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The Charlotte Way

City Gives Developer Millions While Cutting Off Poor People’s Water

Odd as it sounds, I just can’t shake the memory of a recent Charlotte City Council meeting — and the lesson it teaches about our broken politics and bankrupt public ethics.

At the meeting, which occurred in November 2021, Council considered two items: First, it voted to award $75 million in tax breaks and other public benefits to a private developer partnering with Atrium Health to construct a so-called “Innovation District” near uptown. Second, elected officials heard an update on the city’s decision to once again cut off municipal water to those households behind on their utility bills.

When juxtaposed, these two unrelated matters illustrate how our government too often caters to the privileged and powerful while imposing petty indignities on the poor and powerless. And perhaps more important, the episode casts a light on the structural incentives and habits of mind that prompt us to think of huge giveaways to big business as constituting the affirmative good of investment while we view modest aid to flesh-and-blood human beings as representing the necessary evil of public assistance.

*******

First a quick word about language and dishonesty — and the degree to which the latter has informed the former in conversations about the Innovation District.

Public discussions and news reports surrounding the development have almost invariably characterized it as an Atrium project. But it’s not. Rather, it’s to be built by Wexford Science & Technology, a Baltimore-based, for-profit development firm. Atrium will be just one of many tenants.

Tax breaks and other public payments totaling $75 million will result in another Atrium groundbreaking like this one held in 2020. Wexford Science & Technology, the for-profit company developing the project, will no doubt make out nicely.

Project boosters seemingly chose to make Atrium the public face of the development for strategic reasons: Any government or business official with even a rudimentary political calculator could conclude it would be easier to convince elected officials to give tens of millions of dollars in tax revenue to a non-profit healthcare provider than it would be to convince them to dole out such amounts to a for-profit real estate company.

The ruse wilted slightly when city officials publicly acknowledged last fall that Wexford would actually receive the requested $75 million — thereby boosting its profits with help from local taxpayers.

Having noted this dishonesty, in what follows I (mostly) describe the Innovation District as an Atrium project so as to avoid confusion.

*******

In April 2019, Atrium Health and Wake Forest Baptist Health announced plans to form a partnership and build a medical school in Charlotte. (Atrium is technically the Charlotte-Mecklenburg Hospital Authority, a public entity created by state law. Wake Forest is based in Winston-Salem and runs a medical school there.)

Atrium and Wake Forest shared renderings of the planned school in August 2020. Then, in October 2020, the two entities officially merged, creating an $11 billion healthcare behemoth.

Six months later, in March 2021, Atrium announced the location of its planned medical school campus: twenty acres in midtown at the corner of South McDowell Street and Baxter Street, adjacent to I-277. Groundbreaking on the Wake Forest School of Medicine–Charlotte would occur in early 2022.

The public discussion and news coverage from early 2021 largely, if not entirely, failed to mention that the campus’s developers would seek tens of millions of tax dollars to help fund the project.

That changed in September 2021 during a presentation to county commissioners, when Atrium claimed the school and associated Innovation District would create 11,500 jobs over fifteen years and generate more than $800 million in economic impact. (Atrium didn’t give commissioners the study that purportedly supports these self-serving claims, and commissioners didn’t press the company for it.)

A rendering shared with Charlotte City Council shows Atrium’s “Innovation District” just outside uptown. The project’s for-profit developers, Wexford Science & Technology, will receive $75 million in tax breaks and other public benefits to help build the project.

At the meeting, Peter Zeiler, the economic development director for Mecklenburg County, did Atrium’s bidding.

“From an economic development perspective, this is probably the most exciting thing to happen in Mecklenburg County since the expansion of Charlotte Douglas International Airport,” he told commissioners.

But, Zeiler added, the project will require “serious public support.”

Specifically, Atrium — which continues to sue poor patients who can’t pay their medical bills and falls far short in providing charity care commensurate with its savings as a non-profit business — would be asking for a combined $75 million from the city and county. (Like children on Christmas morn, the commissioners were giddy about the project, suggesting any future vote on whether to give Atrium the tens of millions it sought was sure to be a formality. Their glee also meant they would later pay nothing but lip service to worries from the nearby Cherry community about the gentrifying ripple effects of the project.)

