GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	2 

SENATE BILL 504
Economic Development/Travel and Tourism Committee Substitute Adopted 5/5/93

Short Title:  Economic Development Board/Plan. 	(Public)
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Sponsors:
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Referred to:  Appropriations.
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March 18, 1993

A BILL TO BE ENTITLED
AN ACT TO MODIFY THE ECONOMIC DEVELOPMENT BOARD IN THE DEPARTMENT OF COMMERCE TO REQUIRE THE BOARD TO PREPARE AND UPDATE ANNUALLY A COMPREHENSIVE STRATEGIC ECONOMIC DEVELOPMENT PLAN FOR THE STATE OF NORTH CAROLINA, AND TO REQUIRE THE DEPARTMENT OF COMMERCE TO ESTABLISH A PLANNING UNIT TO SUPPORT THE ECONOMIC DEVELOPMENT BOARD'S ONGOING ROLE IN ECONOMIC AND COMMUNITY DEVELOPMENT PLANNING.
The General Assembly of North Carolina enacts:
Section 1.  The General Assembly finds that:
(1)	The Department of Commerce's Economic Development Board is a 25-member advisory board charged, in part, with advising the Secretary of Commerce on formulating a program for the economic development of the State.
(2)	The Economic Development Board has published a strategic business plan for quality growth, that sets out a series of strategies and initiatives to be taken by the State in economic development.
(3)	North Carolina has received wide recognition for its economic development successes, although it has some development weaknesses.
(4)	The Economic Development Board of the Department of Commerce, the Governor's Commission on Workforce Preparedness, the Rural Economic Development Center, and other organizations and agencies have developed strategic plans related to economic development.
(5)	The economic development policy currently stated in G.S. 143B-428 and the resulting plan developed by the Economic Development Board are lacking key elements necessary for a truly comprehensive and effective economic development plan.
(6)	North Carolina needs a statewide economic development plan that would do all of the following:
a.	Identify the roles and responsibilities of the many diverse agencies and organizations involved in economic development.
b.	Provide measurable objectives or performance indicators to assess the State's economic development progress.
c.	Set out broad vision and mission statements and general goals and policies of the State with regard to economic development.
d.	Reflect the input of all parties involved in economic development as well as the input of the public.
(7)	The lack of an integrated, comprehensive statewide economic development plan creates several inefficiencies as follows:
a.	Agencies involved in economic development have little direction regarding the types of programs and priorities they should focus on.
b.	The General Assembly has limited guidance as to which economic development appropriations are the most effective.
c.	There are no explicit performance indicators against which agencies' effectiveness can be measured.
d.	Various agencies may be duplicating one another's programs or even serving at cross purposes.
(8)	The Economic Development Board should be modified and empowered with additional responsibility for planning and authority to recommend economic development policy to the Secretary of Commerce, the Governor, and the General Assembly on a variety of issues.  The Department of Commerce, through the Economic Development Board, should be the lead agency in coordinating all affected parties in developing and updating an integrated, comprehensive economic development plan.
Sec. 2.  G.S. 143B-434 reads as rewritten:
"§ 143B-434.  Economic Development Board – creation, duties, membership.
	(a)	Creation and Duties. –  There is created within the Department of Commerce an Economic Development Board.  The Board shall have the following duties:
(1)	To provide economic and community development planning for the State.
(2)	To recommend economic development policy to the Secretary of Commerce, the General Assembly, and the Governor.  The recommendations may cover the following issues as well as any other economic development policy issues:
a.	Use of tax abatements and other incentives to motivate economic development.
b.	Definition of which specific activities and programs should be considered economic development activities and programs for the purpose of receiving State appropriations.
c.	The role of institutions of higher education in economic development.
d.	The use of State funds to leverage private nonprofit economic development initiatives.
f.	The linkage of workforce preparedness activities and initiatives, and economic development planning.
(3)	To recommend annually to the Governor biennial and annual appropriations for economic development programs.
(4)	To develop and update annually a comprehensive strategic economic development plan, as provided in G.S. 143B-434.1.
