CHARLOTTE, N.C. (AP) — Duke Energy Corp., one of Charlotte's biggest companies, is guaranteeing a $10 million line of credit for the 2012 Democratic National Convention, The Charlotte Observer reported Saturday.
The guarantee would put Duke Energy's stockholders — not Duke's electric customers — at risk if the Democratic National Committee defaults on the loan, said company spokesman Tom Williams.
"We stepped in to do it as a way to land this convention and support this community," Williams said. "When our region is successful, Duke is more successful."
Duke chief executive Jim Rogers is leading fundraising efforts for the convention. The company has long been a major arts and education backer in the community.
The contract between the DNC and the convention organizing committee, which was finalized Friday, calls for the host committee to raise $36.6 million. That would cover the cost of improvements to the Time Warner Cable Arena as well as production and transportation costs.
"It is just security in the event of a cash shortfall," Will Miller, acting executive director of the Charlotte organizing committee, said of the credit line provided by Fifth Third Bank and guaranteed by Duke. "The host committee is obligated to pay it back, and the host committee will pay it back."
Some suggest the arrangement is just another large corporate contribution to curry favor with elected officials. But Democratic Party spokesman Brad Woodhouse says no. "No one is giving us anything," he said. "This is a line of credit."
Like many other electric generating companies, Duke is facing high costs of making its coal-fired power plants meet federal environmental rules. The utility also is planning a new nuclear power plant in South Carolina that would require state and federal approval.
"Duke may not be angling for a particular payback, but certainly they are currying favor with the Democratic Party," said Sheila Krumholz, executive director of Washington's Center for Responsive Politics. "If it buys goodwill without having to spend a dime, Duke will feel it's been a good deal for them. Their shareholders may not like the risks."
University of North Carolina Charlotte public policy expert David Swindell says Rogers' involvement in planning and fundraising for the convention can only help the company as it deals with the Obama administration.
Organizers of the 2012 Republican National Convention haven't sought a credit line.
"We received all individual money to this point. We do not anticipate having a line of credit," said Ken Jones, president and chief executive of the 2012 Tampa Bay Host Committee.
Fifth Third Bank, which is providing the letter of credit, recently announced a public stock offering to repay its federal bailout, or TARP money. The convention contract says the host committee cannot accept in-kind donations from companies that received TARP money unless those funds have been repaid.
Woodhouse says the credit line from Fifth Third doesn't violate the Democratic Party's rules.
Information from: The Charlotte Observer, http://www.charlotteobserver.com
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