“I’m proud to be a North Carolinian, but I’m ashamed of the legislation,” said McNaughton, 26, who was drinking beer on a patio on a muggy spring night, a dog curled up in her lap. “I’m ashamed of this state, and I hate to say that.”

A non-discrimination ordinance passed in this city sparked the law, which became the subject of the highest levels of legal volleying Monday when Gov. Pat McCrory sued the federal government. McCrory said the law does not violate the rights of transgender people. Hours later, Attorney General Loretta E. Lynch filed a suit accusing the state of violating the 1964 Civil Rights Act.

The legislation, known as the “bathroom law” because it mandates that people use the bathroom that corresponds with the gender on their birth certificate, was passed in response to an anti-discrimination ordinance passed in Charlotte in February that extended new protections to gay, lesbian and transgender people.

Some think the fight has cast a pall over the state and this city of nearly 800,000. PayPal scrapped plans to create 400 jobs in Charlotte after the law was passed, and the state was rebuked by corporations including Apple. The NBA has indicated that it may move next year’s All-Star game somewhere else.

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Some here are going out of their way to send a message that Charlotte welcomes all. A handful of bars and restaurants have switched all of their bathrooms to unisex. The Charlotte Regional Visitors Authority and local businesses started the “Always Welcome Charlotte” campaign to promote diversity and inclusivity.

“The damage is deep, it’s broad and it will be awhile before we recover,” Mayor Jennifer Roberts said in an interview on the steps of the Charlotte-Mecklenburg Government Center after a city council meeting where Roberts said a man holding a Bible told her she was going to hell for standing behind the anti-discrimination ordinance.

Roberts said conventions that typically book far into the future have refused to come to North Carolina because of the law, depriving restaurants, printing companies, hotels and small businesses of income for years to come. McCrory, who used to be the mayor of Charlotte, blamed the city for starting the firestorm by raising the issue of gender identity and gender expression.

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“No one in North Carolina was talking about bathroom policy until the Charlotte city council imposed a mandate on private businesses,” McCrory said Monday.

McCrory’s office did not return requests for comment.

“Our city did the right thing. We stood up for equality, we are in line with civil rights, with the civil rights law, with human rights, and we will continue to profess and express and demonstrate those values,” Roberts said.

She said she is pleased with Lynch’s action and has not yet spoken with the attorney general, but plans to. Right now, Roberts said, the city is in legal limbo — it does not yet know whether it has to comply with state law or abide by the Justice Department’s instructions. Lawyers are looking into it, she said.

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In impassioned remarks, Lynch linked the bill with Jim Crow laws and resistance to the Brown vs. Board of Education decision. McCrory, speaking on the Mark Levin Show, said his chief of staff, who is black and whose father fought for civil rights in the state, told McCrory that Lynch shouldn’t go there.

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“There is absolutely no relevance between the issue of civil rights for African-Americans, which went through a tremendous struggle, and the issue of how do we determine the gender of a person going into our public showers or public restrooms or public locker rooms,” McCrory said.

“And for her to pull that card out means her legal argument is pretty weak. But it’s offensive to my state and it’s offensive to me,” he said.

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Roberts said she texted McCrory before he signed the bill asking the governor not to do so and expressing concerns that the city could lose Title IX educational funding.

“I really tried to plead with him as the former mayor of the great city of Charlotte. I said, please, understand what you’re doing,” she said. “Because there is a cloud over not just your former city but also your state.”

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Roberts said she thinks many in Raleigh, the state capital, don’t understand how cities need to be inclusive to be competitive in the 21st-century economy.

“I feel like we have people making laws for our state who don’t truly represent North Carolina,” she said.

At one point, a man in a Donald Trump hat walked past Roberts and said, “I pray for you every week.”

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Roberts responded, “All prayers are welcome.”

Lawrence Shaheen Jr., a lawyer and political consultant, attended a meeting of local Republicans on Monday night. Shaheen thinks the city ordinance is part of a “radical left-wing agenda” that the Obama administration is enforcing by “dictatorship.” Shaheen thinks the city of Charlotte overreached with the ordinance and that the state bill is necessary to keep restrooms single-sex.

“I think the mayor is completely out of touch with the city, and I hope she survives her primary next time, because I really don’t think she’s gonna be here much longer,” Shaheen said.

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The bill, he said, is necessary; he thinks that it will keep grown men out of women’s restrooms frequented by little girls.

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“North Carolina has been a place where liberals come to try to cause culture wars. Instead we pass common-sense legislation to make sure that we can actually have a good place to live,” he said. When asked about PayPal pulling out of the city he said, “You’re welcome not to come here.”

Marc Rotterman, a conservative activist and veteran of the Ronald Reagan campaign, thinks Lynch, a native North Carolinian who is well-respected here, is overreaching.

“It’s a solution in search of a problem,” he said, adding that the issue has “been blown out of proportion.”

Rotterman said he would not be surprised if the issue made its way to the Supreme Court.

Outside of Growlers Pourhouse in the hipster NoDa neighborhood, Phoenix Hunter and Will Haywood smoked cigarettes and could be heard discussing the law. Growlers changed its two single-stall bathrooms from a men’s and a women’s room to two unisex restrooms in the wake of the law. Both men said they see the law as government overreach, with the state usurping the power of cities.

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“He is grasping at straws because he is facing reelection” Haywood said of McCrory. “If he backed off he would lose conservative support. He’s already lost moderate support.”

Haywood said the law is “reflective of segregation, things we’ve dealt with in the state poorly.”

Inside, Kyle Bleau, 24, and Keisha Riley, 36, sipped cocktails. Bleau, who is gay, said he can now be fired because of his sexual orientation.

“It’s not just a bathroom issue,” he said. “It’s an equality issue.”

It has also affected his summer plans: He had tickets to see Demi Lovato and Nick Jonas, who said they will no longer come to North Carolina because of the law.

Riley said she doesn’t understand the argument that the law will protect young girls from predators; she thinks bad people will find a way to do bad things, regardless of such a law. She is originally from New Jersey and said she was shocked that the law passed.

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“It kind of makes you feel like you are living in a different era, going back in time,” she said.

Roberts said she has been inundated with messages and calls of support and opposition. She thinks the fight she is waging is one that will have a long-term effect.

“It’s hard to see the endgame at this point, but if the endgame is that our whole country is going to make forward progress on equality and inclusion, then that is some relief,” she said. “But it’s still very difficult.”