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Regional Report Triad May 2008

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TRIAD

Wineries Cork Costs With Higher Prices 

Even the most ardent fans of wines produced in the Yadkin Valley have to admit they’re not cheap. Critics will point out that they cost nearly twice as much as comparable wines from California, Chile, South Africa or Australia.

Margo Metzger, executive director of the North Carolina Wine and Grape Council, admits that consumers can find cheaper wines than Tar Heel varieties. “Most of the wineries are young, so we’re talking about recovering real costs.” One of those costs is the most basic — grapes. “The price of grapes here is about $1,100 a ton, about twice as much as in California.”

Charlie Shelton, co-owner of Shelton Vineyards in Dobson, sells his wines for $16 to $40 a bottle, depending on the vintage. “Our winemakers taste wines that we feel are comparable and competition to us. Everything is priced to be competitive. Sometimes you even have to price some products below costs.”

Lena Hobson, co-owner of RagApple Lassie in Boonville, calls pricing an inexact science and says most vintners in the Yadkin Valley American Viticultural Area are still paying off startup costs. “When we were writing a business plan, we looked at price ranges in North Carolina to see if that’s something we can live with and still remain in business.”

RagApple Lassie wines sell for $14 to $17 a bottle, and the company produced about 6,000 cases last year. By contrast, Duplin Winery in Rose Hill, the largest and oldest winery in the state, produced nearly 200,000 cases last year. The Eastern North Carolina winery uses native muscadine grapes rather than European ones grown in the Yadkin Valley AVA, and most bottles sell for $7.50 to $12.

Mark Friszolowski, general manager and winemaker at Childress Vineyards in Lexington, says his pricing formula is simple. “We want to make wines at a profit, even if it’s a small one. We’re OK with our wine costing a little bit more money.” Childress wines range from $11 to $60 a bottle.

Some even suggest that the wineries pump up their prices to avoid the notion that the product is, well, cheap. Hobson says she’s seen that sort of thing during her days of volunteering with nonprofits. “If you give something away, people do not attach a value to it.” But artificially inflating prices is risky, she says.

Metzger pooh-poohs the notion. “There may be instances of that in the world of wine, but I haven’t seen it here in North Carolina.” Says Shelton, “There are some recipes for disaster out there, and that is one of them.”

Friszolowski isn’t so sure. “There might be a few isolated instances. There’s a lot of ego in this business, particularly when someone’s name is on the bottle. But most people will charge because they need to.”

 

GREENSBORO — RF Micro Devices, which makes cell-phone parts and employs about 1,900 here, bought England-based Filtronic Compound Semiconductors for $24.8 million, adding about 300 employees. The move will delay construction here of a $100 million, 300-worker factory planned for this year.

WINSTON-SALEM — New Krispy Kreme Doughnuts CEO James Morgan will get an annual salary of $650,000 and stock options worth an estimated $578,000. He also is eligible for a bonus of up to $455,000. Predecessor Darryl Brewster’s $2.6 million pay package in fiscal 2007 included a salary of $634,487.

TRINITY — David McIlquham, 53, resigned as chairman and CEO of mattress maker Sealy. Larry Rogers, 59, president of Sealy North America, is interim CEO.

WINSTON-SALEM — Novant Health, which owns nine hospitals in North Carolina, paid $300 million to buy a 27% stake in seven hospitals in the Carolinas from Naples, Fla.-based Health Management Associates. Four of the hospitals are in North Carolina: Davis Regional Medical Center in Statesville, Lake Norman Regional Medical Center in Mooresville, Franklin Regional Medical Center in Louisburg and Sandhills Regional Medical Center in Hamlet.

GREENSBORO — Columbus, Ohio-based Skybus Airlines blamed high fuel costs and poor economic conditions for its shutdown in early April. Earlier this year, the discount carrier opened a hub at Piedmont Triad International Airport. It employed about 80 and was making 16 daily flights from PTIA at the time it closed. The move cleared the way for another discount airline, Las Vegas-based Allegiant Air, to stay at the airport. It had announced plans to discontinue flights there May 31. It will keep service to Orlando and St. Petersburg, Fla., and resume service to Fort Lauderdale.

