Under the Dome

February 7, 2014

NC Commerce Department's public-private partnership plan unproven

When North Carolina moves its job-recruiting and marketing functions to a new public-private partnership later this year, it will join just 12 other states with similar structures in place. And with many of those states switching to the partnership model within the past several years and with each of them somewhat different, the economic development strategy remains largely unproven.

When North Carolina moves its job-recruiting and marketing functions to a new public-private partnership later this year, it will join just 12 other states with similar structures in place. And with many of those states switching to the partnership model within the past several years and with each of them somewhat different, the economic development strategy remains largely unproven.

“There is no conclusive study or set of studies that can say definitively that a public-private partnership is a more or less effective way of going about economic development than a public agency,” Patrick McHugh of the General Assembly’s Fiscal Research Division told a legislative committee on Thursday.

The Commerce Department plans to move its job recruiting and marketing functions to the newly formed Economic Development Partnership of North Carolina in the second half of this year.

McHugh told lawmakers at the Joint Legislative Economic Development and Global Engagement Oversight Committee about pitfalls that other public-private economic development agencies across the country have encountered, including conflicts of interest and perceptions of conflicts, a lack of transparency and limited investment from private businesses. Such problems, he said, can undermine the credibility and effectiveness of such partnerships.

Commerce Department officials said they have studied states that have tried similar approaches and that Senate Bill 127, which they are relying on as a blueprint for the new Economic Development Partnership, includes provisions aimed at preventing those problems in North Carolina. Commerce officials hope Senate Bill 127 will pass in this year’s short legislative session, which begins in May, giving them the authority they need to forge ahead.

Richard Lindenmuth, the interim chief executive officer of the Economic Development Partnership, said partnership “successes” would be the only way to alleviate public concerns that problems in other states could happen here.

“Once this starts moving and we can demonstrate that it’s going in the right direction, that we’re sensitive to conflicts of interest, that our staff is indeed being measured, that we are indeed transparent, that we are reporting correctly once those things become evident, then the concerns should dissipate,” Lindenmuth said.

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