NC Politics in the News (Oct. 4)

October 4, 2008

Pardon Our Dust

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1. Wachovia Deals

Triangle Business Journal
Wachovia announced Thursday that it has negotiated a deal with San Francisco-based Wells Fargo & Co. that calls for a $15.1 billion sale of the Charlotte-based bank, upending a previously announced deal with Citigroup. The Wachovia/Citigroup deal was brokered Sept. 29 with the help of federal regulators. Citigroup says it includes an exclusivity agreement that prevents Wachovia from negotiating an acquisition by anyone else. On Saturday, Citigroup announced that a New York judge has put a temporary hold on Wells’ proposed buyout of Wachovia. Judge Charles Ramos of the N. Y. Supreme Court ordered Wachovia to court on Friday, when he plans to hold a hearing on whether the Wells deal violates Wachovia’s earlier agreement to sell its banking operations to New York-based Citigroup for $2.16 billion. Court records for last week’s hearing were not available Sunday morning. But Citigroup says Wachovia objected to the proceedings and attempted to head off the order. Citigroup says it has been providing funds to Wachovia to preserve its liquidity since the Sept. 29 agreement. It says it was completing the requirements of the deal when Wachovia made its surprise announcement late last week. Wachovia officials could not be reached for comment.
2. Variable Rates
The Charlotte Observer
The variable interest rates on some of North Carolina’s state debt have started to return to lower levels. The average rate has dropped about two percentage points since last week, Sara Lang, spokeswoman for the State Treasurer’s Office said.
The state has $855 million in variable-rate debt, about 12 percent of the total state debt. The rates adjust weekly. For about $500 million, the new weekly rate is an average of 5.66 percent. A week ago it was 7.58 percent. For about $355 million, the new weekly rate is an average of 5.36 percent. A week ago it was 7.49 percent.
The state was paying a rate of under 2 percent three weeks ago. Lang said the state budget assumes a 4 percent interest rate, blunting any immediate impact on taxpayers. From August to September, the state’s monthly payment on the $855 million in debt more than doubled from $1.2 million to $2.5 million.
3. No Port/SouthPort
Wilmington Star-News
Members of a citizens group that objects to a planned international port near Southport got the chance Tuesday to air their concerns to State Auditor Les Merritt. Merritt, a Republican, said he attended No Port/Southport’s second public meeting Tuesday night to show support for the questions the group is asking and the answers it demands. Merritt, who is up for re-election, stopped short of endorsing the group’s efforts to stop the $2.3 billion terminal from being built, but emphasized his concerns. Merritt is a member of the Council of State, made up of 10 statewide elected officials. In 2006, the panel unanimously approved the N.C. State Ports Authority’s $30 million purchase of 600 acres for the port project.
Merritt said he stopped short of approving the entire project. At the time of the vote, he said he was skeptical about the state partnering with private industry. The authority has picked a preliminary private partner for the project. Before the meeting Tuesday, Merritt said he has concerns about the safety and environmental issues surrounding the port. “I would’ve preferred to see more work done to allay the safety and environmental concerns before selling this project as a major economic benefit to the community,” he said. The ports authority is seeking funding to conduct the necessary feasibility and environmental studies.
Rep. Bonner Stiller also made an appearance at the meeting. Stiller, R-Brunswick and also up for re-election, said he has not taken a firm stance on the proposed port. He described his position as “guarded optimism.” “I am not a cheerleader for this thing,” he added. No port/Southport’s meeting at the Southport Community Building, which drew in more than 200 people, focused mostly on health and safety concerns surrounding the port, which is supposed to open its first phase in 2017. John Lauer of Southport presented the group’s concerns about air pollution caused by the many trucks, trains and ships that would come along with a major port. He cited health concerns such as cancer and asthma. The ports authority is anticipating 275 trucks arriving or leaving each hour and 10 trains leaving the port each day. “We have a problem. Our health is in danger here,” Lauer said.
4. Drawbridge Proposal
The News & Observer
Community leaders in Beaufort warn that tourism and marine businesses will lose 250 jobs and $17 million a year if the state replaces a U.S. 70 drawbridge with a fixed span too short for tall ships. A planned 65-foot-high bridge over Gallants Channel would keep historic tall-masted vessels from reaching the N.C. Maritime Museum’s new $4 million waterfront docks, according to an impact report prepared for the Beaufort town commissioners.
