Richland Co. Sen. Harpootlian again questions Panthers Bill

Columbia, S.C. (WOLO)–One Richland Co. senator continues to be the loudest voice questioning the measure that would provide tax incentives to bring the NFL’s Carolina Panthers’ practice facility to York Co., moving it from Charlotte.
Speaking Tuesday on the house floor, Sen. Dick Harpootlian says the bill sets a precedent that would lead to other sports teams coming to the state Department of Revenue “with their hands out.”
Harpootlian also says the bill in its current form redefines the terms “new job “and “full-time job”.
He points out that currently existing jobs in other states that move to South Carolina are not included in new jobs tallies.
In addition, he says the current bill changes the parameters for full-time job from a 35 hour work week to a 185 days a year.

Today’s remarks were the latest where Harpootlian called into question the cost of the project, who will pay for it, as well as the number of jobs it is expected to create.

 

Sen. Harpootlian’s floor remarks on S.655

I want to begin, not with the particulars of the Panthers deal, but with some observations about
what S.655 might mean for the next sports franchise deal. And I say, the “next sports franchise
deal” because, if we pass this bill, this will not be the last professional sports team coming to the
South Carolina Department of Commerce with its hand out—just the last one this body gets to
vote on.

The operative provision in S. 655 is an amendment to the definition of the statutory terms “new
job” and “full time job.”1 Presently, a new job is precisely that – a new job. Current law also makes
clear that the term new job “does not include a job created when an employee is shifted from an
existing location in this State to a new or expanded facility[.]” This bill adds to that definition,
adding a special exception for professional sports teams: “However, for a professional sports team,
‘new job’ means all jobs located at the professional sports team park regardless of whether an
employee previously worked at an existing location in this State before 2019 as an employee of the
same professional sports team.” Of course, this provision is essential to the Panthers because for
the last 24 years they have held summer practice sessions at Wofford College in Spartanburg
County,2
which I am sure will be devastated given that Spartanburg County has been renown as a
sports tourism Mecca because of its relationship with the Panthers. I digress.
S. 655 also changes the very benchmark of success by creating a new category of “full time job”
unique to sports franchises. While current law defines a full-time job as a 35-hour week, this bill
defines a full-time job on a professional sports team as a 180-day work year, at least 80 percent of
which—144 days—are spent at the team facility. This accommodation recognizes the considerable
time a franchise spends on the road, during which they pay income tax to states in away locations
consistent with the wages earned there—a tax regime I have learned is commonly referred to as
the “jock tax.” Of course, whatever accommodations might be justified in anticipation of taxing
wages earned during the season is absent here where the Panthers never play in South Carolina.
1 See S.655 (with Statement of Estimated Fiscal Impact) (Exhibit A).
2 See Chris Lavender, “SC trying to lure Panthers to York; Move could mean end of training camp
in Spartanburg GOUPSTATE.com (Mar. 13, 2019) (Exhibit B).

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Broader still, the “professional sports teams” eligible for economic incentives under S. 655 include
the NFL, NASCR, the NBA, or any number of professional sports franchises. Are we prepared to
treat sports franchises so differently? Where we rightly prohibit incentives for companies shifting
facilities from one county to another, are we prepared to authorize the Panthers, and any other
professional sports team to do precisely that? Are we prepared to take exception with the incentive
model that works for every other industry this State has deemed worthy of support? If you make
the car I drive in or the airplane I fly in, one standard; if you entertain me for 2 hours on a Sunday
afternoon, we will write a new standard just for you.
So, understand, while this may be the first sports franchise package, it will not be the last—just
the last time this body has an opportunity to scrutinize such a massive public expenditure and tax
giveaway to a private corporation. The current statute was designed to give Commerce the tools
to recruit companies like BMW, Boeing, and Volvo. Are your prepared to dramatically redefine
the statutory scheme; to fundamentally change its purpose? And to what end? Under current law,
Commerce routinely engages private corporations in economic incentive deals to entice them to
our State without bringing the deal before the General Assembly. The only reason this question is
before the Senate is because the Panthers deal requires a change in law. So, ask yourself, are you
on board with all future sports franchise incentive packages? Because the Panthers will not be the
last, and a vote for this bill is consent to all future deals.

