Some give and take

Wearing two hats, economic developer Rick Watson proved to be an able industry hunter — and gatherer.
By Jerry Allegood

When he strode into Roanoke Rapids City Hall in early 2005, industry hunter Rick Watson must have sounded like northeastern North Carolina’s version of The Music Man. Unlike the fictional rascal who portrayed a pool hall as trouble in River City, Watson didn’t have to create problems. In the previous 15 years, Halifax County had lost nearly 60% of its manufacturing jobs — mostly in textiles, most of them in Roanoke Rapids. Like Professor Harold Hill, the musical’s title character, Watson was selling music as the solution.

Hill schemed to sell instruments and lessons to the townsfolk and abscond with their money. Watson, then president and CEO of the state-supported Northeastern North Carolina Regional Economic Development Commission, sold the notion of a 1,500-seat theater, which he said would kick-start an entertainment district that would transform the fading mill town into another Branson, Mo. Build a theater showcasing country-music entertainer Randy Parton, younger brother of Dolly Parton, and the community will prosper, he told city officials. They bought it, to the tune of $21.5 million that Roanoke Rapids borrowed for construction.

Like Hill, Watson had an angle, a connection town officials say they did not know about initially. But then that was often how this music man played it before leaving his economic-development job — under pressure from a state audit — in March 2006 to work for the theater he had helped sell.

In the musical, Hill ultimately redeemed himself, helping River City form a marching band. But there has been no redemption for Watson — at least not in his river city. The Randy Parton Theatre operated only about a year before shutting down in July 2008 because of paltry attendance. By then, Parton was long gone, having been fired in December 2007. Renamed The Roanoke Rapids Theatre, the white building with plantation-style columns overlooking Interstate 95 became a white elephant for the city — difficult to sell and costly to keep — and the subject of ridicule. In March, the city signed a deal with Chicago funeral-home owner Lafayette Gatling, who took over the theater in a $12.5 million lease-purchase agreement. Roanoke Rapids is stuck with the rest of the debt, which it will be paying for 20 years.

“It’s still a hot issue,” says Mayor Drewery N. Beale. He once delighted in telling a story about the project, which began with Watson passing a business card backstage to Parton’s associates after a visit to Dollywood, his sister’s theme park in Pigeon Forge, Tenn. These days, Beale won’t talk about Watson. “We just thought we were going in the right direction.”

Now the city is looking for a new direction. So is Watson. He no longer works as an industry hunter or is associated with the theater. He has battled a lawsuit, testified before a grand jury and faced criticism over his role in this and other projects. He lives in Garner, where he’s involved in development efforts he won’t discuss. He also declined requests for an extended interview for this article, though his brief comments indicate he stands by the project and his role in it.

The man who convinced Roanoke Rapids officials they should and would be hobnobbing with “legends” such as country singers Jeannie Seely, Jean Shepard and Ronnie Milsap is not a musician. Watson doesn’t even consider himself an economic developer. He says an economic developer can talk knowledgeably about building codes, state laws and regulations, wastewater and utilities. “I don’t know anything about economic development. I think I’m a hell of a salesman.”

Even his critics agree. “He’s the type of fellow that can sell ice to Eskimos,” says Jim Garrett, owner of NC-Rents LLC in Roanoke Rapids, who sued over the agreement forged with the town. More down-home than slick, Watson courted powerful state officials such as Senate President Pro Tem Marc Basnight, former Gov. Mike Easley — himself the subject of a grand jury investigation into his political dealings — and former House Speaker Jim Black, now serving a prison term in Georgia for political corruption. “He was [like] a preacher,” says one county official in the region. “He could get people motivated to do things.”

His clout was such that, even today, many won’t comment for the record about him or his methods. Privately, they credit him with good intentions but say he hurt his cause by taking stakes in businesses he was recruiting. His outsider status is a marked turnaround for someone credited with revitalizing economic-development efforts in one of the state’s poorest regions. He came to work for the commission in 1996, when per capita income there was about $17,923. When he left, it was $26,860 — a nearly 50% gain. The statewide increase was 44.5%.

A native of Wilson, Watson, 57, received a bachelor’s in business in 1974 from what was then Atlantic Christian College in his hometown. He worked at his family’s farm-equipment business and two other small companies before moving in the 1980s to North Topsail Beach, where he spent 10 years in property development. He then took a job as an industrial recruiter for the N.C. Department of Commerce in April 1992, leaving two years later to become director of the Bladen County Economic Development Commission. After two years there, he was hired by the Edenton-based northeastern commission, which represents 16 counties in that corner of the state. It is one of seven regional agencies formed by the state and funded mostly with public money. Watson’s first job was to patch up an organization that had been riddled with dissension. It had two top executives, one for tourism and one for economic development. Both were fired for what newspapers described as squabbles over turf and salaries. Each had been paid about $58,000 a year. He took on both jobs, starting at $75,000 a year.