		The Board shall meet at least quarterly at the call of its chair or the Secretary. Each quarter the Secretary shall report to the Board on the program and progress of this State's economic development.
(b)	Membership. –  The Economic Development Board shall consist of 34 members.  The Secretary of Commerce shall serve ex officio as a member and as the secretary of the Economic Development Board.  Four members of the House of Representatives appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, four members of the Senate appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, the President of The University of North Carolina, or designee, and the President of the North Carolina Community College System, or designee, shall serve as members of the Board.  The Governor shall appoint the remaining 23 members of the Board, provided that effective with the terms beginning July 1, 1997, one of those appointees shall be a representative of a nonprofit organization involved in economic development and two of those appointees shall be county economic development representatives.  The Governor shall designate a chair and a vice-chair from among the members of the Board.  Appointments to the Board made by the Governor for terms beginning July 1, 1997, and appointments to the Board made by the General Assembly for terms beginning July 1, 1993, should reflect the ethnic and gender diversity of the State as nearly as practical.
The initial appointments to the Board shall be for terms beginning July 1, 1993.  Of the initial appointments made by the Governor, the terms shall expire July 1, 1997.  Of the initial appointments made by the General Assembly, two terms made upon the recommendation of the Speaker of the House of Representatives and two terms made upon the recommendation of the President Pro Tempore of the Senate shall be designated to expire on July 1, 1995; the remaining terms shall expire July 1, 1997.  Thereafter, all appointments shall be for a term of four years.
The Governor shall make a replacement appointment to serve for the unexpired term in the case of a vacancy, provided that a  vacancy in a term appointed by the General Assembly shall be filled in accordance with G.S. 120-122.
	The members of the Economic Development Board shall receive per diem and necessary travel and subsistence expenses payable to members of State Boards and agencies generally pursuant to G.S. 138-5 and 138-6, as the case may be.  The members of the Economic Development Board who are members of the General Assembly shall not receive per diem but shall receive necessary travel and subsistence expenses at rates prescribed by G.S. 120-3.1.
(c)	Advice and Staff. – The Secretaries of Administration, State, and Transportation, the Commissioners of Agriculture and Labor, and the State Treasurer, or their designees, shall advise the Board on economic development activities within the responsibility of their respective departments.  Clerical and professional staff support to the Economic Development Board shall be provided by an Interagency Economic Development Group composed of representatives of the following State agencies:
(1)	The Department of Administration.
(2)	The Department of Agriculture.
(3)	The Employment Security Commission.
(4)	The Department of Labor.
(5)	The Department of Transportation.
The Department of Commerce shall have the responsibility for coordinating the activities and efforts of the Interagency Economic Development Group.
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Sec. 3.  G.S. 143B-433(a) reads as rewritten:
"(a)	(1)	The North Carolina Alcoholic Beverage Control Commission,
(2)	The North Carolina Utilities Commission,
(3)	The Employment Security Commission,
(4)	The North Carolina Industrial Commission,
(5)	State Banking Commission,
(6)	Savings and Loan Association Division,
(7)	The State Savings Institutions Commission,
(8)	Credit Union Commission,
(9)	The North Carolina Milk Commission,
(10)	The North Carolina Mutual Burial Association Commission,
(11)	North Carolina Cemetery Commission,
(12)	The North Carolina Rural Electrification Authority,
(13)	Repealed by Session Laws 1985, c. 757, s. 179(d),
(14)	North Carolina Science and Technology Research Center,
(15)	The North Carolina State Ports Authority,
(16)	North Carolina National Park, Parkway and Forests Development Board,
(17)	Economic Development Board,
(18)	Labor Force Development Board,
(19)	Energy Policy Board,
(20)	Energy Division,
(21)	Navigation and Pilotage Commissions established by Chapter 76 of the General Statutes.
	."
Sec. 4.  Part 2 of Article 10 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B-434.1.  Comprehensive Strategic Economic Development Plan.
(a)	Definitions. – The following definitions apply in this section:
(1)	Board. – The Economic Development Board.
(2)	Department. – The Department of Commerce.
