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HomeMy WebLinkAboutNovember_10_2008_Special_MeetingIREDELL COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING MINUTES (Continuation of the November 3, 2008 Meeting) NOVEMBER 10, 2008 The Iredell County Board of Commissioners met in Special Session on Monday, November 10, 2008 at 12 Noon, in the Iredell County Government Center (Commissioners' Meeting Room), 200 South Center Street, Statesville, NC. Board Members Present Chairman Marvin Norman Vice Chairman Sara Haire Tice Steve Johnson Godfrey Williams Absent: Ken Robertson Staff present: County Manager Joel Mashburn, County Attorney Bill Pope, Deputy County Manager Susan Blumenstein, and Clerk to the Board Jean Moore. CALL TO ORDER INVOCATION by Commissioner Johnson PLEDGE OF ALLEGIANCE DISCUSSION AND POSSIBLE ACTION ON A FINAL ASSESSMENT RESOLUTION FOR THE LANGTREE AT THE LAKE SPECIAL ASSESSMENT DISTRICT: (Property currently owned by Langtree Properties, LLC, Richard W. and Pamela M. Howard, David Jacobs and Peggy S. Jacobs, S&S Family Limited Partnership, Atrium at the Lake, Inc., and the John Q. Hammonds Revocable Trust with the Properties being at/near the Intersections of Langtree, Alcove, Mecklynn, Caldwell Woods Roads, and Interstate 77, in the Davidson Township, along with additional land if contiguous by land or water in Iredell County, North Carolina): Commissioner Johnson said the following: "I want to set some parameters as to what I feel we need to address, and this comes from hearing from a number of people and gathering a better understanding of what transpired with the Local Government Commission. I'll admit to some of my own ignorance and probably to some inaccuracy on statements I previously made, and I make that determination based on what I think is a better task before us. Since our last meeting, I've learned, in my mind at least, that our role is much greater than I had previously come to believe. As a result of that, since our role is greater, the potential for some exposure, or some cost to the county, may be greater. Contrary to previous statements, some of which were my own, 1 now understand that we are to a certain extent, a preliminary board of review in regards to the feasibility. Since learning this from some of you folks that attended the LGC meeting, I believe that we must insist on the opportunity to perform due diligence regarding the feasibility and impact to the county. Previous statements or questioning regarding business plans, cash flow, debt service, and impact on the county were the sole responsibility of the LGC. I now believe those statements to be inaccurate, as one of our tasks in the preliminary assessment phase is to evaluate the financial feasibility of the project. If I understand the road map that has been put out before us, at the end of that phase, the board of commissioners could adopt a resolution to be presented to the LGC, and at some point, it will make it back to us with their evaluation. Then, we'll be faced with another decision. The difficulty I personally have right now is that if it is our task, as stated by the LGC, then, I think it is impossible to make that decision and do the due diligence without having been presented a business pian for the project, and without some assessment of its impact of cost to the county as related to other forms of infrastructure that will be needed to address the increased population of this project and to the financial viability of the project itself. So, those are the matters needed before 1 can responsibly make a decision as to whether this matter goes to the LGC. Those are some questions that will have to be asked. Now, if that makes me a pothole in the road to progress, then I've been called worse things. I'll get over it, and hope some other folks will too, but 1 think now, having gained a better understanding, l think that is the task before us." County Manager Mashburn reviewed the history of the request as follows: •ln September the board approved a preliminary assessment resolution. The resolution started the process for the petitioners to come before the commissioners and gain support in issuing a certain amount of bonds that would be used in a special assessment district for Langtree infrastructure. *The second phase was to conduct a hearing, and then later, the county commissioners were to adopt a final assessment resolution. The hearing was held, and the amount of time required between the hearing and the possible adoption of the final assessment resolution has expired (ten days). Now, the final resolution has been brought back for possible adoption. Mashburn said a difficult part in the decision-making process was due to the legislation being new in North Carolina, and there weren't that many people (bond counsel, LGC) who had the answers; plus sometimes, one question only led to another question. He said even as late as this morning, the LGC had notified the staff that one provision in the final resolution needed to be deleted because of noncompliance with state statutes. Mashburn said it was important to put into perspective exactly what was being presented to the board. He said the resolution was not the application that would be submitted to the LGC for approval. Mashburn said the document was a resolution that laid out some of the parameters that needed to be met before the board applied to the LGC. He said the resolution did not issue the bonds, rather several items had to be accomplished first. Mr. Mashburn said paragraph 1 (resolution) did address some of Commissioner Johnson's comments. He said the language read: Subject to the approval of the LGC and the receipt of studies and reports acceptable to the county commissioners confirming the financial feasibility of the project and setting forth the impact of the project on the county and the other units of government within the county the execution and