A week after City Council and the County Commission gave away $350,000 in taxpayer money to a local company, some politicians are wondering if they got burned. Last week, both bodies voted to give the money to Framatome ANP as part of a business investment grant. In exchange, the company agreed to create 100 new jobs and to stay in Charlotte. The company claimed it had been offered incentives to relocate to Virginia. Soon after the vote, County Commissioner Jim Puckett stumbled upon a November 2003 article in the Charlotte Business Journal that called into question whether the company ever had any intentions of leaving in the first place.
At the time, the Journal reported, Framatome was looking to move from its offices in the Wachovia Center to a larger space, but had no plans to look outside the Queen City. “Framatome vows to remain in Charlotte, where it has its second-largest US operation,” the Business Journal reported.
Last week, Framatome spokesperson Tommy Smith said the Business Journal got the story wrong.
But when Creative Loafing pointed out to Smith that the Business Journal had quoted him directly as having said, “We’re definitely planning to remain in Charlotte,” he didn’t have an explanation.
Smith wouldn’t say definitively whether the Business Journal misquoted him or not. He says he can’t remember if he asked the paper for a retraction, although Business Journal Managing Editor David Harris said Framatome has never contacted the paper about any inaccuracies in the article.
City Council voted in closed session in February 2004 to begin negotiating a business investment grant with Framatome. Last week Tom Flynn, the city’s economic development director, told Council that Virginia offered Framatome about $1 million in incentives to locate there. The company was offered a total of $700,000 to stay here by the city, county and the state.
City Council member Patsy Kinsey, who voted for the grant, said she would have given it more thought had she known about the articles.
“I am assuming that nobody on Council remembered seeing that or knew it or I’m sure it would have been brought up,” said Kinsey.
Smith initially told CL that the company was talking to Virginia about incentives at the time the Business Journal article was written, but then later in the same interview said that he wasn’t sure about the timeframe during which the company began conversations with Virginia. As for whether the incentives influenced the company’s decision to stay in Charlotte, Smith couldn’t say for sure.
The company itself has been in Charlotte in a different form for years, as a part of Duke Energy. In 2002, Duke sold its nuclear plant engineering unit to Framatome. Framatome now contracts with Duke to provide some of the services the unit once provided in-house.
That left some Council members wondering if Framatome could have left Charlotte for Virginia and still serviced its clients in the area, in particular Duke, which Smith described as one of the company’s biggest customers.
“The intel I had on this company was that they weren’t going to leave,” said City Council member John Tabor. “One of their biggest customers is right here in Charlotte.”
Smith, too, says the company’s philosophy is to “locate our people where our customers are,” but he also says the company still could have provided fuel and engineering services to Duke if it had moved to Virginia, though it would have had to have left an unknown number of its 500 employees in Charlotte to meet the company’s needs.
Though Council members weren’t yet aware of Framatome’s comments in the Business Journal when they approved the grant at a Council meeting last week, it was clear some were beginning to get cold feet about this kind of grant.
Council member Susan Burgess said she won’t vote for the grants anymore because the money could be used for police protection, adequate roads and other core services the city provides.
“We’re giving away free money and Framatome knows it, so why not come and get it?” she said.
Council member Don Lochman said that the full, combined $700,000 grant from the city, county and state isn’t big enough to influence the decisions of companies like Framatome that are worth hundreds of millions of dollars.
Council member Pat Mumford later called for a moratorium on the grants, and the Council eventually decided to take another look at the rules that govern which businesses get them, despite warnings from Mayor Pat McCrory that they are a necessary evil.
“Every city and state is struggling with this,” said McCrory. “You have (company representatives) who say ‘show me the love.’ It doesn’t have anything to do with the money. It is a statement.”
McCrory says that by not giving a company like Framatome a grant, the city risks losing it to competing states, which in turn means the city could lose a lot more than a few hundred thousand dollars in tax revenue generated by the company over a decade or more.
“It is an extremely complex issue,” said McCrory.
This article appears in Mar 9-15, 2005.
