Ed Martin is the nation’s best regional business magazine writer. That news may have lost its novelty but certainly not its wow factor. After all, this is the seventh time he’s won first place for best body of work in the Alliance of Area Business Publications Editorial Excellence Awards — and the 11th time he’s placed in that category — a record nobody has come close to matching and, in my opinion, ever will. The same goes for his tally of 30 prizes from the AABP for his reporting and writing, 21 of them first places.

As they have so often in the past, the judges — members of the University of Missouri journalism faculty — cited our senior contributing editor’s gift for infusing flesh, blood and emotions into work that, in the hands of one less talented, would be as soulless as ciphers on musty ledger pages. “Martin’s stories,” they noted, “are fine examples of how to humanize business stories without losing sight of the numbers. The writing has many lively turns of phrase that keep the reader engaged to the very end.”

Ed shared a byline on the story that inspired the cover of our February 2013 issue, which also won a gold prize. Designed and illustrated by former Art Director Merissa Jones and fine-tuned by longtime Design/Production Director Moira Johnson, their handiwork provoked some teeth-gnashing among executives of the world’s largest retailer. “BNC took Wal-Mart’s slogan and happy-face visuals and turned it on its head to create a humorous cover with an edge,” the judges wrote. “The title focuses the magazine’s angle on the impact of low wages on the economy.”

Another contributing editor, Ken Otterbourg, wrote the cover story that appeared the following month in our March 2013 issue. It won the silver prize for best local coverage of a national business/economics story in the category open to both magazines and newspapers. “Using social media, great graphics and wonderful storytelling, Otterbourg tells the fascinating story of the birth of e-cigarettes. Lots of detail is packed in the story, giving great twists and insight about how an industry is being reinvented amidst health concerns and heavy regulation.”

We also won a bronze prize for best recurring feature in the open category for our Regional Report section (rechristened Statewide in our new redesign). “The Regional Report uses inviting graphics and crisp text to show readers from anywhere in North Carolina how their own locale stacks up. The beautifully illustrated data sets cover an impressive array of topics.”

Based in Los Angeles, AABP represents 64 independent magazine and newspaper publishers in the U.S., Canada and Australia. This year’s competition drew 659 entries from 43 of them.

kinney@businessnc.com

Bipartisanship is dead. Everyone says so. Democrats and Republicans are constantly at each other’s throats — in Washington, in Raleigh, in communities across North Carolina. They’re all shouting, but no one is listening. As a result, the very survival of self-government is at stake. It turns out, however, that bipartisanship always seems to be dead.

Go back a dozen years, a hundred years, even thousands of years to the very birth of representative government, and you will find the equivalent of contemporary politicos and journalists complaining about a lack of consensus on big issues and an unwillingness to put the public good above factional or partisan interest. Cicero, the ancient Roman statesman and orator who would eventually be assassinated by a political rival, once warned that politicians who “take counsel for a part of the citizens, and neglect a part, bring into the state an element of the greatest mischief and stir up sedition and discord.” Rather than “act like sailors who quarrel for a place at the helm,” Cicero said, true leaders would “care for the whole body politic.”

I consider Cicero one of the wisest human beings who ever lived. His advice here is sound. But it’s important to remember that, be they ancient or modern, political commentators tend to focus on what is controversial. Much of the day-to-day operation of government is far from partisan or adversarial. Some of it, necessary 
and even praiseworthy, is pretty dull. And in just about any session of Congress or state legislature, you’ll find examples of bipartisan cooperation on momentous issues.

North Carolina offers several recent examples. One of the most striking occurred in 2011 with the passage of the Judicial Reinvestment Act, which made major changes in how criminals are sentenced and punished. Introduced by two Republican and two Democratic members of the state House, the bill reflected 
a convergence of opinion on how 
best to deploy taxpayer money to promote public safety. Conservatives long convinced of the importance of predictable, consistent penalties to deter crime had come to believe that incarceration was overused for some offenders — particularly those who had their probation revoked for reasons other than committing more crimes. Liberals long convinced that community penalties — such as probation or suspended sentences — were fairer than incarceration for many offenders had come to believe that they needed to be more rigorously evaluated and uniformly applied.

This conversation across the ideological divide didn’t originate in North Carolina. Texas led the way years earlier, along with an assortment of evangelical Christians, civil-rights leaders and fiscal conservatives. Using rigorous data collection and analysis, Judicial Reinvestment advocates proposed new ways to structure probation, parole and sentencing systems and persuaded more than a dozen states to adopt some kind of reform.

In North Carolina, the original legislation passed June 15, 2011, with a 50-0 vote in the Senate and 115-1 in the House, in large part due to lobbying by its primary sponsor, Republican Rep. David Guice of Transylvania County. Democratic Gov. Bev Perdue signed the bill a week later. A few months after that, she hired Guice, a former parole officer, to run the state’s community penalties section. When Republican Pat McCrory took office, he elevated Guice to commissioner of the state’s entire correction and juvenile-justice system.

