State mum on any rural center fallout for GE

Jul. 21, 2013 @ 01:24 PM

Answers weren’t immediately forthcoming from state officials on Friday about how a funding freeze targeting the N.C. Rural Economic Development Center might affect the center’s contribution to an incentive deal for GE Aviation.

N.C. Department of Commerce spokeswoman Beth Gargan referred questions about the matter to the N.C. Office of State Budget and Management.

State Budget Director Art Pope and Deputy Director for Budget David Brown didn’t reply to an email requesting comment. Nor did Gov. Pat McCrory’s press office respond to a phone call seeking comment.

The Rural Economic Development Center is scheduled to provide $500,000 of the $9.9 million in incentives that the state has pledged to give GE Aviation in return for the company expanding its manufacturing operations in four communities.

Durham is one of the four. A GE Aviation plant off South Miami Boulevard will assemble a new line of jet engines intended to equip next-generation models of the Boeing 737 and Airbus A320.

Local governments in all four communities also have pledged incentives. Their end is worth an estimated $10.6 million; Durham city and county officials agreed to contribute $600,000 of that.

The funding freeze, ordered Thursday by Pope, followed the release of a state audit that said the rural center was overpaying its in-house administrators and hadn’t been doing a good enough job of monitoring the performance of incentive beneficiaries.

Pope’s order directed the rural center to turn over to his office information about its finances and said the state may pull its funds out of the center’s programs.

It has contributed $363.7 million to the center since the start of fiscal 2005-06 and as of the end of 2012 believed the center was holding at least $113.0 million, Pope said in his letter to rural center officials.

Local leaders presume the state will honor its pledge to GE Aviation, given the high-profile nature of the engine project.

“I strongly suspect the state will confer with [GE Aviation] and work out something,” said Ted Conner, vice president of the Greater Durham Chamber of Commerce, a group that helped put together Durham’s end of the incentive package.

But “I’m not certain how the state would handle it, if [the $500,000] would come from another division or how they would handle it,” said Kevin Dick, director of the city’s Office of Economic and Workforce Development.

He added that local officials talking to the state have worked primarily with the Department of Commerce. The rural center’s problems “certainly wouldn’t change our local commitment” to the GE deal, Dick said.

The GE incentives, like most such deals, are payable by both the state and local governments over time, based on whether and how fast the company delivers on its job-creation and investment promises.

The jet project is expected to yield 242 new jobs and a $195 capital investment spanning factories in or near Durham, Wilmington, Asheville and West Jefferson, N.C.

While the Durham plant will handle assembly, the other three will manufacture parts. The Asheville plant will make special “ceramic matrix composite” parts using a technology GE hopes to apply in a broader way to future engine projects.