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2014-11-17 Special MeetingNEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 181 ASSEMBLY The New Hanover County Board of Commissioners met for a Special Meeting on Monday, November 17, 2014, at 12:30 p.m. in the Assembly Room of the New Hanover County Courthouse, 24 N. Third Street, Wilmington, NC. Members present:Chairman Woody White; Vice-Chair Beth Dawson; Commissioner Jonathan Barfield, Jr.; and Commissioner Thomas Wolfe. Commissioner Brian M. Berger was absent. Commissioners-elect Skip Watkins and Rob Zapple were in attendance. Staff present: County Manager Chris Coudriet; County Attorney Wanda M. Copley; and Interim Clerk to the Board Teresa P. Elmore. City of Wilmington Council members present: Mayor Bill Saffo; Mayor Pro-Tem Margaret Haynes; Council Members Neal Anderson; Kevin O'Grady; Laura Padgett; Charlie Rivenbark; and Earl Sheridan. City of Wilmington staff present: City Manager Sterling Cheatham; City Attorney William Wolak; and City Clerk Penny Spicer-Sidbury. Facilitators: Director Jim Roberts, UNCW Center for Innovation and Entrepreneurship and Dr. Thomas Porter, UNCW Cameron School of Business, Department of Marketing. Chairman White and Mayor Saffo called their respective Boards to order for the Special Meeting reporting that the purpose of the meeting was to hear a progress update on the six priority items from the Garner Report – Pathways to Prosperity: New Hanover County’s Plan for Jobs and Investment that the governing bodies identified at their August 26, 2014 joint meeting. Chairman White welcomed everyone and introduced Commissioners-elect Skip Watkins and Rob Zapple as part of the board discussion. Mayor Saffo reported that both the City and County Managers and their staffs have prepared specific initiatives for discussion to receive further direction from the Boards in moving forward with an economic development plan. Progress Updates on Priority Items with Discussions Mr. Roberts spoke on the importance of economic development in creating more jobs as well as better paying jobs for citizens so that they can enjoy the quality of life and quality of place of our area. He said that updates would be presented from one person for each initiative who will summarize the progress of the last 45 days followed by discussion to receive feedback and direction in moving forward with the objectives. Film Incentives Vice-Chair Dawson, the Commissioners’ representative serving on the Wilmington Film Commission, reported on efforts of the members of the commission as follows:  Worked with film industry leaders in developing strategies to support the film industry in New Hanover County and Southeastern North Carolina.  Continue to work with legislators in the expansion of economic development incentives or grant programs to retain and recruit more films to the area.  Reach out to legislative delegation and leaders across the State to educate them on the importance of the film industry to our economy.  Continue to advocate for the film industry:  Two new film projects for the area  2014 estimated revenues = $180 million  One current project confirmed for 2015 (Under the Dome)  As a member of the NC Association of County Commissioners (NCACC) Taxation and Finance Steering Committee, she gained support in making film incentive program or grant program a priority of the NCACC legislative agenda. Mayor Saffo added the following:  Advocated for and has the support of the Metro Coalition of Mayors as well as the League of Municipalities in supporting either the tax credits or grants as incentives for film.  Worked to assure the film industry of efforts in securing a long-term commitment from the State.  Very competitive process with other municipalities working to get the State grants.  Discuss with legislators to speak with one collective voice whether to support a tax credit or a grant program and to remove caps on the amount of incentives that can be provided.  Both Boards should adopt resolutions by the first of the year to send to legislators in support of film incentives. Dr. Porter led the group to facilitate questions and suggestions on the update: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 182  Councilwoman Padgett suggested that a more unified front of cities and counties in support of the film industries would strengthen efforts with the State. Also, she suggested to use possible leverage of city and county monies with State money to recruit large film projects as done in the past. Three County Micro-Marketing Alliance Steve Yost, NC Southeastern Partnership, spoke on the partnership of Scott Satterfield, Wilmington Business Development, and Jim Bradshaw, Brunswick County Economic Development Commission, to create a marketing focus for the coastal counties to encourage businesses and industries to consider the area as an optimal business location. He presented the following marketing strategies:  Change name of the micro region to the Wilmington Region Marketing Initiative consisting of the three counties of New Hanover, Brunswick and Pender.  Extend the partnership with other allies to include Wilmington International Airport, NC Ports Authority, and NC Biotech Center Southeast Regional Office.  Strengthen teamwork of working together and strengthen focus of the marketing message.  Develop final marketing plan for governing boards by early January 2015.  Targeting the industries mentioned in the Gardner Report:  Precision manufacturing  Metal work fabrication technology  Life and marine science research  Aircraft assembly, modification, and maintenance  Airspace supply companies or manufacturing  Food and beverage manufacturing  High value office operations  Plastics and distribution  Aerospace technology  Strategies based on regional assets:  Diversified manufacturing base  International ports  UNCW  Cape Fear Community College  Wilmington International Airport  Energy plants  Coastal quality of life  Setting a plan for specific marketing events  Conferences and trade shows  Site selection consultant  Establish a set of performance metrics for a long-term initiative:  Measure productivity generated through the initiative  Develop marketing materials based on the Wilmington Region brand:  Scheduled two events for industry recruiting missions in May 2015 Dr. Porter led the group to facilitate questions and suggestions on the update:  Council Members O’Grady and Padgett suggested that the governing bodies and the community be kept abreast of upcoming recruiting events to have support and assistance from the community.  