On Monday morning, top North Carolina officials plan to celebrate another landmark jobs project from an unproven manufacturer near the center of the state.<\/p>\n
Read more Canes can end Stanley Cup Final today: \u2018We\u2019ve got to put our best foot forward\u2019<\/a><\/p>\n Three years after the electric vehicle company VinFast ceremonially broke ground in Chatham County and two years after Boom Supersonic completed its superfactory<\/a> in Greensboro, the California aerospace startup JetZero will officially begin constructing its promised 14,500-worker campus \u2014 also in Greensboro.<\/p>\n Those first two facilities have yielded few to no jobs and one recent lawsuit,<\/a> with North Carolina as the plaintiff. What then can make JetZero soar where VinFast and Boom so far haven\u2019t?<\/p>\n \u201cI\u2019ve gone out and seen their demonstrator aircraft in California,\u201d North Carolina Secretary of Commerce Lee Lilley told The News & Observer last month from his Raleigh office. \u201cAnd I think their pathway to get to production looks to me, not easy, but certainly one that seems achievable. And it\u2019s in a marketplace where there\u2019s clearly a need for some disruption.\u201d<\/p>\n In a 30-minute interview, Lilley addressed JetZero\u2019s potential to topple the Boeing-Airbus duopoly with its manta ray-like<\/a> design. He also discussed the state\u2019s litigation against VinFast and whether North Carolina can do economic incentives better. There was also a lot of talk about data centers, of course.<\/p>\n A former lobbyist and adviser to Gov. Roy Cooper, Lilley was appointed to head the Commerce Department by Democratic Gov. Josh Stein at the start of his term. The N&O\u2019s conversation with Lilley has been lightly edited for clarity and length.<\/p>\n N&O:<\/b> Starting with VinFast. My first question is when did you lose faith in the company?<\/b><\/p>\n Lilley:<\/b> Well, the question is really better, What do we want to do? What\u2019s the General Assembly asked us to do with the site? What do we want to do with this great site? It\u2019s there, and the state is invested in it to create and generate tremendous economic activity.<\/p>\n The attorney general\u2019s determined that VinFast is in breach of that agreement<\/a>, so that\u2019s the reason that they\u2019ve moved forward to file that lawsuit. I can\u2019t say a lot about open litigation at this time. I mean, I think our statement speaks for itself, and the filing speaks for itself. But the bottom line is we need to make sure that companies that we work with live up to their agreements. The attorney general\u2019s determined that they haven\u2019t, and that\u2019s why we\u2019re here today.<\/p>\n N&O:<\/b> Is the goal to claw back every penny spent on the site?<\/b><\/p>\n Lilley:<\/b> The goal is to recognize that the company\u2019s in breach, and so we\u2019re pursuing legal action to ensure that that site ultimately generates economic activity, and that when we make these agreements with companies, that taxpayers\u2019 investment is protected.<\/p>\n N&O: Just going back to the first question, and I hear you want to look ahead. But what lessons are there to learn from VinFast and that experience?<\/b><\/p>\n Lilley:<\/b> Well, the story is not complete yet. I think the lesson that I would take from it at first blush is the state is wise to continue to invest in economic development that\u2019s yielded great results for us across the state.<\/p>\n The state is also wise to include in those agreements protections for those taxpayer investments, whether they\u2019re on the job development investment grant side where you have to meet those performance standards in order to receive a grant, or on-site development, additional appropriation that comes from the General Assembly, that we protect their investment. So, the lesson is, make sure that those investments are protected.<\/p>\n N&O: Last question on that. Do you think there\u2019s another way to do large incentives like this, where the state still invests in sites, but the award is less tethered to a specific company?<\/b><\/p>\n Lilley:<\/b> We do, and the General Assembly does as well, and that\u2019s the source of the megasite program<\/a>, select site program, where we\u2019ve gone out and identified those tracts, which we think deserve some additional public investment to make them more shovel-ready.<\/p>\n Read more NC senator \u2018being kind\u2019 with proposal forcing Charlotte to repay I-77 toll costs<\/a><\/p>\n N&O: When people hear that JetZero is going to break ground in Greensboro, why should they be more optimistic, at least compared to VinFast?