State showering cash on project
BYLINE: Lee Weisbecker
RALEIGH - State and local incentives for Dole Food billionaire David Murdock's biosciences research campus in Kannapolis range from $147 million to $216 million, but that doesn't include enhancements in the hopper at the General Assembly.
With those additional items - spanning the field from sales tax breaks to venture capital investment guarantees - incentives for Murdock's "biopolis" are entering territory occupied by the likes of those granted to Dell Computer, which got a package worth $280 million, and Google, which is pulling down $183 million to $219 million.
The Dell package sparked a controversy that grew into a full-fledged uprising with the Google deal. Lawsuits were filed, and now a state commission is studying the efficacy of incentives.
By contrast, Murdock's public-private partnership, a proposed 20-year plus collaboration between Dole Food's research division and the state's leading research universities, has barely sparked much comment, let alone controversy.
That's due in part to the fact that after the 2003 shutdown of Cannon Mills, Kannapolis' largest employer at the time, the city near Charlotte became the symbolic epicenter of the eroding manufacturing sector in North Carolina.
"They know the history of this region and have used it to their advantage," Sen. Robert Pittenger, a Charlotte Republican and vocal opponent of incentives, says of supporters of Murdock's biotech campus. "But if we're willing to give away the store, you really can't blame them for trying."
Pittenger recalls a two-hour dinner he attended with Murdock and Sen. Fletcher Hartsell, a Concord Republican who represents Kannapolis, when the biopolis proposal was in the early talking stages.
"At the time, the demands were reasonable," says Pittenger. "He (Murdock) was going to bring a huge amount of capital investment, and if we needed to build a road or something, that seemed to be the right thing to do. But now it's like one thing has led to another and to another."
Backers of the project, who point to the construction activity that's transforming Kannapolis as Murdock's "core" lab building rises from the ground, don't see it that way.
"There are skeptics like there are on any economic development project," says Sen. David Hoyle, a Democrat from Gastonia, which is 45 miles west of Kannapolis, and a biopolis supporter. "But the way I see it, this could really, really be something for North Carolina."
One of Hoyle's Senate colleagues, Andrew Brock, a Republican from Mocksville, which is 40 miles north of Kannapolis, agrees. "Murdock has a vision ... and we think this could be a great catalyst."
Direct, taxpayer support
To date, the key elements in the Murdock package that have been approved include the following:
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On the state level, $48.6 million in direct, taxpayer appropriations from the state's general fund over the next two fiscal years. The money goes for university lease payments for lab and greenhouse space, university scientists' salaries and equipment.
Specifically, the state has agreed to pay Murdock $26.3 million in 2007-08 and $22.3 million in 2008-09. Those represent years two and three of the 20-year endeavor. Last year, lawmakers ponied up $8 million in kick-off payments.
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$6 million from the general fund to the North Carolina Community College System to conduct worker training programs at the "biopolis" during the next two years. -
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On the local level, between $98 million and $168 million in an infrastructure bond package to pay for streets, utilities, site preparation and other improvements. The city of Kannapolis proposes to use higher property tax collections expected to come from the 350-acre campus development to pay off the bonds.
City officials were expected to announce specific bond amounts in a meeting the week of March 26 but put off the oft-postponed announcement.
Officials with the government of Cabarrus County, in which Kannapolis is located, have been asked to provide repayment guarantees if the property tax increase turns out to be inadequate, but they have been taking a critical look at the deal.
If the county was asked to earmark millions annually in repayment guarantees, says Cabarrus County Manager John Day, it wouldn't have the resources to meet $400 million in projected school costs. "Not without a tax increase," says Day.
Universities part of mix
Murdock is a feisty high-school-drop-out-turned-entrepreneur who has made the name of privately held Dole Food synonymous with canned pineapples. He's also the former owner of Cannon Mills, whose failure under different ownership idled more than 5,000 workers.
In the wake of that emotional disaster, Murdock re-entered the picture with his partnership idea, offering to lease research space to North Carolina State University, the University of North Carolina at Chapel Hill, Duke University and other colleges on a mixed-use campus that would include hotels, retail, housing developments and more.
Murdock has said he plans to make state-of-the art equipment purchases - a scanning electron microscope, for instance - available to university investigators and will spend more than $1 billion of "his own money" on the project, which is being developed by Murdock's land development firm, Castle & Cooke.
Thus far, Murdock's vision has proven irresistible to state and local economic developers and lawmakers.
In addition to direct support, a pair of legislative proposals have been offered that, if passed, could be used to incentivize the Murdock development and a $200 million venture capital fund that he's said he would set up in connection with the deal. Those proposals are as follow:
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A bill from Hartsell would set aside $100 million in tax dollars to establish a committee to reimburse venture capitalists for half of their "first loss," up to $30 million, on cash infusions in North Carolina companies. Supporters of the legislation say Murdock could benefit from such a law should an investment from his venture fund go bad. -
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Another bill by Hartsell would grant sales and use tax refunds on equipment, chemicals and other purchases made in the pursuit of life sciences research. No dollar impact has been estimated.
Repeated attempts to reach Hartsell were not successful.
Hoyle says the venture guarantee measure was introduced for discussion purposes. "It's an idea we wanted talked about," he says. "But it's a long shot as far as passage because of the cost."