Wake County.
The best we think we could do is an eight year term to match what’s happening in the eastern
part of the state. Ninety percent is close to your policy. We always keeping 10% revenue
positive with the City. That would yield an estimated value of $3 million dollars over an eight
year term andyou see our share is about a third of that. The state is going hard for this one with a
Job Development Investment Grant, a One North Carolina Grant; there’s also some training
dollars. The Job Development Investment grant is large, the largest one ever its $87 million
dollars over 12 years. It’s a formula driven based upon the amount of jobs and salaries.
Mr. Barnes said Mr. Richardson did you say that Cary and Wake County have approved their
$4.6 million dollar share? $4.6 for eight years.
Mr. Richardson said yes.
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March 4, 2013
Closed Session
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Mr. Barnes said and the state share would be $87 million over 12 years?
Mr. Richardson said it’s a $2 million One North Carolina Grant. There’s the Job Development
Investment Grant which is the large number, an estimate only, $87 over 12. How that works is
75% of the company’s salary withholdings paid to the State are returned to the company in the
form of the grant. With the exception of a portion of that goes to a rural fund. So the net benefit
to the company could approach $87 million over 12.
Mr. Barnes said the $2.99 million dollars from the City and the County, $1.06 million coming
from us would be a return of taxes generated over business personal property?
Mr. Richardson said and the real estate improvements.
Mr. Barnes said are they buying the buildings?
Mr. Richardson said no sir.
Mr. Barnes said so what sort of improvements are they making do you know?
Mr. Richardson said the building is shell. So up fitting 350,000 square feet, $26 million of the
$40 is estimated to be in that up fit of the building. So we think that translates into a higher
value building. They will pick up that through their lease payments to the Bissell Companies.
Mr. Barnes said but isn’t that business personal property?
Mr. Richardson said no the computers, furniture and fixtures are business personal. That’s about
$16 million. The $20 whatever the number is that is the up fit of the building, walls, floors,
helping to up fit the building. You’re right expenses are shared oftentimes by the landlord and
the tenant in this case they budgeted $26 million dollars for that.
Mr. Barnes said and so the landlord isn’t paying for any of that.
Mr. Richardson said correct. The landlord may be paying a portion of that that we don’t know
that’s been negotiated but the company would intend to spend $26 million.
Mr. Dulin said remember the increased tax base generated along that corridor of the Ballantyne
business park is how smoky is going to pay for that bridge too.
Mr. Richardson said that’s a good point. Part of the Synthetic Tax Increment grant is a 15 year
45% city-county combined; $11 million dollars maximum for those road improvements and the
bridge. The agreement that you signed with them will deduct any business investment grant
payments before we would pay them any money. The last slide is the action we recommend
taking tonight if you are so inclined.
Motion was made by Councilmember Howard, seconded by Councilmember Cooksey to
indicate intent to approve the City’s share of a Business Investment Grant to MetLife for a
total estimated amount of $1.06 million over eight years (total City/County grant estimated to
be $2.99 million).
Councilmember Howard said the only thing I want add to that and I know Warren you will tell
me this is probably never going to happen. But for some reason this ever does, given what’s
going on in Raleigh, if some reason they ever got serious about succeeding, I want something
that says, you tell me the best way to put it Bob that we are not responsible for this if for some
reason they de-annex. Not that I’m encouraging that but we shouldn’t be still paying if for some
reason something crazy happens in Raleigh.
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March 4, 2013
Closed Session
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Mr. Hagemann said I think the answer is the way our contracts are written. Our obligation to pay
is contingent upon our actually receiving tax revenues. And if for some reason it was taken off
our tax base, we would not receive tax revenues and therefore wouldn’t be obligated to pay the
percentage to the company.
Mayor Foxx said is there a way to make that express in the agreement? Because it’s sort of an
interpretation argument I guess.
Mr. Hagemann said we can definitely look at putting in words that do what you are suggesting
without scaring them.
Mr. Howard said well they’re going to be scared when they start reading the newspaper.
Mr. Cooksey said anytime we go outside our policy I do try to weigh why we’re doing that.
What I appreciate about this one going outside the policy is the source of revenue still remains
the property tax dollars. In the case of Chiquita and UTC that I voted no on, you will recall what
I didn’t like was some upfront money coming from outside that. Even though this is pushing the
boundaries of the policy at least the source of funds is still contained and we’re not obligating
any other revenue source other than what they’re going to pay us for. So I’m comfortable with
that change from the policy.
