N.C. Railroad Co. closes on $8 million of land at Greensboro megasite

David Mildenberg on May 2016 at 2:00:00 pm 
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The North Carolina Railroad Company has acquired 630 acres at the Greensboro-Randolph Mega Site for $8 million, bolstering the project aimed at attracting a large manufacturer to the Triad region.

“The project is going according to plan and we look forward to marketing the site to a major manufacturer, along with our partners,” President Scott Saylor said in a telephone interview. Plans call for the Raleigh-based company to buy another 245 acres at the site. Promoting economic development is a key mission for the railroad company, which operates along a 317-mile corridor between Morehead City and Raleigh.

Area officials have worked for several years to prepare the site in Randolph County to be marketable to an expansion-minded automaker or some other major employer. The goal is to finally win a major relocation after BMW, Mercedes-Benz and other companies passed over North Carolina in favor of sites in states that offered more lucrative incentive packages. The site is about 18 miles southeast of downtown Greensboro.

Officials in three other areas in North Carolina also are assembling land for a megasite, including the Chatham-Siler Advanced Manufacturing Site, which is about 18 miles south of the Randolph location. In April, Chatham County officials agreed on options that would prompt it to spend as much as $58 million to buy land for that megasite if a manufacturer commits. Greensboro businessmen D.H. Griffin and Tim Booras now own the land, and the options run through mid-2017, according to the Triad Business Journal.

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Tom Ross takes new job leading Paul Volcker's nonprofit in New York

David Mildenberg on May 2016 at 5:00:00 am 
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Tom RossFormer UNC System President Thomas Ross is joining a New York think tank founded by Paul Volcker to help rebuild trust and pride in government and other public institutions.

Ross will be president of the Volcker Alliance, started in 2013 by the former Federal Reserve Board chairman who is credited with helping pull the U.S. economy out of a tailspin in the 1980s. He starts July 1 at the group, which has about a dozen employees.

“The strains and pressures on government at all levels are plain to see,” according to a statement from Volcker, 89. “Tom Ross’s broad experience in education, government, and philanthropy will be brought to bear on all our efforts to improve government performance.”

One of the group’s missions is to work with major universities and scholars to build support for research that improves the performance of government. “In all those areas, Tom has knowledge and skills in building relationships and brings leadership to our efforts. I am very glad to have him come to New York and lead the organization,” said Volcker, who led the Fed from 1979-87.

Ross retired after six years as UNC president in January after the system’s 32-member board voted last year to seek new leadership. Ross, 65, emphasized he wanted to continue in the job, but the board cited the tradition of past system presidents, including investment banker Erskine Bowles and investor C.D. Spangler, who had limited their tenures to five years.

Paul VolckerRoss’ retirement sparked criticism from a wide spectrum, including one of the system's largest donors, Wilmington pharmaceutical-company founder Fred Eshelman, a Republican who called Ross' departure "a real loss." Ross is a Democrat who took the UNC post in 2011 when Beverly Perdue was governor. Now, virtually all of the UNC board members are Republicans appointed by North Carolina’s leadership, including Gov. Pat McCrory, House Speaker Tim Moore and Senate President Pro Tempore Phil Berger.

Margaret Spellings, former U.S. Secretary of Education under President George W. Bush, started as UNC’s president on March 1.

Volcker Alliance board members include former Atlanta Mayor Shirley Franklin, former Fed Vice Chair Alice Rivlin, former FDIC Chair Sheila Bair and Thomas Davis, a former Republican congressman from Virginia.

Before heading the 17-member UNC System, Ross was president of Davidson College, chief executive officer of the Winston-Salem-based Z. Smith Reynolds Foundation and, for 17 years, served as a superior court judge in North Carolina.


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International lawyers give Charlotte a spin

David Mildenberg on May 2016 at 11:00:00 am 
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About 70 leaders of some of the world’s most influential law firms gathered in Charlotte last week for a three-day meeting hosted by the Robinson Bradshaw law firm.

Interlaw promotes relations between member law firms from across the world, including 14 in the U.S., according to the group’s website. The association’s chairman, Michael Siebold, cited his Frankfurt, Germany-based firm’s ties with Robinson Bradshaw, helping him better service his clients with investments in the U.S. Both Arnecke Sibeth and the Charlotte firm have about 130 lawyers.

“We couldn’t function without a network of trusted friends,” says Siebold, whose work is about 90% international-oriented, including an emphasis on stadium and sports law. He had visited Charlotte on business twice before, working with German-owned companies in the region and building a friendship with Robinson Bradshaw partner Tom Gates.

While Donald Trump’s condemnation of trade agreements is raising international concern, Siebold emphasized the benefits of pacts that promote more interactions between nations. “This region has understood the importance of embracing immigrants and integrating them quickly by teaching them the language and how to become part of society,” he said.

The Charlotte meeting included comments on the city’s rebound from the 2007-09 recession by Charlotte Mayor Jennifer Roberts, Mecklenburg County Commission Chair Trevor Fuller, County Manager Dena Diorio and Charlotte Chamber President Bob Morgan. Each noted that the city had rebounded more quickly than expected, given the problems facing dominant employers Bank of America Corp. and now-defunct Wachovia Corp. in 2008. While panelists credited Wells Fargo for buying Wachovia and expanding local employment from 20,000 to 23,000, none mentioned the taxpayer-backed bailout instituted during the banking industry’s darkest days. The U.S. Treasury bought $45 billion in Bank of America preferred shares, and $25 billion in Wells Fargo; both banks have since repurchased the shares.

While Charlotte’s unemployment rate has declined to about 5% from a recession-era peak of about 11%, public assistance rolls have increased from 150,000 to 200,000 residents over the past several years, Fuller noted.

“I was pleasantly surprised at how well Charlotte mastered the crisis, without painting an unrealistic picture,” Siebold said.

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Jim Blaine handing off top job at SECU

David Mildenberg on May 2016 at 4:30:00 pm 
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We wrote a Business North Carolina feature story last year on Jim Blaine, who has led the State Employees' Credit Union of North Carolina since 1979, helping build the nation’s second-largest credit union with $33 billion in assets. On Monday, Blaine said he is retiring and ready to hand off the reins to a successor, probably early next year.Jim Blaine

“They say 60 is the new 40, but 80 ain’t the new 50,” says Blaine, who is 66. While SECU has hired a search firm and may launch a national search for a new CEO, he says there are several good internal candidates. “We’ve had three or four senior managers make presentations to our board over the past year. We’ve been working on succession for the past 18 months.”

Blaine, who makes about $850,000 annually, thinks he’s leaving a thriving institution. “Things are in good order, and we’re growing like crazy.” He expects a new CEO to be hired before the credit union's fiscal year ends on June 30.

The credit union had about $300 million in assets when Blaine took charge 37 years ago. It now has more than 2 million members and 5,800 employees with offices in each of the North Carolina's 100 counties. One of its most unusual policies is charging the same interest rates to all borrowers. Most lenders other credit unions give preferred rates to borrowers with stronger financial histories. Charge-offs for bad loans have been a fraction of industry averages, even during recessions.

For years, Blaine was best known for his feuds with former N.C. Bankers Association President Thad Woodard over the issue of tax advantages for credit unions, particularly as rules changed, making it much easier to qualify for membership. Tax policy has not changed, while bank executives still fume over the issue.

Our story noted that while Blaine is little known because of his low profile, experts credit his leadership at SECU among the most remarkable stories in North Carolina finance over recent decades. Unlike the state's famous banking titans, SECU grew without making any acquisitions.

Blaine's outspoken and humorous nature is most evident in his blog, which skewers industry regulators over practices that he views as unfair to credit union members.

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How much NC bank CEOs get paid

David Mildenberg on April 2016 at 4:15:00 pm 
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Brian MoynihanIt’s annual meeting and proxy time, that season when public companies are forced to disclose salaries of their five highest paid executives.

We’ll leave the grousing about excessive CEO pay to Bernie Sanders and others. We just wondered how CEOs of the larger North Carolina-based publicly traded banks compared with the big cats of state banking, Bank of America’s Brian Moynihan and Wells Fargo’s John Stumpf. Neither lives here, but maybe some day they will see the light and join their more than 40,000 associates in the state.

Running two of the giant four companies that dominate U.S. banking is a headache a minute, if not a second. It’s certainly a lot tougher than running a community or regional bank. And Moynihan and Stumpf are super-smart and decent guys, as anyone who has met them can attest.

But having interviewed a lot of the other guys on this list, it’s unclear why the gap in pay is so wide. Most would at least hold their own with the two big-bank CEOs, given support from legions of other top-notch executives at BofA and Wells.

Worth noting: Bank of America’s market cap declined 70% in the past decade, while Wells Fargo’s gained 48%. Investors did better in the S&P 500 Index, which climbed 58%.

Here’s a listing of the average annual compensation for the past two years for several CEOs, which gives a bit more perspective than one year.

John Stumpf, Wells Fargo, $20.3 million

Brian Moynihan, Bank of America, $14.6 million

Kelly King, BB&T, $12.9 million

Rick Callicutt, BNC Bancorp, $2.8 million *

Frank Holding, First Citizens, $1.8 million

Gene Taylor, Capital Bank, $1.4 million *

Scott Custer, Yadkin Financial, $984,000

Richard Moore, First Bancorp, $913,000

Dana Stonestreet, HomeTrust Bancshares $882,000

Jim Cherry, Park Sterling, $877,000

Chip Mahan, Live Oak Bank, $871,000


*Callicutt’s 2014 pay included a $3.2 million stock bonus. Otherwise, his average pay would be $1.1 million

 *Taylor’s compensation is for 2013-14; 2015 proxy has not been filed.