Atrium’s sale pitch accelerated in November 2021, when it unveiled detailed plans for the Innovation District. The development would include four “research towers,” an education building, two public parking lots, a residential tower with 350 units, a hotel, more than an acre of open space, an unspecified number of mixed-use lots, and 17,800 square feet of ground-level retail. The healthcare system said the project would be supported by $1.5 billion in private investment (though it did not disclose what, exactly, this meant).

*******

Just two weeks after Atrium announced these plans, it was time for City Council to decide whether it would pony up its share of the requested corporate welfare.

Atrium’s presentation to city officials sounded the theme of investment.

Tracy Dodson, assistant city manager, economic development director, and the business community’s woman on the inside, led the charge: “I want to remind you this is more than a medical school. … This is an innovation district, and it’s bigger than just the school. It’s about growing jobs in our community and the new industry sector in our community, but part of what makes this special is this being designed in a way to offer jobs and upward mobility for a lot of people in our community.”

Assistant City Manager Tracy Dodson explained to City Council last fall that Atrium’s Innovation District would be en economic boon for the community. She did not disclose the profit the project’s developer expects to make.

She explained that of the $75 million the project’s developers were seeking, $60 million would come from so-called Tax Increment Grants. In practical terms, that means the project’s developers would receive up to $60 million in rebates from the property tax revenues generated by the project in future years. The remaining $10 million would come from the sale of government bonds.

The money would be used to reimburse the costs that developers would incur building infrastructure for the project, including streets, utilities, and a large parking deck.

Dodson then mouthed the same talking points earlier advanced by Atrium when its representatives appeared before county commissioners: The project would create 11,500 jobs and have an $811 million economic impact.

Assuming the project is the unalloyed good described by Dodson, and further assuming the economic impacts predicted by her are correct, a key question remains: Are public dollars necessary to make the project a reality? As Councilwoman Dimple Ajmera asked, “Would this project have been possible without our investment in the parking structure?”

Dodson answered, “No, our investment in the infrastructure is really what sets up the campus to be successful. If they are growing and attracting the businesses here they anticipate, the infrastructure has to be in place. You can’t build it all fast enough to keep up. … To not do it dramatically, negatively impacts the project.”

Fair enough: The infrastructure needs to be there to facilitate the development’s growth. But that doesn’t answer the question of why the people of Charlotte should foot those costs.

The honest answer to that question — and a perfectly rational answer from a profit-seeking business like Wexford — is that to the degree the firm can externalize costs and convince someone or something else to pick up the tab, it will.

On that front, Charlotte’s an easy mark, a community whose elites are so desperate for the Queen City to achieve world-class status — whatever that means — that the slightest civic promise or threat does the trick. That’s why, anticipating this line of inquiry, Dodson passed along a warning: “I’ve been involved in this project for well over a year, and I can tell you [the developers] have talked about other sites well outside of Charlotte.” (“Talked about” — what does that mean?)

To give heft to the threat, and in response to Councilwoman Victoria Watlington asking essentially the same question as Ajmera — “If we’re going to get the benefit anyway, why would we invest these dollars?” — Dodson called up Collin Lane, who serves as Atrium’s senior vice president for continuing care management and facilities management. He told Council that Atrium had considered sites in Union County and over the border in South Carolina. The unspoken ultimatum: Give us what we’re asking for or else.

Collin Lane, Atrium’s senior vice president for continuing care management and facilities management, issued City Council an implicit ultimatum: Grant us our tax break or else.

That was enough for Council — unanimously and in bipartisan fashion — to fall in line, approving the give-aways and defending its endorsement of corporate welfare as a matter of investment. (County commissioners would later do the same, though two commissioners dissented.)

“Really our investment is for the entire innovation corridor,” Ajmera concluded. “All the benefits outweigh our public investment toward the parking structure.”

Mayor Pro Tem Julie Eiselt hailed the project’s “return on investment,” while Councilman Malcolm Graham observed, “We’re investing in someone that we know.”

Councilman Matt Newton described the development as a “transformational project” and noted, “We want to make sure we are getting a good return on investment.”

The city wasn’t agreeing to spend money; it was agreeing to invest money, and that was something to celebrate.

*******

While Council and its coterie of bureaucrats made clear they think tax give-aways to private developers count as investments, they also suggested that they view help to poor people as mere relief, a form of the dreaded dole, a kind of welfare or public assistance.

