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House | June 25, 2014 | Committee Room | Commerce

Full MP3 Audio File

Members, if you would, please find your seats. Good morning. I am not Representative Murry, obviously. I'm Representative Saine and I'll be chairing today in place of Tom Murry. First of all, I'd like to introduce our pages today. We've got Griffin Matsuo, I'll try to say that right, from Wake County, sponsored by Kelly Hastings, Thomas Moore III, Orange County, sponsored by Representative Verla Insko, Hadley Nelson from Mecklenburg County, sponsored by Representative Samuelson, Carter Noeker from New Hanover County, sponsored by Representative Davis, Adrian Overcash from Wake County, sponsored by Representative Wilkins and Riley Peterson from Wake County, sponsored by Representative Stam. This is Commerce and Job Development, our House sergeant at arms are Bill Bass, Joe Croak, Jesse Hays, Martha Parrish and Lauren Hawkins. Thank you all. First up on the agenda, we will take up House Bill 1100, Boost State Nature/Heritage Tourism Industry. We have a PCS. Do we have a motion to consider the PCS, bring it before the committee? We have a motion by Representative Elmore seconded by Representative Moore. The PCS is before you. Representative McNeill, if you're ready to present. [SPEAKER CHANGES] Thank you, Mr. Chairman, committee members. This is a committee bill that came out of the LRC, Cultural and Natural Resources Committee, which met during the interim, the off season between the two sessions, and this bill was, received a unanimous vote within the committee to move forward with the bill. The purpose of the bill is exactly as it is stated, it's to boost the state nature and heritage tourism industry, and just, oh, I'm sorry, I thought you had a question. OK, the proposed committee substitute for House Bill 1100 would create the Natural and Heritage Tourism Advisory Board and then direct the Department of Commerce to hire a consultant to make recommendations regarding the operation of the state historic and cultural sites. Section 1 of the bill would create an independent 9 member Nature and Heritage Tourism Advisory Board, which would be located administratively within the Division of Tourism Film, Board, as forced development in the Department of Commerce. The board would be authorized to make recommendations to the Secretary of Commerce and the General Assembly on the following, methods for increasing nature and heritage tourism to and within the state, methods for increasing the level of private investment in the state's nature and heritage tourism industry, identification of nature and heritage tourism potential for state owned facilities and assets, methods of advertizing the state's nature and tourism industry and then improvement of interagency cooperation. [SPEAKER CHANGES] ?? at the appropriate time. [SPEAKER CHANGES] Thank you, sir. [SPEAKER CHANGES] OK. Section 2 would appropriate $100,000 to the department to hire a consultant to review the operation of the state historic and cultural sites, and I'll dispense with reading the rest of it. You all can read, so if you've got any questions, I'll be glad to entertain. [SPEAKER CHANGES] Thank you, Representative McNeill. Representative Carney. [SPEAKER CHANGES] Thank you, Mr. Chair. I raised my hand earlier to make that motion, so if you want to recognize the gentleman from Fayetteville, you can. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] But I really want to make a comment. [SPEAKER CHANGES] OK. [SPEAKER CHANGES] That I think this is a great bill, and I think anything that we can do to promote tourism in this state is great, but especially with developing this guidebook for the nature and heritage trails here. I think it's a good bill and long overdue, so I talked to the bill sponsor and I'll yield to the gentleman from Cumberland. [SPEAKER CHANGES] I think you have one more. [SPEAKER CHANGES] Representative Moore. [SPEAKER CHANGES] Very quick question. So you're creating a 9 member board. Maybe a question for staff, will they be under the ethics guidelines like the rest of the board members, will they follow under that, will they fall under that same guideline under that same act. [SPEAKER CHANGES] Representative McNeill, do you have an answer to that question or staff if possible. [SPEAKER CHANGES] I think he directed it to staff, but I do not have an answer for that, so staff might. [SPEAKER CHANGES] Please.