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Johnny Harris blasts HB2 as Tim Moore slams tech giants

David Mildenberg on April 2016 at 9:30:00 am 
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         We recently published a column noting Charlotte developer Johnny Harris' penchant for straight talk. He didn't like the column a whole lot, but we always admire his frankness.

        Harris kept up the tradition this week, slamming the General Assembly’s action on HB2 as harmful to North Carolina’s economy and image. In comments to the Charlotte Business Journal's Erik Spanberg, he said, “Some of the legislators think we’re making this up. We’re not. And they’re not on the firing line. If you don’t understand who pays the taxes and drives the buggy.”

         His comments came as House Speaker Tim Moore dug in on HB2 Monday, opposing any significant revisions to the law that blocks non-discrimination ordinances to protect LGBT people and prevents the use of public restrooms based on gender identity. In an interview with Time Warner Cable, Moore also cited hypocrisy by PayPal and Apple for their criticisms of the new state law while continuing to do business in authoritarian nations with abysmal human rights records.

         It’s hard to see what benefit North Carolina gains when one of its most influential politicians picks a fight with technology giants, musical stars and other agenda-setters. But then top PayPal and Apple executives, Bruce Springsteen and Demi Lovato don’t vote in Moore’s hometown of Kings Mountain or anywhere else in North Carolina.

         But  Harris can vote here. While everyone only has one vote, reality suggests Harris' comments could have a lot more impact on Moore and others than the well-meaning folks on both sides of the issue who are protesting, praising or getting arrested in Raleigh HB2 rallies this week. Or maybe fighting a culture war is worth the price to Moore.

          The CEO of Lincoln Harris added, “We’ve taken a social issue and now it’s become a political issue and now it is having adverse economic impact on our state and the city of Charlotte. Significant impact. I don’t care what anybody says, we are being impacted and we’re going to be impacted even more until we work something out. And I would hope that some of the rhetoric from the political side would begin to realize just how negative this has become.”

         Harris also noted the potential loss of the NBA All-Star game in 2017 and hinted at potential problems with the PGA Championship planned for Quail Hollow Club in Charlotte that same year. Harris is president of the private club.

         “I can’t talk about it, but I can tell you the threat is very real in every aspect of my business and in every aspect of my community involvement. Every aspect. Every aspect.”

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Can North Carolina reverse its declining appeal to decision-makers?

David Mildenberg on April 2016 at 11:30:00 am 
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Two weeks ago we wrote about how House Bill 2 would surely damage North Carolina’s brand. Unfortunately, in this prediction, we got it right.

Now there’s a continuous cascade of denunciations of the bill by well-organized civil rights groups, hundreds of top business executives and celebrities, Triangle liberals and a few chambers of commerce. Privately, economic-development executives warn that North Carolina is no longer viable for many corporate relocations because of the controversy.

The anger draws defensive responses from proponents of the law who view the critics as hypocrites with “a pet social agenda.” Many bill supporters don’t understand the fuss — they really didn’t mean to hurt the LGBT community, they just want to keep order in the bathrooms and keep the bureaucrats from inflicting undue influence on businesses.

That is apparently the governor’s contention, after he backtracked on the General Assembly’s sneak attack on state employment law.

With all that rancor, it’s certain that the short session of the legislature starting next week will be an international spectacle. (They are rarely "short," with this one expected to last at least three months.) Raleigh hotels, suffering significant lost business because of HB2, should get some benefit from visiting journalists and various activists.

Hopefully cooler heads will prevail. One way to start might be inviting some of North Carolina’s best employment-law experts to speak to the General Assembly about HB2’s impact. Several law firms have published primers, including Poyner SpruillSmith Anderson, and Constangy Brooks, Smith & Prophete, often taking conflicting views. Legislators would learn something by reading the reports or listening to experts explain the ramifications.

My former boss, Bloomberg News Editor-in-Chief Emeritus Matt Winkler, accurately called the controversy an unnecessary mess that is blunting the state’s excellent economic momentum  — for which Gov. McCrory deserves some credit. It's noteworthy when a data-driven, politically liberal New Yorker like Winkler praises a Republican governor in the South, as he did in his column.

It’s also worth reading Charlotte Observer Editorial Page Editor Taylor Batten’s excellent piece on how Gov. McCrory’s outlook changed when he shifted from mayor to governor. The column overstates the change: Some of my LGBT friends have long considered McCrory unprincipled, citing his refusal as mayor to support or attend the annual Charlotte Pride festival, which highlights the city's diversity. But there’s no doubt that most of Charlotte’s business leadership considered Mayor McCrory a moderate who, in most instances, understood the role politicians play in creating a welcoming environment for businesses.

The key question is how long it will take our state to rebuild the business community’s confidence. In should not take long if decision-makers, ranging from CEOs to artists to convention planners, understand three key things about HB2:

         1) Its supporters hold sincere religious convictions that deserve respect  — it's called the Bible Belt for a reason.

         2) Rural lawmakers in the General Assembly, many of whom live in less diverse communities than Charlotte or Raleigh, have outsized influence in North Carolina.

         3) There is a Donald Trump-like frustration with an economy that is punishing most North Carolina outside of the two big metro areas. PayPal and other tech titans won’t place 400 people in rural North Carolina, where the tax base is eroding. All North Carolina businesspeople should consider how to attack this problem.

Sen. Berger has painted himself into a corner on HB2 and seems too proud to backtrack, lashing out at the CEOs of companies that employ hundreds of thousands of North Carolinians. So emphasizing those three points to the decision-makers may be the best that HB2 opponents — and our economic development community — can hope for.

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Feeling low in High Point

Allison Williams on April 2016 at 4:00:00 pm 
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Mark Weinstein sat on a leather couch in the sun Saturday morning outside his Golden Oldies store at Broad Avenue and Elm Street in downtown High Point. High Point's spring and fall furniture markets are his biannual Super Bowl, the two busiest weeks of his year, but opening day found him sitting down. "The big hitters aren't coming," he said. "Pottery Barn canceled on us. So many customers won't come. They won't come to the state."

Even before this week's Furniture Market began, organizers warned that North Carolina’s House Bill 2 had already damaged the show, which the High Point Market Authority says has a $5 billion economic impact on the state. HB2 requires that transgender people must use the bathroom designated for their birth gender and stirred a swift backlash, ranging from businesses such as PayPal pulling the plug on a planned expansion to singer Bruce Springsteen canceling a Greensboro concert. 

The High Point boycotts have left business owners like Weinstein feeling bitter. "Bruce Springsteen can afford it," Weinstein said. "I've got to make six months' rent in 9 days." His store sells a mix of antiques, vintage items and garden objects.

Williams-Sonoma Inc. retail outlets are among the bigger names to stay home, but what's unknown is how many others will sit out or scale down. Architectural Digest editor-in-chief Margaret Russell and Giulio Capua, the magazine's publisher and chief revenue officer, said they would attend the market, but cancel their annual cocktail party. Other designers said they would trim their trips to a day or two rather than stay for the entire show. Over the weekend, attendance seemed heavy, with the well-heeled pouring out of buses in front of the International Home Furnishing Center, but exact numbers won't be released until after the market, said spokeswoman Ashley Grigg. 

The market remains vibrant after 107 years because it’s still less expensive for exhibitors than shows in Las Vegas, Dallas or Milan, T. William Lester told the Associated Press. Lester is a city and regional planning professor at UNC Chapel Hill who co-authored a 2013 study on the market's economic impact. But an extended boycott could “whittle away the competitiveness of the built-up advantage that High Point has,” Lester said.

He told the AP that a 5% drop in market sales could translate into a loss of more than $100 million for North Carolina furniture manufacturers, which employ about 14,000 workers.


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Charlotte Chamber ducks HB2 commentary

David Mildenberg on April 2016 at 10:15:00 am 
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Several years ago, the Charlotte Chamber embraced the LGBT community in Charlotte by welcoming an affiliation with the Business Guild, renamed last year the Charlotte LGBT Chamber, which has been a key voice for LGBT business leaders. It was an impressive decision that reflects greater acceptance of gay and transgender citizens and their vital economic impact in the city and state.Bob Morgan

Now the Chamber is caught in a no-win position after the state’s Republican leadership — including Gov. Pat McCrory — passed the controversial HB2 law, enraging many gay rights advocates and causing national condemnation. The conservative argument is that the law is about public safety — preventing bathroom molestations — and promoting nondiscriminatory policies, without specifically naming the LGBT community. The overwhelming response by PayPal, Bank of America, Wells Fargo, Red Ventures and other companies is that the law discriminates against that community and makes North Carolina a much less appealing place to do business.

To be effective, the Chamber has to have a productive relationship with the governor and state political leaders. Even more important, perhaps, it needs to promote Charlotte as a welcoming, progressive area.

McCrory and the Chamber were joined at the hip on most issues throughout most of the governor's 14-year run as mayor of the state's biggest city. Bob Morgan, who once worked for former U.S. Rep. Alex McMillan, a Republican, has been chamber CEO since 2005.

The Chamber put out a statement earlier this week urging a “solution” to the controversy. It raised as many questions as answers.

So today we asked Morgan two questions about the situation.