Now, with respect to the particulars of the Carolina Panthers deal, my hope was we would have an
opportunity to discuss and debate the nuances of the proposal, perhaps spar over competing
economic models. That is one of the reasons I retained an economist to help me—to help all of
us—scrutinize the limited information we were given. I assumed there must be volumes of data,
economic analyses, term sheets, confidential communications, and other papers that better defined
the contours of the deal and its putative benefits. Thanks in large part to Dr. Rebecca
Gunnlaugsson’s assistance and correspondence with the Governor’s Office, I’ve come to the more
troubling conclusion that the Panthers’ proposal is precisely as ill-defined and unvetted as has been
represented to us and that it rests on a series of flawed assumptions.

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Recall that on April 8, we received a two-page letter from the Governor and a two-page cost-
benefit analysis, both touting the merits of the deal as a net positive value of $188 million to the

State with an economic impact exceeding $3.788 billion.

3 This purported benefit was expected
notwithstanding the $40 million cost the State would incur to build a new I-77 exchange in
proximity to a new Panthers facility.
On April 10, I wrote the Governor noting I had placed the bill on the contested calendar until the
Senate received sufficient information to make an informed judgment about the possible merit of
the proposal.

4 I noted my objection stemmed from insufficient information, but that after sufficient
information was disclosed, I would remove my objection and allow the bill to proceed to debate
and a vote even if I concluded it was not a bill I could support. I highlighted the absence of deal
specific records and furnished a preliminary report by Dr. Gunnlaugsson that observed based on
the publicly available information:
1. The Department’s net net impact figure was overstated by at least $2.684 billion;
2. The expected job creation was approximately 200 jobs, not 5,700; and
3. That the Department’s figures appeared to rely on a series of flawed assumptions by:
a. Assuming all 150 players, coaches, and staff will relocate to South Carolina;
b. Assuming those individuals will spend all of their wages in our State; and
c. Assuming all construction and equipment purchases will occur in South Carolina.
Now, a couple observations about Dr. Gunnlaugsson’s work. First, she is someone with a doctorate
in economics who previously served in State government, including as the Department of
Commerce’s chief economist from 2009–2011. She is a subject-matter expert and has first-hand
experience in Commerce. She knows better than anyone in this Chamber what a Commerce deal
should look like and what due diligence should have been done.

3 See Ltr. H. McMaster, April 8, 2019 (with Illustration of Potential State Impact of a Professional
Sports Team Locating in a Tier 1 County enclosure) (Exhibit C).
4 See Ltr. R. Harpootlian to H. McMaster, April 10, 2019 (with preliminary report and curriculum
vitae of Dr. Rebecca Gunnlaugsson (Exhibit D)

