Business

Charlotte Chamber official: ‘Heaven knows’ how many deals lost over HB2

CoStar Group, a real estate research firm, was looking to take space in 615 S. College, the green-hued office tower under construction in uptown Charlotte, according to emails obtained under a records request.
CoStar Group, a real estate research firm, was looking to take space in 615 S. College, the green-hued office tower under construction in uptown Charlotte, according to emails obtained under a records request. rrothacker@charlotteobserver.com

New emails obtained under a public records request show how North Carolina’s House Bill 2 derailed a 732-job business expansion in Charlotte, leading the company to instead choose Richmond, Va., a month later.

When the CEO of real estate research firm CoStar Group went to his board to get the go-ahead for final negotiations, he was “broadsided with their pushback over the HB2 issue in Charlotte,” Jeff Edge, a Charlotte Chamber official who was recruiting the company, wrote in a Sept. 20 email to a city economic development official.

CoStar was re-evaulating Charlotte as the choice “due to all of the press and chatter over HB2 in the past week,” Edge writes in the email, which came days after the NCAA and ACC pulled games from the state over the law. “They have re-opened the competition to look more closely at Atlanta and Richmond now.”

The Observer, citing real estate sources, reported on Oct. 25 that CoStar chose Richmond after its board rejected Charlotte over the controversial law that limits LGBT protections. The emails, obtained from the city of Charlotte under a records request, shed new light on how the law killed the CoStar deal – and how it has threatened other recruitment efforts.

“As long as neither side is willing to compromise on this issue, I fear this will be an epidemic outcome for many projects we are still in the running for at this time,” Edge writes in the email to A.C. Shull, a Charlotte economic development official.

The emails also indicate the city may have lost another potential headquarters over HB2, but don’t provide details.

“Heaven knows how many deals we’ve been crossed off the list and didn’t know we were even being considered for since March,” Edge wrote. “We received a similar response from a headquarters company client yesterday.” Chamber officials would not comment Wednesday.

Gov. Pat McCrory signed HB2 in March to overturn a Charlotte non-discrimination ordinance supported by Mayor Jennifer Roberts and a majority on City Council. The law has cost the city major sporting events such as the NBA All-Star Game, concerts and business projects, such as a 400-employee PayPal operations center.

The legislation became a major issue in the gubernatorial campaign, and McCrory’s Democratic challenger Roy Cooper leads by more than 5,000 votes as provisional ballots are reviewed. The Charlotte Chamber has urged elected officials to reach a compromise on the issue to prevent further economic losses.

Edge, the Charlotte Chamber official, declined to comment on Wednesday. CoStar, which has previously confirmed that it looked at Charlotte before choosing Richmond, did not respond to a request for comment. The company did not comment last month on HB2 but issued a statement affirming LGBT rights.

‘Ours to lose’

Before HB2 emerged as a stumbling block, the emails show that Charlotte was close to winning the CoStar expansion after weeks of negotiations over incentives.

On Sept. 13, Edge sent an email to city and county officials saying the Washington, D.C.-based company had decided to increase the number of jobs it would create to 732 from 566, and raise the average wages to $57,000 a year from $45,000. The capital investment was also set to increase to $13 million from $8.8 million.

That had led the state to increase the value of its main incentives grant to $8.3 million from $7.6 million. With a $1.1 million training grant, that would boost the package to $9.4 million.

Heaven knows how many deals we’ve been crossed off the list and didn’t know we were even being considered for since March.

Charlotte Chamber official Jeff Edge, in a Sept. 20 email to a city economic development official

CoStar told officials if they could raise the total to $10 million “they will locate in Charlotte and not go to Kansas City,” Edge wrote in the email to Shull, city economic development director Kevin Dick and Mecklenburg County economic development director Peter Zeiler.

“The CEO of the company (Andrew Florance) says he needs the state’s package at that level to recommend North Carolina as their choice.”

In the email, Edge said he would like to ask the city and county to raise their local incentives due to the increased investment, jobs and wages. “This project is ours to lose at this point,” he wrote. “Let’s win it!”

By Sept. 14, an email from Shull said the incentives package had been increased to $9,819,832, with $421,832 coming from the city and county. That was about $180,168 short, but Edge was working with the company to increase the investment, which would further increase incentives that could be offered.

By Sept. 15, Shull said that package had risen to $10,204,269.

Documents previously obtained by the Observer had indicated that North Carolina, Charlotte and Mecklenburg had been willing to offer about $9.7 million in incentives. That compares with the $10.6 million CoStar is set to receive from Virginia and the city of Richmond, a figure that includes $4 million of in-kind services.

In a Sept. 15 email, Shull says CoStar was “primarily focused” on the 615 South College office tower currently under construction in uptown, as previously reported by the Observer. The company planned to commit to at least four floors and 105,000 square feet of space to be improved, a later email says. CoStar had asked for an optional fifth floor, which would take the square footage to 130,000.

The emails show the recruitment effort first heating up in July, when CoStar submitted information that economic development officials needed to prepare the proposed incentives package.

Dick, the Charlotte economic director, said neither he nor Shull had a direct conversation with CoStar over HB2. Zeiler, his counterpart in county government, has previously said he had no “direct knowledge” that CoStar passed on Charlotte over HB2.

Ricky Diaz, a spokesman for the McCrory campaign, did not comment on CoStar’s decision but said North Carolina’s recent No. 2 ranking on Forbes magazine’s annual “Best States for Business” list speaks for itself.

The Observer has also requested records from the North Carolina Commerce Department, but it has not yet received any documents.

Rick Rothacker: 704-358-5170, @rickrothacker

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