Did Gov. McCrory or Mayor Jennifer Roberts — the two central and opposing figures in the controversy — discuss HB2 with Morgan before its passage? Morgan declined to comment.

What is the Chamber doing to secure the “solution” cited in its press release?

“We’re very engaged, but we choose to be below the surface, rather than above it.” He declined to share any details.


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Who's going to step up to restore respect for North Carolina?

David Mildenberg on April 2016 at 11:30:00 am 
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PayPalPayPal’s decision to ditch its Charlotte expansion plans because of the controversy over House Bill 2 has sparked angry responses from state Republican lawmakers. Senate President Pro Tempore Phil Berger suggests the “liberal media” has aided Democratic politicians, gay rights groups and the “political correctness mob" to trash the reputation of the city and state.

At least that statement shows there is universal agreement that North Carolina’s brand has been damaged by this debacle, no matter who one blames. We can also agree it is past time for all parties to cut the rhetoric and devise a solution that reflects North Carolina’s image as a moderate, business-oriented state open to people of all colors, faiths and political leanings. It should be a source of pride that we are a purple state that welcomes all comers.

A few things we’ve learned as this mess drags on:

Surely Gov. McCrory regrets not taking more time to consider HB2 before he signed the bill, hours after it passed the legislature. A good night’s sleep and a few phone calls to key people might have produced a better result.

Everything on this issue will have to be viewed through the prism of the divisive McCrory vs. Roy Cooper election, which is still seven long months away. Most know that those two guys agree on far more than they disagree — both are moderate politicians who love their state. But in our gerrymandered political environment, they have to cater to their polarized bases.

PayPal and other companies may be hypocrites in basing corporate decisions on the ethics topic of the day: Why does the company sell its products in China and other nations that take much harsher measures towards the LGBT community than HB2?

But PayPal and other companies also have every right to take principled stands, particularly a desire to avoid policies that discriminate against their employees. Few complained in the days when local businessmen controlled communities instead of multinational corporations. The town fathers promoted both the good — noble civic causes — and the bad: the shameful Jim Crow rules. PayPal CEO Dan Schulman is a sincere person who can teach us a lot, beyond the fact that he leads an iconic company valued at more than $46 billion.

Bashing the media has worked politically in North Carolina for generations. That is sad. It’s true that some of the state’s most powerful media companies have offered liberal editorial commentary for at least 30 years and have been owned by Democratic-leaning families, including the Daniels and Goodmons. But those families and their editorialists also have been North Carolina’s biggest supporters and cheerleaders, and their journalists have made life hellish for many Democratic politicians. (Just ask Jim Black, Mike Easley, Jimmy Green, Wendell Murphy, R.C. Soles etc.). To accuse the “media” of liberal bias in 2016, given the impact of Fox News, Rush Limbaugh, Civitas Institute and other conservative-leaning entities is purely a political stunt.

The concept of state government controlling most aspects of local government is outdated. If Charlotte wants to take a different stance on issues than Monroe or Goldsboro, that should be applauded instead of rejected. It’s much easier for the people’s voice to be heard at the local level than statewide or nationally.

We can't wait to see how soon McCrory, Cooper, Berger, House Speaker Tim Moore and Lt. Gov. Dan Forest resolve this debacle.


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North Carolina Golf Panel’s Most Challenging Tee Shots (by course)

Ben Kinney on April 2016 at 12:00:00 am 
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North Carolina golfBusiness North Carolina's annual golf issue is out and, as always, it includes the listing of the top 100 courses in the state compiled by the North Carolina Golf Panel. In addition to the top 100, the panel also also provides various lists including best courses by region, "hidden gems" and top 50 courses you can play. As you can imagine, this is a very popular issue with our readers. This year we had so much information that we didn't have the space in the print edition to include every listing. That being said, here is one such listing that you won't find in the April issue:

These are courses, by region, that panelists believe throughout their 18 holes offer the most challenging tee shots.


  1. Grandfather Golf and Country Club, Linville
  2. Balsam Mountain Preserve, Sylva
  3. Linville Ridge, Linville
  4. Elk River Club, Banner Elk
  5. Mountain Air Country Club, Burnsville


  1. Quail Hollow Club, Charlotte
  2. Trump National Golf Club, Mooresville
  3. Myers Park Country Club, Charlotte
  4. Verdict Ridge Golf & Country Club, Denver
  5. The Club at Irish Creek, Kannapolis


  1. Sedgefield Country Club (Dye), Greensboro
  2. Tot Hill Farm Golf Club, Asheboro
  3. Tanglewood Park (Championship), Clemmons
  4. Old Town Club, Winston-Salem
  5. Grandover (West), Greensboro


  1. Lonnie Poole Golf Course, Raleigh
  2. The Club at 12 Oaks, Holly Springs
  3. Treyburn Country Club, Durham
  4. Raleigh Country Club, Raleigh
  5. The Hasentree Club, Wake Forest


  1. Pinehurst No. 7, Pinehurst
  2. Pinehurst No. 8, Pinehurst
  3. Tobacco Road Golf Club, Sanford
  4. Country Club of North Carolina (Dogwood), Pinehurst
  5. Pinehurst No. 2, Pinehurst


  1. River Landing (River), Wallace
  2. River Landing (Landing), Wallace
  3. Cutter Creek Golf Club, Snow Hill
  4. Carolina Colours Golf Club, New Bern
  5. Scotch Hall Preserve, Merry Hill


  1. Masonboro Country Club, Wilmington
  2. Country Club of Landfall (Nicklaus), Wilmington
  3. Leopard’s Chase, Sunset Beach
  4. Bald Head Island Club, Bald Head Island
  5. Eagle Point Golf Club, Wilmington


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Color Masters Painting to acquire much larger Michigan contractor

Cameron Walker on April 2016 at 3:30:00 pm 
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Raleigh-based Color Masters Painting Inc. is buying a Traverse City, Michigan-based painting company in a transaction that will likely boost sales by more than threefold over the next year, President Zeb Hadley says.

The purchase of  commercial painting contractor National Coatings Inc. is slated to close on April 15 for an undisclosed amount. Color Masters, which had $8 million in sales last year, expects to top $26 million over the next year because of the acquisition. About 160 National Coatings employees will join the combined company, while Hadley expects to hire another 35 employees in the next year in Colorado, Idaho and Raleigh.

Color Masters was a runner-up in Business North Carolina’s annual Small Business of the Year program last year.

National Coatings specializes in large painting jobs in the range of $500,000 to $3 million; recent projects include casinos, Wal-Mart and J.C. Penney stores and the Colorado and Idaho state capitol domes, and the Denver Broncos football stadium.

Hadley started Color Masters in 2003 as a junior at N.C State University, hauling his father’s power washer from house to house on weekends. Within a few months, he had drummed up enough business to hire two employees and devote himself full time to the company. He surpassed $1 million in sales by 2010.

“We purchased the company to have more brick and mortar offices in the states that we already work in,” says Hadley. Color Masters is poised to improve the business operations at National Coatings, which has relied on paper reports and the U.S. Postal Service. “I plan to integrate an entire platform of technology.”

Color Masters is financing the transaction with help from the Small Business Administration and Fifth Third Bank, which Hadley says “has really jumped to the occasion and pushed the project along to meet our closing date.” Other banks weren’t interested in the transaction because National Coatings was so much larger and geographically dispersed than Color Masters, he says.

The two companies have a combined backlog of $19 million. “We plan to achieve a gross sales volume of $28 to $30 million in 2017 which will make us the largest painting contractor in the Southeast by 30%.”

Pat Burden, who founded National Coatings in 1996, picked Color Masters over two higher bidders because “he wanted me to have it,” Hadley says. Burden died of a stroke in December after striking the transaction.

- Cameron Walker is a writer who lives in Raleigh

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N.C. lawmakers put a stop to minimum-wage hikes before cat gets out of bag

David Mildenberg on March 2016 at 3:00:00 am 
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Many have wondered why the N.C. General Assembly included a provision in the controversial HB2 employment rights law that also blocks local governments from instituting higher minimum wage levels. Veteran Raleigh political observer Rob Schofield speculates that the N.C. Chamber helped to negotiate the action, which has received much less attention than the debate over discrimination against gays, lesbians and transgender people. (Chamber spokeswoman Kate Catlin says the Chamber had no input into the legislation, which it is now analyzing.)

We asked Senate Majority Leader Mike Hager, and his answer is straightforward: “We thought that was going to be the next issue to come up” in various city councils across North Carolina, and the Republican leadership wanted to nip it in the bud, he says. “We didn’t want to be spotty on this because it has statewide economic implications. We felt it should be dealt with by the General Assembly as a statewide issue.”

Hager also argues the furor over HB2 breaks fairly evenly between small and large businesses. “The small businesses in my district like this bill and think it is fair because it keeps more regulations and costs off them,” he says.

“Big business can afford to be politically correct, but that’s not the case for many small businesses.

Hager also calls it hypocritical for large companies — including Facebook, which operates a massive data center in his district near Forest City — to accept state-government subsidies and then demand lawmakers change their opinions on HB2.

Citing Google, American Airlines, Bank of America and others, “It is disingenuous for them to be willing to take millions of dollars in tax credits and other benefits, but then hammer us on this policy.”

Pressed on why state lawmakers should interfere with local decisions on minimum-wage levels, Hager notes that a higher wage in Charlotte or Greensboro could cover every company that contracts with businesses or government agencies in those towns. The resulting higher costs will sap profit and boost product costs, Hager says.

