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High schools need to get down to business

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Capital – January 2005

High schools need to get down to business
By Ned Cline

Braggarts across North Carolina are trumpeting rising test scores as proof of how great the state’s public schools are. It ain’t bragging if you can do it, former St. Louis Cardinals pitcher Dizzy Dean opined. But is the state really doing it?

Much of the hoopla sounds as hollow as a whiffle ball. Test scores have become a dime a dozen because government now grades schools almost as often as teachers grade their charges. More doesn’t always make things better, though.

Concern is growing about the value and volume of these tests, some of which are cousins of political polls, providing only a one-day snapshot of knowledge. The scores reveal little about the quality of education. Students might only be learning to pass government-mandated tests. If they can do that, though, the politicians and educators can keep bragging.

Evidence of this comes in State of the South 2004, published by Chapel Hill-based MDC Inc. The latest of MDC’s biennial reports, it assesses public high schools across the South. MDC isn’t a left-leaning think tank looking for ways to spend government money. Founded in 1967, it studies pressing public-policy issues in 13 Southern states and proposes ways to address them. A small part of its $2.6 million annual budget comes from the state of Mississippi. Other support comes from foundations such as the Duke Endowment.

The study’s results don’t put the Carolinas among the top of the class. High schools are failing not so much because of what they aren’t doing but more because of what they aren’t getting. A key ingredient that’s missing, the report says, is community and business involvement. Among its recommendations is a challenge to business leaders to take a more active role in improving public schools in their communities. If they don’t, the report says, they may end up with a work force that isn’t trained to work.

“What we really need is more civic will and a kind of civic cholesterol test,” MDC President David Dodson says. “We cannot solve the problems by using only people with educational titles. We need to involve community and civic leaders because they know what is needed for economic progress.”

The MDC report urges civic and business leaders in North Carolina and other Southern states to step forward as leaders in this state did more than 40 years ago when they created the community-college system. It recommends job-training programs in high schools that will meet specific needs of businesses in the communities.

The concept isn’t new. Hargrove “Skipper” Bowles — father of erstwhile U.S. Senate candidate Erskine Bowles — proposed a similar plan for high schools when he ran unsuccessfully for governor in 1972. Few leaders — and not enough voters, for that matter — took him seriously. Perhaps they should have. Despite all the talking about school reform in the decades since, there has been little walking.

“Businesses depend most on workers we are educating the least as students,” Dodson says. “It is the base of the future work force that we are failing. Civic attention to the problem seems to have vanished in this state except for the technical [governmental] support given by advocates like former governors [Terry] Sanford and [Jim] Hunt.”

The report considers issues that affect all students but focuses on what MDC calls the “muddled middle.” They’re the ones who miss out on both the federal dollars often available for economically disadvantaged students and the attention from teachers and principals who focus on high achievers. These students might not be future CEOs or future dropouts, the report says, but they likely will be the backbone of the future work force. “We suspected some of the perils we found,” Dodson says, “but we thought we were better than we are.”

As many as 40% of freshmen in North Carolina high schools don’t graduate in four years, if at all. Some of the blame, Dodson says, lies as much in the academic structure of schools and the lack of skills training as with students’ abilities.

Educators either have not or cannot solve the problems. So what can corporate CEOs do? Dodson suggests working with local schools to determine what is working, what is failing and how companies can help. They can offer tutoring programs or help design classes that teach skills to meet specific company needs. They can work with guidance counselors on ways to develop stronger work ethics in students who may not be high academic achievers. They can urge their own employees to volunteer in local schools.

It shouldn’t be hard to mobilize business leaders. Strong schools breed economic success. Still, it isn’t happening. One reason may be that the successors to once-influential executives aren’t as interested in their communities. Mergers, downsizing and closings have shifted top management jobs and corporate headquarters elsewhere. Business leaders who once were mainstays of North Carolina communities large and small now think in terms of their company’s place in the world instead of its place in its hometown.

“This is a real problem in North Carolina,” says John Dornan, president of the Public School Forum of North Carolina, a Raleigh-based nonprofit working with MDC to develop strategies to solve public-school problems. “This ought to be an alarm bell for businesses to get more involved because the report puts problems in the context of the new economy. We have been losing that in North Carolina.”

Private investment in public schools does work. In Guilford County, for example, the Joseph M. Bryan Foundation invested more than $5 million in academic programs designed to help students better understand classroom assignments through organized peer discussions and direct teacher-student exchanges. Participating schools have shown academic improvements and have had fewer discipline problems. The same foundation has invested in leadership training for teachers and principals through the private Center for Creative Leadership in Greensboro, a corporate-training organization.

Guilford businesses have worked with school administrators to provide incentives for students and teachers, awarding cash prizes, computers and scholarships for achievement. The Bill & Melinda Gates Foundation sank $11 million into the state to study the creation of smaller high schools and specialized schools. The initiative is too new to have produced results, but Dornan of the Public School Forum, which is managing the funding, is hopeful.

These are the types of programs the MDC report recommends expanding through increased corporate involvement. The think tank is working with private foundations to push the report and enlist business leaders to drive educational improvements.

Students in North Carolina’s high schools may be passing the tests, but in the end they may not be making the grade. Dodson and Dornan say MDC’s report is a call to action. Whether civic and business leaders heed it remains to be seen.

Harris sinks more than money in Saks project

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Tar Heel Tattler – January 2005

Harris sinks more than money in Saks project
By Edward Martin

Most Charlotteans who live around Quail Hollow Country Club know their Saks from a hole in the ground. In a tale with twists befitting a store that once hoped to sell them $2,000 Louis Vuitton handbags, they thought they were getting the former. They got the latter instead.

What happened? Developer Dee Dee Harris says things went awry when a letter she sent to city officials, suggesting the public kick in some of the $200 million cost, became public. “I don’t even put notes on my refrigerator now.”

The city balked, financing fizzled, and Saks bolted. So, instead of a Saks, a five-star hotel, shops and an underground parking lot camouflaged by formal gardens, neighbors have an 18-acre moonscape. Land was excavated in February 2004. “It’s just a big ugly hole, and now they’ve put a big ugly fence around it,” says Dan Marks, who lives nearby.

Village at Seven Eagles, where the Saks was to have been, was no hasty concept. Harris is the wife of insurance executive Cameron Harris, whose grandfather — Cameron Morrison — was governor from 1921 to 1925. She formulated the plan more than 10 years ago. The Harris family has a long track record in Charlotte’s retail development, including SouthPark mall. In April, though, city officials released a letter in which she suggested that her company might need public help to finish the project. The letter wasn’t meant to be a formal request, she says. “I’ve always used paper as my therapist.”

