Lawsuit possible as Cooper loses economic development influence

In his campaign for governor, Roy Cooper had a lot to say about his plans to improve North Carolina’s economy.

Give more incentives funding to rural areas and small businesses. Bring back jobs lost due to House Bill 2. Start a state-run mentoring program for business owners, and a micro-loan program for aspiring entrepreneurs. Restore film tax credits, and create new regionally targeted economic development plans.

Some of that work could be more difficult for him to implement, however, due to changes the state’s Economic Development Partnership quietly approved for itself last week.

The governor used to be able to remove board members for any reason, but now he needs proof of “misfeasance, malfeasance, and nonfeasance.” And most of the seats appointed by the governor won’t have their terms end until Cooper’s first term is more than halfway over.

The changes undercut Cooper’s ability to make an immediate impact on economic development policy, since the partnership’s directors are in charge of shaping that strategy for the state. The partnership’s board approved the changes the same day the legislature passed two bills – later signed into law by Gov. Pat McCrory – that will limit Cooper’s power as governor, particularly regarding education policy and election access.

Of the 17 board members, the legislature appoints eight and the governor nine. But Cooper now likely won’t be able to appoint anyone for most of his first year in office. And seven of the nine seats will likely remain filled by McCrory appointees until Cooper’s four-year term is more than half over.

Board members serve staggered terms. Two seats will open up in October 2017. Another four will open in October 2018. And three of the terms don’t end until October 2020, which means Cooper won’t get to use a full third of his appointments until just weeks before he’s up for re-election.

Economic Development Partnership CEO Christopher Chung – who reports to the board of directors – said a guarantee of stability on the board is good for the partnership’s main goals of bringing new businesses and tourists to North Carolina.

“You want some continuity,” Chung said, in order to maintain productive relationships with people in the business world like site selection consultants and marketing professionals.

And although the board members are politically connected, Chung defended the work of the partnership itself as non-partisan.

“Having been in organizations like this in two other states, over 20 years, I’ve worked with probably seven administrations both Republican and Democratic,” Chung said.

Cooper spokeswoman Megan Jacobs said the transition team’s lawyers are looking into the changes. Cooper has also threatened potential lawsuits over the recent legislation stripping some of his office’s power in other areas of government.

What is the EDP?

The Economic Development Partnership is a public-private partnership, created in 2014 to replace the state-run Economic Development Board.

Board members shape the state’s economic development strategy and are expected to raise money – the group is funded by donations as well as taxpayer dollars – and to tap into their contacts, on behalf of the state.

McCrory’s initial economic development appointees in 2013 included his longtime friend and political adviser John Lassiter as the chairman of the board, Red Hat CEO Jim Whitehurst as vice-chairman, and others. The News & Observer reported at the time that McCrory’s appointees had given tens of thousands of dollars to help him get elected, “as is traditional with such boards.”

Lassiter and Whitehurst remain the chairman and vice-chairman of the EDP board; neither could be reached for comment Thursday. Lassiter’s term ends in 2018, and Whitehurst’s in 2020.

The others whose terms don’t expire until 2020 are both Republicans – Caleb Miles, who leads tourism efforts for Pinehurst and the surrounding area, and Mark Bellissimo, who owns a large equestrian facility in Polk County and who was a major donor to McCrory’s 2016 campaign.

According to EDP spokeswoman Mary Wilson, the board voted 14-0 to make the changes. It’s unclear who the three members who missed the vote were.

Cooper will retain some power over the partnership outside of the board, and Chung said he has already met with Cooper advisers to talk about how the governor’s office and the partnership can best work together in the future. The partnership only exists as long as it keeps its contract with the Department of Commerce, which is under the governor and can cancel the partnership’s contract at any time, for any reason.

Chung said he thinks the partnership performed well in 2015 and 2016, and he’s hoping for an even more successful 2017.

“There’s always room to improve,” he said.

This story was originally published December 22, 2016 at 7:05 PM with the headline "Lawsuit possible as Cooper loses economic development influence."