delivery by the parties thereto of'o development agreement acceptable to the board of commissioners and approval of the improvements by said board of commissioners, Iredell County intends to commence a process that would enable the county to issue bonds pursuant to the general statute. Mashburn said studies had to be accomplished before the board issued any kind of bonds. He said it was really a policy issue on whether the board passed the resolution and waited before the next step or received the information prior to a vote. Mr. Mashburn said no one could provide definite answers to many of the questions due to the new legislation. He said also, no other entity in North Carolina had ever used this type of assessment. Mashburn said the board needed to ask all the necessary questions to feel comfortable. Chairman Norman said the answers to many of the questions previously asked had not been supplied. Mashburn said the main question asked at the last meeting was whether or not passage of the resolution would place the county in an unfavorable position, if later, the board members backed out. He said several discussions had occurred between the LGC, the county attorney, the county's bond counsel, and the staff, and some items were added to the original resolution (prepared by Attorney Parker) to address this concern. He said sections 14, 15, 16, and 17 were added to minimize exposure to the county if the board members decided to not proceed with the project. Attorney Bill Pope said the question on whether or not the county was irrevocably committed to going forward should the resolution be approved was no, and he had always had this opinion. He said, however, the resolution was "shored up" to make it clearer that the answer was no. Pope said there was no legal obligation on the county's part to go forward, beyond any point were the board became uncomfortable. He said, as Mr. Mashburn mentioned, the board was basically facing policy questions such as: "Are you comfortable taking this step? Do you need more information before you take this step? What information do you think you need that you don't have to take this step?" Pope said from a legal perspective, the county had no legal obligation on the bonds but there could be a reputational taint if a default occurred. He said adopting the resolution did not commit the county to the project, especially if dissatisfaction occurred somewhere in the process. 2 Mashburn emphasized that passing the resolution did not obligate the county to continue if in the future information was presented that made the board dissatisfied. He asked Pope's thoughts on any legal ramifications. Pope said he didn't think there would be any legal ramifications. He said it was his opinion the board was not committed to go forward. Attorney Parker said Langtree had fully consented to the resolution's additions. He also said paragraph 11 could be stricken from the document, and this was the section the LGC said was in noncompliance with state law. Commissioner Tice said she understood that if the resolution were approved, the county could still back out. Mashburn said that was his opinion, and Attorney Pope concurred. He said the legislation had never been used, and it was unknown what type of actions might occur. Mr. Mashburn said that if the board was uncomfortable at this point, it was within the board's authority to ask for any other information needed for a better comfort level. Commissioner Johnson asked what the LGC would expect of the county. He also asked if it was the LGC's policy for the county to perform the due diligence prior to seeking the organization's approval. Mashburn said yes, and the LGC would expect all project feasibility answers to be included. He said the LGC didn't compile the information -- the county was tasked with this chore. Mashburn said the county was the applicant, and the LGC would expect the due diligence to be completed -- the same as for any other type of bond financing. Commissioner Johnson said the due diligence could be completed, but it might not necessarily mean the board would approve the final resolution. He said some things might be juxtaposed as to the order in which they were occurring. Johnson said (1) the resolution could be approved now and the due diligence could be done later or (2) the adoption of the resolution could be postponed and the due diligence could be done on the front end. He said the timeframe would not significantly be set back regardless of which action was taken. Johnson said it was the expectation of the LGC, for the due diligence to be completed before anything was presented. Mashburn said this was correct. Commissioner Johnson said, "So why not do it now?" Chairman Norman said this was a good question. Mr. Norman asked Mr. Mashburn and Ms. Blumenstein, based on what had been submitted so far, if it was enough. He said the information requested from the developer's attorney at the last meeting had not been submitted to his knowledge. Chairman Norman said he could not vote on the resolution until the staff and the county attorney were satisfied that all of the needed information had been presented, and to his knowledge, it had not been supplied. Deputy County Manager Susan Blumenstein asked if Chairman Norman was referring to cost estimates and what was included in the $57 million. Chairman Norman said yes. Ms. Blumenstein said nothing had been received. Commissioner Williams said that due to there not being any precedent set in North Carolina regarding this type of assessment district, the board had concerns and was being cautious. Mr. Williams said he had additional concerns, for instance, default, and how a foreclosure would impact the county. Williams said the future was unknown with the current economic conditions, and the building industry was suffering. 