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• Science-Based • Professors Troubled School Research C A R O L I N A Over First Amendment Debating Smart Growth ‘FDR’s Folly’ Volume 13, Number 2 A Monthly Journal of News, February 2004 Analysis, and Opinion from JOURNAL the John Locke Foundation www.CarolinaJournal.com www.JohnLocke.org Economic Development Goes Haywire in Northeast east Partnership of the impending visit. Recruited company Roberson’s introduction of Basnight and fell victim to turf war the partnership into the process made the AEDC’s involvement, despite the lead between N.C. agencies Roberson gave it, short-lived. Looking for money By PAUL CHESSER At the July 10 meeting, CropTech ex- Associate Editor pressed the need for a $3.5 million “bridge” RALEIGH investment to get it to a larger “institutional tate officials botched the recruitment round” of investing, in which it hoped to of a biotechnology company because raise $10 million to $15 million. The need for S of a power struggle between the De- seed money to attract private investment partment of Commerce and an economic was a theme to which CropTech would development agency in northeast North repeatedly return throughout the negotia- Carolina, officials of the company say. tions. Documents also show that rather than On July 12 Prince e-mailed Watson in helping the company, CropTech Corp., in an effort to learn more about CropTech’s their negotiations, North Carolina’s North- meeting with Basnight. east Partnership continued a practice of CropTech Corp. planned to extract proteins from tobacco plants for pharmaceutical use. “The company reps make it pretty clear seeking equity in the companies it recruits that [Basnight] is key to the project and they instead of providing services it is supposed in Martin County. And in a series of articles duce human proteins. will go wherever the money is made avail- to offer for free. in The Daily Advance of Elizabeth City last CropTech already had contacted Dr. able,” Prince wrote. “They seemed to think In the process of trying to entice May, officials of DataCraft Solutions al- Charles Hamner of the N.C. Biotechnology that some ‘hopeful’ comments were made CropTech, state agencies and local agencies leged that partnership representatives tried Center, a nonprofit organization established to them during their meeting.” in northeast North Carolina actually con- to get a 15 percent stake in their company in by the state to develop economic opportu- Roberson invited representatives of sev- tributed to the insolvency and demise of the exchange for services from their side busi- nities in the biosciences. Hamner had a eral government-created nonprofit organi- company, a former company executive said. ness. The DataCraft executives claimed they track record of success in judging the viabil- zations, all with public money to use for (See story, Page 3). were told that Watson owned 50 percent of ity of technology companies, and he be- economic development incentives, to a fol- Documents obtained by Carolina Jour- the side business and would “close deals” came a cheerleader for a CropTech move to low-up meeting scheduled Aug. 2. That nal and interviews with many officials in- for DataCraft — which would have been a North Carolina. meeting included Basnight, his director of volved in negotiations between CropTech violation of Watson’s contract with the part- “I was enthusiastic about CropTech special projects, Rolf Blizzard, and Watson. and the state show that an economic incen- nership. because I thought it had the potential to According to records of the Northeast tive deal hinged on CropTech receiving $3 Senate President Pro Tem Marc provide NC farmers the opportunity to raise Partnership, “Senator Basnight want[ed] million from the N.C. Tobacco Trust Fund. Basnight, D-Dare, appears to wield strong up to 15 to 20 thousand acres of a new crop,” this project very much.” Blizzard’s notes The deal fell apart because government of- influence over the Northeast Partnership, he told CJ via e-mail. from the meeting state that the N.C. Bio- ficials perpetually postponed closing dates sometimes determining whether and how Richard Roberson of the state Depart- technology Center offered a $250,000 loan, on agreements and imposed numerous businesses get state incentives. Evidence ment of Commerce introduced the and that Watson would work to get $1 other delays, forcing CropTech to expend from the CropTech case bears out this influ- CropTech project to the Albemarle Eco- million in venture capital and $50,000 in its limited capital, company officials said. ence. Officials representing Basnight and nomic Develop- local government North Carolina’s Northeast Partner- the Northeast Partnership did not respond ment Commission funds for CropTech. ship, chief negotiator with CropTech and to phone messages and questions submit- — a regional agency Inside: Blizzard would se- led by Executive Director Rick Watson, pro- ted by electronic mail. representing the cure $3 million from posed that the company give ownership governments of Why CropTech Persisted - P.3 the Tobacco Trust equity to the partnership in exchange for CropTech’s first visit Camden and Pas- A View of the Northeast - P. 4 Fund, $250,000 from helping CropTech get financial incentives. quotank counties the Governor’s The partnership would put up little, if any, In mid-2001 Blacksburg, Va.