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Second, I would be remiss not to correct the record concerning her conclusion or, rather, the
characterization of her conclusion by the Department of Commerce and some public reports. Dr.
Gunnlaugsson did not conclude that Commerce’s figures were overstated by $2.684 billion, but
that there would still be an economic impact of at least $1.1 billion. She concludes that
Commerce’s economic impact figure is overstated by at least $2.684 billion, but possibly more.
Her adjustment is based on the information available—if additional information were furnished,
Commerce’s numbers may be shown to have been overstated further still.
On April 11, I received a letter of Commerce Secretary Bobby Hitt with observations in response
to Dr. Gunnlaugsson’s preliminary report and assurances the project “is a good deal for the State
of South Carolina and York County” and noting that “even if you assume Dr. Gunnlaugsson’s
calculations are correct and every point valid, the benefit to the state is still projected to be $1.1
billion.”5 As I just explained, that is not accurate. Nevertheless, Secretary Hitt’s response raised
further questions still. For example, in response to the observation that this deal largely shifts
economic activity, Secretary Hitt replied that the true scope of that shift cannot be precisely
ascertained—in implicit concession that at least the premise was correct. Further, Secretary Hitt
opined that this deal would spur new economic clusters, like a sports medicine facility, but there
is no evidence to support the contention a new sports medicine facility would open in York County
instead of Charlotte. Further still, Secretary Hitt conceded a foundational assumption underpinning
this deal by acknowledging, at least, that all Panthers players, coaches, and staff “may not move
initially” to South Carolina.
Other discrepancies became apparent. For example, while Secretary Hitt’s response noted the
Department only assumes 20 percent of construction-related purchases will occur in South
Carolina—an assumption that seems reasonable—that assumption is inconsistent with the $224
million construction and equipment benefit anticipated by Commerce’s figures. That sum exceeds
the anticipated $200 million capital investment and the 20 percent figure. Also, while Secretary
Hitt acknowledged expected job creation could fall short of the 5,700 plus jobs promised, I am

5 See R. Hitt to R. Harpootlian with S.C. Dept. Commerce response to Dr. Gunnlaugsson’s
preliminary report, April 11, 2019 (Exhibit E)

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informed by Dr. Gunnlaugsson that the updated calculations provided by Commerce rely on non-
standard assumptions that appear inconsistent with the facts as we know them.

None of these questions have been resolved and the Administration’s response has been focused
on obscuring the facts, not clarifying them. For example, we recently received a copy of a letter
from Department of Transportation Secretary Christy Hall to the Governor assuring him that the
$40 million interchange the State plans to build an interchange to cut player drive-time to and from
work “will not be funded with SCDOT funds and will not compete with any other ranked and
funded SCDOT projects.”6 No explanation has been offered as to where that money will come
from if not from DOT’s budget. But assume Secretary Hall is correct and that the $40 million
interchange can be funded from some other pot of money: is that really the best use of those funds?
There is no other road in this State in need of fixing? No other highway in need of a new
interchange to relieve traffic congestion? I know many of my constituents spend hours of their
week commuting to and from work sitting in traffic on congested highways. That’s purely wasted
time that creates no economic value and diminishes the time they spend with family. How many
of your constituents do the same?

And if this interchange isn’t being built with State money, where will the funds come from? Does
the Governor plan to spend federal tax dollars in whole or in part to build the Panthers’
interchange? Surely, that cannot be his intention because this Governor has been adamant in his
strong, principled philosophical commitment to the notion that we cannot and should not seek to
justify a massive public expenditure simply because the federal government will pick up the tab.
Governor McMaster, and Governor Haley before him, refused to expand health insurance coverage
for an estimated 170,000 of our State’s poorest residents even though the federal government
would pay 90 percent of the cost.7 Never mind this expanded insurance coverage would have
6 See Ltr. C. Hall to H. McMaster, Apr. 23, 2019 (Exhibit F)
7 See, e.g., Lauren Sausser, “Will South Carolina expand Medicaid? Gov. Henry McMaster’s
administration says no.” POST AND COURIER (Nov. 18, 2017); Adam Manno, “194,000 South
Carolinians could get insurance if McMaster expanded Medicaid, study shows,” CITY PAPER (May

17, 2018), https://www.charlestoncitypaper.com/TheBattery/archives/2018/05/17/194000-south-
carolinians-could-get-insurance-if-mcmaster-expanded-medicaid-study-shows (Exhibit G).

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broadly benefited doctors and hospitals—a significant economic sector that carries the financial
weight of treating uninsured patients in emergency rooms. Forget any moral obligation to care for
the least of those among us—the working poor who make too much money to qualify for Medicare,
but too little to buy their own plan on a health insurance exchange. No, philosophy trumped
pragmatism and the Governor refused to take federal money to help insure tens of thousands of
women and children. While I am heartened to see that ideology does have its limits in this
Administration, it would be shocking to learn the Governor is willing to use federal money to build
an interchange for David Tepper—a man worth an estimated $11.6 billion. I requested clarification
on this point, but to date, received none.

