Doubts linger on plan to give Philip Morris plant new life

Nov 5 2010 - 2:56pm

CHARLOTTE, N.C. -- A Georgia entertainment company has ambitious plans for the shuttered Philip Morris USA plant in Concord, N.C., with hopes of transforming the old cigarette factory into a campus with a movie production studio, a water park, restaurants and an electric-car manufacturer.

Terry Keeney, president of Stargate Worldwide Corp., said the project could create 4,000 jobs for Cabarrus County, which has struggled with high unemployment especially since Philip Morris shut down last year. Keeney also hopes to make use of a soon-to-expire tax benefit from last year's federal stimulus package.

But skeptics say that such a huge undertaking is always risky, and even more so in a recession.

"It's really tempting when the economy's struggling and you have this huge piece of property that's just sitting there and reminding you of what the county used to be, (to go along) when somebody says, 'Hey, I've got this great plan,' " said Joe Coletti, a fiscal policy expert at the conservative Raleigh, N.C.-based John Locke Foundation. "But in this case you are pledging part of the county's reputation on this, and that's where the county needs to be taking a look and saying, 'Does this really make sense?' "

Keeney said he understands that it's difficult for outsiders to envision what the Carolina USA Performance Park would be.

"I think once they come and start putting in applications and seeing the final drawings, they'll just be thrilled," he said in an interview. "We designed this with the community in mind."

Keeney said his company is under a confidentiality agreement with Philip Morris and can't talk about details of the financing, including the lenders, until after the deal closes. He described his plan as a $750 million project, including the property. He hopes Stargate can secure $100 million in what would essentially be a lower-interest loan made possible by the federal stimulus bill. Cabarrus County would play an administrative role in securing the $100 million in bonds, but county, state and federal officials say that the bonds' private investors -- not the government -- would be on the hook if the project fails.

County officials and commissioners said they don't know much about Stargate, but they plan to learn more. Because county money isn't directly involved in the bonds, they said, they haven't examined the company as closely as they would if it were asking for direct incentives.

"I've looked at their website. I've heard the guy (Keeney) talk. I don't know a whole lot more than that," said John Day, the Cabarrus County manager. But "we're treating it a little differently than we would if they were" asking for incentives.

John Cox, president of Cabarrus Economic Development, said he is "cautiously optimistic" about the project.

Keeney said he has commitments for tenants for about 70 percent of the existing Philip Morris buildings. The massive site includes 2.4 million square feet of manufacturing space. Eventually, he said, the Carolina USA Performance Park would include auto-parts manufacturers, an electric-car manufacturer, a candy manufacturer, restaurants and movie and production studios, including a 3,500-seat broadcast theater.

"Our whole purpose," Keeney said, "is to get people working." The diversity of the park's businesses will enable it to withstand any economic cycle, he said.

But Coletti, of the John Locke Foundation, said he's not sure the combinations make sense.

"If you have a down cycle of the economy, people are going to cut back on electric vehicles, they're going to cut back on travel to water parks, they're going to cut back on movies," he said. "I'm not sure where the diversification comes from."

Coletti said that other projects have started with a bang and then failed to meet expectations. The city of Roanoke Rapids, N.C., for example, had to sell the Roanoke Rapids Theatre just a couple of years after it was built. Dell Computers received millions in state and local incentives six years ago for building a computer-assembly plant in Forsyth County, N.C, then announced last year that it was shutting down.

Cox, of Cabarrus Economic Development, said companies have to take calculated risks for the economy to improve.

"That's one of the things that has made the American economy great for a couple of centuries now," he said. "We're never in a position to counsel a company to what their business decisions (should be), but we certainly encourage innovation, entrepreneurship and the risk of capital, even in these difficult times, because we want to see people go back to work."

County commissioner Liz Poole said the commission was aware that a few companies were interested in the Philip Morris site, but it didn't find out about Stargate until Monday. Stargate incorporated a company called Carolina USA Partners in North Carolina in September, and it is working on the Philip Morris project under that name. Keeney is president of both companies.

"I know more about General Motors than I know about that company," said commissioner Coy Privette.

Commissioner Grace Mynatt said parts of the plan as she's heard it "seem very vague." Mynatt said she had "a big question mark" about the plans to manufacture electric cars, because "you don't just all of a sudden start building electric cars."

Philip Morris spokesman Ken Garcia confirmed the company has accepted a tentative agreement from Carolina USA Partners to buy the site. Both sides are conducting due diligence, and the deal is expected to close at the end of the year, he said.

Dublin, Ga.-based Stargate was started in 1989 and produces concerts, celebrity appearances and other fundraising events for nonprofits, according to its website and Facebook page. For the past several years, the website says, Stargate has been consulting on projects that "spark new life into retired properties such as factories, malls, and big-box stores."

"Limited investments are available in Real Estate Projects. Waterparks, Theaters and Amphitheaters, & RV Resorts and mixed use properties in various States," Stargate's website says.

Searches through news aggregating sites didn't turn up any previous projects by Stargate Worldwide.

Nashville, Tenn.-based Elevating Entertainment announced this week it is scheduled to be one of the tenants under Stargate, with plans to create a movie and TV production facility. Chief Executive Dave Moody went to the University of North Carolina-Charlotte and was a member of The Moody Brothers, a gospel-country band with strong Charlotte ties. His company produces Christian-themed entertainment.

The Philip Morris plant was once one of the largest factories in the region and the county's biggest taxpayer. In 2007, it had 2,500 employees; it shut down in 2009.

Commissioners say they hope Keeney's plan can succeed.

"It will provide property tax revenue for the county, it will provide jobs for our citizens," said commissioner Bob Carruth. "We've got that huge empty building sitting on the south side of Concord. If they can do it, that's great."

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Distributed by McClatchy-Tribune Information Services.

 

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