Big seagoing catamarans also would be blocked from the Jarrett Bay marine industrial park on the Intracoastal Waterway. The state Department of Transportation wants to start work in 2015 on a 2.2-mile, four-lane U.S. 70 bypass around the north side of town.
The proposed bypass, Carteret County’s top road priority since the early 1990s, was added this year to DOT’s construction timetable. Now some county officials worry that a design change would increase the cost and delay construction.
But Beaufort civic leaders named to a study committee this year say DOT overstated the cost of a new drawbridge — and overlooked its benefits — when it settled on a fixed-span bridge.
5. TransPark Funds
The News & Observer
Despite a tightening of international credit markets, the Golden LEAF Foundation is seeking a $100 million loan. It committed the funds in May to the Global TransPark Authority in Kinston to help lure Spirit Aerosystems. The TransPark is building the company a factory as part of an incentives agreement to bring more than 1,000 jobs to Eastern North Carolina.
The foundation has more than $700 million in assets, but that money is tied up in stocks, bonds and the like. Unwinding the investments to get the cash could hurt the allocation strategy and investment return. So Golden LEAF opted to borrow.
“It’s more of a convenience issue,” said Dan Gerlach, a former advisor to Gov. Mike Easley who took over as foundation president this week. Gerlach said the foundation has received several bank proposals for the financing and he expects more.
So far, he hasn’t seen a big effect of the credit crunch. Gerlach said the foundation likely could pay back the loan within a year.
6. Carbon Offset
Triangle Business Journal
Progress Energy Customers will soon be able to enroll in a program intended to help them reduce their carbon footprints. The Raleigh-based utility and NC GreenPower unveiled the program Wednesday. The program will give customers the option of making a carbon-offset donation while paying their electric bills. Progress will use those contributions to fund NC GreenPower-selected projects designed to prevent or capture greenhouse gas emissions. Progress says that each tax-deductible contribution of $4 will be used to mitigate 500 pounds of carbon dioxide emissions or their equivalent. Those savings equate to the average motorist not driving for two weeks, according to the Raleigh-based company. NC GreenPower is a nonprofit group that works to improve the state’s environment through voluntary contributions toward renewable energy.
7. Rate Cut
The News & Observer
The state Utilities Commission has approved natural gas rate cuts for PSNC Energy and Piedmont Natural Gas. The panel on Tuesday approved reductions to PSNC’s residential rate by 14 percent and Piedmont’s by about 16 percent, effective Wednesday. The two companies asked for the decrease because natural gas prices have fallen in recent months. Even with the decrease, both utilities’ rates will be higher this October than they were a year ago. The two utilities serve nearly 1.2 million customers in North Carolina.
8. Vertical Licenses
The Fayetteville Observer
The state Division of Motor Vehicles began issuing vertical licenses on Wednesday for motorists under the age of 21. The twist on the traditional horizontal layout is aimed at keeping alcohol out of the hands of minors. “I think the new format will help tremendously,” said Ted Carlton, a district supervisor for the state’s Alcohol Law Enforcement agency. “As soon as you look at the license you have to turn it. It forces you to do something a different way then you’re accustomed to.” Drivers under 21 are allowed to use their existing licenses until they expire. If they are under 21 when it is time to renew, the renewal will be the vertical format license.
Carlton, whose district includes Bladen and Columbus counties, said an ALE survey found that storekeepers often are busy with several customers at once and don’t read a driver’s license close enough to accurately determine the customer’s age. The survey was used by the N.C. Child Fatality Task Force to push for the new law. “More than half the time, vendors made a mistake and sold alcohol to somebody who was clearly underage,” said Tom Vitaglione, the task force’s president. Vertical licenses are used to distinguish drivers under 21 in more than 20 states, some of which the task force contacted to gauge results. “We found positive results virtually everywhere,” he said. The cost to the state Department of Motor Vehicles to switch formats was estimated to be about $50,000 for new software. But Department spokeswoman Marge Howell said the department’s software vendor supported the concept and donated the software.