Likely provisions that would exclude businesses with fewer than 50 or 100 employees from having to offer the higher wages don’t impress Hager. People in his district who rely on giant retailer Wal-Mart shouldn’t have to pay more for groceries or other items because a local government favors a $12 or $15 minimum wage, he says. With citizens in his district earning average wages of about $31,000, it’s not fair to ask them to pay higher prices due to a minimum-wage mandate, he adds.

The minimum wage in North Carolina and neighboring states is $7.25 an hour. The highest rate nationally is $11.50 in the District of Columbia and $10 in California and Massachusetts.

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Key facts about the N.C. discrimination debate

David Mildenberg on March 2016 at 4:30:00 pm 
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North Carolina’s new law aimed at blocking discrimination based on race, biological sex, color, religion and national orientation — but not sexual or gender identity — is creating a national firestorm.

We asked two employment-law experts in North Carolina for their perspectives. Luke Largess, a Charlotte lawyer with Tin Fulton Walker & Owen, was a lead lawyer for the plaintiffs in the 2014 case that successfully challenged North Carolina’s ban on same-sex marriages. Gregory Wallace is a constitutional law professor at Campbell University School of Law.

 They have very different opinions of the House Bill 2. But they agree on these aspects of the law:

  • If a business owner wants to discriminate against gay, lesbian or transgender people, he may do so without recourse from the state of North Carolina.
  • North Carolina previously did not have a “public accommodations” law involving how to deal with discrimination in the public realm.
  • Since 1986, North Carolina has had an employment-practices act that allowed people to bring discrimination claims in state courts. These state-level claims are often attached to federal lawsuits involving alleged discrimination. That is no longer permitted.

 Wallace makes these additional points:

  • North Carolina is among 32 states in the U.S. that do not provide any anti-discrimination protections for gays, lesbians or transgender people.
  • For those who are protected and want to complain, the new law sets up a state government agency to resolve complaints of discrimination in public situations. It is akin to the federal Equal Employment Opportunity Commission, which must issue a “right to sue” opinion before a complaint can be filed at the federal level.
  • The law is unclear about whether state government may sue a business for alleged discrimination. The person who is aggrieved may not sue.
  • The new law also does not provide protections based on age, pregnancy, marital status and military service. For example, a health club may deny membership to a senior citizen simply because it prefers to only enroll younger people.

Largess makes these additional points:

  • The trend in federal courts is to provide more protections to prevent discrimination based on sexual orientation.
  • Precedent from Supreme Court decisions makes it very likely the North Carolina bill will be struck down.
  • Spiteful comments about transgender people by N.C. lawmakers show their disrespect and discriminatory views.

Final comments:

“This law puts North Carolina in the mainstream of public accommodations and other anti-discrimination laws,” Wallace says. "The political rhetoric on both sides is quite intense."

“The General Assembly is refusing to recognize that sexual orientation and gender identity are core issues of people’s being, rather than being a choice similar to favoring the Yankees over the Red Sox,” Largess says. “It’s also a bizarre ratcheting down of everyone’s rights in the process of declaring that gay and lesbian people don’t have their rights.”

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Little Washington-based bank targeted by investor pushing for change

David Mildenberg on March 2016 at 10:10:00 am 
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Greenville investor Phil Lewis is seeking to shake up First South Bank, a Washington, N.C.-based community bank that has provided a lucrative ride for its longtime directors amid the banking industry’s struggles. First South, with assets of $885 million as of Dec. 31 and a stock trading at a price little changed from 15 years earlier, pays its directors as much or more than their peers at much larger institutions.First South Bancorp

Lewis in December asked First South to support his shareholder resolution calling for the board “to immediately take the necessary steps to achieve a sale, merger or other disposition of the company on terms that will maximize shareholder value as promptly as possible,” according to a filing with the Securities & Exchange Commission. After the bank’s board responded with a “no thanks,” Lewis appealed to the Securities & Exchange Commission, which on March 4 ruled that the resolution must be considered at First South’s annual meeting, typically held in May.

Following the SEC decision, First South's board on March 16 sent a response to shareholders, calling Lewis’ measure “ill-advised and unwarranted.” The letter noted that approval of the proposal could cause uncertainty about the bank’s future, undermining relationships with customers, employees and communities.

The bank will respond to the shareholder proposal in its annual proxy statement to be filed with the SEC on or about April 15, First South CEO Bruce Elder said in an interview. That document will also announce the bank’s annual meeting date.

Elder declined to discuss Lewis’ criticisms, noting the bank’s response would be included in the proxy statement. But he rebuffed Lewis’ assessment of the bank’s directors as lacking banking expertise. “The board has navigated various economic conditions that the bank has faced over the last decades. To say there is no experience is misguided.”   

Lewis, who has owned an insurance company in Greenville for more than 25 years, holds about 149,000 shares, now valued at more than $1.2 million, according to a report he filed as part of his proposal. The filing contends that First South is poorly managed with modest profits, high expenses and an ineffectual board.

In recent years, First South has increased the maximum age of a director from 70 to 85, enabling directors Linley Gibbs Jr. and Frederick Howdy, both 84, and Charles Parker, 79, and Marshall Singleton, 76, to remain on the board, Lewis said in an interview. The bank’s six directors each received fees of $45,000 to $55,000 in 2014, while three — Parker, Singleton and Frederick Holscher, 67 — received additional  deferred compensation totaling about $150,000, according to the most recent filing.

By comparison, Southern Pines-based First Bancorp., triple the size of First South, pays about $23,000. Dunn-based Select Bancorp, which is slightly smaller, pays its directors about $12,000 to $21,000, based partly on meeting attendance. The State Employees’ Credit Union, with more than $30 billion in assets, pays nothing except lunch or dinner expenses.

Lewis also criticizes retirement plans that are enabling larger gains for First South’s longterm directors. Holscher, 67, deferred about $292 in monthly fees for six years, or about $21,000, the company’s most recent proxy shows. Under the agreement, he is entitled to about $435,000, payable in 120 monthly installments that started when he turned 65. Under a separate plan, he deferred about $21,000 from 1994 through 1998. By the time he reached 65, he was eligible for about $490,000 over 10 years. A third plan pledges $240,000, giving him a cumulative benefit of more than $1.1 million. Other longtime directors at First South have similar arrangements. Holscher, a lawyer in Washington, N.C., has been on the board since 1985.

First South’s arc mirrors many North Carolina community banks, except it has remained independent while several others with assets of less than $1 billion have sold out to larger rivals. The bank’s share price increased about sixfold between 2000 and mid-2006 as former CEO Tom Vann gained a reputation as a conservative lender. Profit peaked at $17 million in 2007.

But the ensuing recession hammered eastern North Carolina, and First South's loan portfolio proved to be less than rock-solid. Vann, who had led the bank since 1975, retired in 2012. First South reported a $10 million loss that year, following a $2 million loss in 2010 and $1 million profit in 2011. Unlike many N.C. banks, First South had enough capital to refrain from participating in the federal bank bailout, called the Troubled Asset Relief Program.  

To replace Vann in 2012, the board hired Elder, a former chief financial officer at Crescent State Bank in Cary. Crescent is now part of Raleigh-based Yadkin Financial.

Under Elder, First South sold $47 million in troubled loans in 2013, reinstated a quarterly cash dividend of 2.5 cents per share, bought nine branches from Bank of America, added two younger directors and expanded lending in the fast-growing Raleigh-Durham market. The quarterly payout had been 20 cents per share before the financial crisis.

While the bank’s profit increased 15% to $4.7 million in 2015 from a year earlier, its profitability remains below industry averages and its 83% expense ratio is higher, Lewis said in his shareholder proposal.

“The last three years of proxy statements (2012, 2013, 2014) show the Bank has had a net loss of $900,000, while directors and senior management were paid over $7 million [including a payout to former CEO Vann.] That is why I feel like the resolution is timely and needed,” Lewis said.

First South’s potential is apparent to some Wall Street investors. Four hedge funds, including one led by veteran bank investor Jeffrey Gendell, are among First South’s 10 largest holders, according to Yahoo Finance. Those 10 investors controlled more than 17% of the bank’s shares as of Dec. 31, while the bank’s officers and directors held 12%, according to the proxy.

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Bathroom banter does damage to state's business brand

David Mildenberg on March 2016 at 11:00:00 am 
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Charlotte bathroom ordinanceCongratulations to N.C. Reps. Chuck McGrady and Charles Jeter and N.C. Senators Fletcher Hartsell, Tom Apodaca and Tamara Barringer. They are the only Republican lawmakers standing up to the panderers who pressed for today’s special session at the N.C. General Assembly on the pretense of protecting people who use Charlotte bathrooms.

Congratulations also to Gov. Pat McCrory for not pressing for the session, even if he personally disagrees with the Charlotte City Council’s decision related to discrimination issues.

North Carolina’s advantages economically are so strong that this kind of legislative silliness won’t have a long-term effect. But such pandering does short-term damage to our brand as a welcoming, progressive business-oriented state.

My experience of more than 30 years in North Carolina suggests virtually all of the businesses and entities that are creating new jobs and opportunities here tend to be led by people who abhor discrimination. Why would they want to expand in a state that doesn’t show respect for all people?

The special session also points to the bitter partisanship blocking the state's progress. Republicans know their chances of winning a majority in the city councils of North Carolina’s biggest cities are waning as fast as the opportunity for Democrats to win a majority of the General Assembly because of the 2010 gerrymandering.