(3)	Economic distress. – The presence of at least one trend indicator or at least one status indicator:
a.	Trend indicators:
1.	Weighted average age of industrial plants exceeding statewide average age.
2.	Loss of population over the most recent three- to five-year period.
3.	Below average job growth over the most recent three- to five-year period.
4.	Outmigration over the most recent three- to five-year period.
4.	Decline in real wages over the most recent three- to five-year period.
6.	Above average rate of business failures over the most recent three- to five-year period.
b.	Status indicators:
1.	Per capita income below the State average.
2.	Earnings or wages per job below the State average.
3.	Unemployment above the State average.
4.	Poverty rate above the State average.
5.	Below average fiscal capacity.
(4)	Plan. – The Comprehensive Strategic Economic Development Plan.
(5)	Region. – One of the major geographic regions of the State defined in the Plan as an economic region based on compatible economic development factors.
(b)	Board to Prepare Plan. – The Board shall prepare the Plan by April 1, 1994.  The Board shall review and update this Plan by April 1 of each year.  The original Plan shall cover a period of four years and each annual update shall extend the time frame by one year so that a four-year plan is always in effect.  The Board shall provide copies of the Plan and each annual update to the Governor and the Joint Legislative Commission on Governmental Operations.  The Plan shall encompass all of the components set out in this section.
	(c)	Purpose. – The purpose of this section is to require the Board to apply strategic planning principles to its economic development efforts.  This requirement is expected to result in:
(1)	The selection of a set of priority development objectives that recognizes the increasingly competitive economic environment and addresses the changing needs of the State in a more comprehensive manner.
(2)	The effective utilization of available and limited resources.
(3)	A commitment to achieve priority objectives and to sustain the process.
(d)	Public and Private Input. – At each stage as it develops and updates the Plan, the Board shall solicit input from all parties involved in economic development in North Carolina, including:
(1)	Each of the programs and organizations that, for State budget purposes, identifies economic development as one of its global goals.
(2)	Local economic development departments and regional economic development organizations.
(3)	The Board of Governors of The University of North Carolina.
The Board shall also hold hearings in each of the Regions to solicit public input on economic development before the initial Plan is completed.  The purposes of the public hearings are to:
(1)	Assess the strengths and weaknesses of recent regional economic performance.
(2)	Examine the status and competitive position of the regional resource base.
(3)	Identify and seek input on issues that are key to improving the economic well-being of the Region.
The Board shall hold additional hearings from time to time to solicit public input regarding economic development activities.
Each component of the Plan shall be based on this broad input and, to the extent possible, upon a consensus among all affected parties.  The Board shall coordinate its planning process with any State capital development planning efforts affecting State infrastructure such as roads and water and sewer facilities.
(e)	Environmental Scan. – The first step in developing the Plan shall be to develop an environmental scan based on the input from economic development parties and the public and on information about the economic environment in North Carolina.  To prepare the scan, the Board shall gather the following information.  Thereafter, the information shall be updated periodically.
(1)	Compilation of the latest economic and demographic data on North Carolina by State, Region, and county including population, population projections, employment, and employment projections, income and earnings status and outlook, migration and commuting patterns, unemployment, poverty, and other similar data.
(2)	Compilation of the latest data on the strength of the business environment by State, Region, and county with emphasis on the dynamics of job creation:  start-ups, expansions, locations, contractions, and failures.  Special assessments are to be made of rural, small, and minority business components of overall activity.
(3)	Compilation of the latest data on labor compensation, construction costs, utility rates, payroll costs, taxes, and other cost data normally considered by manufacturing firms and new businesses and shall be tabulated by State, Region, and county.
