Legislature amends Umstead Act

RALEIGH – Earlier this session, legislators passed a law that would make it easier for the University of North Carolina to compete with small businesses in college communities. The bill, HB 1539, which sets forth the changes to the Umstead Act, was opposed by several business leaders including several in Orange County.

The bill was unanimously passed by members of both the House and Senate. The Umstead Act is a 76-year-old provision that prohibits unfair state-supported competition with private companies.

Mark Zimmerman, a Chapel Hill businessman and chair of the Chapel Hill-Carrboro Chamber of Commerce’s Board of Directors, when interviewed previously about the bill said it could hinder businesses in Chapel Hill and other university communities. He mentioned specifically businesses on Franklin Street in Chapel Hill that sell UNC-Chapel Hill-related items. He said if UNC is allowed to sell similar merchandise to alumni it could damage the stores on Franklin Street.

“There are real businesses and real people that will be affected by this,” Zimmerman said.

The bill allows UNC system schools to participate in business that would further the mission of the university, primarily serve the students or employees, provide a related university service to alumni, or enable the local community to use the university’s facilities, equipment, or expertise.

It also establishes a panel, within the Board of Governors, to review any claims that a university is participating in unfair competition with businesses.

The bill was sponsored by Rep. Bill Daughtridge, Rep. Harold Brubaker, Rep. Phillip Haire, and Rep. Douglas Yongue.

Daughtridge previously said the bill would allow the universities to help small businesses develop prototypes and other items by using expertise within the system.

He said some of the provisions in the bill could have been implemented by the universities previously, but university officials where uneasy about doing them for fear of violating the Umstead Act.

“This is a clarification so [the universities] know where they stood,” Daughtridge said.

Joni Worthington, a spokeswoman for UNC-General Administration, said the bill would not allow UNC institutions to participate in “unfair competition.” Instead, she said it would open up the universities to offer their expertise to the community in an effort to enhance economic development. She said that opinions from the state Attorney General’s Office say that UNC has not violated the Umstead Act in the past.

This is not be the first time that the Umstead Act has been amended. Previous amendments have allowed UNC institutions to operate student health services, the Centennial Campus at North Carolina State University and dining services.

Shannon Blosser is a staff writer with the John W. Pope Center for Higher Education Policy in Chapel Hill.