GREENSBORO — Houston-based Continental Airlines added two daily nonstop flights between Greensboro and Cleveland, giving it 10 daily flights at Piedmont Triad International Airport.

WINSTON-SALEM — Apparel maker Hanesbrands plans to build its first factory in China. The plant in Nanjing will cost at least $100 million and employ about 1,000 when it opens in 2009.

HIGH POINT — Two subsidiaries of St. Louis-based Furniture Brands International that shared offices here plan to move their headquarters. Drexel Heritage will go to Thomasville, taking about 40 jobs. Henredon will move to another building here.

WINSTON-SALEM — Forsyth Medical Center and Wake Forest University Baptist Medical Center appealed the state’s rejections of competing plans to open hospitals four miles apart. Forsyth wants to open a 50-bed hospital in Clemmons; Baptist, an 81-bed hospital in Advance.

GREENSBORO — Textile maker Unifi sold a vacant plant and land in Dillon, S.C. Paterson, N.J.-based 1019 Realty paid $4 million for the 536,000-square-foot plant and 63 acres.

MOUNT AIRY — Bodet & Horst, which makes knitted fire barriers for mattress manufacturers, spent about $1.5 million to open a factory here that employs 10. The German com- pany also employs 65 at a factory in High Point, where it has operated since 2004.

WINSTON-SALEM — Liberty Hardware, part of Taylor, Mich.-based Masco, plans to add 526,000 square feet to its 690,000-square-foot headquarters and distribution center. Liberty, which employs 350 making decorative hardware, isn’t sure how many workers it will add.

WINSTON-SALEM — Forsyth County won approval from the National Steeplechase Association to resume the Tanglewood Steeplechase next year. Commissioner Ted Kaplan says the race, which ended six years ago because it lost corporate sponsorship, could be a tourism magnet. It drew 20,000 spectators a year to Tanglewood park in the 1980s.

WINSTON-SALEM — Wake Forest University Baptist Medical Center launched a five-year study aimed at reducing complications in diabetic patients after heart surgery. It will be paid for by a $3.6 million grant from the National Institutes of Health.

Regional Report Eastern May 2008

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Eastern

Counties deflate wind power 

Local opposition is knocking the wind out of efforts to promote renewable energy, but whether coastal ordinances that halt or tightly regulate electricity-generating windmills have them down for the count remains to be seen. The latest setback came in March, when Carteret County imposed a nine-month moratorium. In January, Currituck County started restricting where they can be built.

“We’re faced with something we know little about,” says Doug Harris, chairman of the Carteret County commissioners. “We’re looking at something that, from sea level to the tip of the blade, could be 470 to 490 feet tall. That’s taller than the Wachovia Building in Raleigh and certainly taller than our lighthouse at Cape Lookout.”

Carteret ordered the moratorium after Raleigh developers proposed building three large wind turbines east of Morehead City that could generate more than 4 megawatts of power, which they would sell to Raleigh-based Progress Energy. The Currituck ordinance requires utility-size windmills to be on at least 25 acres and 1½ times their height from property lines.

Carteret commissioners want time to study windmills before a new state law triggers a building boom. It requires utilities to obtain 12.5% of their power from renewable sources and greater efficiency by 2020. “We’re just concerned about the fall zone and other public safety and health issues,” Harris says, adding that the moratorium is not “a vote against wind power as such.” Commissioners expect county planners to offer proposed guidelines by this winter.

What seems like clean, cheap power is causing division even among environmentalists. Steve Kalland, director of the North Carolina Solar Power Center at N.C. State University in Raleigh, says some contend windmills endanger birds and other wildlife and create visual and noise pollution. “Most recognize that wind energy is better overall for the environment than other options,” he says.

However, opposition grows when communities discover the size of wind turbines, says Daren Bakst, an analyst for the John Locke Foundation, a conservative think tank based in Raleigh. “You’re talking about structures as tall as 49- or 50-story buildings.” Last year, Ashe County banned large turbines, blocking a plan by a local farmer to build a mountaintop wind farm. Nearby Blowing Rock has banned all windmills.