But North Carolina’s charter limits the power of local entities, while granting overarching power to state government. It was written at a time when rural interests dominated the state. Rural interests remain vital — our state’s two most powerful lawmakers live in relatively small towns that increasingly rely economically on the big cities about 40-50 miles away. Sadly, more than two-thirds of our state’s growth is occurring in the three metro areas, rather than a more even division that would be healthier. Bathroom banter does nothing to attack that problem.

The state charter enables people who may have too little time on their hands, or who need a winning issue for their present or future campaigns, to make bizarre comments about how Charlotte’s new law is “radical” and a “public safety issue.” It also may give them a chance to add considerably more important legislation that further blocks local control, such as capping the minimum wage statewide. That is a vital issue that needs serious debate and not be treated as an afterthought.

People who are afraid of visiting a Charlotte bathroom should do the obvious: Stay out of Charlotte bathrooms. Certainly there are plenty of available privies for the fearful in Kings Mountain, Eden and other places around the state represented by folks who don't like Charlotte City Council decisions. (The council voted 7-4 for the nondiscrimination ordinance.)

My friend Ed Hinson, a veteran Charlotte lawyer, noted some issues that might be worthy of a special session — and matter to businesses — in a letter to The Charlotte Observer this week:       

“If our teachers were among the lowest paid in the nation; if our poorest citizens could not afford a decent place to live despite a building boom; if many of our educated young people were burdened by oppressive debt; if a speedy travel lane reserved only for motorists who could afford it was being added to a congested highway, would our political leaders call a special session of the legislature to address these problems?"


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Sharp kids at Charlotte middle school impress three business types

Ben Kinney on March 2016 at 10:00:00 am 
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Last Friday, two Business North Carolina editors and I were fortunate enough to visit E.E. Waddell Language Academy in Charlotte as part of the Students@Work program which took place across the state all last week.  Students@Work is a job-shadowing and job-mentoring initiative originated by the North Carolina Business Committee for Education in 2011. BNC is one of hundreds of companies that belong to the Raleigh-based group.  Working closely with the N.C. Department of Public Instruction, more than 128,000 eighth-grade students have been impacted to date.  The goal is to expose middle-school students to career pathway options so they understand the potential for attainable jobs and the relevance of what they are expected to learn in their classrooms every day.

We visited Mr. Vinson Washburn’s 8th grade “Exploring Business Marketing and Entrepreneurship” class to discuss our jobs, business in North Carolina and entrepreneurism’s impact on the state’s economy. I was apprehensive sharing experiences working at a print publication to a bunch of eighth-graders, many addicted to their cellphones or tablets. In fact my first question was, “Do you all know what a magazine is?” Fortunately, we were blown away at the research and grasp of BNC’s mission. The students were polite, well-behaved and, most important, they were curious about everything we discussed.  

Sometimes we can be cynical about the next generation. Technology is something that wasn’t at my fingertips as a teenager. I was proud of my knock-off Walkman, but that was about it.  These kids have a lot more than a Walkman and used their tech skills to research our site before our visit.. They were  ready to discuss some serious, thought-provoking issues. It was a great experience and my colleagues, our business and I are better because of  it.

Sidenote: Waddell is one of the star success stories in North Carolina public education. It’s a K-8 magnet school that requires its students to learn one of five languages: Japanese, Mandarin Chinese, German, French or Spanish. The school, housed in a 15-year-old former high school building in an  economically struggling part of Charlotte, has a waiting list of students hoping to enroll. It’s also one of the city’s most diverse schools — Mr. Washburn’s class  included Hispanic, African-American, Caucasian and Asian-American kids. Three visiting Japanese exchange students also attended during our visit.

Ben Kinney is publisher of Business North Carolina magazine. 

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New from Business North Carolina

Kerry Singe on March 2016 at 12:01:00 pm 
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Business North Carolina's online newsletter, DeveloptCLT, launched Thursday and I’m thrilled to introduce it to you.

During our planning for this new publication, we met with some of you and learned that people in Charlotte's commercial real estate market want to hear from others in the industry and we are embracing that concept. We aim to offer up a weekly mix of informative, easy-to-read articles that introduce new concepts, people or viewpoints. We also want to showcase your voices, and will be including guest-written columns from your peers. 

 Personally, I’m excited to be involved in this effort because after seven years of writing about real estate, I remain fascinated by the people I meet and the deals being done that shape the city. It doesn't hurt that the Charlotte region is among the nation's hottest real-estate markets.

I have a journalism graduate degree from Northwestern University, the same alma mater as Business North Carolina editor and DevelopCLT contributor David Mildenberg. Both of us have lived in Charlotte for many years. Another contributor, BNC Senior Editor Allison Williams, brings even more Southern cred, with a degree from the University of South Carolina.

We’d love your involvement and feedback. If you are interested in writing a column or know someone or something worthy of a profile, let us know. Thanks for taking the time to give us a look — and look for us in your inbox every Thursday.  Sign up here, where you may read our stories no matter the day. 

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The sucker punch heard around the world

Melanie Weaver Lynch on March 2016 at 2:00:00 pm 
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By now, you’ve seen the viral video of a Donald Trump supporter sucker punching a protester being led out of an election rally at the Crown Coliseum in Fayetteville. But did you read anywhere that the Crown and Cumberland County sheriff’s deputies did a fantastic job with crowd control and preparation for one packed house on Wednesday? You did not hear this from
The Washington Post or The New York Times which reported the story based on social media reports. Yahoo wrote that the campaign “turned violent again” in Fayetteville. From my seat, it did not feel that way.

Why did they report only the bad and not the good? Where have all the good guys gone? Is it the juicy wrasslin’ (as my publisher might say) that leads? Does the media fear they will lose loyal readers and that their fans will not be interested in the plain Jane, pure and honest truth? You might not read anymore if they don’t, right? Well, I say they are wrong. I think people would like to hear the truth about what really happens. I believe people want to hear the good, the bad and the ugly.

Here’s the good: Fayetteville did an amazing job at providing a safe venue and a well-planned event that many feared would be a dangerous and controversial one. For every heckler starving for attention there was a security officer there to listen. Donald looked good and appeared to be strong and tolerant.  

The bad: I did not have an opportunity for Trump to sign the 2013 cover of Business North Carolina magazine when we featured his new golf course and his face on our cover. (I had my orange Sharpie that matched the cover perfectly.) Two people were issued citations on misdemeanor charges of resisting a public officer and trespassing, according to The Fayetteville Observer. Cumberland County sheriff’s deputies later charged the 78-year-old man who struck the protester. 

The ugly: I got a chance to see Trump in person. Wait a minute … I know what you are thinking. No, the "ugly" is not Trump. He looked great and was strong in stature and personality. I’ve always admired his business success. I think each of us would secretly like to have a few lessons on the “art of the deal,” but I was disappointed in the way he made references to his family, including Wilmington native and daughter-in-law Lara Yunaska, as “good looking.” That's all good and fine, but I would be more impressed if he said he is proud of his family for their strong spirit and soul. Looks fade and disappear over time but your spirit will only become stronger if you are living the way you were created and with patience, servitude and humbleness.

Just as I believe that good always Trumps evil, I have hope for the Donald. He reminds me a bit of my father who is not so filtered at times, literal, matter-of-fact and, without fail, has led me to grow up with a strong work ethic, to be independent and stay clear of drugs. So I would say to the Donald, "Mr. Trump, a little birdie told me you collect Bibles which in my opinion is the greatest book of all time. Something tells me that if you open these Bibles, you might just find the 'art of patience, servitude and humbleness.'" I'm not here to judge, trust me, I can brush up on these life lessons myself. I'd really like to see more of this side of him. Perhaps he'll get some pointers from his friend Dr. Ben Carson who today gave Trump his endorsement.

As for the media, don't get Trumped by all of it. Believe in what you see for yourself and always know there are many viewpoints out there. Just as beauty is in the eye of the beholder, reporting is in the pen of the writer. Remember, don't be quick to judge. Sometimes things are not as they appear. 

 Melanie Weaver Lynch is a BNC account manager

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Even if you find Medicaid boring, take time to read this

David Mildenberg on March 2016 at 12:00:00 pm 
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Unless you are among 18% of North Carolinians who receive Medicaid, the term induces either boredom or despair. The mechanics behind the government’s health insurance for low-income families and individuals are so complex, and the subject so distressing, that it’s much easier to just avoid the topic.

But senior contributing editor Ed Martin took a close look at North Carolina’s Medicaid program, which would be dramatically revised under a law passed by the General Assembly last year. His story is published in the March edition of Business North Carolina, which will be online next week.