3 Commissioner Tice said she thought Attorney Parker, Attorney Pope and Ms. Blumenstein had talked to the bond counsel and that the final assessment resolution was just a paper allowing the project to move forward. She asked Attorney Parker's comments. Attorney Parker said this was correct, and Commissioner Johnson was also correct. He said the developer was required under the resolution to provide details and information. Parker said he thought the resolution had been signed off by all parties. He said everyone had to be satisfied, and all questions needed to be asked. Parker held up a three-ring notebook and mentioned it was the business plan and said, "I defy any of you to ask a question that cannot be answered out of this." I have spreadsheets that show the next three years month -by -month. I have a complete preliminary analysis of how much money a two-bedroom loft will have to have, and each hotel room month -by -month." Parker said he had the information but he didn't want to turn it over before an assessment resolution was approved because the development's competitors might see the data. Mr. Parker said the resolution included a provision stating that Langtree would pay the county's bond counsel costs as long as the fees were reasonable. He said a development agreement was already drafted. Parker said, "Why should the county have any expense whatsoever?" Parker said the project was about job creation. He said a month delay might mean the difference in a family keeping or losing their house. He said some guy might want a job laying power line underground. Parker said there was someone out there needing a job, and every month delay, was another month of no income for a family out of work. Attorney Parker said the legislation was an economic stimulus package passed by the state senate/house and signed off by the Governor. Commissioner Tice said it was understood that another project in the county might request this type of special assessment. She said the process was new, and she agreed the county needed to be cautious. Tice said, however, that during her 18 years as a commissioner, she didn't feel she had ever placed the county at risk. Tice said the legislation was a tool, and when all questions were answered to everyone's satisfaction, this type of assessment would probably be the method used in the future. Commissioner Williams said Langtree was a $1 billion investment and an increase in the county's tax base. He said the board appreciated the project, and as Commissioner Tice said, there's probably another project that will apply for the same type of bonds. Williams said, however, he still had questions. Attorney Parker offered to answer any questions, or to get answers from any of Langtree's experts. Langtree Developer Rick Howard requested the board to not lose focus on the fact that the project was really a stimulus plan. He said banks had stopped lending money, and this was an opportunity for developers to do things that normally towns and counties were expected to provide. Howard said this was about creating infrastructure -- roads, water, sewer, and without these, jobs could not be created. He said now was the time, and the Langtree area was the best area in the county for this type assessment. Howard said (1) the county's second largest employer was near the site (2) a new emerging interchange was being built and (3) businesses were looking to open in the area plus people wanted to live there. He continued by saying it was the new east/west connector to Kannapolis and the Biotech Research Center. Howard said Langtree was putting in the infrastructure because Mooresville could not. He said the bonds were not just about Langtree, rather water and sewer lines were being installed on Alcove Road and roads two miles from the project were being widened. He said these were things that should be done by the county or town. Howard said the state had approved the legislation and every day or month had an impact not only on Langtree but also on people needing work. He emphasized again it was not just about Langtree -- it was developing the southern end into the economic engine that it would become, and the board could either delay it or accelerate it. Howard said the project posed no risk to the county. He said over $50 million had been invested, and thousands of jobs would be created. County Manager Joel Mashburn said the General Assembly put the onus on the commissioners to decide if the project met "muster." He said it would be the commissioners who were judged in the future as to whether or not the project was a good or bad decision. He said the statutes were written in generalities because the state recognized that at a later time, 4 specifics would have to be addressed. Mashburn said the resolution did not address all of the specifics needed before the LGC presentation. Chairman Norman asked if the staff had the information needed for the LGC. Mashburn said no, but paragraph one in the resolution mentioned the county would receive studies (financial feasibility of the project plus the impact on the county and other units of government) paid for by the developer, and there would be no cost to the county. Mashburn asked Pope and Blumenstein if this was their understanding. Pope and Blumenstein said yes. Attorney Parker said a development agreement would have to be entered into to lay out many of the details. Parker said he and Attorney Pope would draft this document for the board's approval. He said that if the developer's agreement wasn't agreeable with the board, "then we're out." Parker said the agreement was already drafted, and it would be e-mailed to Attorney Pope if the resolution were approved. He said the board had another pass or shot before the project went before the LGC. He said, "Many, many bites of the apple, and it's a bad apple for us. Anytime you don't like the taste of our apple, you can spit us out at no risk to you, and I will say that's a matter of public record and if it came up in