I am troubled by other aspects of this proposed project that raise broader systemic questions about
the Department of Commerce and the manner in which similar deals are being cut, as well as the
wisdom of incentive packages that favor specific private corporations instead of creating the
conditions for economic success that all business can enjoy.
Concerning Commerce, the lack of transparency surrounding this deal is shocking. This State is
prepared to spend $40 to $45 million to build an interchange before the Panthers turnover a single
shovel’s worth of dirt and then give away $115 million in payroll taxes without any empirical
evidence this tax giveaway will deliver the benefits promised. There are no performance
benchmarks before incentives kick-in. There are no claw-back provisions. But if what we’re being
asked to do here is trust the professional judgment of Commerce that this is a good deal, the
Department has been unwilling to extend that same trust to this body to provide adequate
assurances the deal has merit.

I am not insensitive to the notion that some aspects of an economic incentives deal might need to
be shielded from public view in order to protect our competitive advantage. But here, I spoke with
the Panthers’ lawyer who acknowledged there is no other state competing with us for this project.
Still, in an effort to address what might be legitimate concerns about ongoing negotiations, I
proposed to the Governor that this body go into executive session—something we did twice last
week—in order to hear from Secretary Hitt and review documents underpinning the Department’s

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assumptions and the Panthers’ negotiation. The response from the Administration is that there is
no further information to disclose, nothing more for this body to consider.
In attempting to examine the Panthers deal, I have discovered that the opacity of this process
appears routine with Commerce and its handling of other incentive deals. According to one
independent watchdog organization that studies incentive deals, South Carolina is tied for 45th in
the Nation as one of the least transparent state governments when it comes to disclosing the
successes or failures of tax abatement programs such as this one.8 Indeed, there appears to be little
or no accountability with respect to the performance of impact zone investment credits, the
Governor’s closing fund, job development and training tax credits, and job tax credits themselves.
I am told that on May 1, Secretary Hitt admitted to a meeting of the Senate Commerce Legislative
Oversight Subcommittee that when it comes to public reporting by commerce of the jobs created
by any particular deal, Commerce’s public announcements routinely parrot the corporate
benefactor’s claim that a deal will create X number of jobs by copying the corporation’s press
release and releasing it as the State’s official job-creation position. That is not disclosure, it is
propaganda.
More troubling still is the manner in which these corporate beneficiaries are permitted to
manipulate the terms of a deal to gain benefits far beyond those initially contemplated. We have
learned that companies have manipulated the number of employees they are supposed to bring to
our State by breaking up deal goals to immediately receive tax credits that were supposed to be
earned based on promised performance. By way of example, I am told Secretary Hitt told the
oversight subcommittee that a company that has promised 500 jobs might return to Commerce to
obtain credits after creating just 250 jobs and that Commerce has acceded to such demands. This
strikes me as a clear bait-and-switch once public attention has moved past whatever publicly
reported terms have been disclosed and touted as a success.

8 See Philip Mattera, et al., “Show Us the Subsidized Jobs” GOODJOBSFIRST.ORG (Jan. 2014)
(Exhibit H).

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Because of these reports and the process surrounding S. 655, a bi-partisan group of 10 members
of this Chamber have requested a Legislative Audit Counsel review of all economic incentive
packages over the last 10 years to examine the efficacy our strategy based on objective facts: the
number of jobs promised versus delivered, the number of dollars actually invested, and the
accuracy of the Department’s methodology in evaluating economic and fiscal impacts.
9 I am
grateful to those of you who joined that request and I am hopeful the LAC’s review will further
our obligation to conduct oversight of Commerce and better inform our consideration of future
proposals.
So, what exactly is the rush? As I mentioned, no other state is competing for this project, and I
would have thought the General Assembly learned its lesson about the perils of such precipitous
action in light of the Base Load Review Act. Recall that the Base Load Review Act was introduced,

referred to subcommittee, given three readings, and passed with unanimous consent in two-
months’ time.