It would be premature to declare the 2011 reforms a clear success. But the early trends are promising. In June, the Kentucky-based Council of State Governments Justice Center spotlighted eight states with marked declines in criminal recidivism in recent years. North Carolina was at the top of the list, with a decrease in its recidivism rate of nearly seven percentage points for convicts released in 2010. Still, only some of the effect could be attributable to parole reforms enacted the following year. Similarly, new admissions to the state’s prisons have plunged 26% since the passage of the Judicial Reinvestment Act. But prison admissions also declined from 2009 to 2011, albeit at a much slower rate (4.5%).

Judicial reform is hardly the only recent instance of bipartisan legislation passing in the General Assembly. In 2013, large majorities of both parties approved McCrory’s proposed changes to vocational education and the distribution of transportation money. In the 2014 session, the governor won bipartisan support for his plan to contract out some functions of the Commerce Department to a new nonprofit organization, a move he says will improve North Carolina’s ability to recruit business.

Whatever you think of the merits of these ideas, their proponents advanced them in a way Cicero would have appreciated. They identified an issue of broad concern and devised a policy response. They looked for common ground among those who otherwise disagree. When encountering opposition, they didn’t question motives. Instead, they made contrary arguments and amended their proposals to win more converts.

For some, calling for bipartisanship is really just code for demanding that the other party capitulate. It rarely works. Most political differences are real, not merely theatrical. We are going to disagree about what government is and what it should do until the end of time. That doesn’t mean policymakers can’t find areas of agreement and act on them. Such constructive bipartisanship remains very much alive, rumors to the contrary notwithstanding.

John Hood is chairman and president of the John Locke Foundation. You can reach him at jhood@johnlocke.org.

The Carolina way

The well-heeled need not be Tar Heels to attract attention of UNC fundraisers.

By David Mildenberg

Thomas Marsico didn’t go to Carolina, but he’s the poster child for the future of financing the nation’s oldest public university. As UNC Chapel Hill prepares a major fundraising campaign — maybe as much as $4 billion — it’s eyeing 1 percenters such as Marsico, whose Denver-based mutual-fund company manages $16.6 billion. His donations to the school date back a decade, but he kept a low profile until March, when his name went on a nine-story research building, the biggest on campus. Tar Heel taxpayers picked up $243 million of the tab for construction, plus a $50 million annual outlay to study cancer. Both had been championed by Marc Basnight, the longtime state Senate leader and staunch UNC supporter. Now battling Lou Gehrig’s disease, the man who once was the state’s most powerful politician watched the dedication ceremony from his home in Manteo. But future students and researchers will file through Marsico — not Basnight — Hall, a credit to the nearly $40 million provided by the Coloradan known as one of the best stock pickers of his generation.

Raising money from the nation’s wealthiest isn’t as ingrained in Carolina’s culture as it is at elite private universities and some public ones, but that’s about to change. To remain competitive with other state-supported schools ranked among the nation’s best, UNC officials say they need more money from private sources. Donors, from the Marsicos to the $25 givers, contributed about 14% of revenue over the past six years. “We’re still raising $250 [million] to $300 million a year, but the purpose of campaigns is to raise the bar, and we need to be raising $350 million to $400 million a year,” says Roger Perry, former chairman of the board of trustees and a Chapel Hill developer. “We’ve been staying steady, but we are getting ready to rev it up whenever the chancellor says.” A goal and deadline for the campaign hasn’t been set, though David Routh, the chief fundraiser, envisions an eight-year campaign, including a two-year “silent phase,” when a quarter of the goal is typically pledged.  

Revving the fundraising machine comes at what might be one of the best — and worst — times for the school. A soaring stock market has fattened donors’ brokerage accounts. Carolina attracted $778 million in research money last year, 71% of it from the federal government. It ranked seventh among public universities receiving National Institutes of Health funding for medical research. Government research grants make up about 30% of total revenue, up from 25% in 2008. It’s harder to get in, with almost 31,000 applicants seeking about 4,000 freshman slots last year. With many of the nation’s premier private colleges costing $60,000 or more annually, Carolina’s overall price of $23,000 for in-state students and $46,000 for out-of-staters — compared with $27,400 and $56,000 at the University of Virginia — is a deal for some parents.

But it’s not easy to ask for a check with the scent of scandal wafting over the university. Messes in the athletics program and the Department of African, African American and Diaspora Studies — and in the development office — keep embarrassing the school. At least eight senior officials and coaches were fired or resigned over the last two years. Administrators failed to monitor programs that during the last decade offered more than 50 phony classes, many filled with scholarship athletes. The controversies prompted the departure last year of Holden Thorp, a chemistry professor who had been chancellor since 2008. While the no-show-classes controversy mostly involved football players, Carolina’s famed basketball program drew the spotlight in June when former star Rashad McCants claimed coach Roy Williams knew he took fake classes, skipped regular ones and relied on tutors to write his term papers. Williams, who was inducted into the national Basketball Hall of Fame in 2007, responded in a statement, “In no way did I know about or do anything close to what he says.”

The controversy has hampered fundraising, says Nelson Schwab III, another former board of trustees chairman and a Charlotte private-equity investor. Contributions remain “pretty darn impressive, but I think there was no doubt it caused questions to be asked. It caused confusion on a number of different scores. It’s bound to have hurt.”