Building a container terminal is, in a way, like buying a car: The extras can really add up. The State Ports Authority says one proposed in Brunswick County would cost $1.7 billion, up from the original estimate of about $1 billion. Roads, rail links and other improvements will add $500 million to the tab, spokeswoman Karen Fox says. The payoff? The N.C. International Port, near Southport, would create 16,500 jobs, and private development would generate $1.1 billion a year in local and state taxes by 2030. The first phase would open in 2017. Revenue from operations, federal grants and state money would pay for the port. More foreign trade and crowding at East Coast ports make the terminal necessary, the authority says.

WILSON — Augusta, Ga.-based Hull Storey Retail Group says its sale of three North Carolina malls and eight others to Atlanta-based Hendon Properties for $214 million fell through because of a tight credit market. The largest was Wilson Mall. The others were Blue Ridge Mall in Hendersonville and Twin Rivers Mall in New Bern.

WILSON — Becton Dickinson, a Franklin Lakes, N.J.-based medical-equipment maker, plans to open a factory here by summer 2009. It will employ more than 90.

FAYETTEVILLE — James Anderson, 59, replaced Vic Hackley, 67, as chancellor of Fayetteville State University. Anderson had been a psychology professor at State University of New York at Albany. Hackley, interim chancellor, had filled the job since August.

CLINTON — Sampson County offered St. Paul, Minn.-based Fibrowatt $1.5 million to build a plant that would burn poultry waste to produce electricity. The company had not responded by early April.

NEW BERN — Tempe, Ariz.-based US Airways will start a daily round-trip flight between Craven County Regional Airport and Philadelphia in June. It already has seasonal, holiday and weekend flights from here to Philadelphia.

Regional Report Charlotte May 2008

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Charlotte

Living in the country can stink 

Jeff Bennett swears he’s not trying to drive Wallace Farm Inc. out of business. But he thinks something needs to be done about it. His neighborhood near Huntersville in northern Mecklenburg County often reeks of rotting food and manure from the company’s composting operation, and some neighbors have a hard time discussing it rationally. “There are some people who would be extremely angry and vocal and screaming at you and telling you it’s not fair.”

Maybe they shouldn’t be surprised by the scent from Wallace Farm’s 160 acres. For most of the past 60 years, it was a dairy farm, rife with the aromas of dung, silage and compost. About 1990, it began leasing out the dairy operation and focused on composting. The last cow departed in 1999.

The Highland Creek subdivision started south of Wallace Farm in the early ‘90s. Eric Wallace’s grandfather sold the developers land so they could run sewer lines. Until five years ago, Wallace, now company vice president, couldn’t see the houses from the farm. Now, they border it on three sides. Trees that filtered the stench were cut down to make way for more homes, he says. Some went up within sight of compost rows.

Wallace Farm has spent hundreds of thousands of dollars to mitigate the smell, he says. “This is a trend that’s happening throughout the country. I could tell you story after story about how irresponsible residential development has encroached upon farms, landfills, wastewater-treatment plants. People buy their homes, they move in and they complain. It blows my mind.”

But Bennett, president of Highland Creek Community Association Inc., says the odor has gotten much worse since he moved in 12 years ago. Aerial photographs show compost mounds have grown in the past year and a half, he says. The company processes about 100,000 tons of waste a year — about what it did in the ‘90s, Wallace says, but inventory has grown because it’s giving its product more time to mature.

Bennett’s neighbors have discussed lawsuits. Wallace Farm is trying to renew its state composting permit, and Bennett says he would rather avoid legal action by working out tougher rules with regulators, including limits on the size of the operation and what raw materials it can use. “We’d just like to see a solution so everyone can peacefully coexist without the odor issue.”

More Jobs That Count

Just like Jell-O, there’s always room for bean counters. A recent survey of 200 executives in the Charlotte region found 9% planned to add accounting and finance staff in the second quarter, while only 4% planned cuts. “We have not felt the economic turndown here as quickly as everywhere else,” says Andrea Seymour, Charlotte-based regional vice president for Robert Half International Inc., which did the study. “Businesses are still growing here.”