(4)	Compilation of data on assets within the State and by Region and county to include the following:
a.	Available buildings, bona fide industrial parks, and sites.
b.	Characteristics of the available labor force (number, demographic attributes, skill levels, etc.).
c.	Special labor situations, such as military base discharges and large plant closings.
d.	Available infrastructure capacities by county and Region including water, sewer, electrical, natural gas, telecommunication, highway access, and other pertinent services.
e.	The fiscal capacity of counties and localities within counties to support the infrastructure development necessary to participate in the development process.
f.	Analyses of assimilative capacity of riverine, estaurine, or ocean outfalls, or other environmental cost considerations.
g.	Proximity analyses of counties in close alignment with major urban areas in bordering states.
h.	Special educational and research capabilities.
i.	Special transportation situations such as major airports, ports, and railyards.
j.	Available data on the performance, contribution, and impact each economic sector (including, but not limited to, agriculture, finance, manufacturing, public utilities, trade, services, tourism, and government) is having on individual counties, Regions, and the State.
k.	Available tourist and service assets.
l.	Analyses of seasonal population and absentee ownership in resort and tourism areas and their impact on the delivery of public services.
m.	Cost and availability of natural gas and electricity.
(5)	Compilation and analyses of data on economic and industrial changes in competitor states by Region, as applicable.  This data shall be entered into a database and kept current.  It shall include, specifically, all new plant location information such as origin of the plant, Standard Industrial Classification Code, employment, and investment.
(6)	Compilation of cost data, policies, and strategies in competitive Southeastern states as well as other United States regions and foreign countries.
(7)	Compilation of incentives and special programs being offered by other states.
(8)	Compilation and analyses of other data relating to economic development such as regulatory or legal matters, structural problems, and social considerations, e.g. unemployment, underemployment, poverty, support services, equity concerns, etc.
(9)	The cost of doing business in North Carolina and other competing states, as it may affect decisions by firms to locate in this State.
(10)	Competitive assets within the State and by Region and county, including infrastructure, tourist assets, natural resources, labor, educational and research resources, and transportation.
(11)	Other information relating to economic development such as regulatory or legal matters and social considerations.
(f)	Needs Assessment. – The Board, using data from the public input sessions and the environmental scan, shall prepare an assessment of economic development strengths, weaknesses, threats, and opportunities within the State by Region and by county.  An assessment shall also be conducted of each county to determine distressed areas existing within the county. The assessment will include the identification of key development issues within each geographic area and options available to address each issue.
(g)	Vision and Mission Statements. – The Board shall develop a vision statement for economic development that would describe the preferred future for North Carolina and what North Carolina would be like if all economic development efforts were successful.  The Board shall then develop a mission statement that outlines the basic purpose of each of North Carolina's economic development programs.  Because special purpose nonprofit organizations are uniquely situated to conduct the entrepreneurial and high-risk activity of investing in and supporting new business creation in the State, they should be assigned a dominant role in this key component of economic development activity.
(h)	Goals and Objectives. – The Board using data from the public input and the environmental scan, shall formulate a list of goals and objectives.  Goals shall be long-range, four years or more, and shall address both needs of economically distressed Regions and counties as well as opportunities for Regions and counties not distressed.  The goals shall be developed with realism but should also be selected so as to encourage every Region and county within the State to develop to its maximum potential.  Objectives shall be one year or less in scope and shall, if achieved, lead to the realization of the goals formulated by the Board as provided in this section.
Both goals and objectives should be stated largely in economic terms, that is, they should be related to specific population, employment, demographic targets, or economic sector targets.  Both efficiency and equity considerations are to be addressed and balanced with special emphasis placed on the needs of disadvantaged or economically distressed populations and communities.  The goals and objectives should not state how the economic targets are to be reached, but rather what the economic conditions will be if they are obtained.  So that the progress of North Carolina's economic development efforts can be monitored, the Board shall set objectives for each goal that allow measurement of progress toward the goal.  Objectives should be quantifiable and time-specific in order to serve as performance indicators.
(i)	Formulation of Economic Development Strategy. – The Plan shall have as its action component a strategy set forth in a blueprint for directing resources of time and dollars toward the satisfaction of the goals and objectives stated in subsection (h) of this section.  As a practical consequence of the economic environment, a focus on the competitiveness of indigenous industries and entrepreneurial development is required.  The Plan shall include a strategy for the coordination of initiatives and activities for workforce preparedness, funded by federal or State sources, including, but not limited to, vocational education, applied technology education, remedial education, and job training, and the achievement of the economic development goals of the Plan.  A balance of opportunity between rural and urban regions and between majority and minority populations should be an overriding consideration.  Equity of opportunity for counties and communities across the State will involve the explicit consideration of local fiscal capacity and the fiscal ability to support development activities.
