PayPal withdraws plans for Charlotte expansion over HB2

PayPal’s headquarters in San Jose, Calif.
PayPal’s headquarters in San Jose, Calif. Associated Press

In a move that will cost the city hundreds of jobs, PayPal on Tuesday scrapped plans for a new Charlotte operations center in the most dramatic corporate response yet to a new North Carolina law that limits legal protections for LGBT individuals.

The payment processor’s decision led to renewed calls for Gov. Pat McCrory and the legislature to overturn a measure that has drawn criticism from big companies such as Bank of America and American Airlines as well as sports organizations such as the NBA.

The law’s backers, however, showed no sign of retreating. They placed blame on Charlotte city leaders who passed an expanded nondiscrimination ordinance that spurred the state legislation.

In a volley among gubernatorial candidates, N.C. Attorney General Roy Cooper, a Democrat challenging McCrory, said the legislation, known as House Bill 2, poses a threat to the state’s economy.

“These are new, better paying jobs North Carolina won’t get because Governor McCrory has put his political ideology above all else,” Cooper said. “It’s time to reverse course and take actions to undo the damage.”

McCrory campaign manager Russell Peck responded that Cooper “continues to side with out-of-state and Washington, D.C., special interests over what’s best for North Carolina and its families.”

North Carolina’s new law, signed March 23 by McCrory, limits legal protections of LGBT individuals by setting a statewide definition of protected classes of citizens. The law means schools and local governments cannot adopt more inclusive rules. Legislative leaders said they were responding to Charlotte’s ordinance, which would have allowed transgender people to use the bathroom that corresponds to the gender with which they identify.

Since the bill’s signing, prominent CEOs have signaled their opposition, and more added their voices Tuesday. Ric Elias, the CEO of Charlotte-area marketing firm Red Ventures, said he would “seriously reconsider” a planned expansion in North Carolina.

In a statement, the Economic Development Partnership of North Carolina, a public-private venture that recruits businesses to the state, acknowledged “that a number of companies we engage with in our efforts to market the state for business recruitment, tourism and film production have expressed reservations about doing business in North Carolina because of concerns regarding House Bill 2.”

The organization, chaired by former Charlotte City Council member and McCrory ally John Lassiter, added that it’s confident “our state’s lawmakers and governor will work together to consider ways to best address the concerns of all parties affected by this legislation, and we encourage timely resolution of this matter.”

Republicans who have backed the law, however, gave no indication that they plan any changes.

House Speaker Tim Moore and Senate leader Phil Berger said in a statement that Democratic Charlotte Mayor Jennifer Roberts and Cooper should stop their “misinformation campaign” and immediately “start telling the truth about this commonsense bathroom safety law.”

At a high school in Jamestown, where he was already scheduled to talk about education initiatives, McCrory said it’s up to individual companies to decide how to deal with the new law, according to The Associated Press. McCrory said he expects PayPal to continue providing services in North Carolina.

After taking several questions on the topic, McCrory ended the question-and-answer session and went into the school’s administrative office, avoiding reporters who waited in front of the school to ask additional questions.

Project drew McCrory’s praise

Just last month, PayPal executives gathered with state leaders at the Charlotte Chamber to hold a triumphant announcement of the new operations center, which would employ more than 400. McCrory said the San Jose, Calif.-based company was the kind of technologically advanced company North Carolina and Charlotte need to attract.

“Young people know all about it,” McCrory said March 18 of the company, which allows people to send money electronically. He presented PayPal executive John McCabe with a wooden bowl made from a tree struck by lightning outside the state Capitol to commemorate the occasion.

“Charlotte continues to be a great job-creation center,” the governor added.

After the passage of HB2, PayPal chief Dan Schulman, however, emerged as one of the more than 100 CEOs to condemn the law. On Tuesday, he announced in an open letter the company’s decision to nix the Charlotte operations center.

“The new law perpetuates discrimination, and it violates the values and principles that are at the core of PayPal’s mission and culture. As a result, PayPal will not move forward with our planned expansion into Charlotte,” Schulman said.