Mr. Dulin said I want to talk about our competition a little bit. And it’s interesting, I mean they
are a 173,000 employee firm so it’s interesting that they are consolidating the North Carolina and
yet they’re putting these entities 150 miles apart. Do we know in Missouri, in St. Louis, if they
are consolidating everything close by or are they segregating those as well?
Mr. Richardson said we do know the answer to that and the answer is that they are putting them
all in St. Louis and the reason for the segregation in the State of North Carolina is simply access
to technology workers in the Triangle and access to retail banking types in our community as
Mr. Dulin said their people have selected Cary and Charlotte, is there a chance that, if they are
going to call in the next couple of days probably not, but is there a chance that they might move
everything to Cary or everything to Charlotte? I hope we could get it all if we could.
Mr. Richardson said for the reason that I just mentioned, I don’t think that’s a possibility.
Mr. Dulin said well do we have any idea about what their office situation is and they need
roughly 800,000 feet if they have everybody in the same city.
Mr. Richardson said you mean in St. Louis? I do not know their office needs in St. Louis nor the
details in dollar figures of the St. Louis, Missouri package.
Mr. Dulin said that’s a 52 story building, stacked on top of each other.
Mr. Mitchell said Brad there is one question that I would like to have discussion on and that is
the MWBE’s participation. That’s one thing that we did not put in there when we got the
bananas and I want to make sure we do it right this time because we have local folks who are
benefitting from us making a decision and I don’t know when you would have a discussion; but
it’s good to have it now so they won’t be surprised. And I don’t know what percentage, so I will
wait for staff to give us a recommendation. But when you start talking about construction up
fitting, a lot of our MWBE can participate in those areas.
Mr. Richardson said you’re right. Let me just point out a couple of differences from this and
perhaps a development agreement. Your policy doesn’t require or really allow goal setting for
business investment grants. However a step you’ve taken in the past is the movement toward
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March 4, 2013
Closed Session
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making your policies or your preferences for local hiring, local contracting, in particular minority
women spend evident. We share that information with the company but your policy doesn’t
allow us to set a goal for the up fit of the building that $26 million dollars in the up fit. Much of
that will be done, again, in concert with the Bissell Company since it’s their building and their
contractors who are on retainer or have built the building. So there’s a question about true
opportunity in this case. That’s why we don’t assign goals to Business Investment Grants and
we never have.
Mr. Mitchell said so you’re saying that all of the up fitting will be done by the Bissell Company,
so we need to have this conversation with the Bissell Company?
Mr. Richardson said oftentimes the landlord will have an allowance for the tenant, the negotiated
allowance. The tenant will also budget for that above and beyond the allowance. In this case
they budgeted for $26 million dollars in hard building improvement costs. My suspicion is that
Bissell will be driving the decision on who that is based upon relationships and up fit the
building next door and then their business park. Does that help?
Mr. Mitchell said yes but we are the policymakers we need to revisit that because,
Mr. Richardson said so our interim step from the policy position was one year or a year and a
half of getting a process in place to interview, audit, understand the local spend, local hire and
report back to you through committee. So that’s what we are planning to do over the next year.
It doesn’t help you today I understand that.
Mr. Mitchell said just fyi, can you call the banana folks and find out how many local MWBE
they used to up fit their headquarters at Hall of Fame. What I’m saying to you Council is we
cannot continue to do this. Because we have small business folks out there who get excited
about these opportunities and there are none and it’s just not right.
Mr. Richardson said part of our plan for Chiquita and UTC; the two most recently approved that
are of stature in size is to do this interview/audit with them sometime in FY13-14.
Councilmember Mayfield said is there any way for us to extend this out 10 instead of 8 years?
Eight years is not a long time and I have a concern especially with it being split up that at the end
of the eight years and with their moving on; what that impact is going to be for the community.
Especially with hearing there is no way for us to necessarily put into place to make sure that our
local MWBE’s really are able to take advantage and if we’re not going to be able to put into
place for them to have a local job fair. Which is the same conversation that I had with the
Tanger people and got a clear agreement on if we’re not going to be able to ensure the citizens,
when we’re still looking at a 9% unemployment rate, are going to benefit off of these, then we
need to look at how we extend this time that we’re going to be paying this back.
Mr. Richardson said I will say two things. No, not today on 10 versus 8 but what I would want
you to know is that 8 is the amount of the of time you would pay a grant that would really start
two years down the road after they moved in, made the investment, hired the job. So effectively
before the grant term ends; it would be 10 years. There is an additional 5 years by policy that
they must stay or they owe us money back. And to add more to that we understand they are
negotiating at least a 10 year lease with the Bissell companies with options to extend. On the job
fair, you’re right the companies today don’t do traditional job fairs anymore but we’ve lined
them up and made connections with Charlotte Works. You’re familiar with Charlotte Works, to
do some screening, recruitment, help for those large numbers of positions that will be hired in
our community to provide some assistance, and to get the word out to the community as well.