 

CLEVELAND — Daimler Trucks North America plans to lay off about 1,500 of the 2,900 workers at its Freightliner factory here in June and cut production from two shifts to one. The Portland, Ore.-based company blamed soft demand for its trucks on a weak economy and costs from changes in federal emissions standards.

CHARLOTTE — Beaverton, Ore.-based Metro One Telecommunications will close its call center here this month, idling nearly 275, as part of a cost-cutting plan. About 600 workers companywide will be let go.

CHARLOTTE — San Jose, Calif.-based Tessera Technologies, which helps miniaturize electronics, expects to add 185 positions at its research center here. That will increase employment to about 285. Most of the hires will be engineers.

CHARLOTTE — Sporting News magazine plans to move its headquarters here from St. Louis in July. It employs about 30 and is owned by Charlotte-based American City Business Journals, which bought it in 2006 from St. Louis-based Vulcan Sports Media.

CONCORD — With five hotels set to open here within the next year, Cabarrus County tourism officials are trying to increase the number of hotel workers in the region by, among other things, seeking an expansion of community-college training programs and improving public transportation. The hotels will require at least 600 workers.

CHARLOTTE — Stephen Macadam, 47, replaced Ernie Schaub, 64, as CEO and president of EnPro Industries, which makes seals, bearings and other industrial products. Macadam had been CEO of BlueLinx Holdings, an Atlanta building-products distributor.

CHARLOTTE — The U.S. National Whitewater Center hired Amplify Sports and Entertainment as its marketing agency. The center, which had a $1.3 million operating loss in its first fiscal year, wants the New York-based company to procure a naming-rights deal and attract corporate sponsors for its events.

CONCORD — Cabarrus County commissioners approved more than $190,000 in tax incentives for a Chapel Hill company that wants to put flight simulators near Con-cord Regional Airport. FlyRight plans to invest $12 million and hire about 18.

CONCORD — The city is seeking a private partner to help build a second 12,500-square-foot terminal at Concord Regional Airport and a 125-space parking deck. It hadn’t estimated the cost.

HICKORY — St. Louis-based Furniture Brands International plans to sell its HBF division to Muscatine, Iowa-based HNI for $75 million. HBF, which makes upholstered seating, textiles, wooden tables and wooden case goods for offices, employs about 335 in Hickory.

CHARLOTTE — Speed Channel, a cable-television network focusing on automobile and motorcycle racing, plans to add 34 jobs during the next three years. That will bring employment to more than 100.

TAYLORSVILLE — Jasper Group, an Indiana-based furniture maker, plans to begin production here this summer. The factory will employ about 40.

HICKORY — Lenoir-Rhyne College will change its name to Lenoir-Rhyne University in August. The school’s president says the change reflects an expansion of its curriculum, including more courses in health care, business, education and religion.

CHARLOTTE — MedCath, which builds and operates heart hospitals, plans to sell Dayton Heart Hospital in Ohio to Dayton-based Good Samaritan Hospital for $55 million this month. MedCath will then own nine hospitals in seven states — none in North Carolina.

KANNAPOLIS — The state Division of Facility Services denied Winston-Salem-based Novant Health’s application to build a $90 million, 50-bed hospital here, saying it’s unnecessary. Novant is expected to appeal.

CHARLOTTE — Goodrich laid off about 45 employees at its plant in Danbury, Conn. The aerospace company says the layoffs, which will leave the plant with about 500 workers, reflect changes in some customer contracts.

Pat Riley

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Personnel File – May 2008: real estate

Pat Riley, President/COO
Allen Tate Co., Charlotte

Pat Riley built houses while working his way through high school and college in Pennsylvania. In the last 17 years, he played a major role in building North Carolina’s largest privately owned residential real-estate company. Last year — when it turned 50 — Allen Tate’s sales exceeded $6 billion. That was four times the city of Charlotte’s budget in 2007.

Such an edifice can’t be constructed upon a foundation of modesty. “All we’ve aspired to be was the Carolinas’ premier residential real-estate company,” Riley, 57, says. He calls the Piedmont Crescent, which runs from Raleigh through Spartanburg, S.C., “our footprint.” Riley had big shoes to fill — and not just geographically.