Donations for athletics were $23.6 million in 2013, versus an average $32 million for the previous five years, about 10% of the money collected by the university. One reason is that The Educational Foundation Inc. — Carolina’s athletics fundraising group, better known as the Rams Club — didn’t have a major capital drive, says John Montgomery, the group’s executive director. In recent years, those projects included raising money for the new classroom and weight-training building next to the football stadium, which received $7.5 million from Charles Loudermilk, founder of Atlanta-based Aaron’s Inc. furniture- and electronics-rental business, and $3 million from Raleigh’s John William Pope Foundation.

Carolina’s lofty national reputation — it rates fifth among state-supported schools in this year’s U.S. News & World Report ranking — isn’t translating into more money from state lawmakers dealing with rising costs of K-12 schools, transportation and Medicaid. After years of growing faster than inflation, spending on higher education has plateaued in North Carolina and many other places. The state provided 18% of Carolina’s total revenue in 2013, down from 27% six years ago. Gov. Pat McCrory, who favors further cuts in the 16-campus UNC system, wants the Chapel Hill flagship to bear more than 20% of the reductions. Lawmakers tired of paying what they consider a high price for Carolina can point to the University of Virginia, which gets less than 6% of its revenue from the state. Before the economic downturn, states increased appropriations every year, “often blindly without knowing whether they needed to,” says Rita Kirshstein, director of Delta Cost Project, a Washington D.C.-based group that studies university finances. “But even post-recession, most states don’t have the money.”

Boosting tuition to cover the shortage seems an unlikely solution, at least in this state. UNC has balanced its ambition to be among the most prestigious public universities with a goal of remaining within reach of talented students from families of limited means. Tuition accounts for about 12% of revenue at UNC, compared with 19% at UVA, and the cost of attending is among the lowest of U.S. public universities, Kirshstein says. “We don’t think Virginia is the best model,” says Steve Lerner, chairman of the board of trustees’ finance committee and founder of Chapel Hill-based Blue Hill Group. One reason is the North Carolina constitution, which requires the General Assembly to provide “higher education, as far as practicable, be extended to the people of the State free of expense.” It’s a concept even many of the state’s wealthiest people buy into. The UNC system’s official portrait of C.D. Spangler Jr., the Charlotte billionaire investor who was its president from 1986 to 1997, shows a laptop’s screen displaying that wording from the constitution.

During stump speeches in her first year as chancellor, Carol Folt emphasized that the university is committed to the Carolina Covenant, launched in 2003 to assure that students from low-income families can graduate debt-free. She’s quick to note that some large public schools have dropped similar pledges.

As she tries to grow a state university’s reputation globally, one of Folt’s biggest tasks will be as a rainmaker, bringing home the money needed to nurture such aspirations. A native of Akron, Ohio, she attended public universities in California, then spent 30 years at Dartmouth College, where she taught biology before becoming an administrator in 2001. It’s the smallest Ivy League school, with about 6,300 students. Carolina has more than 29,000. But the New Hampshire university’s endowment totaled $3.7 billion as of June 30, 2013, 60% more than Carolina’s $2.3 billion. (Both are a fraction of the University of Texas and Texas A&M University systems’ shared $32 billion endowment, fueled by oil- and gas-tax receipts on public land.) One of her first hires was Routh, who graduated from Carolina in 1982. Mickey McLean, a journalist who was his classmate at Page High School in Greensboro, remembers him as “a born leader who was miles ahead of most of us in maturity.”

Routh replaced an interim development director appointed after Matt Kupec, who had been in charge of fundraising since 1995, resigned in September 2012. The former Carolina quarterback departed amid media reports that he had taken more than 20 trips with Tamara Hansbrough, mother of former Tar Heel basketball star Tyler Hansbrough and a university fundraiser, and had charged personal expenses to the school. Kupec had told campus groups that the goal for the next major campaign could be $4 billion, topping the $3.2 billion drive rival Duke University launched in 2012 and matching the University of Michigan’s target, which was a record for public universities until the University of California, Los Angeles, announced in May that it plans to raise $4.2 billion by 2019. Stanford University owns bragging rights for private schools, with $6.2 billion, though Harvard is gunning for $6.5 billion by 2018. Carolina’s last long-range campaign, which ended in 2008, raised $2.4 billion.

Routh is no novice at telling rich people what they should do with their money. He worked for Charlotte-based Bank of America Corp.’s U.S. Trust wealth-management division in Greensboro and Raleigh for more than a decade, interrupted by a three-year stint as director of planned giving during UNC’s last capital campaign. At U.S. Trust, he advised high-net-worth individuals on how to preserve wealth through generations, including estate and tax matters. Part of that, of course, is how to deal with gifts. He’s being paid $395,000 a year at Carolina, about $45,000 more than Kupec’s annual salary. With a potential bonus of almost $100,000, his compensation may approximate Folt’s, who gets $520,000 a year. As vice chancellor for university development, he oversees 240 fundraising employees, including 150 who work for individual schools and departments. “David’s gift is his ability to listen to people and understand what excites them and what might cause them to invest in Carolina’s future,” says Peter Hans, chairman of the UNC system Board of Governors. “It’s increasingly necessary to increase private giving. Chapel Hill does it well, but certainly it’s a quicker way to get there when you have a billionaire giving a big gift.”