A little background: In March 2020, as a result of the COVID-19 pandemic, the city halted municipal utility disconnections. It continued to do so even after the expiration of Governor Roy Cooper’s executive order mandating the cut-off moratorium. But in October 2021, the city resumed disconnections.

Just before Council approved the Atrium bonanza, Assistant City Manager Brent Cagle tried to avoid a public discussion of the resumed utility disconnections, mention of which was nestled in the middle of a presentation about the city’s pandemic response. Only an insistence from Councilwoman Renee Johnson got Cagle to address the issue.

Councilwoman Renee Johnson pressed Assistant City Manager Brent Cagle to publicly address the resumption of utility disconnections. Cagle tried to dodge her questions.

“I’ve been asking for this for awhile. So the citizens do know the exemption has stopped and that they are subject to termination. I just want to make sure that information is out there,” Johnson told Cagle as he tried to avoid the topic. (Johnson’s passive voice — “has stopped” — tells. Who’s the actor? Who did this? Who’s responsible?)

The city ended the moratorium on utility disconnections on October 4, 2021. (It seems city staff, not City Council, made this decision.) After resuming disconnections, Charlotte Water cut off 800 customers between October 4 and November 4, Cagle said. In a plan of phased-in cruelty, he explained the city intends to increase the rate of disconnections over a roughly six-month period until the utility reaches pre-pandemic levels of 3,000 disconnections per month.

Assistant City Manager Brent Cagle told City Council that Charlotte Water intends to implement a plan of phased-in cruelty whereby utility disconnections would ramp up over a six-month period before reaching pre-pandemic levels of 3,000 disconnections per month.

Shawn Heath, special assistant to the city manager, touted the “proactive outreach” the utility had performed in recent months to alert customers they were once again subject to service disconnections, while Cagle highlighted efforts “to make sure customers are aware of financial relief to help them with their water bills.” (As with Johnson, Heath’s characterization of the decision to resume disconnections lacked the active voice: “The October date was a date that was established and communicated early,” he said. Established by whom? Someone is doing this. It’s not just happening. Who’s cutting off people’s water? Of course, it’s us. We, through our municipal government, are disconnecting people utilities, and it’s a choice, not an inevitability, to do so.)

Heath tried to assure Council that cutting off people’s water — that is, denying individuals and families access to something essential to life — need not worry anyone. Payment plans and relief programs are available.

Shawn Heath, special assistant to the city manager, told Council the October 2021 resumption of utility disconnections “was established” — a passive characterization suggesting no one is responsible for the decision.

Unlike Atrium’s application for tens of millions of dollars to develop a real estate project, poor people who need help with water bills must seek assistance not from the city itself, but from outside agencies.

Also unlike the municipal tax give-aways for the Innovation District, those who seek help with water bills must jump through the hoops of means-testing or other eligibility criteria. (It never occurred to Council to force Atrium or Wexford to open their books and disclose whether they’re having trouble making ends meet. The poor must prove their worthiness while the powerful are deemed worthy by virtue of their position.)

If poor people meet the eligibility requirements, and if they submit their applications on time and in the proper manner and at the right location, and if the relief programs don’t run out of money, then applicants for public assistance — the very words hold a stench in our nostrils! — may be eligible to receive temporary help for a limited time and on a limited basis.

Such assistance is not, as with the Atrium tax breaks, an investment in our neighbors and fellow human beings, not an affirmative good to be celebrated and touted as a tool to help facilitate human flourishing, but a shameful instance of mere relief and a cause of begrudging, municipal pity.

*******

The injustice screams out, but no one hears.

What accounts for the solicitousness that our elected representatives extend to big business and the relative callousness they display toward flesh-and-blood constituents?

Surely the structure and dynamics of bureaucracy — which are, and are concerned with, abstractions — bear some of the blame for convincing our government to more easily identify with another “it” than with suffering human beings in the community. The functionaries who man the levers of bureaucracy, whether government or business, share an affinity with each other borne of their attending similar educational institutions, receiving similar training, holding similar credentials, occupying similar socio-economic positions, performing similar jobs, and living similar personal and professional lives enabled by their relative material comfort compared to poor people who can’t pay their water bills.