<\/b><\/p>\n Lilley:<\/b> I don\u2019t think that they\u2019re really comparable in this case. I will say what I think Jet Zero is doing is, they\u2019re very far along in the development of their finances for this project. Very far along in the development of their product.<\/p>\n The two main producers of aircraft (Boeing and Airbus) have a lot of orders that go back years that they have to meet. What JetZero is proposing is something that is pretty novel, and I think needed in the industry. So we\u2019re pretty pleased with their progress so far. We\u2019re still working through their agreement with the state, so that we\u2019ve got all that protected, but we like where it is.<\/p>\n N&O: On data centers, how would you advise a rural NC county commissioner who has a hyperscale data center proposal in front of them?<\/b><\/p>\n Lilley:<\/b> I\u2019ve advised them to talk to other communities that have done this or that have taken this on. I\u2019m not in a position to tell them do it or don\u2019t. What I advise them, and I have advised them when they call me, is to say, \u2018Well, call Richmond County, and ask them what were the decision points that they had to go through, what were the things that made them feel confident about the AWS project<\/a>, and how do they feel about it today, and how they feel about it going forward? And then bring that into your consideration.\u2019<\/p>\n I mean, there\u2019s no getting around the fact that elected officials at the local level have to listen to their constituents, and if the constituents say we don\u2019t want to do this<\/a>, it\u2019s going to be a tough road for them. If it\u2019s something that they are interested in, because they think it will generate real economic activity, not just property taxes, but significant construction activity, significant long-term employment activity, especially relative to the scale for a rural community, then you know there\u2019s some good opportunities there.<\/p>\n N&O: What is your role in addressing, managing, steering data center development in the state?<\/b><\/p>\n Lilley:<\/b> Well, unlike a lot of other large economic development projects, we don\u2019t offer discretionary incentives for data center projects, even large hyperscale projects. We do frequently meet with developers. They share with us what they\u2019re looking for, what their interests are. They often want to talk about workforce and workforce availability.<\/p>\n What we tell them is a couple of things. The first is, (we\u2019re) very, very clear that we\u2019re not here to help you with the local political issue. That\u2019s something you\u2019ve got to work out on your own. You find a community that wants to host you, great. You find work with a utility that\u2019s going to be able to provide the power and protect ratepayers, great. You make sure you\u2019ve got the water questions squared away, great.<\/p>\n Then we\u2019re there to help do the things that Commerce typically does. Help you with your workforce. Help you understand how to work within state government around permitting. Make sure that this is going to be a successful project that generates economic activity and higher wages in the area.<\/p>\n N&O: Governor Stein has encouraged the state to look at removing the specific data center sales incentives. Do you think data center developers would stop looking here if those incentives were removed?<\/b><\/p>\n Lilley:<\/b> Well, I think the governor\u2019s read on this is correct. That policy<\/a> was put into place when it was very early in the days of data centers, and they were quite small, and we were actually trying to create an incentive for the development of data centers around the state, and it worked.<\/p>\n I think the governor\u2019s view of this today is that, given the demand for compute, that that\u2019s probably not a particularly meaningful incentive, which is not to say that developers don\u2019t want to have it, but it\u2019s probably not the deciding factor for them. Our understanding from lots of discussions with (developers) is that the deciding factor are those three issues I talked about before: local support, availability of power and availability of water.<\/p>\n Your question was, what does that mean for overall data center development in North Carolina (if we stop the sales tax incentives)? I don\u2019t know. I think we\u2019ll see. I think it probably has some impact. But Ohio just announced<\/a> they are suspending their sales tax exemption for data centers. Lots of other states are doing this.<\/p>\n