Other major national universities have reported bigger rebounds in private gifts than Carolina has since 2009, probably because they haven’t experienced as much turnover at the top, says Susan Ross, whose Durham consultancy is helping the university’s Eshelman School of Pharmacy and other departments devise plans for the upcoming campaign. “UNC has postponed their campaign as long as they should have, but now David has been brought in to do it,” says Ross, a fundraiser at Duke for more than 25 years. “It hasn’t really been a lost opportunity because fundraising has gone on during those two years. But some lead donors know that a campaign is coming around the corner, so they may not want to have made their biggest lifetime gift yet.”

To prime the pump, Folt has hosted groups of about 75 people at events in Atlanta, London, Palo Alto, Calif., Palm Beach, Fla., and New York City. She arrived late for a 6:30 p.m. event at Atlanta’s High Museum in February, fresh from a meeting at the White House with other university presidents. “She absolutely impressed everyone with how much she knew about the university, her passion and her energy level,” says Michael Egan, a lawyer who attended the gathering. Folt emphasized her vision for UNC being “the great global public research university,” coupled with her commitment to the Carolina Covenant for students whose families earn less than two times the federal poverty line.

Day-to-day collegiate fundraising involves regular lunches and dinners with potential donors, many of whom are courted for years before a big gift is secured. Carolina fundraisers aren’t paid a commission, and their salaries range from $70,000 to $150,000 a year, Routh says. They spend a lot of time at nice restaurants and country clubs. ”These are fun, excellent jobs, and they pay well enough that you don’t have to leave them, even if you won’t get rich,” Ross says. The goal is to match donors’ interests and passions for improving the world with ideas bubbling up from Carolina’s professors and researchers.

That’s what happened with Marsico, who took up the fight against cystic fibrosis after the disease struck the child of one of his secretaries, says Maclyn Clouse, a finance professor at the University of Denver who taught him while he was earning his MBA in the 1970s. Marsico declined requests for an interview, and Carolina won’t provide details of its relationship with him, university spokesman Scott Ragland says. Through he never attended Carolina, his two sons are UNC graduates, and his ties to the state are tighter than that. He sold Marsico Capital Management LLC to BofA for $1.1 billion in 1999 and 2001, then led the expansion of the bank’s mutual-fund business. Though its assets under management soared, he grew tired of working for a big corporation and bought back his company in 2007 — paying $2.65 billion, according to Pensions & Investments magazine.

Marsico connected with Dr. Richard Boucher, who has researched cystic fibrosis and other pulmonary diseases at Carolina since 1977. In 2002, Marsico invested an undisclosed sum in Parion Sciences Inc., a Durham-based drug researcher Boucher had co-founded. Between then and 2005, privately held Parion raised more than $22 million, according to U.S. Securities and Exchange Commission filings. The company continues to test cystic fibrosis treatments. In his day job, Boucher leads the university’s CF/Pulmonary Research and Treatment Center. Marsico, who Clouse says wanted to be a doctor but failed to get into medical school, also has given more than $10 million for undergraduate programs at the private University of Denver.

Duke, Dartmouth and many other private universities stress the importance of giving the day students show up on campus and follow up over ensuing decades, creating a tradition of support, Routh says. “What you hear from the minute you arrive is that you are able to be here because of our extraordinary benefactors.” That hasn’t always been the Carolina way. “The publics are getting there, but state support was so strong for so long, and they didn’t start serious fundraising efforts until the 1960s in many cases. It’s not the deep culture that there is in the private colleges.”

Other than receiving regular reports from the development office, “fundraising has never been discussed in my three years on the board,” Lerner says. The UNC Board of Governors, which also oversees the system’s other campuses, appoints eight of the 12 members, with the governor of the state picking the other four. “It’s obviously not a pay-to-play board,” Lerner says, comparing it with Duke University’s 36-member one, which includes billionaires and CEOs of large U.S. companies. “There’s clearly some expectation that serving on Duke’s board involves giving or raising money.”

“Carolina has always been underdeveloped,” says Tom Drew, a Durham consultant who has helped the University of New Mexico and other colleges raise money. “Carolina’s alumni base is wealthier and larger than Duke’s — and has been for at least 30 years.” That’s saying something, given that the Durham school’s list of $50 million-plus donors includes New York-based Carlyle Group co-founder David Rubenstein, Los Angeles-based Oaktree Capital Management LP co-founder Bruce Karsh and Boston medical-device developer Peter Nicholas, who has given $130 million. Duke has raised more than $1.8 billion over the past five years, compared with about $1.4 billion at Carolina and $494 million at N.C. State University, according to the Council for Aid to Education, a New York-based nonprofit that tracks fundraising.