10 The House spent just three days on what we now know is one of the largest, self-
inflicted fiscal calamities since Act 388. But for my objection putting S. 655 on the contested

calendar, this deal would already be done with no meaningful debate whatsoever. An identical bill
flew through the House in just two weeks and was approved with minimal debate on a vote of 90-
25.11 In this Chamber, S. 655 was never referred to a subcommittee for hearings and testimony.
Earlier this Session, I participated in a committee meeting that gave more time to whether
miniature horses ought to be included in the definition of a service animal than we have spent
scrutinizing the finer points of S. 655. Have we learned nothing from the Base Load Review Act?
From the need to scrutinize such overt special interest legislation to ensure it serves the public
interest? Is there some reason this deal has to be signed this year, based on this incomplete record,
with these unanswered questions?

9 See Ltr. R. Harpootlian to K. Powell in re Legislative Audit Council Request, April 18, 2019
(Exhibit I).
10 See Bill Summary, Base Load Review Act, S. 431, Session 117 (2007–08), SCSTATEHOUSE.GOV
(last accessed May 6, 2019) (Exhibit J)
11 See Bill Summary, Professional Sports Teams, H. 4243, Session 123 (2019–20),
SCSTATEHOUSE.GOV (last accessed May 6, 2019) (Exhibit K)

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With respect to economic incentive deals more broadly, this is our opportunity to make an
important choice about the proper role of government. Do we believe our role is creating the
conditions of economic success—an even playing field where all businesses succeed or fail on
their own merit? Or is our role to pick winners and losers—to put the considerable weight of the
State and the public’s money behind one market participant? In my view, that is the choice we
have here.

This choice is particularly stark when it comes to professional sports franchises. It has been
suggested by the Administration that the Dallas Cowboys’ headquarters and practice field is an apt
comparison for the Panthers’ proposal and how it might attract a sports medicine cluster, hotels,
conventions space, restaurants, and retail to the new facility. I respectfully disagree as there are
many distinguishing facts—including the respective teams’ success, popularity, fan base, location,
and proximity to major population centers—that raise serious concerns over whether the Cowboys
are an appropriate comparative model. Notwithstanding the success of the Cowboys’ project, it
appears to be the exception, not the rule, when it comes to the public-private sports franchise
projects.
Several studies detail the litany of broken promises by sports franchises across the country that
have succeeded in fooling state and local governments into wasting spectacular sums of public
money based on the promise of jobs and economic growth. One authors’ survey of the practice
summarizes their findings as a “field of schemes.”12
Consider just a few examples. In my correspondence with the Governor, I raised the example of
the City of Richland, Virginia’s incentive package to entice the Washington Redskins to move
their training camp. According to a public audit, the financial projections underpinning that

12 See Neil deMause and Joanna Cagan, Field of Schemes: How the Great Stadium Swindle Turns
Public Money into Private Profit (2008); see also FIELDOFSCHEMES.COM (last visited May 2,
2018).

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decision have proved unfeasible in light of actual performance: the city is suffering an annual
revenue shortfall in excess of $4.5 million and has been saddled with a $10 million loan.13

Or consider the Minneapolis Vikings. When the Metrodome’s roof collapsed in 2010, the Vikings’
owners took state and local government hostage by threatening to leave for Los Angeles if
taxpayers would not pay for stadium repair and renovations. Minnesota state government buckled
under the pressure and forked over $500 million dollars to rebuild the stadium, the total cost of
which is $678-million dollars financed over 30 years. How about the Atlanta Braves? Cobb County
taxpayers ceded the right to $300 million in property taxes and incurred $397 million in general
obligation bonds to finance the team’s move from iconic Turner Field to the new SunTrust Park.14
When it comes to exploiting taxpayers and shirking obligations to the public that supports them,
the Panthers apparently do not fare much better. According to a March 13 report by the Charlotte
Observer, at the same time they are pursuing tens of millions of dollars in incentives from our
State, the franchise is disputing the value of the Bank of America Stadium in an effort to reduce
its tax obligation to local government in North Carolina.