       Here is a CliffsNotes version of Ed's story that everyone should understand — even if the topic is Medicaid:

  • States decide who gets Medicaid and how care is delivered, even though the federal government pays most of the bills.
  • North Carolina is among 19 states that didn’t expand Medicaid in concert with “Obamacare,” the federal plan to insure more people. If we had expanded, more than 20% of N.C. residents would receive Medicaid benefits.
  • Medicaid spending accounts for about a third of all state-government spending. That’s right: One third of your state tax bill goes to pay for health insurance for people who are not eligible for Medicare, the federal program for people age 65 and older.
  • The 2007-09 recession sent Medicaid costs soaring. A bad economy causes economic distress and too few people save for a rainy day.
  • North Carolina’s Medicaid program has been well run and cost-efficient, according to Harvard Business School research cited by U.S. Sen. Richard Burr in April 2013.
  • A day later, Gov. Pat McCrory labeled North Carolina’s program as “broken.” Rising Medicaid costs had unnerved state leaders, who wanted more predictability.
  • McCrory’s comments mirrored Republican governors across the U.S., who made “a broken Medicaid system” a well-rehearsed political talking point. They cite research about Medicaid from libertarian-oriented think tanks.
  • Republican lawmakers approved a new plan that will pay insurers a set fee to take care of Medicaid recipients. The risk — if Joe or Janie's health care costs are much higher than the set fee — will be with insurers, not the state.
  • North Carolina’s hospitals don’t want to be cut out of the game, so they begrudgingly are creating an insurance company to compete with the traditional industry giants.
  • Ralph HiseMedicaid is an excellent revenue source for many hospitals. The government pays its bills.
  • North Carolina is submitting its plan to the feds by June 1. The Obama Administration is likely to stew on it, perhaps through the end the president’s term. Most Democrats oppose the reform, which they say will reduce the quality of care as insurers profit.
  • Medicaid spending is $181 million under budget during the first half of this fiscal year. A better economy reduces economic distress.
  • McCrory and Rick Brajer, secretary of the N.C. Department of Health and Human Services, declined Ed’s repeated requests to discuss the state’s new plan — which, again, affects nearly a fifth of N.C. residents. Showing more guts was Sen. Ralph Hise, a Spruce Pine Republican who explained his support for the change in an interview. Thank you, Sen. Hise.


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Risky business

Ben Kinney on March 2016 at 10:55:00 am 
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So there has been much talk in the state’s economic- development community about landing the "Big One." Megasites are being prepared and global automakers wooed to bring a plant and thousands of jobs to the Old North State. That’s well and good, but it’s also time to focus on something that was once here and taken from us, many moons ago.

Some 30 years ago as a kid in acid-washed jeans running through Charlotte’s mean streets listening to Wang Chung, I kept my eyes peeled for local celebrities. Because it was the headquarters city of Jim Crockett Promotions, it was common to see the era’s finest professional wrestlers: “Nature Boy” Ric Flair stylin’
and profilin’ with the Four Horsemen at SouthPark mall; the Evil Russian, Nikita Koloff and his Uncle Ivan praying at breakfast at Shoney’s; Chief Wahoo McDaniel buying milk and eggs at Harris Teeter. It was a golden age as the gods walked among us between performances at the old Charlotte Coliseum, Greensboro Coliseum, Raleigh’s Dorton Arena and other venues.

Alas, as with many industries, corporate takeovers swallowed up the Crocketts' family business. Turner Broadcasting took our stars to Atlanta, then later sold to Pinehurst native Vince McMahon’s WWF empire. Now called the WWE, a once-great Southern  institution sadly is now controlled by Yankees. It’s time to take it back. Attention Ronnie Bryant, Bob Morgan, Chris Chung and other industry recruiters: Here’s my plan to bring back the wrestling industry.

Dusty RhodesGet a professional manager, er, consultant: I’d nominate Jim Cornette, Jimmy “The Mouth of the South” Hart or Mr. Fuji. Famed strategists, they would plan a Great North State Wrestling Alliance. If things weren’t working out, someone would get whacked in the back with a folding chair when no one was watching.

Create a facility that trains wrestlers and monster-truck drivers. Tully Blanchard, Flair and the Rock 'n' Roll Express could teach classes including “The Dos and Don’ts of a Texas Death Match,” “Folding-Chair Bashing 101,” and “Razor-Blade-to-the-Forehead Etiquette.”

Supply chain: Suppliers would include Spandex manufacturers, auto-parts businesses, and, of course, some sort of pharmaceutical entity.

Location, location: The facility would be on the former Eastland Mall site in east Charlotte, an area ripe for redevelopment. The former home of Jeans West, Shah Safari and Spencer’s could be a thriving entertainment factory for a new generation of rednecks.

Free trade: Create an agreement to allow Mexico’s wrestlers of the Lucha Libre to work on a special visa. We’ll hire Rey Mysterio Jr. as a consultant.

A real hall of fame: Finally, we need a place to honor the sport's true greats. First to be inducted will be the late Dusty Rhodes, the plumber’s son known as “The American Dream.” A true American success story, he famously said, “I’ve dined with kings and queens and slept in alleys … eating pork and beans.”

Let’s get started bringing back wrasslin’ to where it belongs. How about it, Governor McCrory? Don’t make me call you Governor Chicken! As Dusty would say, “It’s risky business.”

Ben Kinney is publisher of Business North Carolina. Reach him at

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Toll road opponents shouldn't let hopes get too high

David Mildenberg on March 2016 at 2:55:00 pm 
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So N.C. Department of Transportation Secretary Nick Tennyson is taking a trip Monday to Texas to learn why a toll road between San Antonio and central Texas filed for bankruptcy this week. The move gives fresh hope to opponents of Ferrovial SA’s plans to add toll lanes on Interstate 77 north of Charlotte.Nick Tennyson

Here’s what Tennyson is going to learn: There are very few similarities between the two projects.

The Texas toll road was built parallel to super-busy Interstate 35, which runs from Mexico to Minneapolis and is one of the great business corridors in the U.S. Among its many bottlenecks is the inner city of Austin, Texas, which has been one of the fastest growing metro areas in the U.S. over the past decade. Imagine terrible Interstate 285 drive-time traffic in Atlanta – that’s what happens every morning and evening on I-35 in Austin.

But central Texas is full of undeveloped grassland, not far from Austin and San Antonio, so the Texas DOT hoped a toll road running parallel to Interstate 35 — but 10-20 miles east —  would relieve some of Austin's traffic burdens. Ferrovial’s Cintra subsidiary won the contract to build the project and bonds were floated to pay the bill, with repayments coming from toll revenues.

Unfortunately for TxDOT and Ferrovial, truckers and citizens prefer to sit in horrible traffic from Austin to San Antonio rather than waste time driving farther west to get on SH 130, then pay $15 or $20 in tolls to use the road.

Except in extreme rush-hour periods, picking SH130 doesn’t make a lot of sense for most drivers. It will some day when development has reached the SH130 corridor, but that is years off. Those  SH130 bonds quickly became junk bonds.

The story is completely different in North Carolina. Ferrovial knows that Interstate 77 is essentially Charlotte’s Main Street and drivers have no alternative because there isn’t land available for a new parallel highway like SH130. There’s also that thing called Lake Norman that limits the addition of new roads or lanes on the stretch between downtown Charlotte and Statesville.

So Ferrovial negotiated a  50-year deal with the N.C. DOT that limits the state’s ability to add “free” lanes without paying the toll-road company some compensation. Ferrovial knew that it had made a lousy deal in Texas; there was no way they would repeat that mistake in North Carolina.

The N.C. powerbrokers, including U.S. Senator Thom Tillis, former Gov. Beverly Perdue and Gov. Pat McCrory, who promoted the I-77 toll-lanes projects, correctly believe that fast-growing Charlotte needs new funding sources for transportation projects. But their vision isn’t matched by statesmanship nor attention to details. Rather than advocating for higher transportation-related taxes, they opted for the easier toll-lane option. Then they compounded the problem by keeping the public uninformed about what was happening. Better to tick off the folks in north Mecklenburg and Iredell counties who will have to pay the tolls every day, rather than enrage taxpayers statewide.Texas toll road

So Secretary Tennyson, have a great trip, enjoy some super Tex-Mex and brisket in the Live Musical Capital of the World. No doubt your findings may help Gov. McCrory slip away from his past support of the toll lanes. But we already know the answer – SH 130 isn't I-77.


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Cancer care pays off for famed Raleigh investor

David Mildenberg on March 2016 at 1:00:00 pm 
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James MaynardJames Maynard, one of North Carolina’s most esteemed investors and best known for his Golden Corral restaurants, got a big pay day through the February sale of Biologics Inc. to San Francisco-based McKesson Inc. The Cary-based cancer-drug sales company is a portfolio company of Maynard’s Investors Management Corp.

Details of the sale were not provided by McKesson, which simultaneously announced its purchase of Vantage Oncology, a Manhattan Beach, Calif.-based provider of radiation oncology services. The combined price tag for Biologics and Vantage was $1.2 billion, McKesson said.

Ownership of privately held Biologics is unclear, aside from Investors Management. Biologics spokeswoman Allison Keenan declined to disclose Maynard’s stake or that of other investors.

Biologics was started in 1994 by Robin Smith and Karen Freeman, who proposed a one-stop shop to provide cancer patients with specialty medicines needed for their illnesses. The company was valued at less than $60 million in 2007, when a private-equity group that included Maynard, Cherokee Investment Partners’ Tom Darden and retired IBM Vice Chairman Paul Rizzo bought more than a third of the company’s equity for $19.3 million, according a state securities filing cited by the Triangle Business Journal. Annual revenue then totaled $45 million.

In 2010, Smith and Freeman told their majority ownership to an investor group that included Raleigh leaders including Maynard's associate Richard Urquhart, banker James Hyler and surgeon Richard Myers. Stuart Frantz took over as CEO at that time.

Since 2010 Biologics’ staff increased from 68 to 350 as it signed contracts with large drug companies to support patients with cancer and other diseases, according to a company press release in July. It doesn’t disclose sales, which Barclays analyst Eric Percher estimated to be $900 million a year.