City politicians brushed it aside. Meanwhile, Birmingham, Ala.-based Saks grew impatient, possibly because its first Tar Heel store — at Triangle Town Center in Raleigh —was thriving. Saks shredded its lease with Harris in November, though a spokeswoman says the company “will continue to monitor the luxury retail market in Charlotte.”

November brought another twist. Tar Heel voters approved tax-increment financing in which future taxes from projects such as Village at Seven Eagles can be used to finance publicly issued bonds to build them. Harris says Village at Seven Eagles will create about 500 jobs, but key city officials say they’ve heard nothing more from her.

The outlook? Although several City Council members have said they’re willing to consider helping finance the project under the new law, others say no way. So Marks suggests filling the hole, planting grass and using the site for baseball or soccer fields. The score so far: Raleigh 1, Charlotte 0.

Fruit of the loam

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Fruit of the loam

Shelton Vineyards is one reason North Carolina is growing a reputation for making fine wines.
By Frank Maley

In 1524, explorer Giovanni da Verrazano wrote in his log that the grapes he found growing along the Cape Fear River “without doubt would yield excellent wines.” A Tar Heel wine industry flourished from Colonial times, and from 1840 until the state voted itself dry in 1909, North Carolina led the nation in wine production. But this was the sweet vino of the native muscadine, not classic Old World wines from vinifera grapes. Neither European varietals nor French-American hybrids would grow here, the experts said: It rained too much, and the nights were too hot — they would succumb to fungi. It was not until the early 1970s that Jack and Lillian Kroustalis proved them wrong. Their Westbend Vineyards in Lewisville became one of the first in the state to make French-style wines.

Others followed, many in the foothills along the Yadkin River. The state’s wine industry took another big step toward regaining its reputation in 2003, when the region won federal recognition as an American viticultural area like Sonoma and Napa in California. Wines bearing the Yadkin Valley appellation must draw at least 85% of their content from grapes grown there. “It gives us an identity,” says George Denka, president of Shelton Vineyards, near Dobson. “It allows us, too, to form some alliances with other wineries from the region and market as a group.” But each winery is responsible for the quality of its product. It takes three years from the time vines are planted for them to produce and up to nine years to fully mature. By that standard, Shelton Vineyards is just a child. It was started in 1999 by Ed and Charlie Shelton, former owners of Charlotte-based Shelco, one of the state’s largest construction companies. Denka won’t discuss revenue, saying only that the Sheltons have invested “many millions.” With 200 acres under cultivation, it is the largest vinifera vineyard (though not the largest winery) in the state.

At harvest time in August and September, any of the 32 full-time employees might find themselves in the field, supplemented by as many as 60 seasonal workers who pick grapes for $1 a bucket. After the fruit is crushed and ready for fermentation, the temperature is stabilized between 50 and 60 degrees and yeast added to break down sugars into alcohol, carbon dioxide and heat. After fermentation — six days to three weeks — delicate white wines such as Riesling are chilled and bottled. Some wines from grapes harvested in August can be ready for sale as soon as December. The rest — about 75% of Shelton Vineyards’ annual output of about 25,000 12-bottle cases — is aged 12 to 14 months in 55-gallon oak barrels. After bottling, 60% of production will be sold through distributors to stores and restaurants. The rest is sold at the winery or through the vineyard’s wine club.

North Carolina ranked 12th in wine production in 2003. More than half the $30 million worth produced came from vinifera grapes. But the state is still better-known for its native varieties. To battle the stereotype, Shelton Vineyards tries to sway consumers through taste tests. Its wines often are chosen over better-known brands in blind tests, Denka says. But when the blindfolds come off and the same tasters sample them again, the better-known brands usually are chosen. “It proves the mind can override the palate,” Denka says. “It proves the power of marketing.”

Former Burlington CFO thinks Red Hat fits him

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People – January 2005

Former Burlington CFO thinks Red Hat fits him
By Chris Roush

Charles Peters traded old-line for high-tech. But the transition from chief financial officer of Burlington Industries — now part of Greensboro-based International Textile Group — to CFO of Raleigh-based Red Hat Inc. isn’t his biggest challenge. The company, which sells and services the Linux computer-operating system, is struggling to regain investors’ confidence. Its stock was off more than 50% in mid-November from its four-year high of $29.06 in June.

The decline started with the resignation of Peters’ predecessor, Kevin Thompson, followed by the announcement that first-quarter revenue had missed analyst estimates. It continued in July when Red Hat said it would restate earnings for the previous three fiscal years.

“When the restatement was complete, it should be noted that there were no major changes,” says Peters, who joined the company in September. Net income for the fiscal year that ended in February 2004 was $13.7 million, down from $14 million. Fiscal 2003’s net loss went from $6.6 million to $6.7 million, and fiscal 2002’s net loss dropped from $140.2 million to $140 million.

Still, investors haven’t flocked back to Red Hat, one of the most-scrutinized high-tech stocks on Wall Street. Analysts estimate revenue for the fiscal year ending in February will hit $200 million, up about 59% from the previous year. But Red Hat projected third-quarter revenue below their estimates and didn’t give earnings guidance, citing Peters’ inexperience with the company. Peters, 52, is part of a management team CEO Matthew Szulik has hired to help the company grow and expand into international markets. During the last year, it has added an executive vice president of worldwide operations, a vice president of client services and new counsel.

A Cincinnati native, Peters grew up in Boston and attended the University of Massachusetts, where he played basketball with future Hall of Famer Julius Erving and University of Louisville coach Rick Pitino. When he was a sophomore in 1971, UMass lost 90-49 to Carolina in the first round of the National Invitation Tournament in New York. “Erving fouled out, and they threw me into the game,” the 6-foot-7-inch Peters says. He had three rebounds but didn’t score. UMass faced Carolina again two years later in the NIT, losing 73-63. Peters had four points and three rebounds.

After earning a bachelor’s in accounting in 1973, he worked nine years for Price Waterhouse in Boston and London. He got hands-on experience with high-tech when he joined Concord, Mass.-based hardware and software maker GenRad Inc. He became CFO in 1985.