The Economic Investment Committee of the N.C. Department of Commerce had unanimously approved $3.7 million in state incentives for PayPal. The state incentives would also have included $480,000 in community college training, as well as contributions from Charlotte and Mecklenburg County. The incentives packages would have been tied to the company hitting job-creation and investment targets.

The company had planned to open its office at 1000 Louis Rose Place, off Research Drive in the University City area. PayPal said the jobs would have an average salary of nearly $51,000 a year, and the company committed to invest $3.6 million in its new facility.

Schulman said the company is now seeking an alternative location for the operations center. Last month, PayPal had said Arizona and Florida were in the running against Charlotte. PayPal is also working, Schulman said, “to overturn this discriminatory legislation.”

Darlene Heater, executive director of University City Partners, said the cancellation is a blow to the University City area.

“We’re extremely disappointed,” said Heater. “That’s 400 jobs that were coming to our area that are no longer coming.”

The Charlotte Chamber in a statement reiterated a call for “leaders at the city and state levels to contribute toward a solution that is in the best interest of our city and state.”

HB2 supporters push back

HB2 supporters fired back after PayPal’s announcement.

“Companies like PayPal who are pushing their radical bathroom policies on states like North Carolina should think twice before they assert themselves into the policy decisions of the state,” said Tami Fitzgerald, executive director of North Carolina Values Coalition.

And Michele Nix, vice chairman of the North Carolina Republican Party, accused PayPal of “corporate hypocrisy and bullying,” citing the company’s past violations of economic sanctions on Cuba, Sudan and Iran.

Opponents, however, said the law will harm North Carolina’s ability to remain economically competitive.

“PayPal’s announcement that it’s taking 400 jobs out of Charlotte makes it clear as day that HB2 is dangerous and harmful legislation,” said Chris Sgro, executive director of Equality NC. McCrory and Berger “are willfully hurting North Carolina with HB2.”

In addition to PayPal, movie and TV show makers have shown a willingness to withdraw from the state over HB2. Lionsgate is pulling production for a new Hulu show that was supposed to be filmed in Charlotte, and Rob Reiner, who directed films such as “When Harry Met Sally” and “The Princess Bride,” has said he won’t film in North Carolina until the bill is repealed.

Among sports organizations, the NBA, which is set to host its All-Star Game in Charlotte next year, has expressed concern over the law. But the NFL said Tuesday that it will not move its spring meeting, scheduled for May 23-25, from Charlotte. The Carolina Panthers have made their position of nondiscrimination clear, a league representative said, as has the city of Charlotte.

The Associated Press and Observer staff writers Jim Morrill, Mark Price, Deon Roberts and Jonathan Jones contributed.

Business, sports reaction to HB2

On Tuesday, PayPal said it was canceling plans for a new operations center in Charlotte in response to the state’s new public accommodations law. Here’s how other organizations have reacted:

▪ Braeburn Pharmaceuticals is reconsidering plans for a $25 million manufacturing and research facility in Durham.

▪ Google Ventures is no longer investing in North Carolina until House Bill 2 is repealed.

▪ Lionsgate pulled production for a new Hulu show that was to be filmed in Charlotte area.

▪ The NBA, set to host its 2017 All-Star Game in Charlotte, said it’s “deeply concerned that this discriminatory law runs counter to our guiding principles of equality and mutual respect.” The league said it doesn’t yet know what impact the law will have on its “ability to successfully host” the event.

▪ The NCAA, which has men’s basketball tournament games planned in North Carolina in 2017 and 2018, said it is monitoring the situation. The Central Intercollegiate Athletic Association, the oldest African-American sports conference in the U.S., has hosted its annual basketball tournament in Charlotte since 2006 and says it is also monitoring the situation.

▪ The Charlotte Regional Visitors Authority says the new law has deterred some businesses from having conventions in the city.

▪ ESPN, which is considering Charlotte as a host city for its 2017-2018 Summer X-Games, said it’s re-evaluating its plans.

Katherine Peralta

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