court -- the statement I just made, would bind my client. At no risk to this board. Mr. Johnson you asked for more due diligence materials, if I don't make you happy, we are out, at no risk to this board." Bedford Cannon said he was a local attorney but he was appearing as a taxpayer. He said it was hoped the developer had success in the project, but he asked why the county was involved in the first place. He said that if the financing, temporary and permanent, was already in place, then it should go forward. Cannon said there should be contingencies in the plan for unexpected costs such as from municipalities. Mr. Cannon said this wasn't a marriage that Iredell County wanted to be involved with, and Langtree had private sector developers. He said the developer should do the developing and not the county. Cannon said a letter had been submitted that contained some of his concerns. Mr. Cannon said he wished the developers well; however, the county shouldn't be involved. He questioned why the county was being asked to participate, especially since the developers said they already had the financing. Attorney Parker said banks were happy to lend money on vertical development, or when the building comes out of the ground. He said the banks were okay with lending money on horizontal development and acquisition -- the difference was banks were only lending about 50 to 60 cents on a dollar for acquisition/horizontal development. Parker said that's why you didn't see anything going up. He said loans were in place and the commitment papers could be shown. He said, however, it was realized that everything shared with the county would wind up public due to the Public Information Act. Parker said he understood this, and he would take the risk. He said the papers could be shared with Mr. Cannon. He said the 30 -year loan (legislation) was a part of the economic stimulus. Parker said Mr. Cannon was a county citizen and at some point, he could have access to the business plan. Commissioner Johnson said the questions weren't asking if the project was worthwhile, or if it would stimulate the local economy. He said the commissioners had only known about the request for days -- not weeks -- and the board shouldn't be faulted. Johnson said due diligence would be performed, and he couldn't accept the argument that doing it on the front end would delay the project. He said doing the due diligence on the front end would mitigate, to some degree, the possibility of a reputational taint mentioned by Attorney Pope. Johnson said that if the board didn't do the due diligence first, the taint would be worse. He said the LGC expected the county to perform the due diligence, and the best way was to accomplish it now. Commissioner Johnson said he had friends on both sides, but when he sat as a commissioner, he represented the county. He said a business plan was needed to demonstrate that the cash flow would work, and this would involve debt deferment, the allotment process per parcel, money to be set aside for contingencies, cost assessments, and future operational costs to the county as the project related to schools, fire, law enforcement, and EMS. Johnson said he thought the LGC would ask these questions. Commissioner Williams asked how the board could come up with a due diligence list. 5 Deputy County Manager Blumenstein said many estimates would be required along with a feasibility and economic impact study. She said contact could be made with her counterpart in Cabarrus County to find out who prepared the feasibility/economic study for the Biotech project that was financed with the Tax Incremental Financing (TIF). Blumenstein said the LGC was satisfied with the Cabarrus TIF presentations, and Buncombe County had also engaged in this type of financing. Mr. Mashburn said some type of agreement was needed prior to contracting for the due diligence work, and the county should not pay for the studies. Attorney Parker said a development agreement could be entered into prior to the resolution's adoption, but he needed to discuss the matter with his partners. He said, "When you ask the government to help, you've opened up your books to the government." Mr. Parker said he and Mr. Pope could work on the agreement. Commissioner Johnson said, "That's why I'm a conservative. The king's commands always follow the king's coins, and the queen's shekels, the queen's shekels." MOTION by Commissioner Johnson to instruct the staff to (1) develop a comprehensive definition of the term due diligence (2) consult with the county's bond counsel, the Local Government Commission, or anyone else as needed, to determine what is expected as far as the county's due diligence (3) follow Ms. Blumenstein's suggestion to consult with the folks having experience with TIFs, although this financing is somewhat different from the special assessment method, and to seek their counsel as far as what is involved in drawing up an agreement and making a presentation to the LGC, and (4) include in the information a business plan, future cost assessments, an economic impact study on the county, and for all these expenses to be borne by the developer. VOTING: Ayes — 4; Nays — 0 County Manager Mashburn said the next step, possibly at the next meeting, would be to have a developer's agreement presented to the board. He said this had to be approved in order to recover the due diligence costs. Attorney Parker agreed, and he said a definition of due diligence was needed. He said it was being left to the county staff to determine the answer, and it could be incorporated into the developer's agreement that he and Attorney Pope would create. MOTION by Commissioner Johnson to request that a developer's agreement be drafted as mentioned by the county manager. VOTING: Ayes — 4; Nays — 0. ADJOURNMENT: There being no further business, Chairman Norman adjourned the meeting at 1:00 P.M. Approval: 6 Clerk to the Board