Peters joined electric utility Boston Edison Co. in 1991 as senior vice president of finance. He became Burlington CFO in 1995, spurred by his wife — a cousin of former Raleigh Mayor Paul Coble — to move closer to her family.

His work in the international operations of GenRad and Burlington should help Red Hat as it expands to China and India. “I was looking for a new and different opportunity. Red Hat has to be one of the most exciting technology stories in the country at the moment.”

For whom Bell tolls

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For whom Bell tolls

Real-estate mogul Steve Bell still puts in 15-hour days for his company and investors because he thinks it’s “neat.”
By Chris Roush

In a conference room at his company’s headquarters, a gray-haired man whose 59-year-old physique is beginning to assume the contours of a pear fishes in his pocket for a crumpled Burger King receipt. He points with pride to the senior-citizen discount on his lunch. “I was glad to get that 47 cents.”

Steve Bell wheels and deals, but he’s no slickster. He peppers his conversations with the word neat. “It was a neat opportunity,” he says of buying a Burlington shopping mall in the early ’90s, a watershed for his company. As for why he’s in real estate: “I just thought that being involved in the ownership and management of investment properties would be a neat career.” But details of deals stick in his mind like flypaper: He counts at least 500 since starting his company in 1976.

Greensboro-based Steven D. Bell & Co. owns and manages two-dozen shopping centers and other commercial properties — about 3.5 million square feet — 18,000 apartments and 11 retirement homes in eight states. Its portfolio is worth $1.7 billion. The 675-employee company bought and sold $550 million of real estate in 2004 — its most active year ever. Among those deals was one for its first skyscraper, the 21-story Wachovia Tower in Greensboro, for which Bell agreed to pay $36 million. He’s mogul material.

But moguls usually don’t lunch at restaurants with drive-through windows, show up on their neighbors’ doorsteps toting bags of produce from their backyard gardens or shag on the dance floor with all the swaying grace of the Geico gecko doing The Robot. Bell is the anti-Trump. What’s missing is more than the brashness, bad hair and TV contract. He’s a walking contradiction who works 15-hour days on nine-digit deals while keeping track of his spare change, a guy who relishes the time he spends both at Atlantic Beach and across the Atlantic Ocean on African safaris — he has been to Africa three times and is going again in October. His name graces nothing as splendid as Atlantic City’s Trump Taj Mahal casino resort, but he has hit the jackpot with properties that are heavier on function than flash.

Bell might be the unlikeliest deal king in North Carolina, and who better than himself to put that in perspective. A while back, he was walking from his car to his office when he spotted a penny on the ground. It was muddy, but he popped it in his pocket anyway. “I thought if I ever get so much money that I don’t care about pennies, then maybe my values are changing.”

He has played cards more than 20 years with the same group of guys at Greensboro Country Club — losing, he admits, more than he has won. He prefers playing a hunch when he can perform due diligence on it. But even then, he won’t bet the farm. “The real-estate business is a gamble, period,” says Ed Harrington, the company’s president. “Steve is as risk-averse as you can be in this business.” To understand the man, dissect one of his deals.

It’s an overcast Sunday afternoon. Rain has begun to fall. At Prestonwood Country Club in Cary, autograph hounds troll the course at the Jimmy V Classic charity golf tournament. Nearby at Cornerstone Shopping Center, shoppers shuffle in and out of Lowes Foods. A cop cruises the parking lot. Eleven years ago, this was dirt. Durham lawyer and real-estate investor Richard Drew brought Bell here to visit the 8.4-acre site — ground zero in the direction Drew thought Cary might grow. “This was out in the middle of nowhere,” Bell recalls. But it was near Research Triangle Park, and Cary’s population was exploding — from 21,800 in 1980 to about 100,000 now.

Drew developed the shopping center, leasing all its space before construction was finished in 1995. Bell kept the site in mind, though. “It was next to a couple of schools, and I knew mothers might often stop by after dropping off their kids.” Retail-sales projections for 1997 showed a growth rate for the Triangle of up to 4.5%, compared with 1.1% for the rest of the state. A 302-unit apartment complex was being built next door.

Bell swung into action. He sent an acquisition summary to potential investors — mostly high-net-worth individuals such as doctors and lawyers — detailing the property’s tenants and possible return. He asked for a minimum investment of about $125,000. Dozens responded — he won’t disclose any names — and Bell cut a deal with Drew, who died in 2003.

“We complained but thought we could still generate an acceptable return,” Bell says. “We try to never pay asking price, but with that one, we probably paid close to it.” His company bought an 80% stake in Cornerstone for $8.65 million in April 1997, with 12 investors pumping nearly $2 million into it. The company assumed a mortgage. Bell invested about $110,000 of his own money. “I probably invest in 95% of everything we purchase.”

Sales at the shopping center’s anchor stores grew more than expected. Lowes Foods’ rose to $15.1 million in 2000, up 15% from 1996, and Eckerd Drug, which took over the original Kerr Drug location, reported 2001 sales of nearly $6 million — almost triple Kerr’s 1996 total. Higher sales led to higher rents and bigger quarterly payments to investors. The average annual return was about 37%. Cornerstone was thriving, but Bell was getting itchy. The deals are like marriage, but he thinks ahead to the divorce even before buying the ring. “We don’t want to fall in love with a piece of property. The time to sell is when it’s performing well, not when it’s performing poorly.” Bell sold Cornerstone to Goldsboro-based Centrex Properties in June 2002 for $10.7 million — 23.7% more than it paid. Before taxes, the company had $4.46 million in principal and profit to give investors on top of the quarterly payments they had received.

Cornerstone was a bread-and-butter deal for Bell. It’s brick. It’s low-maintenance — little was spent on renovations. It’s the kind of property that has made money for him and his investors since he started his company nearly 30 years ago. A native of Little Washington, he grew up in Raleigh where his father was a dentist and oral surgeon. Some small-town ways stuck. “He has a garden every year,” says Mitch Oakley, a friend and managing director of Greensboro-based Charles Aris, an executive-search company. “He plants it, he hoes it, and then he’ll show up at your door with tomatoes.”

Entering Carolina, Bell didn’t want to follow his dad into medicine. But he proved no credit to accounting, his first choice. “If I was struggling in accounting, I definitely would have struggled in medical school. And that just didn’t excite me.” He changed majors and graduated in 1967 with a bachelor’s in history, then took real-estate courses for a year at East Carolina, the only school in the state that offered them then. Real estate, he thought, is like an oil well pumping day and night. “It is over here generating rents and income on a monthly, quarterly, annual basis. You every now and then have to put money in it.” Like laying the groundwork for a deal, he developed an eight-year plan for the creation of Steven D. Bell, junior mogul.