more if the board is advisory only then the State Government, at this act, does not apply to that board. [SPEAKER CHANGES] Thank you. Representative Speciale. [SPEAKER CHANGES] I'm trying to understand the purpose of this bill. Doesn't the Department of Cultural Resources or Department of Commerce, something, already do this stuff to promote North Carolina tourism and why are we, it seems like a redundancy to me, to appoint another board. [SPEAKER CHANGES] There is a board that has, I think, 29 members on it now, I think if you'll look in your budget, in your budget bill, page 155 there's also a section in the budget to add two members to that board. This board probably would have some redundant areas that they look into. [SPEAKER CHANGES] Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman, actually Representative Speciale asked my question. Personally, I can't see justification when we got sites that follow under cultural resources and it's their responsibility to be promoting these and I'm just thinking we're a layer that's not really necessary to get the job done. [SPEAKER CHANGES] Representative McNeill. [SPEAKER CHANGES] Okay, I would say that the division of tourism, the Department of Commerce, supports this bill and the North Carolina Travel and Tourism Coalition also support this bill. And I think Mr. Gupton[??] is here. [SPEAKER CHANGES] Representative Conrad. [SPEAKER CHANGES] I just wanted some clarification on the guidebook. I thought PCS eliminated the guidebook, is that- [SPEAKER CHANGES] The PCS did eliminate the old section 2 of the guidebook, that's correct. [SPEAKER CHANGES] Any other questions/commentary for the bill sponsor? We have a motion to accept the PCS by Representative Floyd. Do I have a second? We have ?? by Representative Moore, sorry, to state the motion correctly, if favorable this motion will go to appropriations. All those in favor signify by saying aye. Those opposed ??. ?? the aye's have it. The aye's do have it. Thank you, Representative McNeill. Switching the order of business just a little bit, we have Senate Bill 614, Cancellation Procedure Changes. Senator Brown, you're recognized to present your bill. I'm sorry. Do we have a motion to accept the PCS? Motion by Representative Catlin and a second by Representative Riddell. Senator Brown. [SPEAKER CHANGES] Thank you, Mr. Chairman, committee. This bill has been passed through the House Reg Reform Committee already and it's the piece that deals with the military and, as far as it relates to the Military Affairs Commission and Bright[??] proceedings, what the first section of the bill does is establishes a new requirement that the state construction office maintain accurate maps of various surrounding military installations. Sections 2-5 amends the statute on military lands protection to provide that the State Construction Office of Department of Administration is the entity responsible for reviewing requests for endorsements for the construction of tall buildings or structures rather than the Building Code Council. And finally, the rest of the bill deals with public records and open meetings, and the PCS provides that the Military Affairs Commission, within the Department of Commerce, may withhold documents and decisions, or discussions, related to base realignment and closure for so long as the public inspection would frustrate the purpose of the confidentiality. It also amends the open meetings of public records law to provide that provide that public ?? are not required and disclosed information that reveals documents related to the Federal Government's process to determine closure realignment of military installations until a final decision has been made by the Federal Government in that process. And the bill becomes effective on October 1st. The reason for this is the Bright process that is going on now is a very, very competitive process. States, South Carolina, Texas, Virginia, all are now fighting to maintain and keep their bases and these negotiations that our military

... Affairs Commission is undertaking and decisions that we’re trying to make to protect our bases in North Carolina are important. Other states will go to our website and look at what we’re doing and trump us when they have the opportunity, so it’s important that this information doesn’t get out as far as our strategy goes on how to protect our bases. That’s why it’s so important that we kind of keep this confidential until some of the decisions on the federal level are made. I’ll try to answer any questions but that’s mainly the purpose of the bill, and it’s a little bit time-sensitive, as you can imagine. Most states are a really a little bit ahead of us on this ?? process right now. We’re doing a little bit of catch up, and I don’t think I’ve got to tell anyone what the bases mean to eastern North Carolina as far as our economy goes, and protecting those bases are important. [SPEAKER CHANGES] Thank you, Senator. Representative Whitmire has a question for you. [SPEAKER CHANGES] I just want to thank you, Senator Brown, and all of those who put the work into this. I commended it and at the appropriate time, ready to offer a motion to approve. [SPEAKER CHANGES] Thank you. Any other questions. Representative Lucas, did you have a question? [SPEAKER CHANGES] Not a question, sir. Just a comment that it’s vitally important that we protect the security of our military bases and I think this is a good bill and I support it. [SPEAKER CHANGES] Thank you, sir. Representative Hager, was yours for a motion? We’ve got a motion from Representative Whitmire and seconded by Representative Hager. All those in favor please indicate by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those opposed, like sign. The bill does pass. Thank you, Senator. [SPEAKER CHANGES] Thank you, committee. [SPEAKER CHANGES] Moving along next, make sure that everybody has their copies. I believe they do. We have a PCS for House Bill 1135, and if anyone’s waiting around for House Bill 1156, Spurious Liquor Tastings, that has been pulled by the sponsors, so you’re free to go if that’s all you were waiting around for. I do want to mention that to you. House Bill 1135, Business Facilities Development. We do have a PHS. We have a motion to put the bill before us? We have a motion by Representative Hager, seconded by Representative Whitmire. The bill is before you. Representative Jeter. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Thank you. Representative Starnes. [SPEAKER CHANGES] Which PCS are we looking at? Is it the version 2? [SPEAKER CHANGES] Representative Jeter, if you’ll answer that for us please. [SPEAKER CHANGES] Representative Starnes, the item that was handed to you which was listed as version 2, the only change from the original PCS to what was just handed to you is there was a requirement that we put in on page 1, line 22 item 6, which was Environmental Disqualifying Events. That was a requirement by the staff. [SPEAKER CHANGES] So it’s version 2 that we’re looking at. [SPEAKER CHANGES] It’s version 2. That’s the only difference between that and the full bill. [SPEAKER CHANGES] Thank you for your brevity. Representative Jeter. [SPEAKER CHANGES] Brevity has always been my strong suit, so once again I can’t tell you what a good bill this is. I was in Town Hall, in Huntersville Town Hall on Monday, and the Town Manager Greg Ferguson – in case he’s listening, super guy – came up to me and said “One of the problems we have with economic development is the building site selection, getting facilities for businesses to come in and having ready-made opportunities to develop sites for businesses.” Obviously a lot of our local municipalities don’t have the money to front some of those things; this bill allows a mechanism to do just that. I‘ll shut up and answer your questions. [SPEAKER CHANGES] Any questions for the bill sponsor? Representative Millis and then Representative Brody. [SPEAKER CHANGES] Yes sir. Just a quick question for staff. Under the aspects of the bill that speaks about a subsidized loan, could they speak to what that actually means in terms of normal loans that will be offered to private businesses versus this language? [SPEAKER CHANGES] Staff can answer that. [SPEAKER CHANGES] Yes, Greg Roney with the Research Division. It talks about subsidized loan and it refers to that loan having these really low interest rates, so depending on what tier the county is determines what the interest rate is – zero, one or two percent. Then it doesn’t… If you’re asking about competition with private lenders, the scheme of the bill is that the Department of Commerce would have this fund, and then the Department of Commerce would enter into as agreement with a local government, and then the local government would actually be the entity that loaned the money out to a business, and then the interest rate would be…

Below market. And the exact interest rate would depend on what tier the county is. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So what I’m hearing is that by way of this bill, local governments would have the ability to offer a much lower loan rate, almost to the aspects of 0%. Would this be just to local governments to actually build infrastructure, or are we talking about actually building shell buildings and the whole, is this only for public infrastructure or can actually go to private business development? [SPEAKER CHANGES] Mr. Chair. [SPEAKER CHANGES] Recognizing staff. [SPEAKER CHANGES] It would go to developed property that would then be leased or sold to a private business. And so the plan anticipated is that the local government would improve a site and then, an overarching requirement in this is that the Department of Commerce has to have sort of a state wide plan and evaluate these different sites so that it’s supposed to be coordinated at the state level by the Department of Commerce and then if any site is actually selected for a subsidized loan, then that would flow through to the local government, and then the local government would improve the land or building, and yes shell buildings it specifically mentioned something the subsidized loan would be approved for. [SPEAKER CHANGES] Just to clarify, Mr. Chairman. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] I understand your question differently, so let me answer it a little differently. The loan itself goes from the state to the municipal government, whether it be the county or city, it does not go to the individual base, the business. It goes from government entity to government entity which is in essence a function of the state anyway. It is not a loan to the business in question. [SPEAKER CHANGES] Follow up, Representative Millis. [SPEAKER CHANGES] Yes sir. I definitely agree with the bill sponsors’ intent about this, but I have to say from an aspect of the role of state government, is that I’m all for this aspect for public monies or subsidized loans for public infrastructure. But if this is going to go to enable local governments to actually build shell buildings to actually compete in the private market, I’ve seen local governments actually go in, build shell buildings, hold a note for two, three, four years and if anybody had to do that in the private sector, that’s not being subsidized by the tax payer, they