Two Charlotte economic development groups facing deficits, filings show

Two of Charlotte’s three economic development groups reported deficits in their most recent tax filings, despite an improving economy and success in recruiting new businesses to town.

The Charlotte Regional Partnership and Charlotte Center City Partners faced separate revenue challenges in the years covered by their most recent filings. But the Charlotte Regional Partnership said it has since returned to the black, and Charlotte Center City Partners said it has built up reserves to weather shortfalls.

The Charlotte Chamber, the city’s largest economic development group, reported a surplus in the year covered by its most recent filing. All three nonprofit groups reported salary increases for their top leaders.

The annual Form 990 tax filings provide a window into the operations of organizations that are key to bringing new jobs and businesses to Charlotte. In recent years, North Carolina has made changes to the way it recruits businesses to the state, spurring questions about how local groups will work in this new framework.

The three nonprofit groups have similar missions to promote business and economic development but focus on different areas and priorities in the Charlotte region.

The Charlotte Regional Partnership is responsible for promoting the 16-county Charlotte area as a place for businesses to expand and relocate. In its filing for the year ended June 30, 2014, the group posted a deficit of $275,194, according to its most recent 990 filing. That compares with a deficit of $3,322 a year earlier.

The increase in red ink was driven mostly by a drop in contributions from the state of North Carolina, the group’s audit shows. Total grants from the state declined by almost three-fourths to $137,143. The audit said the group expects to receive no money from the state in fiscal 2015.

The Charlotte Regional Partnership also receives funding from various municipalities and counties, as well as corporations, the audit says.

The organization lost funds when the state shifted money away from regional partnerships to the newly created Economic Development Partnership of North Carolina, said Charlotte Regional Partnership CEO Ronnie Bryant. The state partnership, a public-private venture that started work in October 2014, has taken over some business recruiting functions from the Department of Commerce.

Locally, the group’s contributors were also awaiting the results of a study analyzing the missions of the Charlotte Regional Partnership and the Charlotte Chamber, Bryant said. The study, released in June, determined that both agencies were needed but should take steps to eliminate redundancy and competition between them.

The financial support the organization has received since the study indicates confidence in the group is “very high now,” Bryant said. “Our supporters just needed to understand the partnership’s viability and role before moving forward,” he said.

The Charlotte Regional Partnership is shifting to a calendar year reporting cycle and has not yet filed a 990 for 2015. But the partnership said it expects a surplus of about $81,000 for the year. (In the period from July 1, 2014, to Dec. 31, 2014, it posted a deficit of $134,418.)

Counties in the region “continue to support the partnership by investing 30 cents per capita, and we have increased our private investment to make up for the loss in state funding,” a partnership spokesman added.

Bryant said he expects 2016 to be a “solid year” for economic development in Charlotte. His group will work closely with the state partnership in the year ahead, he said.

Revaluation hurts CCCP

Charlotte Center City Partners promotes uptown Charlotte and South End as a place to do business and also coordinates programs in the center city ranging from concerts to a free shuttle service.

For the year ended June 30, 2015, the group reported a deficit of $909,575, compared with a deficit of $104,219 in the previous year.

The organization, which receives most of its revenue from a special tax on properties in uptown and South End, lost income when a review of property values in Mecklenburg County reduced tax collections in the district, CEO Michael Smith said. That forced the group to return about $830,000 in tax revenue to the city, producing the bulk of its deficit.

“We wrote a check back (to the city), and we have less resources going forward,” Smith said.

Going forward, the group expects the revaluation will reduce yearly tax revenues by around $536,000 from what they would have been. But the group could receive additional income as new apartments and office buildings go up in uptown and South End, he said.

Charlotte Center City Partners began preparing for the reduction a few years ago by building a strategic reserve to help cover expenses, Smith said. The group had assets of $2.99 million at the end of its fiscal year, according to its 990.

The nonprofit has not cut staff because of the tax hit but plans to add new employees only if it receives additional revenue, Smith said. For example, it hired a director for a new Historic West End initiative, but only after receiving a grant from the Knight Foundation.

Charlotte Center City Partners is also bringing in sponsors to help pay for programs, including Bank of America for a planned Charlotte Symphony performance this year at Romare Bearden Park.

“We continue to make little strategic decisions like that,” Smith said, “but we feel really good that because of this strategic reserve fund we have the resources that we need during a really important period in the development of our center city.”

Charlotte Chamber revenue up 3%

The Charlotte Chamber recruits businesses to Charlotte, lobbies on business issues and provides networking opportunities for its members.

In 2014, total revenue at the Charlotte Chamber exceeded expenses by $321,442, according to its latest 990 filing. That was up from a $317,439 surplus in the previous year.

Its total revenue increased by more than 3 percent to $8.6 million, more than the money brought in by the two other groups combined in their most recent fiscal years. The Charlotte Chamber draws its revenue from membership dues and other services.

“Our revenue model works, and we do deliver back on our return on investment back to our members,” Mike Manning, the Chamber’s chief financial officer, said.

The Chamber saw a slight dip in its membership to 3,210 from 3,242 in 2013. Manning attributed that to increased competition among business groups and said it mirrored a trend in other large cities.

Salaries rise at all 3 groups

Besides revenue and expenses, the 990 filings also report compensation for top executives. The leaders of all three groups received raises in their most recent fiscal years.

▪ Chamber CEO Bob Morgan made $434,485, including salary, bonus, benefits and other compensation, up more than 7 percent.

▪ Charlotte Center City Partners’ Smith received $398,373, including salary, bonus, benefits and other compensation, up more than 5 percent.

▪ The Charlotte Regional Partnership’s Bryant made $321,274, counting salary, retirement and other benefits, up more than 2 percent. He received no bonus.

This story was originally published January 10, 2016 at 10:00 AM with the headline "Two Charlotte economic development groups facing deficits, filings show."