The concept of differentiation should be employed.  The Plan should recognize the various strengths and weaknesses of the State and its component regions, subregions, and, in some cases, individual counties.  The concept of market segmentation should be employed.  Different Regions and subregions of the State should be promoted to different markets.
(j)	Implementation Plan. – Based upon all of the foregoing steps, the Board shall establish an implementation plan assigning to the appropriate parties specific responsibilities for meeting measurable objectives.  The implementation plan shall contain all necessary elements so that it may be used as a means to monitor performance, guide appropriations, and evaluate the outcomes of the parties involved in economic development in the State.
(k)	Annual Report. – The Plan shall contain a section devoted to measuring results, to be called 'An Annual Report on Economic Development for the State of North Carolina'.  The Annual Report shall contain a comparison of actual results with stated goals and objectives and significant and meaningful statistics to allow policymakers to adjust strategy and tactics as necessary to achieve the formulated goals.
The Annual Report shall break down data by Regions and counties including:
(1)	The net job change (expansions minus contractions) by the various economic sectors of the county, Region, and State.
(2)	Realized capital investment in plants and equipment by new and expanding industry in each county, Region, and State.
(3)	Manufacturing changes by county, Region, and State that affect the value of firms, total payrolls, average wages, value of shipments, contributions to gross State product, and value added.
(4)	The net change in the number of firms by county, Region, and State with statistics on the dynamics of change:  relocations in versus relocations out; births versus deaths; and expansions versus contractions.
(5)	A measure of the status and performance of all sectors of the county, Region, and State economy including, but not limited to, manufacturing, agriculture, trade, finance, communications, transportation, utilities, services, and travel and tourism.
(6)	An assessment of the relative status and performance of rural business development as opposed to that in urban areas.
(7)	An analysis of the status of minority-owned businesses throughout the State.
(8)	An assessment of the development capability of the various Regions of the State in terms of their environmental, fiscal, and administrative capacity.  Those areas that are handicapped by barriers to development should be highlighted.
(9)	An evaluation of the State's economic performance as indicated by the above statistics with the goals and objectives outlined in the Plan.
(l)	Accountability. – The Board shall make all data, plans, and reports available to the General Assembly and the Joint Legislative Commission on Governmental Operations at appropriate times and upon request.  The Board shall prepare and make available on an annual basis public reports on each of the major sections of the Plan and the Annual Report indicating the degree of success in attaining each development objective."
Sec. 5.  The Department of Commerce shall establish a planning unit within its executive offices to support the Economic Development Board's ongoing role in economic and community development planning.  The unit should consist of two professional staff plus necessary support staff.  The planning unit shall assist the Board in coordinating the planning process, monitoring and updating the plan, and collecting and analyzing the data necessary for planning.
Sec. 6.  There is appropriated from the General Fund to the Department of Commerce the sum of three hundred thousand dollars ($300,000) for the 1993-94 fiscal year and the sum of three hundred thousand dollars ($300,000) for the 1994-95 fiscal year for the Economic Development Board created in this act.  It is the intent of the General Assembly that this will be a continuing appropriation.
Sec. 7.  Part 2 of Article 10 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B-437C.  Allocation of economic development responsibilities.
The Economic Development Board created in G.S. 143B-434 shall coordinate economic development efforts among the various agencies and entities, including those created by executive order of the Governor, that receive economic development appropriations and the Board shall recommend to the Governor and to the General Assembly the assignment of key responsibilities for different aspects of economic development.  The Board shall recommend to the Governor and to the General Assembly resource allocation and planning designed to encourage each agency to focus on its area of primary responsibility and not diffuse its resources by conducting activities assigned to other agencies."
Sec. 8.  This act becomes effective July 1, 1993.  The terms of all current members of the Economic Development Board shall expire July 1, 1993.