lose their rear end. So if this was actually basically just confined to public infrastructure, I’d be fully supportive, but if it goes outside those bounds, even though I agree with the intent of the bill sponsor, I just have to represent my constituents to say that I have a major problem. [SPEAKER CHANGES] Thank you, Representative. Representative Stam, also a co-sponsor of the bill. [SPEAKER CHANGES] I’d like to just make a couple of remarks about it. In the fall of 2012 and into early 13, I met with 20 economic developers in 3 different locations around the state, with some other representatives and senators. I think Robert Brawley was at one of them. Bill Brawley, there were half a dozen other. Lots of things we disagreed with. Representative Millis, you know I’m a hawk against give-aways and tax incentives, right? This is one thing that they were unanimous on as one of the most important things we could do for the semi-rural and rural areas. And it’s not a big, it’s not an issue for my district, or many of your districts. But if they don’t have anything to show a prospect, even a place, the prospect just doesn’t come. Now once they get them there, they can show them all the other wonderful things. So we talked about, we looked at what we could do. The counties, the cities are subdivisions of the State of North Carolina. The subsidized loan is a loan to ourselves. Because there are, I don’t want to make cities and counties upset if I say what they are, but they’re [LAUGH] they are subdivisions of the state. What they do is this is a potential loan to the city or county, and we have a provision in here that private banks can also join in a loan with equal priority and the idea is that a lot of them will if they’re not shouldering the whole thing. But unlike all other incentives, this has a 100% callback because it’s secured by a first lien on the property. And it has very easy repayment terms, but you’re going to get it back. I don’t care what they talk about in ?? or whatever. They do not have true callbacks because if the person goes into bankruptcy you’re a general

Creditor. Here the state is a secure creditor. This is what the economic developers say they really need in the semi-rural and rural areas and in some parts of the urban counties but not Research Triangle Park. I’d encourage you to support it. [SPEAKER CHANGES] Thank you Representative Stam, Representative Millis for a follow up. [SPEAKER CHANGES] Representative Stam definitely, thank you for that clarification as well as Representative Jeter and just to re-clarify my comments, I agree with your intent whole heatedly. I understand the actual hand down between the state and local governments. My aspect would be, I would be fully supportive of this bill if it was constrained to public infrastructure by way of local governments being able to put water lines in the ground sewer lines in the ground. Again public monies for public infrastructure, but if we’re getting into the aspects of building shell buildings and things of that nature that actually competes with the private sector, I have a major issue with that. [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] We would anticipate mostly that this will be pad ready rather than shell buildings, but in some cases shell buildings. In the semi-rural, rural areas, that’s just not an issue. You have to go to some of these places to know what I’m talking about. They just have nothing and once you bring in something, then other things perhaps can grow around it. [SPEAKER CHANGES] One more follow up, we've got a lot of questions. [SPEAKER CHANGES] Representative Stam, I represent a rural county, I’m familiar with the shell building aspects and public infrastructure I’m all behind, but again this is an issue and local governments are being more or less coerced in this aspect so a lot of time it doesn't put the tax payer in the best position. Thank you. [SPEAKER CHANGES] Representative Brody for a question. [SPEAKER CHANGES] Thank you Mr. Chairman. I want to question a little bit deeper on the eligible properties. Some of these properties in the rural areas actually have to be cleaned up before they can be turned around and built there or prepared. Does this legislation allow the municipality once they get the money to be used for Brown Field clean up and all of that, and then in addition to that, once they clean it up then develop the site? [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] Representative Brody I appreciate the question. That is predominately why we put in version two, which is item six the Environmental Disqualifying event, to address Brown Field issues and those type of things. We had a situation in Huntersville where we had an old mill site that was a Brown Field and we had to do some of those things. The goal was and the reason why we put in item six was to address those concerns. [SPEAKER CHANGES] Thank you for your questions. Follow-up? [SPEAKER CHANGES] If you could, I didn't get to fully – sometimes I just don’t fully understand some of these things that we put in here. Could you tell me, does that mean that they can’t be used for Brown field clean up or the item six means that they can be used for Brown Field clean up? [SPEAKER CHANGES] If we can have [Staph ?? 