After deal’s demise, what’s next for House Bill 2?

After the futile attempt last week to repeal it, House Bill 2 will continue to cast a long shadow over North Carolina’s politics and economy well into the new year, if not beyond.

The aborted repeal came during a special session that brought lawmakers to Raleigh for nearly 10 frustrating hours. It culminated in a single Senate vote marked by partisan rancor and pointed jabs at Republican and Democratic leaders as well as the city of Charlotte.

The day left an increasingly toxic political atmosphere awaiting Democratic Gov.-elect Roy Cooper and the new General Assembly that convenes in January.

It exposed vulnerabilities in the clout of Senate Republican Leader Phil Berger and House Speaker Tim Moore.

It further poisoned the legislature’s relationship with the state’s biggest city.

And it left HB2 intact.

“Where’s there any trust between anybody at this point?” said Michael Bitzer, a political scientist at Catawba College. “The bitterness and the recriminations from both sides are pretty deep.”

HB2, approved in March, blocks local governments from giving anti-discrimination protection to LGBT individuals and requires transgender people to use the restrooms and locker rooms of the gender on their birth certificate in government buildings. It was a response to a Charlotte ordinance that added LGBT protections, including allowing transgender people to use the bathroom of the gender with which they identify.

The law has led to lost jobs and sports and entertainment boycotts. The NBA pulled its 2017 All-Star Game from Charlotte. The NCAA and ACC canceled tournament games. The tourism industry says the measure has cost the state’s tourism industry hundreds of millions of dollars.

Lawmakers met last week after a deal had been hammered out among Cooper, Berger, Moore and Charlotte Mayor Jennifer Roberts. When the deal collapsed Wednesday, no path to a future repeal deal was apparent.

Berger blamed the failure on bad faith by Cooper and Democratic lawmakers.

“The tragedy here is it will be extremely difficult to try to cobble this back together,” he said.

But Cooper said he will try.

“It was was our best chance, but it cannot be our last chance,” he told the Observer. “We have to continue to try to fix this because it is a stain on the reputation of our great state and it has to be fixed.”

Roberts said she would support a “blue ribbon panel” to work toward a solution.

“We will work hard to have good communication and to make sure we work with our legislators who have authority over us,” she said.

In the meantime, the effects of last week’s failure will continue to be felt.

The new session

Rarely has an incoming governor faced the hostility from legislative leadership that Democrat Cooper is expected to encounter.

Late Wednesday, Berger introduced a bill that would have repealed HB2 and set a moratorium on future ordinances such as Charlotte’s. He called for separate votes on each part.

But Cooper, who opposed the moratorium, called the tactic “legislative trickery.” He urged Democrats to vote against repeal. And they did, combining with some Republicans to kill the bill.

“I think Roy Cooper tried to do everything he could to sabotage a reasonable compromise,” Berger told reporters after a more than nine-hour session.

Cooper said he’ll take office looking for common ground but be prepared when he doesn’t find it.

“Clearly I’m going to have to fight them from time to time,” he said. “My mom and dad told me about keeping my word and clearly the word was not kept with me on this. So clearly I have to go into my discussions with them in the future mindful of this.”

Charlotte and the legislature

The rejection Wednesday of a House Bill 2 repeal left Charlotte leaders wondering whether Raleigh’s vitriol toward Charlotte will impact the city’s relationship permanently, threatening the city’s goals in other areas such as transportation and how many sales tax dollars it receives.

Outgoing state Sen. Bob Rucho, a Charlotte Republican, said he’s worried the ill will over HB2 could spill over into other legislation.

“For the past 20 years, there were a number of other members of the General Assembly who worked very hard to eliminate the stigma of ‘The Great State of Mecklenburg,’ ” Rucho said. “In three months Mayor Roberts destroyed all of that good will.”

The City Council’s legislative goals for 2017 are modest. Besides seeking a deal on HB2, the city hopes to protect the data-driven formula that decides which highway projects are funded. Charlotte and other cities like the “Strategic Transportation Investments” formula because it rewards urban areas, but rural areas want it changed.

The city also wants to block a change in how sales tax revenue is distributed. Like the proposals to change the transportation formula, rural areas believe they are being shortchanged.

If those two efforts move forward, Charlotte will have allies from other cities like Raleigh and Greensboro.

“Those issues are more about urban and rural and the differences there,” said City Council member John Autry, a Democrat who will become a member of the N.C. House in January.

HB2 also is likely to play into the fall Charlotte mayor’s race. Two Democrats – Mayor Pro Tem Vi Lyles and State Sen. Joel Ford – are considering challenging Roberts. Republican City Council member Kenny Smith said he’s also considering running.

Roberts is expected to face criticism that she hasn’t done enough to reach a deal, while she has pointed to her staunch support for LGBT rights.

In a campaign fundraising email Friday, Roberts said, “We will never stop fighting to push Charlotte forward, including ensuring full equality in our city.”