He was recruited by the company’s founder and namesake in 1991 with the assurance that he would succeed Tate, who at 76 remains chairman. “He wanted to grow his company,” Riley says. “At that time, it had five branches, and we did $468 million in sales.”

Part of the growth has come from strategic acquisitions of other independently owned real-estate brokerages. In 1996, it bought its first outside Charlotte, in Rock Hill, S.C. Since then, it has scooped up more than a dozen in the Carolinas. It entered the Triad in 2002, then opened offices to get a toehold in the Triangle.

Another tactic has been streamlining house buying by creating subsidiaries that offer mortgages, insurance and other services. “Customers and clients love to have somebody they trust to handle all the moving parts,” Riley says. The company also has a real-estate school, and its agents — more than 1,800 of them — average 18 sales, worth about $4 million, a year.

The future? More growth, says Riley, who is chairman of the Charlotte Chamber of Commerce. That’s despite a cooling market, which he says is caused by potential buyers having trouble selling homes elsewhere, plus overbuilding brought on by the Carolinas’ reputation as a hot housing market. “Builders from all over the country,” he says, “have flocked here in droves.”

Marching on

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Up Front: May 2008

Marching on

The story-tellers of the Highlands are as varied in their subjects as are literary men and women everywhere. One is a historian narrating events simply and concisely; another is a historian with a bias, colouring his narrative according to his leanings. One is an inventor, building fiction upon fact, mingling his materials … .

— from Alexander Carmichael’s introduction to Carmina Gadelica: Ortha Nan Gaidheal (Hymns and Chants)

Looking up information about Lexington’s past while fact-checking this month’s cover story, I Googled the name of my great-great-grandfather. Ebenezer (or Ebenzer, maybe Ebanezer, depending on whichever record is right) B. (for what, I have no idea) Kinney had lived just north of there. Born in 1835, he died in 1886, age 51. One of his nine children was David Franklin Kinney, my great-grandpa, the name same as mine.

All this I already knew, but I also came across a reference to a service record, sparse though it be: On Aug. 27, 1862, Ebenezer B. Kinney, age 27, a farmer from Davidson County, had been enlisted as a private into Company C of the 61st North Carolina Infantry. On Jan. 1, 1863, he was listed as having been “left sick on road” at Goldsboro. His name was dropped from the company rolls five months later.

I could but wonder. The Civil War was well into its second year when he went in, leaving behind a wife and two small children. Only a few months earlier, the Confederacy had enacted the first general military draft in American history. I suspect he was a reluctant rebel, coming from that part of the Piedmont, called the Quaker Belt, where the “rich man’s war, poor man’s fight” never had been popular. The state, too, had been reluctant, the last to leave the union, but would pay a heavy price for secession. With one-ninth of the Confederacy’s white population, it provided a sixth of its fighting men. Of the 120,000 who served, a third would die, more than half from disease. One of every four Confederates killed in action was a Tar Heel.

The 61st fought its first battle while he was with it, part of a 2,014-man force trying to check a thrust by more than 10,000 federals from New Bern at the Wilmington and Weldon Railroad near Goldsboro. In marches preceding the action, more than 100 of the regiment tramped through snow barefooted. In one company, 10 of 13 without shoes died. After some skirmishing, the 61st and Gen. Nathan Evans’ South Carolina brigade awaited the advance, their backs to the Neuse at Kinston, as Dec. 14 — a Sunday — dawned.

Evans was West Point, a professional soldier. He also liked his liquor. Commanding from the other side of the river, he would order the 61st to advance after it had run out of ammunition. He directed artillery fire on trenches he thought his men had vacated but still held. Finally, flanked and outnumbered, they withdrew to find he had set the bridge on fire. “Here we lost several of our men and it is truly miraculous that half of them at least were not killed or burned to death,” Capt. N.A. Ramsey of Company D wrote. “God was with us on this beautiful, lovely Sabbath day.” The regiment reached Goldsboro Dec. 17 and returned to Wilmington Jan. 2.

In a sad way, I see the furniture workers Senior Editor Amanda Parry writes about in this issue as comrades of these men. They, too, are victims of forces beyond their control, pawns in a game controlled by politics and economics. The fate of many, I fear, is to be left on the road.

