Wall Street of the South Braces for Hurricane Florence
(Bloomberg) -- Charlotte built everything it needed to become banking capital of the South: gleaming office towers on a hill surrounded by parking lots, freeways and the assorted concrete markers of rapid development.
Hurricane Florence and its floods may reveal the cost of the North Carolina city’s rush to build.
After the storm makes landfall Friday morning, it is expected to push monumental amounts of rain on Charlotte and its 860,000 residents. The impact will be worsened by this city’s “growth is good” philosophy, according to Mary Newsom, director of urban policy initiatives at the University of North Carolina-Charlotte’s Urban Institute.
Over decades, the business-dominated establishment tried to draw bankers from the Northeast’s urban centers. They created a dense, Manhattanesque central district dubbed Uptown and invested in a single light-rail line to bring people to buildings inhabited by Bank of America Corp., BB&T Corp. and Wachovia. Outside the core, growth sprawled over the Piedmont countryside with few constraints.
“Let the developers do what they want,” is how Newsom characterized the approach.
The philosophy fit a town devoted to business and banking. Bank of America and Wachovia (since purchased by Wells Fargo & Co.) drew other regional institutions -- including Regions Financial, U.S. Bancorp and Citizens Financial Group -- which often hire from their larger rivals. The city rode the wave until the crash, when the businesses shed thousands of jobs.
Untrammeled growth in the good years, Newsom said, meant replacing creeks with pipes and then paving them over, which lets buildings and infrastructure rise but causes water to back up during heavy rainfall. That flies in the face of topographical facts, Newsom said.
“We’re a city of hills and creeks,” she said. “Flooding can be a real problem here.”
As new skyscrapers went up, Newsom said, developers found that the rock beneath made it expensive to dig out enough underground parking spots for the workers who filled those buildings. So the towers are surrounded by surface parking lots, a far cheaper alternative that increases the flood risk.
Todd Mansfield, chief executive officer of Charlotte developer Crescent Communities, described the city as a “growth-oriented community.”
“Growth obviously can have adverse consequences,” said Mansfield, former global chairman of the Urban Land Institute. “The amount of impervious cover has certainly increased in this community substantially.”
Still, Mansfield said local officials have passed ordinances to ease the consequences of runoff, and spent money on storm-water infrastructure. The county has also bought and torn down homes in flood-prone areas. But Mansfield said those efforts probably won’t be enough to handle Florence.
Don Ceccarelli, program manager for stormwater services in Charlotte and surrounding Mecklenburg County, said the soil is largely clay, which does not absorb water well. That, combined with rapid development, has made the community prone to floods.
“Rapid growth in Charlotte -- that’s an understatement,” Ceccarelli said.
Retired banker Hugh McColl, who did as much as anyone to make Charlotte the city it is today, said fears are overblown.
“Charlotte’s in really probably a very good place to deal with 2 or 3 feet of rain,” McColl, 83, said in a phone interview from his office in the Bank of America tower at the center of the city. “Our city has been spending a huge amount of money in water-removal systems.”
McColl was for years a pillar of Charlotte’s business, cultural and governmental spheres, stewarding a civic tradition of banking that traces back to 1799, when the region was home to the first discovery of gold in the U.S. That caused the U.S. Mint to establish an outpost in the city in 1835.
Almost two centuries later, McColl orchestrated the 1998 merger of NationsBank with San Francisco-based BankAmerica, creating the country’s first coast-to-coast bank. The newly formed Bank of America, of which he was chief executive officer, would be headquartered in Charlotte and have operations in 22 states. Three years later, McColl’s crosstown rival, First Union Bank, merged with Wachovia to create Charlotte’s second powerhouse: Wachovia Corp.
Charlotte quickly became known as “Banktown” and benefited from the country’s binge on commercial real estate as skyscrapers began to punctuate the skyline. Bank of America and Wachovia continued to pursue mergers and acquisitions, with Wachovia being gobbled up by Wells Fargo in 2008 and Bank of America completing its purchase of Merrill Lynch a year later.
The financial crisis dealt the city a heavy blow. Its unemployment rate peaked in January 2010 at 12.9 percent, when the national average was hovering at 9.8 percent. Its civic pride as a world-class city was dented by the departures of headquarters and executives, and continued controversy as the state’s legislature pursued social policies inimical to business.
McColl said he’s not concerned that a hurricane will cause banks to leave, undoing the trend he did so much to achieve.
“There’s no chance of that happening,” McColl said. Even if Charlotte floods, the water will run downhill from Uptown. “We’re on the high ground.”
©2018 Bloomberg L.P.