Cash Grants for Real Estate Developers without Competition for Jobs—A Constitutional Quandary

<p>A local real estate developer, Al Czervik, proposes to construct a mixed-use development with residential, office, and retail space. The city council likes the development plan because it is consistent with the council’s vision for the area. Czervik, seeing incentives being offered to convince companies to locate in North Carolina rather than other states, misses the significance of the competition element of those incentives and thinks his development, too, should receive incentives. He requests a $1 million cash grant ($100,000 per year for 10 years) from the city to “make the project work.” Czervik is unwilling to promise jobs, of course—because it is the tenants who will provide jobs, not his development—but he is confident that tenants with jobs will locate in the development and therefore he seeks a subsidy nonetheless. Czervik’s request gets the attention of the city attorney, who is well aware that this request rests on very shaky legal ground (as explained in this blog post and this law review article). How might the city attorney frame the legal issues for city council members, who are initially receptive to Czervik’s request?</p> <p style="text-align: center">Background: Constitutional and Statutory Considerations</p> <p>We start with a foundational principle of the North Carolina constitution. Local governments are not permitted to make gifts of public money or assets “but in consideration of [i.e., in exchange for] public services,” according to Article 1, Section 32 of the North Carolina Constitution (for further legal analysis of that constitutional provision, also known as the exclusive emoluments clause, see a blog post [...]</p>