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Leaving the nest

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Fine Print – May 2008

Leaving the nest
By G.D. Gearino

If you ever had cause to visit the Durham headquarters of Motricity Inc., the software company that found itself with a pile of investor cash last year, you surely marveled at the place. In the renovated American Tobacco complex, within foul-ball distance of Durham Bulls Athletic Park, the headquarters would be the envy of any working stiff who labors in a soulless office building under fluorescent light oozing from an acoustic-tile ceiling. Exposed brick walls? Check. Mammoth wood beams? Check. Stylish furniture? Check. Employee lounge that looks suspiciously like a pub? Check. Nightlife, festivals, restaurants and sporting events fewer than 100 paces away? Check.

Let’s make it official: Motricity’s headquarters is as good as it gets for corporate life. Better yet, North Carolina (and the Triangle specifically) is one of the more nurturing locales for ambitious tech firms, providing an educated work force and political leaders so accommodating that a weekly wash-and-wax of the CEO’s car by the governor isn’t wildly out of reach as an incentive. What company would ever leave such a paradise?

Uh, Motricity. It’ll be gone by the end of the year. Simply put, Motricity — formed in 2004 by the merger of Durham-based Pinpoint Networks and Nashville, Tenn.’s Power by Hand — traded up. When it spent $135 million of that investor money to buy a division of InfoSpace, it decided that Bellevue, Wash. — the Seattle “boomburb” where InfoSpace is — would be an upgrade from Durham. Probably the most significant tech corridor outside Silicon Valley, it’s teeming with software programmers and engineers. But Motricity’s move still has the flavor of a sophomore social climber leaping at the chance to sit at the seniors’ table in the high-school lunchroom. When you realize that analogy makes Durham — and by extension, all of North Carolina — the table where the braces-wearing, acne-plagued doofuses gather … well, it stings.

This is the point at which I could be expected to clamber atop my soapbox and inveigh against the foolishness of passing out incentives willy-nilly to bribe companies either to move to North Carolina or stay here. (After all, Motricity is leaving because it feels Bellevue is a better place to do business, not because it’s being lured away.) Instead, I’ll pose a question: How much loyalty should a company feel to the place of its birth, and how much should we residents feel to that company?

What we owe our companies is an equitable tax structure, a reasonable regulatory climate, an efficient permitting system and a well-maintained infrastructure — in short, the same things we owe ourselves. We also owe them the first chance to claim our patronage. If all things are equal, our reflex should be to buy goods and services from the local fellow. Corporate loyalty to the place that spawned it is more complicated. Companies are like children, in the sense that they start small, grow large and eventually form their own identities and characteristics. Some are surly and grabby and me-me-me right from the beginning, while others grow up gracious and charitable and generous. Some come to feel rooted and comfortable in their homes, while others are always scanning the horizon, wondering if life isn’t better somewhere else.

Let us consider two of our children and examine their relationships with home. Recall first the peripatetic journey of RJR Nabisco. The company, an amalgamation of homegrown R.J. Reynolds Industries and Nabisco Brands, came under the rule of the much-loathed F. Ross Johnson on Jan. 1, 1987. Two weeks later, he announced that RJR Nabisco would move its headquarters from Winston-Salem to Atlanta. And just to pour salt in the wound, Johnson declared that the Twin City simply didn’t have the cultural sophistication to attract young executives. Too “bucolic,” he said.

You can imagine how the good citizens of Winston-Salem felt about that. The new boss had barely been in the job long enough to warm the seat when he announced that the company needed to move out of Hicktown and into a real city. As it turned out, Atlanta wasn’t good enough. After a leveraged buyout by Manhattan big-game hunters in 1989, the headquarters wound up in New York. Eventually — divested of food divisions and some foreign operations — what is now Reynolds America returned to Winston-Salem.

If RJR was the prodigal son, NationsBank was the dutiful one. In 1998, NationsBank — né North Carolina National Bank but grown under gimlet-eyed Hugh McColl into a regional powerhouse — announced that it would merge with San Francisco-based BankAmerica, a deal that would create the largest retail bank in the country. McColl could have been forgiven if he had decided to decamp for Manhattan to join the ranks of the financial world’s Big Swingers. Instead, the newly merged company took the name Bank of America from its new mate, but headquarters stayed in Charlotte, housed in the tallest building between Philadelphia and Atlanta.