15 Had the franchise built the stadium, that
argument might carry some weight, but this is a franchise with a $1 per year 100-year lease of a
city-owned stadium that just six years ago received $87.5 million in public funds from the City of
Charlotte. How have the Panthers re-paid the City of Charlotte for its largess? By disputing its tax
bill. A fine corporate citizen indeed.

So, I rise today to explain why I am removing my procedural hold on S. 655 and why I believe it
is critical that we call the roll and vote it up or down. As we proceed to debate and a vote, each
one of us should think about what we plan to tell our constituents when we adjourn and return
home. To my conservative friends on record extolling the virtues of the marketplace and the folly
13 See Richmond City Auditor, Leigh Street Development Project Audit Report 2018-10, (May 15,
2018) (Exhibit L).
14 See Jason Notte, “5 Cities Getting the Worst Deals from Sports Teams,” MARKETWATCH.COM
(July 21, 2015) (Exhibit M).
15 See Katherine Peralta, “Bank of America Stadium is overvalued by $485 million, Carolina
Panthers Say,” CHARLOTTE OBSERVER, (March 13, 2019). (Exhibit N)

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of picking winners and losers: what will you tell your constituents about this massive piece of
corporate welfare to benefit a single corporation? And to my liberal friends concerned about rising
inequality: what will you tell your constituents about why one billionaire received a $40 million
infrastructure project and $115 million in tax giveaways when so many of our most vulnerable
citizens’ needs remain unaddressed?

I agree with Senator Campsen’s comments the other day: we do not need to bribe anyone else to
move to South Carolina. Growth is exploding in Charleston County, Horry County, Beaufort
County, and yes, York County too. Growth in Lexington County is so out of hand the county is
looking to reign it in before it is too late. Instead of passing this bill, we should come back next
year and commit our efforts to reforming our economic incentives program to bolster the
conditions that incentivize all forms of growth all across our State. Note there is no economic
incentive program for the welder or machinist that wants to expand his small business to hire the
next 25 people. And economic incentives for Tier 3 and Tier 4 counties remain woefully
inadequate to attract new jobs in rural areas left behind in this information economy16. Those are
the issues we ought to engage on and, I suspect, we might even find consensus.
In my district, the public response on this issue has been overwhelmingly against its passage from
Democrats, Republicans, and independents alike. Perhaps your districts are different, but I suspect
not because the public intuitively understands that what is being proposed here is wrong. We are
living through cynical times. People have lost trust in their government—local, state, and federal
alike. That loss of trust stems from a sense that government works well for the rich and powerful
but struggles to meet the needs of ordinary people. To justify our time here, we’ve resorted to
gimmicks, like sending $50 rebate checks to taxpayers—a meaningless gesture that will cost
taxpayers $700,000 just to administer. What could a school in your district do with three-quarters
of a million dollars? How else might we have addressed teacher pay if we had not voted to refund
$67 million—the equivalent of a tank of gas for each taxpayer? Our inaction or ineffectual action
on seminal issues like healthcare and education stand in stark contrast to the haste with which the

16 See Legislative Oversight Comm. Summary Report on S.C. Dept. Commerce Subcomm.,
Session 123 (May 2019) (Exhibit O).

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Governor and one branch of this legislature are willing to act to address the needs of one
undeserving billionaire. If we are unable to see what so many of our constituents intuitively
understand, then they are right to be angry about this State’s immoral and corrupt exercise of the
public trust.
As I’ve explained to the Governor, my sole goal in blocking S. 655 is to ensue this body has all
information about the proposal available to it before we vote. What we now know is there is no
more information about this bill—the Administration is making it up as it goes. With that
understanding, I cannot support this bill, I plan to vote against it, and I urge each of you to do the
same.

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