0:03:18] answer that question please, the specificity of the law? [SPEAKER CHANGES] [Staph], did you hear the question? [SPEAKER CHANGES] Yes, I know that the definition and the discussion about environmental, if you have an environmental violation that’s defined in this statute then that business would not be eligible to buy or lease property from the local government that has a subsidized loan. That’s clear. Your question about would it be permissible purpose to do some Brown fields clean up, would the local government do that. This part of the statute about the eligibility of the business wouldn’t really affect that attribute of the property. One general way to answer that is that the Department of Commerce is supposed to do regulations to put a lot more specificity on the statutory language. That question might be something the Department of Commerce has to decide as an administrative decision, it would certainly make a site to site decision as to whether that was a good idea or not. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] Representative Brody, one thing that I would add at it, if you look on page two, line 25, section 12, I believe that it would allow for those purposes under that section where it says they can improve the land. So based on your question I think the answer is yes. I would remind you at the end of this bill, one of the things that this bill does is to task, to figure out what exactly the guidelines are going to be for that—

...level of specificity when you get into...trying to find the exact section, but...PCS for house bill would appropriate $50,000 to be used to contract for the preparation of strategic business facilities development analysis. There's some effort to clarify some of that loan. I believe section 12 says, in essence, yes they can. [SPEAKER CHANGES] Thank you. Moving through, we've got many lined up for questions. In this order, coming next three are Representative Avila, Stone, and Hager. Representative Avila. [SPEAKER CHANGES] Thank you, Mr. Chairman. I have a couple of quick questions, if I may. Is this loan amount going to be part of the debt load of the government entity, whether it's the city or county, because I notice you specifically prohibit the LGC reviewing it. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] I'll let Represtative Stam answer the question. [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] It would be part of the debt of the city, but it would be balanced, of course, by the asset. It then would become an asset, or the loan would be an asset of the state of North Carolina, which would be fully secured by first lein. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] I guess my question is, is you stated earlier that there are divisions of state government, why do we have to have a middle-man? Why don't we just give the money to them straight from the state? [SPEAKER CHANGES] Well, you could just appropriate money to a lot of different citites and counties, but then you would have a feeding frenzy here at the assembly about whose city and county got how much money. This is to go to commerce to have a state-wide plan of where it's most needed. It's not needed in Northern Raleigh or in Apex, but it's needed a lot in Kinston and Salisbury and I could name fifty other places. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up, Representative Avila. [SPEAKER CHANGES] Looking down at what you prohibit from taking part in this, amusements and government buildings and entertainment, what's left? [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] What page is that? Hundreds of things would be left. Tell me what page you're on. And this was a reccommendation of the developer's association that these particular things that generate other business so much, they're good things by themselves, but they're not manufacturing, they're not distribution facilities. It's things that create commerce for other people in other areas. [SPEAKER CHANGES] Short comment please. [SPEAKER CHANGES] For commentary. [SPEAKER CHANGES] Thank you, Mr. Chairman. I know several cities, right now, that are in trouble because they've started to go into business and I was under the impression that with the new re-org of commerce with its PPP organization that we were going to be taking care of the entire state. I really get nervous when I see states taking...or cities and counties taking on this kind of responsibility when it says the local government must repay the subsidized loan of the business leasing or purchasing property aquired or improved by subsidized loan fails to meet performance criteria. That somebody's going to pay if that business fails. I think the name of that payer is tax payer. I cannot support this. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] The problem is a couple things. Almost every region of this state has a local economic development corporation or local economic development group. At some point, in the more affluent areas, where they don't have it, for the most part, is where the jobs are needed most. This, in essence, helps create manufacturing, other jobs, that's why we specifically eliminate entertainment and other things that you you mention. The other thing is, this is not like giving a business a loan or a tax credit. There is an asset that this is backed up by by the land. The tax payer's not on the hook because the property itself is securing the loan. This is not an unsecured loan from the state. This is a secured loan with a backed asset. [SPEAKER CHANGES] Follow-up to that please, Mr. Chairman. [SPEAKER CHANGES] I'll allow you one more follow-up then we need to move on. [SPEAKER CHANGES] An empty building with nothing going on in it isn't much of an asset for a tax payer's point of view. [SPEAKER CHANGES] Next. Representative Stone, your question. [SPEAKER CHANGES] Thank you, Mr. Chairman. I just want to make a few brief statements real quickly. I can understand developers wanting to support this bill. No one builds more expensive buildings...