A child that considerate is a blessing. Clearly, Motricity isn’t like that. Maybe it’ll wander for a while, then return home, a la RJR. If not, we know what to do: Talk trash about it during family gatherings.

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Ken Kirkman

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Personnel File – May 2008: Real Estate

Ken Kirkman, General Manager
Landfall Realty LLC, Wilmington

When it comes to coastal development, Kenneth Kirkman, 58, has seen it all. After getting his law degree from UNC Chapel Hill, the High Point native opened a practice in Morehead City specializing in land use. In the 1980s, he helped the Roosevelt family develop Pine Knoll Shores. He has been CEO of Bald Head Island Limited and legal counsel for the North Carolina Coastal Alliance, a group of developers, bankers and property owners, and is a principal in Carolina Colours, a 2,000-acre community in New Bern. Here’s his take on current conditions:

“You don’t start hearing in the press that things are really good until about six months after you can tell they are getting good, and you don’t start reading that they’re bad until six months after they start getting bad.”

“One of the unique factors in the current situation is the price of gas. The price of producing a house is going up even though demand is way down, because so much of what’s involved in producing housing involves fuel. If fuel costs should continue to increase, I think it’s going to take much longer to recover, because the producers of housing cannot react quickly enough to the relationship between prices and costs of production.”

“The market has changed a lot primarily because of the baby-boomer demographic. There are some 4 million baby boomers coming into the [retirement-living] market every year, and about half of them indicate a likelihood that they’ll relocate more than three hours from home, and about half of those indicate they’ll consider the Southeast. And of those, a great preponderance want to be near the coast, so there has been more and more interest in coming into Eastern North Carolina. That’s created a whole lot of opportunities and a whole lot of challenges.”

John Cecil

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Personnel file – May 2008: real estate

John F.A.V. Cecil, President
Biltmore Farms Inc., Asheville

Jack Cecil says Biltmore Park, about 1.1 million square feet of condos, town houses, apartments, offices and stores a rock skip from the French Broad River, is his company’s first venture in New Urbanism “unless you want to go back in family history.” A century ago, great-granddad George Vanderbilt built a village near the entrance to Biltmore Estate. “It had a church, train depot, retail and housing, offices, a hospital. It was a mixed-used community,” Cecil says.

Biltmore Dairy Farm was started on the estate in 1897. He joined his father in the business in 1984, the year before they sold the dairy operation to focus on real estate. Cecil, 52, has been president since 1992. His cousin runs The Biltmore Co. (cover story, October 2007); that side got the house when their fathers split the property in 1979.

Biltmore Farms has two other major developments under way: Biltmore Lake, which will have about 800 homes when built out, and The Ramble, which will have about 600. Prices range from about $500,000 to $2.1 million.

Who’s buying? “Obviously, we’re dependent on the Florida market for retirees, but Asheville is also being fed by Atlanta, Charlotte, South Carolina.” And it’s not just retirees who are attracted. “People will move here with their job or bring their own business. We’ve got an increase in the small-business and financial sectors. As the population retires and moves to Asheville, they need money advice and that sort of thing.”

J. Allen Fine

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Personnel file – May 2008: real estate

J. Allen Fine, CEO
Investors Title Co., Chapel Hill

Like most businesses tied to real estate, title insurance has taken a hit from the subprime crisis. Not only has demand dropped due to fewer sales, but claims are up, Allen Fine says. During a foreclosure, a lawyer is going to file a claim on any defect he finds in a title. Net income for his company was down 36% to $8.4 million in 2007 — taking a half-million-dollar hit when some municipal bonds it held were reclassified as taxable didn’t help. But considering the downturn, the company had a great year, Fine, 74, says. He thinks the crisis could affect his business in a positive way. Not all lenders require title insurance. That will change, he predicts. Most didn’t when he started the company in 1972. Thrifts did most of the lending. “I was convinced that deposits would not continue to support the growing demand for mortgage loans and that mortgage lenders would begin to sell loans in the secondary market.” Fine, who taught accounting at Carolina, figured loan purchasers would want some sort of protection. He was right.