He joined the Raleigh office of Cameron Brown Co., a mortgage-banking subsidiary of First Union, in early 1969. He soon was transferred to Greensboro, where he evaluated real estate. “I learned how to value properties. I learned to recognize good locations. I learned something about finance. I thought I would learn something about mortgage banking and then go into sales.” Two years later, he moved to Richardson Corp. as a real-estate broker specializing in investment property. He learned to structure limited partnerships and bring investors together to purchase properties. He also gained confidence and sales skills — and contacts. The Richardson family had made its fortune off Vicks VapoRub, and the Greensboro company had investment clients such as former Gov. Luther Hodges. “I was just a kid in my 20s, and I didn’t have a lot of high-net-worth peers. They introduced me to a lot of folks who had significant income.”

He launched his own company in late 1976, recording about $4 million in transactions the first year. Among its first properties was Carolina Apartments in Carrboro. The company put up $400,000 cash from investors and bought it for $2.75 million. “A few years later, we were sending our investors between $300,000 and $400,000 per year in cash flow,” he says. The company held it 20 years — an unusually long time — selling it in 1997 for $7.5 million.

Steven D. Bell & Co. grew slowly, acquiring apartment complexes and shopping centers. Early investments included Mayberry Mall in Mount Airy and Quaker Village Shopping Center in Greensboro. In the early years, Bell says, it was hard to attract people to Greensboro to work for him. “Charlotte, Atlanta and Raleigh had more sizzle. There was more to do for young people.” It didn’t help that he didn’t pay much. “I basically wanted people to come and love our company. Once they came and proved themselves, I was very willing to pay them.” The company now has an Atlanta office. And it pays better.

Then came Holly Hill Mall in Burlington, the 1991 deal that gave his company its big boost. Bell agreed to pay $14 million, but it was going to take $10.5 million cash. He never had raised more than $3.5 million. He called on clients who had sold a textile company. They agreed to assume 40% ownership. Most of the rest came from other investors, and the seller financed the remainder. “Once we raised that $10 million, we realized we had the ability to go after bigger deals, nicer deals, newer deals,” he says. The 400,000-square-foot mall was about 15% vacant when he bought it. Bell made about $2 million in improvements, including adding a food court and attracting a Goody’s department store. He sold it six years later for $30 million.

As the company and size of its deals grew, Bell handed much of the day-to-day duties to Harrington, a former mortgage banker he named president in 1998. That freed Bell to build an assisted-living division. “To grow,” Harrington says, “you have to let go somewhat and let other people run the ship. That’s difficult for all of us to do. We went from a flat company to putting meat on the bone.” The assisted-living division was a departure from Bell’s initial vision for the company — he had decided early to specialize in apartment complexes and shopping centers. “But we thought that if we don’t get involved with this business, this industry, this type of investment, we’ll find it increasingly difficult because some of the people will get bigger and bigger and bigger, and we’ll just be a tiny little fish trying to get involved.” He had no intention of being swallowed.

It’s Thursday, and Bell is on his way from Greensboro to Asheville, starting a long-weekend swing that will take him from western North Carolina through Georgia, to Atlanta, Macon and Savannah. He’ll look in on company properties but also court new investors and reassure current ones. Profits, he says, aren’t the only way to keep investors happy.

Ten years ago, Steven D. Bell & Co. spent less than $2,500 a year entertaining clients. Now, that might not cover tips for the 60 crew members on the German-owned Sea Cloud, a 360-foot sailboat commissioned by financier E.F. Hutton in 1931. He has been on it five times and chartered it once to entertain the company’s biggest clients. Bell has learned to cultivate his relationships with the wealthy. “When I was younger, I was hungry, and I would often sell something, then go out looking for new investors,” he says. Now about 80% of what he raises comes from repeat investors.

His son, Jon, 32, joined the company in 2001. He has a bachelor’s in real estate and finance from the University of Georgia and an MBA from UNC Chapel Hill and worked for Charlotte-based Faison and Associates. Much of his education, though, came closer to home — from his father. “He would tell me things at an early age that, in hindsight, no kid could understand. He’d point out an apartment complex being brick. At the age of 10, I couldn’t care less. But later on I realized brick was low-maintenance.” His other son works in apartment real-estate development in Washington, D.C., and his daughter worked for the company in the ’90s.

Growth is what Steve Bell had in mind when his son came aboard. Jon Bell specializes in attracting institutional investors such as insurance companies and banks. Five years ago, Harrington says, the company had one institutional investor. Now about 35% of the money it invests in real estate each year comes from them. The 21-story Wachovia Tower in Greensboro will have at least one institutional investor, and 65% of Bell’s biggest deal, $100 million for eight Knoxville, Tenn., apartment complexes, comes from Wachovia Securities.

The difference, Steve Bell says, is like baseball. Wealthy individuals want steady base hits. Institutional investors want to swing for the fence. “If you want to go after the $100 million acquisition, then that just takes too many individuals,” he says. Now he’d like to see more home runs.

The successful deal, he says, comes full circle. He wasn’t finished with Cornerstone Shopping Center in Cary when he sold it in 2002. Its legacy can be traced here to another shopping center, Falls Village, in north Raleigh. On a cool Saturday night, the patio at Stonewood Tavern & Grill is full of diners. Automatic doors swish open and shut at a Fresh Market grocery. Across the street, cars dart into the parking lot at North Ridge Country Club.

When Bell closed out Cornerstone, he went back to its investors and proposed that they roll their money into Falls Village. It’s a tactic he uses often, letting investors defer capital-gains taxes through an IRS 1031 tax-deferred exchange. Ten anted up nearly $3 million. Behind the scenes, Bell hustled. Atlanta-based BVT Development owned the 168,000-square-foot Falls Village, which was built in 1974, and had added a brick façade and brought in new stores. But it also had angered tenants, who claimed construction work led to lost sales.

As with Cornerstone, negotiations were short. In June 2002, the same month it sold Cornerstone, Steven D. Bell & Co. bought Falls Village for $25 million, with $6.4 million cash from Bell and his investors and the rest — $18.6 million — in debt held by Wachovia. Bell ripped into the shopping center, changing store facades and bulldozing a dry cleaner to make way for a 14,000-square-foot building for a new tenant, expected to be Books-A-Million.

