NC Rural Center: Quick cash from US to politicos and their powerful friends

momoneyI am beside myself.  TWO DAYS IN A ROW we’re getting real reporting from McClatchy-Raleigh.  (It’s interesting that they are finally noticing The Rural Center 26 years after its establishment while the GOP controls the state’s executive and legislative branches.) 

Part ONE established what a lot of us already knew:  The NC Rural Center is a huge money pit.   PART TWO, out today, establishes that politicians and their donors and friends have been benefiting from the Center’s work:

Officially, the nonprofit N.C. Rural Economic Development Center awards “job generating” grants, funded by state taxpayers, to nondescript government agencies. The city of Rocky Mount. Montgomery County. The town of Indian Trail.

From the center’s files, other stories emerge: Legislators influencing where the money goes. People and businesses from across the political landscape getting in on the deals. Political money men benefiting from taxpayer cash, spent with little notice or scrutiny.

One of the biggest names: Discount store business Variety Wholesalers, whose CEO, Art Pope, is a well-known supporter of nonprofit groups that criticize taxpayer subsidies for businesses. A former Republican legislator, he’s now Gov. Pat McCrory’s budget director.

One of the best connected: Bob Jordan, the former Democratic lieutenant governor who helped start the Rural Center and was a longtime board member. His company was recently part of a grant, but then backed out.

One of the state’s new leaders: State Sen. Tommy Tucker, who pushed for $300,000 in Rural Center money to help develop a 14-screen movie theater complex in his district – 5 miles from where Interstate 485 loops around Charlotte. Tucker, a Republican from Union County, asked Rural Center leaders to ignore legislation that restricts the center’s spending, according to interviews and documents reviewed by The News & Observer.

The center agreed. Tucker subsequently collected campaign cash from several of the project’s developers.


Politicians get help

The Rural Center was born in 1987 of a legislative commission and remains financed largely by government money. For many years, it focused on clean water projects, research and community development, not projects with direct claims of job creation.

In 2004, lawmakers sent millions its way to build “economic infrastructure” with a mission of generating jobs. Since 2004, the center says it has made grant awards of more than $375 million that led to 32,000 “homegrown” jobs.

The center’s annual appropriation has been about $25 million a year over the past four years.

Grants must be routed through a local government. Records also show involvement from politically connected people, including one of the fathers of the Rural Center.

Bob Jordan, a Montgomery County lumber executive, was lieutenant governor in 1987 when that office ruled the Senate. He was a key player in starting and overseeing the Rural Center for years and remains an “emeritus” board member.

His company signed on this year for a $155,000 grant to rehab a building it owns in Biscoe, about halfway between Raleigh and Charlotte.

The grant was approved in late April. Jordan and Hall said they hadn’t discussed the grant prior to its award.

In an interview, Jordan said his company is strong, has weathered the recession, was ready to expand – and had already hired the workers it promised for the grant.

The company backed out on May 17, three weeks after the money was awarded. Jordan said the company had reconsidered and decided it didn’t need the money.


Hall, who has run the Rural Center for 26 years, dismisses any notion of an insider’s game.

He said grants happen through a routine process open to all. He also said he tries as best he can to respond to lawmakers’ requests.

Mike Graham isn’t so sure about the grants being open to all.

Graham owns a soda shop restaurant, Jukebox Junction, in Canton, west of Asheville. He read in the newspaper that an old building in his town was going to be turned into a restaurant, with $110,000 from the Rural Center. Its owner: Pat Smathers, a former mayor active in Democratic politics.

Smathers once served as chairman of one of the party’s major annual dinners and was a candidate for lieutenant governor in 2008. Smathers wrote in an application that his employees would make $13,650 a year.

Graham said he had been thinking of buying and renovating a building nearby, in downtown Waynesville, to open a second restaurant. His numbers were coming up short on the purchase of the building and he won support from the mayor for a center grant. He said he was surprised when Rural Center officials told them not to apply. The reason: While he estimated his employees would make about $15 an hour, much of it was based on tips; he would not guarantee paying the minimum wage.

He said he believes better political connections might have led to a different result. He called the Rural Center a “good ol’ boy” fund.

Pushing for a project

Union County, near Charlotte, is one of the fastest-growing counties in the state. In 2011, the Rural Center’s board looked at the latest census data and realized its definition of rural no longer applied to Union, Henderson, Iredell, Lincoln and Pitt counties.

So the board changed its criteria to keep those counties eligible for grants. That was helpful when Hall and state Sen. Tommy Tucker met to discuss a movie theater complex proposed in Indian Trail.

Hall and Tucker, who first won election to the General Assembly in 2010, discussed the project with developers who were trying to make the finances work. Those numbers included $1.6 million in interest payments for the partners, according to a document filed with the Rural Center.

That meeting produced a letter on Dec. 13, 2011, from Hall to the senator. Hall spelled out that the center would have to bend its rules to make the requested $300,000 grant.

According to the Rural Center, state law says that private developments can receive only up to $5,000 per job created. The theater project would commit to creating 30 jobs, making it eligible for only $150,000.

Prior to that meeting, Hall said, Tucker had put him “on the spot,” wondering what the Rural Center did, as he made his rounds to talk with lawmakers.

After the meeting, Hall wrote that he would recommend a “one-time exception” to allow for a $10,000-per-job payment using money not typically available for private improvements.

Hall and a vice president won approval after talking by phone individually with five members of the Rural Center’s executive committee, described as its “business arm.” Hall serves on that committee and voted for it. The full 50-member Rural Center board approved the grant as part of a package the following February.

Campaign money

In the meantime, eight of nine partners in the theater project wrote campaign checks to Tucker, a total of about $6,500, records show. […]