Carolina’s biggest givers the past decade include Dennis Gillings, a $50 million donor who taught biostatistics there 15 years before starting Durham-based Quintiles Inc., and Fred Eshelman, an alum and founder of Wilmington-based Pharmaceutical Product Development Inc., who has given more than $35 million. (Rubenstein’s Carlyle Group and San Francisco-based Hellman & Friedman LLC bought PPD in 2011 for $3.9 billion.) The School of Global Public Health is named after Gillings, while Eshelman’s name adorns the School of Pharmacy. Gillings and Eshelman declined interview requests, and UNC wouldn’t provide a list of its largest donors in recent years. But Routh and Perry expect more superwealthy alumni and friends will follow the two men’s example, after a bit more prodding from Carolina.

“We’ve got a handful of $10 million to $50 million gifts, but we need to do a significantly better job,” Routh says. “Whether it’s $1 million going to $5 million or $5 million to $10 million or $50 million to $100 million, we need all of that to happen.” He adds: “It’s not easy, and it’s not a layup. But if you create big enough ideas and engage people deeply enough that they want to invest a high eight-figure or nine-figure gift, institutions like ours are getting those kinds of gifts.”

To focus on the richest players, UNC is starting its first team of deans and development staffers for so-called “principal gifts.” Its Kenan-Flagler Business School has a development officer devoted to New York City, and the university may add another to raise money for other schools. The lode of potential $10 million givers includes a few hundred wealthy business-school alumni, particularly several dozen “Tiger Cubs” who worked for Salisbury native Julian Robertson’s New York-based Tiger Management Corp., one of the largest U.S. hedge funds in the 1980s and ‘90s. Many have a net worth topping $100 million, Drew says. Robertson, who graduated from Carolina in 1955, gave $12 million each to Carolina and Duke in 2000 to start the Robertson Scholars Leadership Program, which covers the cost for about 36 students a year.

For all the effort universities expend to raise money, prospects for those $10 million-plus paydays might rest as much on friendly persuasion and fortunate timing. Consider the story of Mary Cain and her late husband, Gordon, who made a fortune in the chemical industry in Houston. To avoid Texas’ sweltering heat, they spent more than 30 summers in the North Carolina mountains. At their home in Linville, they learned about Carolina’s Morehead Scholars Program from neighbors Alan and Mary Anne Dickson, whose Charlotte family controlled Harris-Teeter Supermarkets Inc. until its sale this year to Cincinnati-based Kroger Co. Dickson, who died in 2012, was a graduate of N.C. State and Harvard Business School, but he was a trustee of the Morehead program for 43 years.

Established in 1945 — it touts itself as “the oldest, most prestigious merit scholarship program in the United States” — it was endowed by John Motley Morehead III, one of the founders of Union Carbide Corp. and an alumnus whose family name is on the planetarium and bell tower at Chapel Hill. Patterned on the Rhodes Scholarship, which sends Americans to England to study at Oxford University, the Morehead Scholarship paid full costs for students who might otherwise wind up in Ivy League schools to go to Carolina. Alumni include author Taylor Branch, banking executive Sallie Krawcheck and Francis Collins, who directs the National Institutes of Health. Gordon Cain considered starting a program modeled on the Morehead but concluded it would take decades to make an impact, says Jim Weaver, Mary Cain’s son from a previous marriage. An engineering graduate of Louisiana State University, Cain “knew that LSU was a good state school but not the caliber of UNC.”

After her husband’s death in 2002, Mary Cain wanted to make one important gift from his estate, which totaled more than $125 million. “Friends tend to give to friends,” Weaver says. “When they keep working on you, she eventually said, ‘What the hell.’” In 2007, she gave $100 million for the renamed Morehead-Cain Foundation. “My mother went to college in Wisconsin, she married a guy from Louisiana, and they summered in North Carolina. She spent five months of the year surrounded by Tar Heels, and she decided this is as good as any of the top five flagship public universities.”

During a recent golf trip to Southern Pines, I fatted an approach shot into a fairway bunker 15 yards in front of me. Seconds later, the offending club helicoptered over the sand trap, landing in the middle of the fairway. It was a childish thing to do. I’m an OK golfer, playing to about a 10 handicap. I should expect the occasional flub. But I’m passionate about golf and, therefore, lack perspective.

A few weeks after my 7-iron took flight, the men’s and women’s U.S. Opens descended upon nearby Pinehurst Resort & Country Club. Though the men’s event was a yawner — Martin Kaymer demolished the field — the renovated course won rave reviews, and Sandhills businesses braced for about 400,000 visitors. A study by N.C. State University and the local convention and visitors bureau projected nearly $170 million of economic impact statewide from the tourneys. Though such reports should be taken with a truckload of salt, anyone who passed through Moore County June 9-22 knows the Opens bolstered the local economy.

About the time Kaymer began assailing Pinehurst No. 2, Brazilian authorities were firing tear gas and stun grenades into crowds of demonstrators in São Paulo and Rio de Janeiro. “I’m totally against the [World] Cup,” a student protestor told CBS News. Why did the world’s most-watched sporting event, one expected to inject $11.1 billion into the economy, get such a rude reception in the country that loves the “beautiful game” more than any other? Moody’s Investors Services forecast that the World Cup would have a negligible effect on Brazil because its estimated economic impact is only 0.5% of annual gross domestic product. Though $11 billion sounds big, it’s trifling to a $2.2 trillion economy.