Recognition came quickly. In 1998, Site Selection magazine, the bible of economic development, anointed Watson’s group one of the nation’s 10 best development organizations, based on investment and new jobs. He got credit for helping to land about $413 million of investment and more than 1,400 jobs the previous year. Among the prizes: Charlotte-based Nucor Corp.’s steel plant in Hertford County. It represented a $300 million investment, with 300 jobs paying average annual wages of $60,000. Ernest C. Pearson, a Cary lawyer who represented the commission and a former assistant secretary for economic development at the Commerce Department, calls Watson a “visionary” for his ability to put together deals. “You had to be creative in that district. He was always trying to make things work.”

Still, the successes weren’t entirely attributable to him. Site Selection noted that state incentives played a big part. In earlier interviews, Watson freely acknowledged the role of the William S. Lee Quality Jobs and Business Expansion Act of 1996, which provided tax credits for companies that created jobs and invested in the state, particularly in rural sections. “The law enabled North Carolina’s rural communities to compete,” Watson told Site Selection. It also attracted criticism. He says he became the “poster boy” for those who oppose tax breaks for private companies.

That wasn’t the only reason for criticism. Even before he got there, the commission had formed North Carolina’s Northeast Partnership Inc. as a private arm and given it the region’s marketing and recruiting duties. It also got the bulk of state money — nearly $1.3 million of the $1.4 million the commission received in the 2004 fiscal year, for example. Public job-hunting agencies often form private, nonprofit arms so that they can solicit donations from companies, other agencies and individual benefactors. But the public and private money normally is segregated and administered separately.

Watson was CEO of both agencies but an independent contractor — rather than a direct employee — of the partnership. It was this status, he says, that permitted him to seek stakes in some companies he recruited. Among the seven regional economic-development partnerships, only North Carolina’s Eastern Region now employs its chief executive as an independent contractor. John Chaffee accepted the job that way in April because, as a former local-government official, coming on board as a direct employee would have affected his retirement benefits. Calvin Anderson, chairman of the region’s board, says it has strict conflict-of-interest rules that prohibit its CEO from working for a client.

Despite his comments about his limitations as an economic developer, Watson could recite technical spiels to recruit industry to his counties. But the Parton project was different. Instead of a packet of charts and statistics, he traveled with a pony-tailed entertainer. Randy Parton’s fame, such as it was, came not from his music but his sister. An early brochure for the theater touts his songs “Country State of Mind” and “Back to the Country,” which he performed at her theme park, and credits him with writing “Cross My Heart,” recorded by Dolly, and “Fragile,” recorded by another sister, Stella.

Watson pulled out all the stops in late 2004 and early 2005 to push the project throughout the region. He socialized with local leaders and tantalized them with the prospect of visits from Dolly. Tom Thompson, director of the Beaufort County Economic Development Commission, says Watson didn’t have to make much of a pitch. “The allure was the Parton name. Everybody was so excited.”

That excitement gave him the chance to pit counties against one another. Paul O’Neal, vice chairman of the Currituck County Board of Commissioners, says Watson told his board it had to act quickly or the deal would go elsewhere. The board didn’t, balking at an agreement that he says called for significant financial risk for the county and none for Parton. Martin County commissioners did likewise, for much the same reasons.

But the idea of replacing mills with music struck a chord in Roanoke Rapids. The city signed on in June 2005 as partner with Parton, Watson and private businessmen to develop an entertainment complex along I-95 with hotels, shops and amusements catering to tourists. It borrowed money to finance the centerpiece, a 1,500-seat theater to showcase Parton and other entertainers. Dolly sang at the groundbreaking in November 2005, but that was her only trip to the region. The theater opened in July 2007. Boosters said the 700-acre project would be built in phases, with the first creating more than 2,595 jobs. They cited a study that estimated the project eventually would lead to 12,250 jobs.

It didn’t work out that way. Not only did the Parton project become an economic drag and embarrassment to the city, it provided ammo for opponents of the state’s tax-increment financing policy, which lets local governments issue bonds that are to be repaid with the tax revenue their projects generate. Roanoke Rapids officials who rubbed shoulders with Watson now want nothing to do with him. Vann Rogerson, his successor at the commission, says the organization’s staff and board won’t talk about Watson.

But Don Carrington, a vice president of the John Locke Foundation — a nonprofit Raleigh think tank that espouses virtues of the free market — is glad to. Carrington, also executive editor of Carolina Journal, the foundation’s monthly and online newspaper, has investigated Watson’s endeavors and written articles accusing him of conflicts of interest. He was the first to detail agreements that Watson helped negotiate between Parton and Roanoke Rapids. For instance, he revealed that Parton was guaranteed at least $750,000 a year and up to $1.5 million for running the theater and performing there. Carrington also reported that Parton quickly burned through much of the $3 million reserve fund the city set aside to operate the theater, spending some on an apartment for his son.