Sports hope for a rebound

A repeal of HB2 would have likely guaranteed the return of lost events, including the NBA All-Star Game in Charlotte, the ACC title game in Charlotte, the NCAA basketball tournament in Greensboro and CIAA tournament games throughout the state.

Without a repeal, the future of those games in North Carolina is unclear.

Lynn Minges, president and CEO of the N.C. Restaurant & Lodging Association, is not optimistic about the return of the NCAA games, which draw thousands of visitors every year to Greensboro’s hotels and restaurants.

Cities throughout the state, including Charlotte, submitted bids in August to host tournament games for the 2018-2019 and 2021-22 seasons. The NCAA has said the sites will be announced April 18, so a delayed action on HB2 does not bode well for North Carolina’s chances of hosting the games anytime soon.

“Unfortunately those bids will be awarded within the next few weeks, and North Carolina will essentially be in a drought for the next six years,” Minges said. The hope is, she added, that the General Assembly return in January “with a fresh perspective.”

The NBA has said that if certain unspecified changes are made to HB2, it will host its 2019 All-Star Game in Charlotte. The CIAA in September relocated eight out of 10 sports championships from the state, though its signature event next year – the 2017 women’s and men’s basketball championship tournaments – will remain in Charlotte. The CIAA has said its board will continue discussing the fate of future games in the state.

Fate in court

The General Assembly’s refusal to rescind HB2 leaves the legal challenges to the law on shifting ground.

The federal government’s HB2 lawsuit against the state relies on an Obama administration interpretation that federal discrimination laws in education and the workplace extend to the transgender population.

The U.S. 4th Circuit Court of Appeals relied on that interpretation in granting a Virginia transgender student access to the high school bathroom that matched his gender identity. The so-called “G.G. Case” is scheduled to be heard by the U.S. Supreme Court next year.

Many legal experts expect the government’s interpretation of the Civil Rights Act to change under incoming President Donald Trump and his pick for attorney general, Republican U.S. Sen. Jeff Sessions of Alabama.

UNC-Chapel Hill law professor Maxine Eichner, a specialist in LGBT legal issues, said she does not expect the North Carolina cases to move forward until the Trump administration clarifies its discrimination policies or the Virginia cased is resolved.

Other legal analysts expect at least one of the North Carolina cases to move ahead, specifically the lawsuit by the American Civil Liberties Union and other groups that was filed within a week of HB2 becoming law.

Chris Brook, the ACLU’s state legal director, says the complaint on behalf of transgender North Carolina residents does not rely on the potentially shifting federal interpretation of discrimination law. Instead, it makes separate constitutional claims on the issues of equal protection and due process.

He says the courts have provided decades of legal precedent that prohibit discrimination against transgender individuals.

In late March, attorneys in the case are scheduled to appear before the 4th Circuit to hear the ACLU’s call for a preliminary injunction against enforcement of HB2 pending the resolution of the lawsuit.

U.S. District Judge Thomas Shroeder of Winston-Salem denied the injunction earlier this year. But using language that critics of the law seized upon, Shroeder said the state of North Carolina has failed to present any evidence that HB2 is needed to protect the privacy of individuals using bathrooms, showers and other public facilities.

Shroeder’s ruling is expected to be appealed.

Business expansions up in the air

Real estate brokers and economic developers were hopeful that a repeal of HB2 would lift a cloud that’s hung over the state since the bill’s passage: The impact on corporate relocations.

In the wake of HB2, PayPal canceled a 400-job expansion planned for Charlotte, while CoStar decided to open a 732-job regional headquarters in Richmond instead of Charlotte. Deutsche Bank decided not to move forward with a 250-job expansion in Cary. Other major companies including Bank of America, American Airlines, Biogen, Microsoft and Apple have said they oppose HB2.

On Monday, when a repeal seemed likely, commercial real estate brokers were optimistic.

Now, with the law still in force, there’s likely to be continued reluctance among some companies to consider high-profile new facilities in North Carolina.

While some companies have continued to announce expansions and additional jobs in North Carolina since HB2 – Snyder’s-Lance selected Charlotte for a 130-job expansion last month, for example – economic developers are wringing their hands over the corporate reaction. Many fear North Carolina being crossed off companies’ list of possible relocations.

CoStar is a case in point. CEO Andrew Florance was “broadsided with (the board’s) push-back over the HB2 issue in Charlotte,” wrote Jeff Edge, a Charlotte Chamber official involved with recruiting the company, in a Sept. 20 email the Observer obtained through a public records request from the city of Charlotte.

At least one high-profile company kept its expansion plans in place after Wednesday’s failed compromise. Popular supermarket company Wegmans said Thursday that it plans to move ahead with its push into North Carolina, starting with several stores in the Raleigh area.

“We don’t believe that reversing course is an effective way to influence change,” the company said in a statement.

Charlotte Observer staff writers Katherine Peralta and Ely Portillo contributed.

This story was originally published December 24, 2016 at 11:23 AM with the headline "After deal’s demise, what’s next for House Bill 2?."