The moves have paid off. Bell distributed $1.25 million in payments to Falls Village investors in 2003. Only four of the other 18 retail real-estate properties the company owned in 2003 had a higher return. Bell says the company will hold Falls Village for six to eight years. Then the honeymoon will end. He will look for new buyers, and the deals will go on.

Firm returns from the grave a profit

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Tar Heel Tattler – January 2005

Firm returns from the grave a profit
By Chris Richter

Imagine Perry Mason confronting a wife who has bumped off her husband for the insurance money. “He was worth more to you dead than alive, wasn’t he?” Durham’s Volumetrics Medical Imaging Inc. is like that. It was buried in February 2001, but thanks to a lawsuit, it’s worth more than ever.

Volumetrics was spun out of Duke University in 1992 to find commercial uses for ultrasound technology. “It was 3-D ultrasound, which was unheard of at the time,” says Jim Newton, an administrator at Chapel Hill-based Tri-State Investment Group, which began pumping money into the venture in 1995.

By 1999, Volumetrics was looking for a partner or buyer. ATL Ultrasound — part of Dutch conglomerate Royal Philips Electronics — seemed the most promising. Volumetrics officials later would claim that ATL offered in February 2000 to buy it for about $120 million. ATL also suggested that the two companies work on a joint product.

Volumetrics says ATL, which had signed an agreement not to disclose Volumetrics’ secrets, began negotiating with one of its competitors, Palo Alto, Calif.-based Agilent Technologies. Even though ATL assured Volumetrics that it was still interested in being its partner, Philips bought Agilent’s ultrasound division for $1.7 billion in November 2000.

In January 2001, ATL told Volumetrics that their relationship was over. Volumetrics shut down a month later and sued ATL, alleging that it used — or could use — the technology it observed during the collaboration to create its own imaging machine. A federal jury in the Middle District of North Carolina ruled in favor of Volumetrics in early 2003 and awarded the company $106 million. The judge tripled the damages. Philips appealed, and the case was to have been heard in fall 2004. But Philips settled at the last minute for $180 million.

Now, after legal fees, former employees who owned shares will get their cut, and investors will see a return on their money. Among them are the nonprofit North Carolina Technology Development Authority, a Research Triangle Park-based economic-development organization that invested about $200,000 in Volumetrics between 1995 and 1999. President and CEO John Draper says he expects $500,000 to $600,000 — perhaps more.

Newton won’t say how much Tri-State put in or how much he expects the 80 investors to receive. But he’s satisfied that they’ll get at least something back. Even if it is from the grave.

Decks are stacked for boat builders

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Economic Outlook – January 2005

Decks are stacked for boat builders

Boat builders and related manufacturers employ more than 20,000 in North Carolina. Consumers here spent about $446.8 million on boats and boating products in 2003, according to the National Marine Manufacturers Association. The state’s industry is growing, Mike Bradley says, and is attracting companies to North Carolina. Bradley is director of Marine Trades Services for the Small Business and Technology Development Center, part of the University of North Carolina system.

BNC: How big is the boating industry here?

Bradley: North Carolina has about 3,000 businesses that fall into six sectors: boating service, marine construction such as docks and boathouses, marinas and boatyards, boat sales, boat-construction products and boat building. The growth is in boat-construction products and services and in boat builders, of which there are more than 120. Can you put a dollar value on the sectors? No. With one exception, the companies are privately held. Of all boats made in North Carolina, we know the value to be in excess of $200 million a year. More than $100 million of that is custom sport-fishing boats.

How much has boat building grown?

When I started as director in 1990, I could find about 75 boat builders. Since then, we’ve seen several major boat builders come into the state: Mako, SeaCraft, Rampage, Cruisers, Tiara and Fineline. These six alone employ a little more than 1,000 people. Then you have custom builders that are small — anywhere from five to 30 people. Those companies have started from within the state. About 10 have started since 1990.

What types of boats are made here?

Most are fiberglass recreational boats. Fiberglass boats range from 16- and 17-footers that cost $20,000 to 24-foot family boats that cost $30,000 to $60,000 to Hatteras Yachts’ 100-foot fiberglass boat — the biggest boat built in North Carolina — that costs more than $6 million.

What does the state excel at?

The best-known boats out of North Carolina are sport-fishing boats. To give you an idea how big this sector is: There are more than 17 custom sport-fishing boat builders in the Manteo, Wanchese and Mann Harbor area. They currently have under construction more than 30 boats over 55 feet long that have a retail value approaching $60 million. These are small companies that are building two to 10 vessels at a time. The majority of them are backlogged for one to three years.

Why sport-fishing boats?

Our boats win major national fishing tournaments where prize money exceeds $1 million. They’re faster, and the design of the boat is built for the waters where tournament fishing happens. We’re building the sport-fishing boat to get the fish fast but with the creature comforts that used to be known only in yachts. When people are paying $6 million for a boat that does nothing but fish in tournaments, they are looking for functionality and a showpiece.

Where are the boat builders?

The coast is home to 84% of our boat builders. But 4% are in the Piedmont, and 12% are in western North Carolina. The boat makers are there because of the lakes. The new ones — Mako and SeaCraft — are there because some of the facilities can be converted to boat building at minimal cost. They moved to Forest City, up in the foothills. They’re starting off with 120 jobs and going up to 300 jobs. They were interested in taking over buildings that were used in the textile industry and had a quality work force sitting around them.

What attracts companies here?

It’s halfway between the big markets of the North and the big markets of the South. It’s just more cost-effective in handling the distribution of the boats. The average size and depth of a boat is getting larger and larger, and where you have to build it is getting pretty restrictive. North Carolina offers a better value on waterfront land zoned commercial or for manufacturing and building, plus taxes and incentives.

What other sectors are growing?

The companies providing the materials, equipment and accessories that go on this boat — the cup holders, the fish finders, the electronics, the radios. There’s also metal fabrication and machine parts. Engines aren’t built in North Carolina, but companies that assemble the engines get a lot of their parts from here.

What hurdles does the industry face?

We are hearing from employers that they are hurting for a supply of workers ready to go to work on time every day with a work ethic that incorporates pride in product and company. There also are vague and sometimes conflicting environmental regulations. For boat builders, the calculations of the amount of volatile organic compounds and the ability to know what degree of compliance you’re in are extremely complicated. Air-quality regulation is divided up into regions, and some regions are more familiar with boat building than others. Water-quality regulations affect mostly boatyards and boat repair.