McKesson reported net profit of $2 billion with revenue of $189 billion in 2015. It is paying for the acquisitions with a mix of cash and debt and an 11 cents-per-share gain is expected during the fiscal year ending March 31, 2017, the company said in a release.

Maynard has handed off the CEO title at his company to his son, Quinton. Investors Management’s other holdings include a building supply company, the Fleet Feet Sports retail chain and the KDI Capital Partners money-management firm.


For a more in-depth look at the transaction, this is a report from a pharmaceutical industry blog.

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N.C. company in a hot energy sector gets snapped up by Southern Co.

David Mildenberg on February 2016 at 10:35:00 am 
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At a November conference call with investors, PowerSecure Inc. CEO Sidney Hinton was asked about how his company’s technology fit with changing energy-industry trends. He responded, “I feel like somebody that’s 7-foot tall and standing by the volleyball net and I just got the ball,” according to a Seeking Alpha transcript.

Investors savvy enough to trade on Hinton’s confident remarks, when his company’s shares traded for about $13, were rewarded Wednesday when giant Atlanta-based utility Southern Co. bought PowerSecure for $431 million, or $18.75 per share. The offer almost doubled the company’s closing price Wednesday, after shares had declined recently along with the rest of the market.

PowerSecure, which is based in Wake Forest just north of Raleigh, is valuable because it is growing rapidly in some red-hot utility-industry business. Its products are used in distributed-energy systems – which refers to small devices that generate power for use by nearby customers. Renewable-energy sources such as solar and wind power typically are used for distributed generation.

The systems remain specks in the grand scheme of Southern Co. and other big electric utilities, which are dominated by giant coal or nuclear plants that produce power transmitted over long distances.

But the specks are getting bigger in a hurry. PowerSecure’s revenues have tripled since 2010 with much of the recent increase coming from data-center customers, company officials explained in the November call. While they didn’t name names, it’s a safe bet that those customers include some technology giants that are building massive data centers to handle the explosion of digital information. Their data centers use massive amounts of power and their owners – many of which are led by environmentally friendly CEOs – prefer renewable resources over nuclear, coal and gas sources. And PowerSecure is poised for solar’s seemingly inevitable growth.

With 20/20 hindsight, Southern Co.’s purchase also makes sense because of CEO Sidney Hinton’s ties to the company. He worked for the Atlanta company from 1982 to 1997 and later had a market-research post at Raleigh-based Carolina Power & Light Co., which is now owned by Duke Energy. During a stint between jobs, he was an “executive-in-residence” at Carousel Capital, the Charlotte private-equity company co-founded by Erskine Bowles and Nelson Schwab. He held about 600,000 shares of PowerSecure as of last April, worth more than $11 million based on Southern’s bid.

Besides Hinton other Raleigh businessmen serving on PowerSecure’s board are Dale Jenkins, the CEO of Medical Mutual Holdings Inc., a physician-owned insurance company, and Kent Geer, a retired partner at Ernst & Young. His work at the accounting firm included leading its annual Entrepreneur of the Year program, which was won in 2012 by Sidney Hinton and PowerSecure.

A $430 million acquisition wouldn’t be too taxing for Duke Energy, given its $50 billion market cap, so it’s a good bet they either gave PowerSecure a close look or made a bid. Duke won't comment on M&A, a spokesman says, while noting it has made investments in distributed-energy companies. Duke also has its hands full with its $4.9 billion purchase of Piedmont Natural Gas Co.

Moral to this story: next time you hear a CEO who is selling lots of energy-saving stuff to some of the hottest U.S. tech companies — and saying he feels 7-feet tall — give it a close look.


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Durham's most interesting journalist

David Mildenberg on February 2016 at 12:00:00 pm 
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IndyWeekBob Geary, one of North Carolina's best journalists, is ending his weekly column at Durham’s Indy Week, previously called Independent Weekly. His last one is worth reading. As usual, Bob shows he gives a darn about his state and community and explains key issues, backed by years of reporting — not just pontificating. Whether you agree with his conclusions or not, Bob has been well ahead of the mainstream on gay rights, mass transit and many other issues.

Alternative weeklies can play key economic roles in communities, defying their reputations as liberal rags. The best example is the Austin Chronicle, which helped turn Texas’ staid capital city into the fastest-growing metro area in the U.S. The Chronicle seized upon Austin’s creative scene — Willie Nelson, Stevie Ray Vaughan, etc. — and the weekly’s Lewis Black, Roland Swenson and Nick Barbaro created the South by Southwest festival in 1987. It has emerged as an international event for music, film and technology industries, attracting more than 50,000 hipsters annually. It’s no coincidence that Apple, Facebook, Google and other tech titans are collectively investing billions in Austin.

Independent Weekly and the Hopscotch Music Festival — started by a former employee — haven’t made as big of a mark in the Triangle. But paper remains a vital voice and the festival is popular. In a 1989 story, Business North Carolina recounted the paper's start in 1983, when founders Steve Schewel and Katherine Fulton and nine other staffers were initially paid $200 a week. "Back then it had nothing to do with business," Schewel told writer Bill Morris. "The paper was strictly politics and journalism."

(Schewel sold the paper in 2012 to a company that owns alternative weeklies in Portland, Ore., and Santa Fe, N.M.)

The building and renovations under way in downtown Durham reflect its growing reputation as a center for creative people with an eye on the future. People like Bob Geary.

Click here to read Bob’s column.

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VF rebounds after global-warming scare

David Mildenberg on February 2016 at 11:15:00 am 
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VF Corp.

Don’t tell VF Corp. shareholders that global warming is a hoax.

Last week when it reported quarterly earnings, the Greensboro-based apparel company missed its estimate by six cents a share, the most in recent memory, CEO Eric Wiseman said on the company’s quarterly conference call. Much of the blame, he said, stemmed from the warmest winter on record.

The news rattled investors, with VF shares declining 4.4% to about $58.50, a 25% decline from the record high of last summer. Warm weather or not, the company earned $1.1 billion last year.

It didn’t take long for people to realize the stock slide was an overreaction: Shares rebounded almost 5% in early trading Monday to $61 after Nomura Securities and other investment companies recommended VF.

Wiseman also cited weakening sales for working people, related to the slowdown in the oil patch and manufacturing. Work wear has the best earnings potential of VF’s brands, Wiseman said, but it’s “really on its heels now.” VF’s main work wear brands are Bulwark and Red Kap.

VF’s shares were due a pause given its stunning rebound since the 2007-09 recession. Shares increased more than sixfold between 2008 and last year as the company earned plaudits for its savvy management. VF hasn’t made an acquisition in four years, focusing on making its $2 billion Timberland purchase in 2011 pay off.

Wiseman hinted that a deal is brewing, noting he’s looking at the company’s entire portfolio. “We think it’s likely something will change this year.” Nomura analyst Robert Drbul noted Monday that declines in rival, smaller apparel companies makes a deal more likely. “We would welcome a much-anticipated, one-strategy meaningful acquisition,” he wrote.         

Sales of VF’s most heralded brand, The North Face, slowed to a 5% increase last year, compared with 12% a year earlier. Not a great need to wear that North Face when it’s 60 degrees in December. But 5% growth remains impressive: It was one of the company’s five brands that make up more than 65% of annual sales.

VF has a great history, raising dividends for 43 straight years (its yield is now 2.5%) and producing more than 500 million apparel products annually, spread over more than 30 brands. About 30% of sales come from overseas, and it owns 1,400 stores to help it move inventory when things slow down.

Or, as was the case last year, when things warm up.


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Tattling on the Tar Heels

David Mildenberg on February 2016 at 10:00:00 am 
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UNC Chapel Hill

While legions of sportswriters tracked every move by Marcus Paige, Grayson Allen, Roy Williams and Coach K in Tuesday’s hard-fought 74-73 Duke victory over UNC, only a few of us numbers nerds get as excited about data that gives a precise picture of the nation’s first public university. But it's Christmas in February: This week UNC issued a bond prospectus offering 136 pages of facts and figures about the university.

Such filings contain reams of information to make sure that potential investors in UNC bonds understand the risks. This document emerged because UNC Chapel Hill wants to refinance $401 million of bonds, taking advantage of the historic low interest rates. One would hope most of it is accurate, given that State Auditor Beth Wood just blasted the university in a report noting its financial statements have included “significant misstatements and omissions.” Chancellor Carol Folt blamed the mistakes on a change in technology systems and the unexpected retirement of the state's controller.

Here are a few interesting, hopefully accurate facts in the report that reflect that UNC is an economic powerhouse, and far more than a great basketball factory.

-- About 26,900 students attend UNC, virtually unchanged from five years earlier. North Carolina added about 500,000 people during that period, so it’s no wonder high-school parents complain how much harder it is to gain admittance than ever before.

-- While enrollment has flatlined, expenses increased 21% to $3.1 billion, from five years earlier. Most of the increase stems from more spending on services including dormitory fees, food service and medical patient care. Much of those costs were balanced by higher revenues. Spending on salaries and benefits gained 9%.

-- Revenue is up 8%, even as state government cut its appropriation by about $55 million to $479 million in 2015.

-- In-state tuition increased 22% over the five years, to $8,591. Out-of-staters are charged $33,673, a 25% hike.

-- Average borrowing of UNC students is about $19,000, or about $10,000 less than the national average. It clearly remains a bargain compared with most peers.

-- The university employs about 12,200 full-time and part-time employees.  The faculty totals about 3,380, including 40% who have tenure.