The entertainer’s relationship with the city deteriorated as attendance at his shows did.It came to a head in December 2007, when officials sent Parton home after they said he showed up drunk for a show. He never performed there again. In February 2008, he received about $750,000 in a settlement that ended his relationship with Roanoke Rapids. Officials say they don’t know whether Watson received any payment from Parton.

Garrett, the Roanoke Rapids businessman, sued in June 2008, contending that Watson, Parton, Pearson and others schemed to lure the city into an agreement to build the theater at taxpayer expense. The lawsuit, thrown out by a judge in January, accused the defendants of making false statements, withholding information and ignoring substantial conflicts of interest. It says Watson deemed it essential to recruit a name entertainer to make the complex salable and settled on Parton. “Although Randy Parton was on record as being somewhat unreliable in the entertainment business and had demonstrated his problems with alcohol, Watson was undeterred,” the complaint says. “He never disclosed such shortcoming to the City of Roanoke Rapids … .”

Dismissing the suit, Superior Court Judge John R. Jolly Jr. ruled that Garrett had no legal standing because the city was acting within its authority. Critics got a more favorable outcome from a 2006 report by the Office of the State Auditor, which concluded that Watson's arrangement with Parton presented a conflict and criticized Watson’s bosses, saying they “have not sufficiently exercised their fiduciary responsibilities to monitor operations and ensure funds are used in the most effective and efficient manner in furtherance of economic development in the region.”

But that wasn’t the only time Watson took equity in a company he was representing. Chesapeake, Va., resident David Russell says Watson pressured him for stock in Transforming Technologies Inc. The company, now based in Charlottesville, Va., and renamed Privaris Inc., makes electronics, including a wireless computer mouse. Russell approached Watson after coming to North Carolina in 1998 in search of venture capital, subsidies and a site for his company. “I felt very comfortable around Rick because he has an extremely assuring manner about him, a very authoritative manner.” Watson also sold himself, using the plaudits from Site Selection. But once he determined the company didn’t have the same potential for jobs as a Nucor, he asked for a piece of it, Russell says, hinting that he could spend personal time on it if he owned a 10% interest in its North Carolina operations. Russell says he never has been asked for a stake by any other economic developer.

Watson used a prop to demonstrate his dual roles. Russell saw it first in a private room of the partnership office in Edenton and again in a restaurant. Watson placed a table napkin on his head like a cap — alternately cocking it from side to side. “He said, ‘Now I’m putting on my sales hat, and now I’m putting on my buyer’s hat,’ and he went back and forth talking to me about valuation and unvaluation,” Russell says. “He gave this nice little lecture about demand and economics and buyers’ markets and sellers, which I knew, but he had this really clever little demonstration.”

After about six months of subtle pressure, Russell surrendered and gave Watson the stake. “I figured, OK, it was the price of doing business.” Even so, he initially felt good about the relationship. He spent nights at Watson’s home, went to parties and met plenty of people, including an investor who provided $500,000. In 2002, the company briefly opened an office in Williamston. But later, things soured. Russell says he felt he had lost control of the company to Watson and the investor, and he has sold his interest in it. It never followed through on promises to create 50 jobs in the region.

Carolina Journal uncovered at least two other examples in which Watson sought equity in a company in exchange for his help. In the early 2000s, Carrington says, Watson asked for a stake in Raleigh-based DFI Group Inc., which was considering building an ethanol plant in Martin County, and in Blacksburg, Va.-based CropTech Corp., a defunct biopharmaceutical company that had proposed a research and production center near Elizabeth City.

In Roanoke Rapids, the Carolina Crossroads entertainment district is still largely undeveloped except for the theater and a Hilton Garden Inn. Cars and trucks barrel down the interstate, bypassing the empty streets of Music, Rhythm and Celebrity rows. Signs advertise land for sale and available retail space. Little Anthony and The Imperials and Deniece Williams will headline a show there this month. Good seats are still available.

Watson hasn’t given up boosting the theater. “I don’t see it as a failed effort. I think that theater is an anchor to draw more business.” He won’t address his testimony before the grand jury, though he has said he welcomes the investigation because he believes it will exonerate him. Mayor Beale, who once saw Randy Parton’s show performed for an audience of 13 people, says he feels good about the current owner and plans for the theater. But he admits predictions of thousands of jobs might never materialize. “I don’t know if we’ll ever be like a Branson, not in my time.”

And there’s still trouble in River City.

Jerry Allegood is a Greenville freelance writer.