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Archive for December, 2012

Mini-Holiday roundup

…Because I pretty much unplugged during the holiday…

*RIP Joe Wilson— I sparred a bit with thew former Greensboro City Council candidate
here, but had the opportunity to meet him in public. We shook hands and amicably agreed to disagree;

*Rhino’s John Hammer on ‘rookie mistakes’ by the new Republican majority on the Guilford County Board of Commissioners:

The Republicans were given a rare opportunity in their first meeting to grand stand and prove they were going to govern differently – looking out for the taxpayers first, not putting the highly paid county staff first and the taxpayers a distant second. But the only Republican who did anything to be proud of is Commissioner Jeff Phillips, who not only voted against the raises, but made a motion to rescind the raises, which failed for lack of a second.

It’s a rookie mistake not to nail down a second before you make a motion, but Phillips is a rookie….For the rookies, seconding a motion does not mean that you agree with the motion, it only means you think the motion is worthy of discussion. Since the whole county had been discussing the illegal raises, it certainly seems they were worthy of discussion and the commissioners did end up discussing them.

*The Winston-Salem Journal congratulates local leaders for their bipartisan support of incentives for Herbalife; no mention of pyramid scheme allegations.

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Herbalife: Pyramid scheme?

Following the big announcement that Herbalife will locate a manufacturing and distribution hub in Winston-Salem come allegations the company is ‘nothing more than a pyramid scheme’:

Hedge fund titan Bill Ackman accused Herbalife of paying its sales staff far more money to recruit new distributors than to actually sell its products.

That results in the roughly 2.6 million distributors at the bottom of the sales pyramid making little or no income, while a handful at the top hauls in millions, he said.

“This is the best-managed pyramid scheme in the history of the world,” Ackman said.

The market has not reacted favorably to Ackman’s allegations; Herbalife’s shares have fallen 21 percent in the last two days. Winston-Salem Mayor Allen Joines says “(w)e had the state attorney general look into its business practices before we moved forward with the project.”

Herbalife is receiving $10 million in state and local incentives to come to Winston-Salem.

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Meanwhile, in Oakland…..

City faces $32 million budget deficit, lays off 200 cops, continues to subsidize the (4-10) Raiders.

In spite of the city’s financial problems, the Raiders are still demanding a replacement for its 46-year-old coliseum. You guessed it– the team is threatening relocation, but who wants them?

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Gboro v. Duke Energy: Behind the scenes

The N&R reports Greensboro City Attorney Mujeeb Shah-Khan has sent a letter to Duke Energy asking them “to suspend all nonemergency pruning and tree removal — or face legal action.” The letter comes after residents from three Gboro neighborhoods spoke out against Duke’s pruning methods, which prompted council member Nancy Vaughan to make a motion instructing Shah-Khan to pursue a cease and desist order.

But —as usual — the Rhino has the behind-the-scenes story. Apparently the City Council met “behind closed doors and armed guards” before Tuesday’s regular meeting, ostensibly to have the council portrait taken. John Hammer writes:

The council, while waiting for their picture to be taken was doing what councilmembers do when they are together – they were talking about city business, deciding on strategies on how to get things done and generally conducting the business of the City Council.

While Shah-Khan was explaining to me that this was only an informal meeting of the City Council and a majority was not actually gathered together, five councilmembers – a majority – were standing in a rough circle discussing the Duke Energy situation, something a couple of hours later the council took action on.

…However, I don’t know if Councilmember Nancy Vaughan would have been so bold with her excellent “cease and desist” motion aimed at Duke Energy if she had not had the time to discuss the matter with her fellow councilmembers and known that she had near unanimous support.

For his part, Mayor Robbie Perkins arrived late to the meeting and because he saw Hammer in the room he assumed it was open to the public. However —as Hammer points out — “every councilmember was present and none had enough of a problem meeting behind locked doors to do something about it.” Just goes to show that everything’s political –even ‘saving the trees.’

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Unemployment and obesity–good for the Triad

Biz Journal analyzes the deal bringing Herbalife to Forsyth County:

An irony: the Triad’s high unemployment rate was actually an attractive feature to Herbalife executives, who wanted to be sure that the community they located in would welcome the company with open arms.

At the time the executives came to tour Winston-Salem, the Triad’s unemployment rate was in the double digits. The northeast side of Atlanta, which housed the greenfield sites Herbalife was close to closing on, had an unemployment rate of around 4 percent.

“We looked at which community needed us more,” Goudis said.

…. Goudis sees Herbalife’s trajectory as a completely different one than Dell’s — one based on the global obesity epidemic, which isn’t going away anytime soon, as compared to the uber-competitive and fast-moving computing and technical world. In fact, Herbalife (NYSE: HLF) has had the same best-selling product since it first opened its doors in 1994: meal replacement shakes.

….“As you travel the world you see that this obesity epidemic unfortunately has no signs of slowing down, so I think fundamentally that’s a different trajectory than maybe what Dell was looking at,” Goudis said. “As long as obesity is around, we’ll be around.”

Following that logic, we can only hope –for the Triad’s sake — that the problem of world obesity will never be solved, lest the factory on Temple School Road stand empty again.

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Obamacare sticks it to Rover

CJ’s Donna Martinez analyzes the medical device tax:

It turns out that being a responsible, loving pet owner puts millions of Americans in the financial crosshairs of the federal government. As the Heritage Foundation points out, IRS rules reveal that the medical devices tax imbedded in the government takeover of the health insurance/health care industry ensnares devices that can be used both on people and animals.