-- Of UNC’s 12 senior executives, only two had their jobs before 2011. Vice Chancellor for Student Affairs Winston Crisp has held his post since 2010, while Vice Chancellor for Medical Affairs William Roper took his job in 2004. Chancellor Folt, who arrived in 2014 from Dartmouth, has clearly shaken things up.

-- The university had total cash and investments of $3.2 billion and endowment assets of $1.8 billion, compared with $2.6 billion and $1.4 billion, respectively, in 2011.

-- UNC’s endowment fund averaged an 8.6% annualized return over the last decade, and ranks in the top 25% of major college endowments over the last 3 years and 10 years. Nineteen percent of endowment funds are with private-equity groups, more than double the fund’s allocations to bonds.

Enough numbers. Here’s hoping the Tar Heels can get it together and even the season series with the Blue Devils in their March 5 rematch.

(The best way to access bond documents is setting up a free account on the Municipal Securities Rulemaking Board's website. The MSRB runs a program called EMMA - Electronic Municipal Market Access and the website is

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Bankers to go California dreamin'

David Mildenberg on February 2016 at 7:00:00 am 
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Not sure if the Federal Reserve uses it as an economic gauge, but one measure of the optimism of the banking economy is the location of the lenders’ annual convention.

When the 2007-09 recession ravaged loan portfolios, prompting significant industry losses and bailouts from the federal Troubled Asset Relief Program, North Carolina bankers settled for some of the Carolinas’ great resorts to hold their annual confabs. Those were days when some resorts stopped calling themselves resorts and trade associations downscaled their meetings amid investor anger over sharp stock-price declines. President Obama and other politicians criticized any excessive spending by bank brass. The hospitality industry took a big hit.  

These days, the mood has changed, it would seem. The N.C. Bankers Association told its members last week it is heading to San Diego’s Hotel del Coronado for the four-day meeting in June. Rooms cost $300 to $400 a night, while the convention costs $650. Add a $500 airline ticket, bring along one’s spouse or partner, and the affair still probably costs less than a Super Bowl 50 experience in northern California enjoyed by Carolina Panthers’ fans. (Enjoyed until the game started, sadly.)

We’d prefer the bankers would stick to our hospitality friends down at the beach or mountains or Sandhills. We embrace Gov. Pat McCrory’s tourism slogan, “Nothing Compares” to North Carolina.

But in fairness, a number of the state’s banks have enjoyed good years, so maybe it’s time to check out California, where the economy has rebounded faster in recent years than most critics of tax-hiking Democratic Gov. Jerry Brown anticipated.

At least a dozen publicly traded banks based in North Carolina outpaced the S&P 500 index over the past year. (See listing below.) The leader was Greensboro-based Carolina Bank Holdings – its stock reached a record high last fall and has increased sixfold since trading for less than $2.50 in 2011. CommunityOne and NewBridge Bancorp management may also have reason to party, given how both are being acquired at much higher prices than many bank analysts expected a few years back.

Of course, stocks of some of the state’s biggest and/or best-run banks sank over the past year, including Bank of America, BB&T, First Citizens and Wells Fargo. Their investors might prefer seeing the state convention held at the Grandover or Blockade Runner, but no doubt each company has much better years ahead.

So have your West Coast fun, banker friends. But when that the economic tide inevitably turns again, we’ll be looking for you on the boardwalk, on the Pinehurst veranda or on the mountaintop. There really is nothing finer than to be in Carolina.


Banks with positive returns over the past year:

Carolina Bank Holdings (CLBH) 54%

CommunityOne (COB) 27% (Being acquired by Capital Bank Financial Corp.)

Asheville Savings Bank (ASBB) 24%

Bank of North Carolina (BCNC) 24%

NewBridge Bancorp (NBBC) 21% (Being acquired by Yadkin Financial)

Yadkin (YDKN) 11%

HomeTrust BancShares (HTBI) 11%

Entegra (ENFC) 9%

First Bank (FBNC) 8%

First South Bancorp (FSBK) 3%

Peoples Bank (PEBK) 2%


Negative returns over the past year:

First Citizens (FCNCA) -10%

Standard & Poor’s 500 Index (SPY) -11

Park Sterling (PSTB) -11%

Wells Fargo (WFC)  -15%

BB&T (BBT)  -18%

Bank of America (BAC)  -28%

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Carolinas HealthCare picks new CEO from Texas

David Mildenberg on February 2016 at 12:30:00 pm 
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Carolinas Medical Center

Carolinas HealthCare System, the Charlotte-based hospital operator with annual revenues of almost $9 billion in 2015, named Eugene Woods CEO to replace Michael Tarwater, who is retiring in June.

"I am honored to be joining Carolinas HealthCare System," Woods said in a press release. "This is one of the most comprehensive and highly integrated healthcare systems in the nation, combining extraordinary care with an unwavering commitment to the region."

Carolinas HealthCare system employs more than 60,000 full- and part-time employees. Its network includes 39 hospitals and more than 900 medical offices in the Carolinas.

Eugene WoodsHere is Woods' LinkedIn biography:

Eugene A. Woods is the president and COO of CHRISTUS Health in Irving, Texas, a position he has held since June 2011. He is responsible for overseeing acute, post-acute and international operations for all of CHRISTUS Health’s regions in the U.S. and Mexico. CHRISTUS is a health system of more than 50 hospitals and long-term care facilities, with 175 clinics and outpatient centers, and 30,000 associates.

Woods has nearly 25 years of experience in senior healthcare leadership positions. Previously, he served in dual roles at Catholic Health Initiatives - as CEO of the eight-hospital Saint Joseph Health System, and national senior vice president responsible for helping to implement system-wide initiatives for the faith-based system which operates in 18 states and includes 86 hospitals. Prior to joining CHI, he was the COO at the Washington Hospital Center, a 968-bed teaching hospital located in the nation’s capital, and one of the busiest hospitals in the mid-Atlantic region.

Woods is the Chairman-Elect of the American Hospital Association Board (AHA) and has also served on the AHA’s Health Care Systems Governing Council, as well as the Regional Policy Board in District 3. Woods also served a Regent for the American College of Healthcare Executives on two occasions, and is an ACHE Fellow. Additionally, he previously was the president for the Washington, D.C., chapter of the National Association of Health Service Executives (NAHSE), and is currently a member of the National NAHSE Board.

Woods received his bachelor’s degree in health planning and administration, master’s degree in business administration and master’s in health administration from The Pennsylvania State University.

He was named a Modern Healthcare Up and Comer in 2001, and is a three time recipient of Modern Healthcare's Top 25 Minority Executive honors (2006, 2008, & 2014). Woods is also fluent in Spanish.

Here is the board that selected Woods:



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Can Bernie Sanders sell his politics in the South? Don't bet on it.

David Mildenberg on February 2016 at 11:00:00 am 
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New Hampshire’s liberal Democrats had their fun Tuesday, giving Bernie Sanders a resounding victory and something for the political media pack to talk about ahead of the South Carolina primary. But the disconnect between Sanders’ rhetoric and what’s happening in the real economy is remarkable. Best example: Sanders proposes significant income tax increases, while the lawmakers who run North Carolina government started pushing for lower rates on Tuesday. Talkers versus doers?

A savvy friend and keen student of U.S. economics noted some of the key inconsistencies of Sanders’ stump speech that proved so appealing in New England:

  • The Vermont senator emphasizes that “nothing has changed since the financial crisis.” In fact, we had the biggest overhaul in financial regulation in many decades, led by liberal Democrats Chris Dodd and Barney Frank. It included establishment of the Consumer Financial Protection Bureau, extending regulatory reach into many different facets of the financial industry. The bureau employs nearly 1,000 people who are supposed to protect the public from nefarious bankers.
  • Sanders complains that “no one has gone to jail” for contributing to the financial crisis. Of course, some financiers have gone to jail. Perhaps, others have not because President Obama’s Department of Justice believes they didn’t have probable cause to prosecute Angelo Mozilo, Ken Lewis, Jamie Dimon and other banking industry kingpins. Does the senator really believe Obama and former Attorney General Eric Holder are Wall Street stooges?
  • Sanders says the economy doesn’t work for the average Joe or Janie because it is fixed to favor the wealthiest Americans. Lots of evidence suggests that is true; just read the annual Forbes 400 list of richest Americans. The widening income inequality and the explosion in CEO pay are deplorable. (Even some of the most conservative businessmen I know think it is wrong that the CEO of a nonprofit Charlotte-based hospital system was paid more than $6 million in 2015.) Short of storming the gates, the issue is how to balance the scales. Sanders wants to provide free higher education, a step up from Obama’s proposal for free community college tuition, which could improve worker productivity and, eventually, incomes. But one hasn’t seen any groundswell of bipartisan support for Obama’s idea, and one doubts the ruling party in most U.S. states and Congress have any desire to favor Sanders’ much more expensive proposal. Fortunately, in the real word, the most recent jobs report showed that incomes are finally accelerating. Talkers versus doers?

Maybe Sanders can muster the electorate to storm those gates, demanding his flavor of reform. Like the New Hampshire folks favoring the local guy, I remember the euphoria I felt in 1972 when Sen. George McGovern, who lived in an adjoining state to my Minnesota, rallied liberals. And I remember President Nixon's 49-state victory, including McGovern's South Dakota.

From the vantage point in the South, a much more politically polarized, diverse and economically vital region than New Hampshire, one suspects his Granite State victory won’t be repeated elsewhere as the public chooses someone offering a more honest, realistic outlook.


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