Sports have become a popular tool for local politicians. The trend is especially prevalent in our largest city, where Charlotte and Mecklenburg County together shelled out $16 million toward a $54 million minor-league ballpark. Last year, the city agreed to spend $87.5 million for renovations at Bank of America Stadium, where the Carolina Panthers play. (In return, the team, which will spend $37.5 million, promised to stay put at least six years.) In March, the then-Charlotte Bobcats asked for more than $40 million to rehab Time Warner Cable Arena, built only nine years ago. Without the upgrades, NBA Commissioner Adam Silver warned, the city couldn’t host the league’s annual all-star game. The 2012 edition, held on the Orlando Magic’s home court, generated $95 million for Orange County, Fla.

The U.S. Opens didn’t come free. The state invested $30 million to widen N.C. 211 into Pinehurst and $8.5 million to replace a bridge in nearby Aberdeen. Moore County Airport got a $9 million renovation and expansion in preparation for increased traffic. But, from its perspective, rural Moore County needs the pop. According to a study by UNC Charlotte economist John Connaughton, sports activity in the Charlotte metro area in 2011 resulted in $1.1 billion of direct revenue. That was just 0.9% of all economic activity. North Carolina lawmakers caught flack for not chipping in on Bank of America Stadium upgrades. Do the Panthers make much of a blip on the state’s $471 billion economy?

I love pro sports for the connections they engender — with friends, with family, with a city. That’s why millions of North Carolinians are blindly passionate about them. That holds us hostage — pay up, owners too often threaten, or we’re outta here — and local officials hasten to hand over the ransom. But who can blame teams for shaking down fans and taxpayers (often one and the same)? It’s a slam-dunk as long as our passion obscures our perspective.

scampbell@businessnc.com

MORGANTON — Heritage Home Group will close its Drexel Heritage plant here by July 31, idling all 87 workers. It’s the St. Louis-based furniture company’s fourth planned factory closing in North Carolina this year. It previously announced it will close two plants in Thomasville and one in High Point, eliminating 170 jobs.

ASHEVILLE — New Belgium Brewing broke ground on its 133,000-square-foot brewery here May 1. Scheduled to begin last year, construction was postponed when the company added capacity to the brewery at its Fort Collins, Colo., headquarters and is expected to be done by the end of 2015. The $175 million project, which includes a 100,000-square-foot distribution center in Enka, will employ 140.

ASHEVILLE — Moogfest 2014 lost more than $1.5 million during its five-day run in April. Expenses totaled $2.7 million, including more than $1.5 million for artists. Asheville-based Moog Music expanded the event this year from three days, (NCtrend, June), adding technology and arts to the musical acts. The maker of electronic instruments had forecast the local economic impact at $30 million, but the Asheville-Buncombe County Economic Development Coalition hasn’t calculated the amount.

ASHEVILLE — The Western North Carolina Alliance will merge with Hendersonville-based Environmental & Conservation Organization and Highlands-based Jackson-Macon Conservation Alliance to consolidate fundraising and advocacy for environmental protection. The new nonprofit will represent 23 counties in the region. The merger will be completed later this year.

Back to July 2014 home page

STATEWIDE Triangle Region

Here’s the drill on fracking

 

On June 4, Gov. Pat McCrory signed the Energy Modernization Act, which allows the state to begin issuing permits for hydraulic fracturing 60 days after the N.C. Mining and Energy Commission develops rules for it. The commission, asked to develop programs for oil and gas exploration in 2012, is expected to submit rules to the legislature in January, meaning permits could be issued as soon as next spring. Hydraulic fracturing — fracking — involves horizontal drilling into shale to extract natural gas trapped in the rock. North Carolina’s shale-gas potential remains uncertain, but the Deep River Basin, a 150-mile stretch of central North Carolina where shale formations are 2,100 to 6,000 feet underground, is the most promising site. In the heart of the basin, Lee County has drawn the most attention from potential drillers. A 2013 study by N.C. State University economist Michael Walden estimates that seven years of infrastructure development for drilling would create 496 jobs and generate $80 million in annual spending in the state. Once production begins, 1,406 jobs could be created with an annual economic impact of $158 million over 20 years. Opponents worry about environmental damage, such as groundwater contamination and air pollution, and the study cautions that property near drilling sites might lose value. But in mostly rural Lee County, where the April unemployment rate was 8%, significantly higher than the state’s 6.2%, the industry could provide a much-needed economic boost.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RALEIGH — Fort Worth, Texas-based Trademark Property will spend $90 million to build Carolina Row at Crabtree Valley, a mixed-use development with 700 residential units, a hotel and up to 150,000 square feet of retail space. Construction will begin next spring and is scheduled for completion by late 2016.

SANFORD — GKN Driveline will invest more than $18 million at its plants here and in Mebane. The division of U.K.-based GKN makes automotive components such as all-wheel-drive systems and employs about 2,000 in North Carolina. It will add 105 jobs here at an average annual wage of $39,048, slightly higher than Lee County’s $37,066. If it meets job-creation benchmarks, GKN Driveline is eligible for a state grant of $1.1 million over 12 years.