Firming up lobbyists

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Capital Goods – May 2008

Firming up lobbyists
By Scott Mooneyham

For as long as anyone has kept track, the most influential lobbyists in Raleigh have been colorful characters who rose to the top of their trade on their connections and ability to schmooze prickly legislators. That’s not to say folks such as Zeb Alley, Don Beason and Roger Bone haven’t been well-versed in the policy issues of their clients or don’t know the legislative process as well as anyone. But all three would look out of place in the offices of a buttoned-down, high-powered corporate-law firm.

Alley, wearing his perpetual, toothy grin, hardly begins any conversation without passing along a ribald joke, often peppered with references to the mountain places and people near his Waynesville home. Beason, gruff and intimidating to those who don’t know him, walked away from lobbying last year. But it wasn’t the criminal charge that followed his flashing a pistol during a traffic dispute that unraveled his career. It was a $500,000 loan to former House Speaker Jim Black, now in prison, that did the deed. As for Bone, he probably wouldn’t know what to do in a white-shoe firm. Like Beason, he’s not a lawyer. The former legislator turned his connections with agribusiness interests in Eastern North Carolina into a lucrative practice.

For nearly two decades, this trio rated high, usually taking the top three positions in rankings compiled by the North Carolina Center for Public Policy Research. They did so representing multiple clients. The business, though, is changing, and the days of the highly successful, independent operators may be numbered. Regional and national lobbying firms, often tied to large law firms, are snatching up lobbyists and staking out a place in the hierarchy. In a state whose population is expected to grow nearly 50% by 2030, government will expand. There’s money to be made influencing it, and the newcomers know that.

Columbia, S.C.-based Nelson Mullins Riley & Scarborough bought Alley’s business early last year. Richmond, Va.-based McGuireWoods Consulting set up shop in Raleigh last year and has taken on four veteran lobbyists. Its parent law firm merged with Helms, Mulliss & Wicker, giving it substantial presence in Charlotte and Raleigh. The Wicker of Helms, Mulliss & Wicker — former Lt. Gov. Dennis Wicker — left to help Columbus, Ohio-based Schottenstein Zox & Dunn set up office in Raleigh. SZD Whiteboard, its lobbying arm, put out its shingle last summer.

Not that high-powered law firms with lobbying arms are new to the game in Raleigh. Southeast giant Womble, Carlyle, Sandridge & Rice, which traces its origins to Winston-Salem, has long had a substantial government-relations business in Raleigh and employed some of the most influential lobbyists around. Other firms with offices in North and South Carolina, and with key lobbyists in tow, have grown as lobbying has become more lucrative.

But in the past, the big law firms had nothing on Alley or Beason. Now those firms and their consulting arms are poised to gain the biggest chunk of business. Disclosure laws and bans on gifts passed in the wake of the scandal that sent Black to prison have put an end to the traditional tactics of chatting up legislators over a steak dinner or a round of golf — paid for by the lobbyist, of course. It’s a change that’s bound to favor the big firms.

Bone, though, isn’t ready to declare himself a dinosaur just yet. He says some clients worry that turnover in large law firms will mean less personal service and less familiarity with their policy issues. “I had a regional manager of a major company — I’m not going to name it — ask me: ‘Are those damn law firms going to take over all of you?’”

Even so, he admits that regional law firms have one big advantage over independent contractors: access to clients. Bone says he lost Richmond-based Universal Leaf Tobacco Co. because McGuireWoods sold it the concept of working with a single firm to handle all its lobbying business across state lines. Law firms working with corporate clients in a variety of other capacities can refer them to their lobbying arms. The lobbying-only shops may never have a shot at those clients.

And then there are those gobs of campaign cash that drive the political world these days. The big firms can tap an army of potential donors among their partners and associates, something that might go unsaid but isn’t missed by the legislators they’re trying to influence. It’s another factor that may signal the end of the back-slapping, good ol’ boy lobbyist who wanders legislative hallways with a quick joke and a mischievous grin.

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.

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