Atrium — and the for-profit developers hiding behind the hospital authority’s name in a scheme to pad their own pockets — speaks the same language as the administration of our municipal government; quantitative analyses, growth metrics, and revenue projections are the technical, amoral stuff about which they can and do communicate, a closed system of symbols and ciphers that enjoys an internal consistency as to aims and methods: making sound business decisions to maximize revenue. There exists a certain camaraderie between government and business bureaucracies, one that, from an insider’s perspective, legitimizes decisions of the former to place themselves in service to the latter and not in service to the people, at least not directly.

With our government adopting as its primary aim an end properly suited to business — namely, maximizing revenue in a fiscally sound manner — elected officials replace questions of right and wrong with inquiries about how to follow the proper protocols to generate a good return. Elected officials, whose duty is to make ethical decisions in service to the people, abandon all pretense of acting in the name of democracy and instead don the garb of bureaucracy in service to other bureaucrats and the organizations they run. Under the influence of well-credentialed, in-house experts, our elected officials become stilted and halting in their willingness to think and act normatively in service to the people. They replace such work with the exertions of self-interested, efficient businessmen, who may pass along some occasional charity to the poor, but only to the degree it doesn’t conflict with their own financial aims — never as a matter of policy and always and only as a matter of largesse. Our elected officials allow themselves to be recruited into the ranks of amoral, technical tinkerers, and careerist bureaucrats then run the field.

What causes our elected representatives and municipal administrators to act in sympathy with other large bureaucracies while displaying relative callousness toward flesh-and-blood human beings who need water to live?

Thusly does our municipal government function. The city might help the poor, but only incidentally and eventually, never directly and as the result of an unshakeable moral imperative.

So when big business wants a tax break, it gets one, but when poor people need water, they get applications and wait lists and arbitrary deadlines. (This dynamic pervades our government: For example, when a billionaire wants a new stadium, our municipal alter ego does what it takes to make sure a stadium is built — and now, not later or eventually. But when working people need affordable housing, we don’t set ourselves to the task of building homes. Rather, we merely seek to incentivize others to do so — piecemeal, incrementally, and often only as a small part of otherwise profit-seeking projects.)

Indeed, city bureaucrats — with the acquiescence of our elected officials — point to the profit motive and the need to follow sound business practices and principles as among the reasons the city cannot provide direct assistance to poor people who soon may be unable to drink a glass of water or flush the toilet or take a shower: Charlotte Water, city staffers reminded elected officials at an October 2021 Council retreat, operates as a so-called enterprise fund. The idea is that our municipal utility is designed to run like a business; revenue collected from customers is supposed to pay for the system’s operation in a self-sustaining system of income and expenditures. Covering poor people’s bills would run afoul of this model.

Municipal staffers’ characterization of our utility is correct as far as it goes, but it’s also true that state law expressly allows City Council to subsidize Charlotte Water from the general fund. Doing so would be a choice — just like the choice to subsidize Wexford’s massive, for-profit development project.

The difference, of course, is that whenever someone without power, privilege, or position would benefit from a government subsidy, municipal administrators often suggest, in the name of responsibility, frugality, and prudence, that such a move would be unwise and ill-advised. And our elected officials, who follow the lead of their staff while forgetting they represent the people and not the bureaucracy, go along.

By Michael F. Roessler

Charlotte citizen. Husband. Lawyer. Dog dad. Book worm.

One reply on “City Gives Developer Millions While Cutting Off Poor People’s Water”

We hear the same dissent every time the city or county makes the claim…..”This investment will bring xxxx jobs and create a $$$$ economic impact for the community.”
How about go back and look at the last 1/2 dozen or so and see if the city/county’s claims have been accurate.
We know they claimed the convention center was completed “on time and on budget”, but it was neither.
We know Mayor Pat promised that the light rail leg down South Blvd (which was never even considered in the transportation study we commissioned) would cost $450mm and wound up being $1.2 billion.
We know the citizens voted down a new NBA arena but Lynn and her gang said, and I quote, “The people don’t understand the importance of this venture.” We, the voters, were overruled and we have the best place for 7,500 people to watch a 15-67 basketball team in the nation.
But the icing on the cake is the toll lanes to Lake Norman…..Pat created generational wealth off of that one.
So dig into some of these and see if the “sales pitch” ever comes true.

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