What about the industry’s future?

Across the board, the industry is encouraged that the tax policies of the Bush administration will continue the growth in the boat-building sector. This industry is dependent on the discretionary dollar. North Carolina is going to see some substantial growth in those companies that want to be closer to where boats are actually built.

Cities get a kick out of soccer tournaments

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Sports – January 2005

Cities get a kick out of soccer tournaments
By Chris Roush

Does your city need to fill hotel rooms, pack restaurants and attract shoppers? Hold a soccer tournament. Nearly every major city across North Carolina plays host to one, and some are adding millions of dollars to their economies.

The state has become a magnet for some of the biggest college tournaments, including the 2004 women’s Final Four at SAS Soccer Park in Cary. That’s due, at least in part, to the success of the UNC Chapel Hill women’s soccer team, which has won 18 National Collegiate Athletic Association championships since 1981. Cary also played host to the Atlantic Coast Conference men’s and women’s tournaments in 2004, while the NCAA Division III men’s and women’s tournaments were held in Greensboro.

That’s not to mention the dozens of youth soccer tournaments around the state that draw teams from across the Southeast. “It’s in every single community and every single state,” says Angela Pratt, sports-sales manager for the Greater Raleigh Convention and Visitors Bureau. “And while business travel has decreased significantly, sports travel has remained the same or increased. The parents say, ‘I’ll be darned if I’m going to miss my kids’ soccer tournament.’ Parents will travel, and they will spend money.”

Her organization estimates the economic impact of tournaments organized by the Capital Area Soccer League at $6.1 million in 2002 and $7.4 million in 2003. Charlie Slagle, CEO of CASL and former men’s soccer coach at Davidson College, says the 2004 figure could be as high as $8.9 million because more teams came to its tournaments.

Greensboro officials expected to reap at least $1 million from the Division III event. An August tournament brought 8,000 to High Point and had an economic impact of $1.9 million. And the Kepner Cup Soccer Tournament run by the Cabarrus Soccer Association kicks an estimated $1 million annually into the Cabarrus County economy.

Greensboro played host to the 2003 Snickers U.S. Youth Soccer Region III Championships at Bryan Park Soccer Complex. A U.S. Youth Soccer Association regional championship is the Holy Grail of youth soccer, says Marc Bush, president of the Greensboro Sports Commission. “From an economic standpoint, it’s as big as an Atlantic Coast Conference basketball tournament.”

That’s quite a claim. The 2003 ACC basketball tournament, also held in Greensboro, had an economic impact of $13.6 million. But Bush doesn’t back down. “They spend money. The No. 1 youth event is girls’ soccer, ages 10 to 15. Those are the ones that bring the most people.”

Greensboro played host to the youth tournament in 1992 and 1997. The Greensboro Youth Soccer Association and North Carolina Youth Soccer Association hope to do it again, Bush says. But the Bryan Park complex will need to add two fields to accommodate new bidding requirements.

More tournaments could be on the way to North Carolina. The National Soccer Coaches Association of America held its convention at the Charlotte Convention Center in January 2004, attracting nearly 3,000 coaches. Charlotte, site of the 1999 and 2000 NCAA men’s championships, used the convention to promote the region for future events.

But a glut of tournaments could overwhelm the market. Organizers canceled the Bank of North Carolina Thanksgiving Shoot-Out in High Point after a lower-than-expected turnout in 2003 and a meager response for the 2004 event. Officials had hoped the event would pump more than $300,000 into the local economy.

Slagle and CASL want to attract more NCAA tournaments. The 2005 men’s championship is coming in December, and he plans to submit a bid next month for the 2006 Division I men’s and women’s championships. But he is concerned about having both events on the same weekend.

Currently, CASL and N.C. State University, which run the NCAA tournaments with help from the city of Cary, sell tickets to the college semifinal and championship games to the players attending youth tournaments held the same weekend. The cost — $24 per youth ticket and $30 per adult ticket — is added to a team’s registration fee.

Holding the men’s and women’s championships the same weekend at the same venue — and having boys’ and girls’ youth tournaments at the same time in nearby locations — might be too much. “My worry would be trying to fill SAS Stadium for both events in the same weekend,” Slagle says.

The NCAA women’s tournament costs CASL and N.C. State about $120,000 to operate. Profits are small, Slagle says, because the NCAA first recoups its costs for teams to travel to first- and second-round matches. It also doesn’t allow him to sell corporate sponsorships. Still, CASL makes money because the attraction of the college event ensures it can fill the field for its youth showcase tournaments held the same weekend. It had 242 teams in its 2003 event. Together, the two events generated about $2.6 million in economic impact, including nearly 10,000 rooms booked at hotels, according to the Greater Raleigh CVB.

But while the men’s 2005 NCAA finals will be in Cary in December, CASL and N.C. State lost the bid for the women’s championship. “The only glitch is that because Carolina is so close and so good, every game they play [in the tournament] is like a home game, so we will never get it every year,” Pratt says. “But if we get it once every two or three years, I think we will be happy with that.”

Bulls ayes

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Bulls ayes

Here’s how our stock pickers hope to beef up their portfolios in ’05.

About 29% of Americans regularly get their news from the Internet, according to The Pew Research Center in Washington, D.C. That’s up from 23% in 2000. Count Bobby Edgerton among the other 71%. In fact, he still doesn’t use a computer. One of his employees at Raleigh-based Capital Investment Counsel handles his e-mail.

Likewise, he isn’t one to blindly follow financial fads. When good companies go bad in the eyes of investors and their stock prices drop, he’s more likely to buy. “Bad news is good news for a guy like me.”

He liked Charlotte-based Duke Energy in late 2003, when it suffered from heavy debt, was well on its way to losing $1 billion for the year and was trading at about $17 a share. Duke rebounded, and — along with Charlotte-based snack maker Lance, another depressed stock in 2003 — it helped him win Business North Carolina’s annual stock-picking competition. Each member of the panel — all of them professional investors — picks three North Carolina stocks he thinks will produce the biggest average total return over a set 52-week period. Edgerton managed a 31.7% return for the period that ended Oct. 15.

All but one of last year’s panelists managed positive returns despite a sluggish market for stocks. The Dow Jones industrial average gained just 2.2% during the period. The S&P 500 did little better, returning 6.6%.