RALEIGH — WakeMed Health & Hospitals named retired Rear Adm. Donald Gintzig president and CEO. He has been interim chief executive of the 678-bed hospital since October 2013, when Bill Atkinson stepped down after 10 years in the job.

DURHAM — Quintiles will acquire Houston-based Encore Health Resources, which helps companies compile and use electronic medical records, for an undisclosed amount. It employs 300 people in North America. The deal was expected to close in the second quarter. Quintiles, a contract-research organization that employs 2,600 in the state, had revenue of $1 billion for the first quarter of 2014 after reaching that milestone for the first time the previous three months.

RALEIGH — David Zaas became president of 186-bed Duke Raleigh Hospital July 1. Zaas, chief medical officer of Duke University’s Department of Medicine since 2011, replaces Richard Gannotta, who left to be president of Northwestern Memorial Hospital in Chicago in February.

CHAPEL HILL — Rho will add 25 jobs at its headquarters here and expects to hire more workers by year-end. The contract-research organization, which employs 371 across the U.S., is expanding because of growth of its commercial business.

DURHAM — Cisco Systems is adding 550 jobs at its Research Triangle Park campus over the next four years and will receive up to $12.9 million in state incentives over 12 years. Average annual wage is $72,700, compared with Wake County’s $49,410 average. San Jose Calif.-based Cisco hired its first employee in North Carolina in 1993 and now employs 4,600 workers here plus 1,400 contractors. Texas and Georgia competed for Cisco’s expansion.

ASHEBORO — Teleflex will lay off most of the 635 employees at its local Arrow International medical-devices plant by 2017 as it moves production to Mexico. Wayne, Pa.-based Teleflex, which bought Arrow in 2007, also employs 450 in Morrisville, where it announced last year that it plans to invest $20 million.

MOCKSVILLE — House of Raeford Farms will reopen a 64,000-square-foot plant formerly owned by Siler City-based Omtron USA, which closed it in 2011, putting 476 people out of work. The Rose Hill-based poultry processor bought the plant at public auction last year for an undisclosed price and will hire 200 to make cooked-chicken products. House of Raeford employs 2,300 in North Carolina.

HIGH POINT — Steelcase will close its plant here by February 2016 and let go all 264 workers. The Grand Rapids, Mich.-based manufacturer of office furniture is consolidating operations in Alabama, Michigan and Mexico.

TOBACCOVILLE — Reynolds American will hire 200 workers over four years to make its VUSE electronic cigarettes at its 2 million-square-foot plant here. Jobs will pay an average of about $40,000 a year, close to Forsyth County’s average of $42,588.

WINSTON-SALEM — A partnership of Philadelphia-based PMC Property Group and San Francisco-based Kimpton Hotel & Restaurant Group paid $7.8 million for the 22-story Reynolds Building. They will convert the 314,000-square-foot building, which served as headquarters of R.J. Reynolds Tobacco Co. from 1929 until 2009, into apartments, a hotel and restaurant.

RAEFORD — Tyton BioEnergy Systems bought the former Clean Burn Fuels refinery for an undisclosed amount and will produce ethanol from regionally grown tobacco. The Danville, Va.-based company will invest $36 million and create 79 jobs that will pay an average annual salary of $43,671, 32% higher than the Hoke County mean. Tyton will receive up to $232,000 from the state’s One North Carolina Fund if it meets job-creation and investment targets.

TARBORO — Keihin Carolina System Technology will invest $12 million to expand its plant here, adding 40 workers to its existing 334. The company, a division of Tokyo-based Keihin Corp., makes electronic, powertrain and air-conditioning systems for cars. It will receive $200,000 in local grants.

NEW BERN — Maola Milk & Ice Cream will close its local milk-processing plant, idling 98 workers by July 27. Some affected employees may relocate to plants in High Point and Newport News, Va. The company, based here since 1935, will keep 30 administrative employees in New Bern.

WILMINGTON — Burns & Wilcox will open an office here, its third in the state. A member of Farmington Hills, Mich.-based Kaufman Financial Group, the specialty insurance wholesaler’s North Carolina division heads its excess flood-insurance department and is involved in its condominium business. The company employs 60 at offices in Charlotte and Morehead City.

BOLIVIA — East Carolina University will open a community dental clinic here by summer 2015. Its School of Dental Medicine has clinics in Ahoskie, Elizabeth City, Lillington and Sylva and is building three more. They provide general dental services to communities with limited access to dentists.

In 2009, a group of doctors formed Independent Physicians of the Carolinas, a Charlotte-based nonprofit. During periodic meetings, doctors from about 50 practices, most in the Charlotte region, discuss topics ranging from health-care reform to back-office operations. With more physicians selling their practices to hospital systems, says board member and Charlotte pain specialist Ratko Vujicic, the gatherings can sometimes feel like a support group for beleaguered holdouts.