-based and Elizabeth City Payback for the Deal? - P. 5 Competitive Fund, of its own money in exchange for a signifi- CropTech looked to North Carolina and — in late June 2001. and $200,000 from cant ownership stake. The company rejected South Carolina hoping to find incentives CropTech wanted the N.C. Rural Eco- the proposal. The state’s seven regional eco- that would enable it to build research and funding to build facilities and “to go com- nomic Development Center. The goal was nomic development agencies were created production facilities, and to operate for a mercial” with its products, and Roberson to get $5 million in cash for CropTech. to provide free assistance to businesses look- few years. CropTech specialized in the “de- believed Elizabeth City was a good fit. At that point Commerce’s “involvement ing to relocate to North Carolina. velopment and commercialization of the Roberson informed AEDC that com- declined a lot,” a department official said. The Northeast Partnership attempted use of genetically engineered plants to pro- pany officials would visit Raleigh on July 10 While Basnight’s soldiers took charge, to work similar deals in the past. In March duce high-value proteins and biochemi- and July 11 to meet with Basnight, and that frustration over turf surfaced. In a tele- 2003 CJ reported that Watson and others cals.” CropTech officials wanted to raise the group would also visit sites in Elizabeth sought a personal stake in an ethanol plant mass quantities of “transgenic” tobacco, City. Before the meetings, Bill Prince of that a Raleigh businessman wanted to build which would be genetically altered to pro- AEDC notified Vann Rogerson of the North- Continued as “Commerce,” Page 3 $1 Billion for Triangle Rail? The John Locke Foundation NONPROFIT ORG. Contents 200 W. Morgan St., # 200 U.S. POSTAGE Good Investment 27% Raleigh, NC 27601 PAID Not Good Investment 59% RALEIGH NC PERMIT NO. 1766 Not Sure 14% Calendar 2 State Government 3 Education 6 Higher Education 10 Local Government 14 Books & the Arts 18 Opinion 20 % of Wake County Voters in January 2004 JLF Poll Parting Shot 24 C A R O L I N A Contents ON THE COVER • Lindalyn Kakadelis writes that nowadays • In an effort to obtain federal funding, the JOURNAL proficiency is relative, which leaves parents Triangle Transit Administration has made • Negotiations with a now-defunct com- and citizens confused about the reliability significant reductions in its proposed pany in 2001-02 revealed fissures in North of how well public school students achieve. Durham-to-Raleigh light-rail line. Page 16 Carolina’s economic development struc- Page 7 ture, which apparently are harming the THE LEARNING CURVE state’s ability to lure business. Page 1 • Education Week’s “Quality Counts” report Richard Wagner considers the problems of fairly assessing • George Leef reviews the book FDR’s Folly: Editor NORTH CAROLINA special education students under the fed- How Roosevelt and His New Deal Prolonged eral No Child Left Behind law. Page 8 the Great Depression, by Jim Powell. • CropTech Corp. negotiated a relocation Page 18 Paul Chesser, Michael Lowrey package to come to North Carolina through HIGHER EDUCATION Donna Martinez Associate Editors State Sen. Marc Basnight because company • Reviews of the books The Ideas That Con- officials “were told there was no one more • CJ looks at a Duke University course, quered the World: Peace, Democracy, and Free powerful in the state of North Carolina than “Womens Studies 161S: Money, Sex, and Markets in the Twenty-first Century by Karen Palasek, Jon Sanders Senator Basnight.” Page 3 Power,” which was included by the Young Michael Mandelbaum, and Outgunned: Up Assistant Editors America’s Foundation in its annual report Against the NRA by Peter Harry Brown and • The fragmentation of leadership and re- on silly college courses. Page 12 Daniel G. Abel. Page 19 sponsibilities has diminished the effective- Chad Adams, Andrew Cline, ness of North Carolina’s publicly funded • Last fall, several universities shut down OPINION Roy Cordato, Charles Davenport, economic development agencies, according “affirmative action bake sales,” held by stu- Ian Drake,Tom Fetzer, Nat Fullwood, John Gizzi, to a private developer who once had deal- dents protesting race-preferential admis- • Michael Lowrey writes that while the re- David Hartgen, Summer Hood, ings in northeast North Carolina. Page 4 sions policies. Page 12 cording industry blames all of its problems Lindalyn Kakadelis, George Leef, on people downloading free music, the real Kathleen Keener, Kathryn Parker, • North Carolina’s Northeast Partnership, • Stephen Balch writes that the last third of problem is that the industry’s economic Marc Rotterman, R.E.

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