Speaker: I can assure you that in a pirate sector are involved ?? because the bill is so expensive this is not the first time the bill is got i mean ?? this comes before us and what i wanna do is to tell you the on what opportunity in my county lee county. ?? 2002 ,2003.They took up themselves being the arm of E D C to built 700,000$ shell building they marker their building in the prime spot and people all over the world would come to see the building ??.We sell that building about a year ago we took a 500,000$ loss and that diction committee one agreed was part of E D C which us funded by the tax payers so this bill comes before us again i understand the ?? free money or assistance money ?? expensive building the private sector eve seen.Looking int that i would ask to not to support this bill, Speaker Changes: Thank you Representative Stones, Representative ??, Speaker Changes: Thank you Mr.Chairman this is for you Mr.Chairman ?? Speaker Changes: ? you know what i mean, Speaker Changes: sorry, Speaker Changes: ?? you know hat i mean, Speaker Changes: yes i do know thank you, Speaker Changes: There is an issue about the bill that Representative ?? talked about in section 13 is the alone percentage for the ?? different counties and i guess we are talked about ?? question i have hear and looking at wait county at 4.7 percent ?? why do we need to have the three percent why do we need to have the urban counties at all guess this question, Speaker Changes: i ll start ?? one of this number i think we like to make in this chamber is that urban counties are all urban and the problem with our tear county systems ?? the most popular county in the sate and i assure you this world is some of the ?? districts here you know i think the people think that ?? and we struggle in our county just like the everyone else so i don't agree with the statement that urban counties ??, Speaker Changes: Follow, Speaker Changes: Fund and commerce were questions what dos this money ?? where does that money come for getting this newly created fund , Speaker Changes: But i, Speaker Changes: Representative Sam, Speaker Changes: The proportion from the ?? board ,this would his place some other finds would not necessarily a lot of new money but what they call us is lot of money that is available for development is not really usable without the purpose ?? in the later years that would actually funded,there was no money actually funded but do remember is the commerce department that would be lending the money and not just because the ?? money ask for if south east ?? you know had a situation they could have a pave ready site i mean it might be in a tear you know the hire tear county but it's a poor area, Speaker Changes: Mr.Chairman follow ??, Speaker Changes: ?? specially from which this money is coming from funds you know exactly which fund, Speaker Changes: Representative Sam , Speaker Changes: Appropriations will be decide by next year the appropriations committee whether to fund that at all if it all, Speaker Changes: Just a comment Mr.Chairman, Speaker Changes: For commentary, Speaker Changes: you know Speaker Changes: Sometimes there is a two north Carolina, there is a urban North Carolina and rural North Carolina ,

Jeter, you know I have respect for both you guys but when I walk out my door everyday I'm not five miles from a international airport or ten miles from an international airport. I don't have sea mud[??] to provide my water and sewer to the whole county. I don't have that infrastructure Rutherford County or Graham County and that's really what unites the rural east and the rural west even though, philosophically and politically, we're so different. But that's really what unites us because we're all the same on those issues. We don't have that infrastructure of other research triangle part down the road or, look at the buildings going up in, all around Wake County, Not just Raleigh but Wake County. We just don't have those and I know there's only a certain amount of money to go around when you're talking about commerce and if you start allowing urban counties, and I think this is a way to get around the tier system, if you start allowing urban counties to be able to tier within themselves then basically that's what you're doing with these loans. Then you actually take money away from tier 1 and tier 2 counties that need it the most. I sat in this morning with the DOT folks and looked at what the STI equations going to do to rural counties. It's not going to be positive to rural counties. Now, we got our roads, our roads are disappearing from us, now is the commerce and the dollars to go for economic development the next thing? That's what worries me and I think we all, our rural folks, need to consider that. [SPEAKER CHANGES] Mr. Chairman, if I could. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] Representative Hager, I don't disagree with you and if, and we are happy to eliminate the tier 3 counties and guide it towards tier 1 and tier 2 counties. We represent tier 3 counties, obviously, from Mecklenburg and Wake. Our soul purpose, primarily is tier 1 and 2 counties. We do have some concerns about the rural areas and tier 3 but we are happy to eliminate tier 3 counties from consideration if that will gain support because our goal is to create jobs in some of the areas that need it. [SPEAKER CHANGES] Representative Jeter, let me give you an update real quick on our batting order, as I see it. Representative Warren, Representative Terry, Representative Speciale, Representative Floyd, Representative Bumgardner, Representative Szoka, Representative Carney, Representative Wells- [SPEAKER CHANGES] Who doesn't want to- [SPEAKER CHANGES] Representative Graham, Representative Richardson, Representative Brown, Representative Conrad, and Representative Alexander, okay. Anybody, let's see, Representative Brawley, Representative Martin. The body will suspend as well as update. Representative Hanes says why not? Representative Warren. [SPEAKER CHANGES] Representative Hanes, I'm sure you'll come up with a question by the time we get to you. Representative Hager touched on the question that I have and for me it's just clarification. According to all the last two PCS's you're taking $50,000 from the General Fund for the analysis on the first section but, as I understand it then, the fund itself will be setup from within the budget of commerce. Is that correct? [SPEAKER CHANGES] That's correct. [SPEAKER CHANGES] Follow-up, please. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] Can you tell me how much money we're talking about in that fund? [SPEAKER CHANGES] It's talking about 15/20 million. [SPEAKER CHANGES] I'll let Representative Stam- [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] In the eco-development board discussions we talked in with 10/15/20 million that would be re-purposed from other things in commerce. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] Of course that would be up to next year's Appropriation Committee. [SPEAKER CHANGES] For follow-up, Representative Warren. [SPEAKER CHANGES] So we're talking anywhere, a ten million dollar spread there, 10/15/20 million dollars. You're not real sure. Can, and then you said that the next year would be from appropriations so we're looking, actually, of that ten or fifteen or twenty million dollars actually coming from appropriations increasing the allocation to commerce next year? [SPEAKER CHANGES] No. Mostly, as I said before- [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] As I've said before, mostly from re-purposing other money that is currently appropriated to commerce. [SPEAKER CHANGES] Follow-up, please. [SPEAKER CHANGES] Follow-up, Representative Warren. [SPEAKER CHANGES] I don't mean to belabor the point, and I apologize if I'm not picking up on this, so the appropriation that would go to commerce next year would be the normal increase or whatever normal increase you would have for commerce but it would be up to commerce to pool that ten or fifteen or twenty million dollars from within their budget? Is it, am I understanding that correctly? [SPEAKER CHANGES] Right, most of the money would come from other money in the commerce and, if I'm not mistaken, commerce supports this bill. At least they've told me many times they do. [SPEAKER CHANGES] Okay but, one last follow-up, please. [SPEAKER CHANGES] Follow-up, Representative Warren. [SPEAKER CHANGES] Just, Representative Stam, just so I, I want to make sure you confirmed for me I understand this. So the fund would be setup with monies

... coming from within Commerce’s own budget based on where they would skim it from other programs or whatever, and then you said “most of it”, so I’m assuming then there would be some type of increase or additional allocations next year to make this fund a little more larger. [SPEAKER CHANGES] Representative Stam. [SPEAKER CHANGES] That’s up to the Appropriations Committee next year. If the Appropriations Committee next year didn’t appropriate a dime for this, it wouldn’t be funded. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] This is setting up the mechanism so that they can work on it for a year and be able to tell us next year what they would actually do with it. [SPEAKER CHANGES] Thank you. Terry, for your question. [SPEAKER CHANGES] Can you hear me? [SPEAKER CHANGES] We can hear you now. [SPEAKER CHANGES] Thank you very much, Mr. Chair. My question is… I guess I think it’s technical but I’m not sure. As I listen to this discussion and as I try to wrap my mind around the new Commerce Department’s system of prosperity zones, I would like to know exactly how this relates to, in terms of formula-driven funding, the prosperity zones compared with the tiering system. I asked earlier for an overlay of prosperity zones in tiers so that I could understand, so can anybody tell me how this would work there? Because I know some of the commerce stuff is based on census track data and kind of is formula-driven. [SPEAKER CHANGES] I think that they could tell you next year more than they could tell you this year, but it’s directed to the semirural and rural areas. That’s the emphasis. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] I understood that quite clearly sir, but the reality about how the rural and the tiering as it compares with prosperity zones is I guess my question. [SPEAKER CHANGES] Representative Jeter. [SPEAKER CHANGES] I think if you’re asking “How is it going to be funded in relation to the other project?” I go back to Representative Stam’s answer to the other items. In essence, all this bill does is set the policy in place and the mechanism for this policy to exist in statute. The reality is in our next budget cycle, the appropriations, the appropriations of which many of us serve on are going to have to decide how much money is spent and where the money comes from and how that fits into the other items. We’re not making that decision today. All we’re making a decision on is is this a policy that we want to pursue, and ask part of the 50 thousand dollars just to figure out answers to some of those specific questions on the financing models, and then next year, for those that are fortunate enough to come back, in appropriations we’ll make the decision of how and where it’s funded from and to the amount. [SPEAKER CHANGES] Thank you, sir. [SPEAKER CHANGES] Representative Speciale. [SPEAKER CHANGES] I have most respect for both you gentlemen but I got to tell you, “if you build it, they will come” has been tried. Global TransPark built that whole thing, put shell buildings up, put roads in, everything else, and all it’s done, it’s been a one armed bandit that has raped us financially for years, for decades. There was a loan fund there to help for infrastructure to help local governments with infrastructure, and it sat dormant for the last two years, and if you remember, I put a bill in and we got that money back out of that fund and gave it back to the counties that put it in there. I’ve got a host of questions here on this bill but I’m not going to ask them. I’m going to ask them kind of rhetorically; I don’t expect you to answer them. How much is this going to cost overall? When we talk about the assets protecting the investment, rarely do the assets return that investment if they’re to be sold. We could go county through county in this state and find shell buildings that were put up at one point or another that turned out to be boondoggles. Guilford County had one. They lost big dollars on that when they tried to sell it. It’s another case of throwing money at something to see if it grows. The state really should be…

and involved in cutting back regulations, things like that. As far as keeping pouring money into investments, you have certificate of participation to help the counties out. Counties have a lot of options, municipalities have options, when it comes to trying to assist business and for the state to continue throwing money at it after we just rearranged everything we're doing in this state, when it comes to the economic zones and everything else, let's let that stuff play out and see what happens. I could go on and on but I won't. I would just like to ask everybody not to support this bill. [SPEAKER CHANGES] Thank you, Representative Speciale. Representative Jeter. [SPEAKER CHANGES] I think you bring the Global TransPark, which is a good example, Roanoke Rapids is another good example where when the state comes in and tries to do economic development it fails, which is exactly why this policy bill is here because what we're trying to do is enable local governments to use the resources of the state to make local decisions. I gave a prime example where I think this bill makes a lot of sense. I go back to the town of Huntersville, we had a economic parcel called the Development Park off 115. We had one company in there, Pactiv, and we had 15 other parcels that weren't being developed because, predominantly, we didn't have a good road access for trucks. The town of Huntersville made the decision to go in there and build a bridge, above grade bridge obviously, pardon the redundancy there, and we brought in three additional huge manufacturing companies because we fixed that problem. Our goal here is to find a financing mechanism to allow the local governments to make those decisions, not to make those decisions at state level, but using the resources of the state. That being said, we could sit here for another hour and a half and debate this. I don't want to waste ya'lls time so I don't believe I have support for this bill, unless I'm reading the room wrong, I've been reading my wife wrong for 15 years so, with that being said, and I apologize for the controversy of the bill, I'll be happy to pull the bill and talk to you all offline. If I can get support I'll bring it back. If I can't, I won't. [SPEAKER CHANGES] Representative Hager, thank you. If I understand correctly you're pulling the bill from the committee for now and we do appreciate the lively discussion and the participation. Those wishing to start today, on the audio, I'm sorry I do apologize. Being no other business before the committee we do stand adjourned. Thank you.