Ms. Mayfield said I appreciate that Brad but what I also know with Charlotte Works is when
they were identified as the company for Chiquita, the invitations that went out for people to
apply was done through Charlotte Works. Out of the around 240 invitations that went out, they
placed 60 people for their job fair, which was an invitations-only job fair. Whether or not those
Charlotte City Council
March 4, 2013
Closed Session
Page 6
60 are still employed is a different conversation. But the idea of an organization that is supposed
to be representing us and representing a business community to have an invitations-only job fair
for people to be able to apply; then out of 200-240 that received an invitation, only 60 to actually
placed and there’s no tracking of how or who as able to obtain those other jobs, that’s what I
have a concern about because again, perception. In the community we say we are doing all these
things in committees; Budget, Housing and Neighborhood Development and, Economic
Development, we’re doing all these different things to try and put things in place to grow and
benefit the entire City; then when a business is talking about coming we throw all of it out the
window to say okay here, you can have whatever you want. Now whether that’s actual or factual
doesn’t matter, it’s the perception in the community that we’re not doing our due diligence to
have them put it in writing or really following up on what’s happening.
Mr. Barnes said I’m going to vote for this one, its one million dollars over eight years, $125
grand a year the equivalent of just over two and half of the jobs I believe, or about two of the
jobs in total, I understand what you’re saying Ms. Mayfield, James and I have been talking about
this stuff for years. One of the challenges is if you’re bringing in a private business it’s very
difficult to tell them what to do. Even as much as we may want to do that and I understand
exactly what you’re saying but it’s so difficult in terms of making people hire people they don’t
necessarily want for a particular job assignment. I think we should vote on it and I believe
MetLife actually has a fairly strong diversity record in terms of employee base. I think they do
from what I’ve read. I don’t know if that’s still true Mr. Richardson but I think it’s worth
moving forward with this action.
Mayor Foxx said we’re going to have a vote but I want to say just one last bit on this which is
that this project requires a lot of coordination among local and state government. I don’t like
monkeying around with jobs particularly well-paying jobs, but one of the things I’m worrying
about is we’ve talked about this relationship between the state and the federal and local
government is that the only power a group like this has is the power to say no sometimes on
things like this. That’s not the suggestion that I’m making today and I’d like to think that I
wouldn’t make that suggestion in the future. But I worry that’s where the politics of this
relationship is headed where good things don’t happen because people just say no because of the
last thing that happened and that’s both a warning to us but it’s also just a concern I have about
where the relationship is seemingly to be headed.
Mr. Barnes said to that point, we could sink this for Wake County, for Cary for the rest of the
State for our County and the City. But what we are doing is playing a role as a partner with the
State as you know with Cary, with Wake County with Mecklenburg County and trying to help
grow the economic base of the State and doing it in a responsible way. As I said its one million
dollars for an eight year investment, what I’m trying to say to you is I feel like this is our
opportunity to continue to say look we have been and will continue to work with everybody who
is working with us.
Mayor Foxx said I’m saying the same thing you are saying but what I’m also saying on top of
that is, is that I am concerned that the only communication that is understood is a hostile
communication as oppose to a responsible affirmative collaborative type of communication.
And I hope that that’s not where this Council ever finds itself but I am very concerned about that
because of how things seem to happen from the State level.
The vote was taken on the motion and was recorded as unanimous.
Mr. Richardson said Mayor I will conclude, we will not make you wait; however we would ask
that you hold confidentiality. These things sometimes take a long time we understand there may
be an announcement on this we feel good about our chances as early as later this week so stay
tuned for the information.
Charlotte City Council
March 4, 2013
Closed Session
Page 7
Mr. Howard said the announcement just came out this weekend about one of the ones we voted
Mr. Richardson said yes, Rack Room Shoes and Off Broadway.
Mr. Howard said is there a way we can hear about that before we read about it in the paper?
Mr. Richardson said absolutely and that was an oversight. We’ve already spoken to the folks
who wrote the press release at the Chamber and they apologized and noted that it will not happen
Mr. Barnes said and further to that point if we could get some notice about job announcements
being made in our district so that we could know and be able to actually show up and be
Mr. Richardson said we will make that priority.
The closed session adjourned at 9:28 p.m.
Ashleigh Price, Deputy City Clerk
Length of Meeting: 37 Minutes
Minutes Completed: April 5, 2013