Half of U.S. doctors will work for hospitals or their physician networks by the end of the year, according to Scott Gottlieb, a fellow at the American Enterprise Institute, a Washington, D.C.-based research group that promotes free markets. The Raleigh-based North Carolina Medical Society doesn’t track how many of the state’s approximately 30,000 licensed doctors work for hospitals, but Charlotte-based Carolinas HealthCare System, the largest health system in the state, has increased its stable of practices 50% to 227 since 2010. The trend also is evident at other large systems, including Winston-Salem-based Novant Health, Durham-based Duke University Health Care, Chapel Hill-based UNC Health Care, Winston-Salem-based Wake Forest Baptist Health and Raleigh-based WakeMed Health and Hospitals. 

Hospitals began buying up independents 15 to 20 years ago, believing they could treat more patients at a lower cost on an outpatient basis, says Duke University professor Chris Conover, a health-policy specialist. The spending spree stalled when practices didn’t prove to be as profitable as predicted, but health-care reform has revived it as systems prepare for a post-Obamacare market. “Hospitals are finding that the easiest way to comply with all the new regulations is simply to employ the physicians,” says Bill Pully, president of the North Carolina Hospital Association. “Is that good or bad? I don’t know, it just is.”

Many predict that Obamacare will morph into a system that resembles accountable-care organizations — provider partnerships that are paid based on patient outcomes instead of by the number of tests and procedures they perform. Medicare uses a formula to calculate savings, giving half to the partnerships. Consolidation, Pully maintains, prepares hospitals for the changes by coordinating treatment among practices.

Independent physicians find selling out attractive because, in part, the Affordable Care Act demands upgraded office technology such as electronic patient records that requires a hefty investment. That was the conclusion of a focus group sponsored by the state medical society. “It was huge,” spokeswoman Elaine Ellis Stone says. “Their reason was that it was nice to have a big organization take that over for them.”

Fewer medical practices flying solo means higher prices, many health-policy analysts say. For example, Vujicic charges $300 for a pain-numbing spinal injection. A similar procedure jumps to nearly $2,000 at a hospital-owned practice, he says. That’s because private insurers usually pay independents according to rates set by the federal Centers for Medicaid and Medicare Services. Large hospital systems, however, negotiate more money for the same procedure from the same insurance company. “It is five to six times higher, and with deductibles going up, I don’t know how patients will be able to handle these higher costs,” Vujicic says. Plus, hospitals often tack a fee to bills to help pay for overhead. Medicare and many private health insurers don’t pick up these charges in full, which means more money out of patients’ pockets.

“But it’s more than just that,” Vujicic says. “It’s about the way I think medicine should be practiced and whether I’ll continue to have the ability to provide better and more personalized care.” A study by Englewood, Colo.-based Medical Group Management Association says productivity drops 25% or more when a doctor becomes salaried. “Once they work for hospitals, physicians change their behavior in two principal ways,” Gottlieb wrote in a The Wall Street Journal op-ed piece in March 2013. “Often they see fewer patients and perform fewer timely procedures. Continuity of care also declines, since a physician’s responsibilities end when his shift is over.” Pully says hospital standards won’t allow wholesale declines in productivity, while a roster of physicians under a single umbrella will wring out savings over time.

The trend favoring hospital-owned practices isn’t likely to slow soon. WakeMed’s primary-care network, which operates almost exclusively in Wake County, has nearly doubled since 2010. “We definitely plan to continue expanding in terms of new physicians,” spokeswoman Kristin Gruman says.

Carolinas HealthCare has added about 15 practices a year since 2009, building a network that employs more than 1,700 doctors in addition to another 1,700 at its 30 hospitals. Spokesman Kevin McCarthy won’t discuss acquisition plans but says, “Our projections here have been pointing up for quite a while.” Though he’s determined to buck the trend, Vujicic seems resigned. “Everything is becoming big, and it’s harder to find an independent.”

CHARLOTTE — H. Lundbeck will acquire drug developer Chelsea Therapeutics in a deal worth up to $658 million. Chelsea, which employs 18 here, received U.S. Food and Drug Administration approval in February for its drug for dizziness and fainting connected to neurological conditions. Danish pharmaceutical company Lundbeck employs 6,000 people in 57 countries. The deal is expected to close in the third quarter.

CHARLOTTE — Menlo Park, Calif.-based private-equity firm GI Partners agreed to acquire Peak 10 from Welsh, Carson, Anderson & Stowe, a New York-based private-equity firm, for an undisclosed amount. Peak 10 operates 24 data centers in seven states, including six in North Carolina. The deal was expected to close in the second quarter.

CHARLOTTE — The power-generation subsidiary of Babcock & Wilcox, which provides engineering, manufacturing and construction services to energy companies, agreed to buy De Pere, Wis.-based MEGTEC for $155 million. MEGTEC makes air-pollution-control systems and employs 600 people in 10 countries. Babcock & Wilcox has 11,000 workers worldwide, including 200 here. The deal was expected to close by June 30.

CHARLOTTE — NuScale Power, which develops power systems for nuclear reactors, will open an operations and engineering center that will employ 70 people. It will share existing office space with Irving, Texas-based Fluor Corp., which owns a majority stake in NuScale. In December 2013, the U.S. Department of Energy awarded up to $225 million over five years to Portland, Ore.-based NuScale to develop nuclear small modular reactor technology.