Obamacare’s 2.3 percent medical devices tax takes effect Jan. 1 and will be imposed on the manufacturer or importer of the item. It doesn’t take an advanced understanding of economics to realize this tax will be passed from manufacturer to veterinarian or hospital, and then to pet owners seeking care for sick animals. Considering that my beagle is plagued by medical issues, I’m a prime target to get dinged.

I cringe to think that sick animals will suffer because the increased cost of certain instruments and materials has moved the price of pet care beyond the owners’ reach.

Remember 18 Democrats —including Sen. Kay Hagan —- believe the medical device tax will cost jobs.

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Middle school on the tablet

A recent N&R letter to the editor on Guilford County Schools’ recent announcement of the $30 million federal government grant to purchase tablets for middle schoolers reminded us that it’s not free money, as is the prevailing opinion around here. (I went to the N&R website looking for above mentioned LTE, but when I started searching, this is what I got.)

It’s true — huge grants are a big reason why we’re in the mess we’re in. But I’ve been reluctant to criticize, keeping in mind that the world in which today’s kids live is very different from the world in which those of us of a certain age were kids, no matter how much we might be in denial.

What’s interesting is GCS’ pitch:

GCS chose the Personalized Achievement, Curriculum and Environment (PACE) Schools Project because it views grades six through eight as a critical time to challenge and support students. Research shows there is a clear link between early interventions and decreased dropout rates, and increased college- and career-ready graduates.

In addition, district data indicate slowing gains in proficiency among GCS middle schools in the past four years. The district has been able to focus significant reform programs at the elementary and high school levels, and the Race to the Top-District grant will allow GCS to focus a comprehensive strategy in grades six through eight.

So this is GCS’ answer to turning around middle school performance. It will be interesting to see how it turns out.

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Re: Quaintance bails on Reynolds building

Quaintance -Weaver Hotels–which owns and operates the Proximity and O.Henry hotels here in G’boro —is taking a pass on the historic R.J. Reynolds Building in downtown Winston-Salem:

After nearly a year of study, Greensboro-based Quaintance-Weaver Restaurants and Hotels has decided the market is too soft to support the conversion of the 314,000-square-foot former office building to a hotel, in large part due to a lack of demand from corporate users.

“We decided we ought not go forward unless we can support our sort of emotional attachment to the building,” said Dennis Quaintance, CEO of Quaintance-Weaver. “The answer is we needed more people coming to town paying higher rates. … It was the corporate segment that was the weak segment that brought it under the threshold.”

I’m not sure what Mayor Allen Joines means when he told the Winston-Salem Journal the “project fell victim in part to the overall rate structure of local hotels ‘being kept artificially low.’” I realize we’re not necessarily talking an apples-to-apples comparison — the Biz Journal points out that average room rates in W-S run just over $75, while a rooms at the O.Henry and the Proximity run over $200. And Quaintance did say it was the soft corporate market that factored into its decision. City leaders say a renovated Benton Convention Center will help remedy that problem.

By the same token, does Quaintance’s pass in the W-S market not undermine the justification for Visit Winston-Salem president Richard Geiger’s $28k bonus?

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Guilford commissioners uphold salary hikes

At last night’s meeting, the Guilford County Board of Commissioners voted to uphold so-called ‘equity adjustment’ salary hikes for 15 department heads. The vote was 7-2, with Commissioners Jeff Phillips and Alan Branson voting ‘no.’ Phillips made a motion to rescind the salary hikes, but it died for lack of a second.

The raises were approved by the previous board during a closed session, which has raised questions regarding their legality. The current board questioned county Human Resources Director Sharisse Fuller at length. Apparently they were satisfied with Fuller’s explanation that she was acting under instruction from the previous board, who initially wanted an pay equity study done on all 2,400 county employees. Fuller explained the county simply did not have the resources to do that, so instead her department for on the 15 department heads.

The way I see, the fear of lawsuits sets the precedent for equity adjustments for all employees. This clearly a backdoor means of handing out raises for a county that’s been telling taxpayers for some time now that the “county’s budget was so tight there was no money for raises or anything else.”

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Re: Perkinettes abandoning Perkins

..As noted here last week. The Rhino’s John Hammer –who coined the group moniker ‘Perkinettes’—- writes:

The Perkinettes have left the building and have left Mayor Robbie Perkins behind.

Perkins is still mayor, but he no longer has the support of the majority of the city councilmembers – the group we dubbed the Perkinettes. In fact, it would be safe to say that the majority of the City Council is pretty upset with Perkins and, right now, are more inclined to vote against him rather than with him.

…Perkins’ tactics of strong-arming and lying to his fellow councilmembers have caught up with him. People around here are pretty trusting and they like to think their mayor has the best interest of the city at heart, but councilmembers now say Perkins is obsessed with the performing arts center and has been using deceit and threats to try and get it passed.

Meanwhile, council members Zack Matheny and Nancy Vaughan have spoken out against the proposed bond to help pay for the performing arts center (emphasis mine):

Their biggest concern: Although the city could do the project without raising taxes, the project would limit the city’s ability to take on new, unplanned projects.

For instance, they said the city couldn’t borrow to pay for the $2 million downtown police department redevelopment or build a parking garage for a proposed downtown university campus, two projects council members discussed in recent weeks.

“There is some misinformation out there that this $20 million bond wouldn’t cost anything,” Vaughan said.

It leaves the city with “no buying power,” Vaughan said.

Thank you, council member Vaughan. By the same token, both Matheny and Vaughan say they support GPAC. So they’re against Perkins’ attempts to ram it without consent of the voters, but they say the city can’t afford a bond, either. Not sure what options are left, though.

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