Edgerton picked Duke again this year, banking on its turnaround under CEO Paul Anderson and its $1.10 annual dividend. Another pick, Greensboro-based semiconductor maker RF Micro Devices pays no dividend but closed Oct. 15 at just $6.67, leaving plenty of room for improvement. His third pick seems to run counter to his bargain-hunting instincts. Greensboro-based Jefferson-Pilot is the priciest of all the panelists’ picks at $48.37 on Oct. 15, but the insurance company’s price-earnings ratio of about 13, one of the lowest in the state, made it seem cheaper. “Business is good and steady but maybe not up to Wall Street’s expectations,” Edgerton says.

Duke and RF Micro were popular picks this year, also finding favor with Frank Black of Charlotte-based Southeast Investments and Doug Smith of Charlotte-based First Charter Investment Services. Several panelists are optimistic about the prospect of increased corporate earnings in 2004 and the buildup of cash reserves. In November, Barron’s reported that the cash balance of companies on the S&P 500 was $590 billion, up from $261 billion five years earlier. Many companies are coming off years of fiscal belt-tightening, and some might have been delaying spending until after the presidential election. “Corporations have a lot of flexibility to buy shares, to do mergers and acquisitions and to increase dividends,” says Frank Jolley of Rocky Mount-based Jolley Asset Management.

That’s the bullish part of his outlook for 2005. Jolley worries that some of the economic stimuli present in the past two years — lowered interest rates, tax cuts in 2003 and defense spending caused by conflict in Iraq — will have less impact now. Government spending could be curbed, too. Unless conditions change, the Congressional Budget Office expects the nation’s budget deficit to hit $2.3 trillion by 2014. Presidents often impose necessary but politically unpopular fiscal discipline in the first year of a new term, Jolley says. “I think earnings will be OK. I don’t think they’re going to be fantastic.”

 

Editor’s note: Stock pickers in this section, their companies or their cients may have a position in the stocks they’ve chosen.

 

Frank H. Black

  • Frank H. Black
  • CEO
  • Southeast Investments N.A. Inc.
  • Charlotte

RF Micro Devices Inc.

This Greensboro-based manufacturer of radio-frequency integrated circuits designs and makes products used in cell phones, base stations, wireless local-area networks, cable-television modems and global-positioning systems. The trend to wireless Internet connections bodes well for RF Micro.

Duke Energy Corp.

Duke strayed from its roots under its former CEO. After its stock fell from around $47 to $12, the new CEO has the company on track to return to its utility roots. With the economic recovery resulting in more demand for electricity, I look for price appreciation with a good yield.

Closure Medical Corp.

Closure Medical makes wound-closure and wound-care devices. The company’s leading product, Dermabond adhesive, is an alternative to stitches and staples. The company’s stock is well off its 52-week high of $39.59, and it has been cyclical since going public.

Bobby Edgerton

  • Bobby Edgerton
  • President
  • Capital Investment Counsel Inc.
  • Raleigh

RF Micro Devices Inc.

A good balance sheet with more than $300 million in cash makes this company a good bet. RF Micro had peak earnings of $50 million in 2000. Polaris, its new transceiver product, should see robust demand. This company has the ability to do $1 billion in revenue and cash flow close to $100 million.

Jefferson-Pilot Corp.

Strong finances and a low price-earnings ratio make this company a good buy. A huge position in Bank of America doesn’t hurt. JP’s combination of universal life, basic life insurance and new product introductions should serve it well. Jefferson-Pilot Communications continues to perform well. The dividend increase is pushing 150% since 1994 for a yield of 3.2%.

Duke Energy Corp.

CEO Paul Anderson will continue to unload Duke’s baggage and maintain the 6% dividend. Consensus earnings per share estimates are around $1.30 this year, which includes a land sale. The “spark spread” — the difference between the price of electricity and the price of fuel used to generate electricity — remains tough on Duke due to the increase in natural-gas prices, but that should abate and liquidity should improve as asset sales continue. Maintaining the dividend remains a huge issue for Duke, but I think it will be kept.

Frank G. Jolley

  • Frank G. Jolley
  • President
  • Jolley Asset Management LLC
  • Rocky Mount

Progress Energy Inc.

Raleigh-based Progress Energy provides electricity to parts of North Carolina, South Carolina and Florida. Its stock has suffered in 2004, largely due to disputes with the Internal Revenue Service over synthetic-fuel credits and hurricane-related losses in Florida. But the stock is already discounting much of the bad news. It trades at about 12 times 2005 projected earnings and yields over 5%.

Jefferson-Pilot Corp.

Jefferson-Pilot is a mid-size life insurance company that also owns and operates radio and television properties and produces sports programming. The stock is trading at just under 12 times 2005 consensus earnings estimates of $4.16. It has paid dividends every year since 1913 and is yielding about 3%. Continued consolidation in the financial-services industry could serve as a catalyst for the stock in the coming year. A spinoff or sale of the communications/broadcast properties would also be viewed favorably by the investment community.

Goodrich Corp.

Charlotte-based Goodrich is a worldwide supplier of aerospace components, systems and services to the commercial and military markets. Earnings in 2005 are expected to rise approximately 25% to $1.76 per share. The stock yields just under 2.7%. Goodrich has seen its prospects improve during the past year, but the stock still remains down more than 45% from its all-time high of $56 in 1998. Goodrich is an attractive total-return vehicle, with improving earnings prospects.

Alexander B. Miles

  • Alexander B. Miles
  • Senior portfolio mgr.
  • WealthTrust Advisors Inc.
  • Charlotte

Bank of America Corp.

BofA continues to provide steady price appreciation bolstered by a reliable income stream. At 11 times 2005 earnings estimates, the stock has been trading at a 10% discount to its peer-group multiple of 12.2 times, and BofA is poised for double-digit earnings growth in 2005. The equity markets should reward improvements from the FleetBoston merger as the company shifts cost savings to high-growth businesses. Recent disappointing earnings, resulting from challenging capital-markets and mortgage-banking environments this summer, provide a reasonable entry point for buying this well-diversified bank with one of the highest dividend yields — 4% — in its sector.

Lance Inc.

The Charlotte-based snack maker and distributor is in the midst of a turnaround as the company refines its delivery routes and eliminates unprofitable vending machines. Lance’s private-label business continues to grow as a primary beneficiary of the company’s relationship with Wal-Mart. Although there are margin and revenue risks associated with higher commodity prices and Lance’s dependence on one major customer for nonbranded sales, the firm should see additional growth in its Lance and Cape Cod brands, while also generating positive cash flow and continuing to pay down debt. Lance’s outsized 4% dividend yield remains secure.

TriPath Imaging Inc.

TriPath Imaging, which has its headquarters in Burlington, develops solutions leading to the early detection and clinical management of cancer, including detection, diagnosis, staging and treatment. All the firm’s revenue is generated through its cervical-cancer-screening products, which maintain a 10% to 15% share of the domestic Pap smear market. TriPath supplies the three largest commercial diagnostic-lab-operating companies in the country. For investors willing to assume more speculative risk, TriPath offers compelling upside growth potential as current and future revenue-generating products navigate the U.S. Food and Drug Administration’s regulatory approval process.

Tom Moore

  • Doug Smith
  • Asst. Vice president-
  • financial consultant
  • First Charter Investment
  • Charlotte

Duke Energy Corp.

Duke’s financial picture continues to improve. Management’s commitment to the dividend, which hovers around 4.5%, is key to investor success. Higher prices for natural gas used in the production of electricity may present a small hurdle for Duke in 2005. If prices decline and management continues to execute, Duke should have another good year. Its shares trade at attractive levels and should reward patient investors.

Cree Inc.

Cree’s research and development is on the cutting edge in the semiconductor marketplace. Several key products should have record sales next year, and the company is very strong financially. If the overall market is to head higher in 2005, technology must play a big part in the advance. I believe that Cree’s stock will provide above-average returns in 2005.

RF Micro Devices Inc.

RF Micro Devices manufactures radio-frequency integrated circuits used in wireless devices. The company’s products are used in cell phones and personal communication devices. While technology continued a mild recovery in 2004, RF Micro’s stock lagged the Nasdaq index. Analysts project higher cell-phone handset sales in 2005. The company and its stock should have an excellent year.

 

 

sweetening the deal

He still struggles with English, and he has a history of hitting the bottle pretty hard. But neither of those things prevented George W. Bush from becoming president, so why should they stop Jackson M. Kinney from making his debut in Business North Carolina’s annual stock-picking contest — especially when, like the president, Jackson has the right family connections to help him land the job? His grandpa, David, is majority owner and editor in chief of the magazine; his dad, Ben, is publisher.

Like his grandpa, Jackson finds “no” to be a crucial part of his vocabulary.

“Want to wear a tie, Jackson?” “No!”

“Want to sit down, Jackson?” “No!”

One word piqued his interest: candy. It lured him from one corner of BNC global headquarters to the other. Clad in casual-Friday duds — blue denim shirt, tan pants and brown shoes with Velcro straps — the 2-year-old crouched over a smorgasbord of sweets, some bearing the ticker symbols of North Carolina’s 75 largest public companies. He took his time, carefully inspecting several pieces before picking up three that carried ticker symbols. They were:

aaiPharma Inc.

This one could make or break the portfolio. It traded at just $1.79 on Oct. 15, so a small change in price could have a big impact on average total return. Its 52-week high was $31.85, so the stock is capable of big gains. But the Wilmington-based drug researcher needs to resolve a problem with turnover at the top. Four people held the title of CEO, at least on an interim basis, in 2004. Its chief operating officer left the company in February, a month after being appointed to the post, and was replaced by an interim COO. In November, the company named a new chief financial officer. Through three quarters of 2004, revenue was down 4% to $149 million, and the loss per share grew from 30 cents to $2.67.

First Charter Corp.

This stock was trading near its all-time high at about $26 in mid-October, so it might be wishful thinking to expect much price gain — unless the Charlotte-based bank is sold, as some investors want. Even if there’s no sale, First Charter pays a 19-cent quarterly dividend and appears to be recovering from an awful year in 2003, when earnings per share fell 64%. Its EPS of $1.02 through the third quarter of 2004 was more than double what it was in 2003.

Progress Energy Inc.

Progress’ closing price of $42.06 Oct. 15 was near the low end of its 52-week range, but the last time the stock hit $50 was more than two years ago. Total return will be aided by the Raleigh-based utility’s quarterly dividend of 57.5 cents a share. Revenue and net income hit $8.7 billion and $782 million, respectively, in 2003. But earnings for the first three quarters of 2004 were down 21% from the previous year.

With those three picks, Jackson unwittingly made his first decisions that affect this magazine. It’s possible he’ll make many more. And if a BNC employee ever asks him for a raise, he already knows what to say.

Alumni may mingle at homegoing game

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Tar Heel Tattler – January 2005

Alumni may mingle at homegoing game
By Arthur O. Murray

Paul Norman likes Elizabeth City and loves his alma mater, Elizabeth City State University. Otherwise, he wouldn’t be president of its National Alumni Association. But if he has his way, the school will take the home out of its homecoming football game, effective this fall. He blames greedy local businesses. They say he’s imagining things.

Norman and other alumni contend that local hotels and motels gouge them year after year. About 10,000 to 12,000 fans attend the game each October. “I’ve heard of rates being increased as much as 75% or 100%.” He says alumni also are required to put up deposits three months in advance and cannot get refunds if they cancel less than three weeks in advance.

Gregg Lasseter, president of the Albemarle Regional Hospitality Association, a trade group that counts six Elizabeth City hotels and motels among its 22 members, denies price gouging. Lasseter, who owns a bed-and-breakfast in Columbia, says some hotel owners have told him they even have discounted rooms for the weekend.

Norman, dean of students at Wake Technical Community College, isn’t buying it and has asked Elizabeth City State Chancellor Mickey Burnim to move this year’s game. “The Tidewater area of Virginia is only about 45 minutes north of Elizabeth City, and we’re also looking at Rocky Mount.” Burnim has promised a decision this month.

Moving the game would reduce the school’s financial take and make it harder for students to attend. The college depends on alumni for money, and it doesn’t want to risk offending the group. But it also depends on businesses in Elizabeth City. Burnim has appointed a committee of alumni and merchants to study the issue.

Even if the game stays in town, the alumni association has approved a boycott of city hotels. Members will stay elsewhere, likely the Hampton Roads area of Virginia and drive to the game on Saturday. Lasseter says a boycott will make the situation worse. “Hotels donate to the university, and they comp rooms for speakers there throughout the year.”

Sure, Norman says, there’s no place like home. But his group will back down only if it gets written assurances on room rates, deposits and refund policies. “We would love to stay in Elizabeth City. It’s the home of our college. It’s where we want to be.”