Commissioner Barfield suggested that working from a regional standpoint will be effective and beneficial.  Vice-Chair Dawson suggested that elected officials serving on the Southeastern Partnership Economic Development Board could be the point of contact to inform the community and governing bodies of any recruitment activities. Rebuilding of New Hanover County – Bringing Water and Sewer to US Highway 421 Corridor Strategy and Policy Manager Beth Schrader presented the following information on bringing water and sewer to the Highway 421 corridor:  Described area by dividing into zones of immediately developable acres for illustrative industries:  Zone 1 - 384 Acres: Food Processing, Precision Manufacturing, Cold Storage  Zone 2 - 420 Acres: Distribution, Heavy Equipment, Pet Food, Pharma, Chemical, Precision Manufacturing, Injection Molding, Boat Building  Zone 3 - 67 Acres: Tool and Die, Metal Fabrication, Cold Storage  Zone 4 - 98 Acres: High Value Office Operations/Headquarters  Zone 5 - 13 Acres: Service Companies, Small Warehouse Facilities, Boat Building  Total of 982 acres available  Phased Plan:  Phases 1 and 2 in process:  12-inch water line and 12-inch force main river crossing; and 12-inch water line to Flemington NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 183  Phase 3 - Primary Service Plan - divided into three sections: A. Northern river crossing near I-140 for water and sewer B. Upper US 421 C. Lower US 421 connects to Phases 1 and 2  12-inch water line and 8-inch force main  Two proposed pump stations  Primary Service Plan for Sewer:  Force main spine to serve customers by pressure connections  Most parcels will connect to sewer via on-site private pumps  Water spine to serve foreseeable demand  Expandable with minimal investment for build out horizon  Budgetary estimates  Primary service plan: $12 million  Future expansion to build out horizon: $3.5 million  Estimated Project Cost:  Phase 3:  Leg A $5.0 million  Leg B $4.5 million  Leg C $2.5 million  Total $12.0 million  Many Different Funding Options for $12 million with term of 20 years:  Limited Obligation Bonds:  Estimated Interest Rate 3.267%  Estimated Total Debt Service $15,957,129  Annual Average Debt Service $797,856  Required Investment for NHC Property Tax to Cover Annual Average Debt Service $144,017,409  Estimated project completion: 3 to 4 years from date of design award  Bring back funding options  Approve moving forward with the project:  Funding for acquisition of rights-of way  Funding for design phase In discussion, the Commissioners and Council members spoke on the importance of providing water and sewer infrastructure to the 421 corridor to expand economic development and directed staff to move forward with submitting projects for approval. In discussion of the Flemington Force Main project, Jim Flechtner, Executive Director of CFPUA explained that the project would bring both water and sewer lines beneath the river about a half mile apart. The water line would be near the Sweeny Water Treatment Plant and the sewer line would be near the Cowan Street pump station. Both would have 12-inch lines. Duke Power would pay the cost of an 8-inch water line to Flemington and CFPUA would pay the difference of increasing the line to 12 inches. There would be a cost savings on the design and use of the same equipment when installing both lines at the same time. The completed project would be necessary before adding the infrastructure along the 421 corridor. In a related issue, Councilwoman Padgett requested the Commissioners to support a resolution that City Council will consider at its next meeting in regards to requesting the WMPO, NCDOT, and CSXT to complete a feasibility study to evaluate the relocation of the CSXT rail line across the river via a route that eliminates rail traffic through the heart of the city and provide a more direct rail access corridor to the Port of Wilmington. She believed it would be as important for new businesses on the 421 corridor to have rail access to move their product as having water and sewer infrastructure. Supporting New and Small Businesses Roger Johnson, Assistant to the City Manager for Development, presented the following update on supporting new and small businesses:  Stakeholder group: Center for Innovation and Entrepreneurship, Wilmington Business Development (WBD), Chamber of Commerce, Wilmington Downtown Inc. (WDI), small business agencies and small businesses  Small Business Technical Assistance:  Create a single point of entry into government processes:  Phone number or email address  Business owner triaged to correct location  Schedule an appointment:  Review start-up checklist/process with customer  Answer questions and provide direction  Staffing needs analysis required  Create a better web presence for on-line assistance:  Develop and publish a business resource guide NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 184  Provide links to supporting agencies (ABC, SBA, etc.)  Creating High Growth Businesses:  Discovered gaps and needs that do not exist:  Not many capital funded startups in Wilmington  Project Team Lead – Sandra Bates:  Author and Consultant on Innovation:  The Social Innovation Imperative, McGraw-Hill, 2012  “Creating a Common Language for Cross-Sector Collaboration,” Stanford Social Innovation Review, July 2013  Contributing author to What Customers Want, Tony Ulwick, McGraw-Hill 2003  Steering Committee for the Edison Awards  Consultant leading over 100 clients in the US, UK, Spain, and Brazil  Focus of Study and Core Team:  Cross-Sector Team:  New Hanover County  City of Wilmington  UNCW Research Organization  UNCW Center for Innovation & Entrepreneurship  Cape Fear Community College Makerspace  tekMountain  Chamber of Commerce  Targeted Audiences:  Business Builders  Investors for financing  Supporting Organizations  Process for study project:  Kickoff workshop - December 2014  Qualitative Interviews (30 interviews) - January 2015  Quantitative Interview (600+ surveys) - February – March 2015  Follow-up interviews (group interviews) - March 2015  Elected Officials Update (generate solutions) - March 2015  Team Ideation (generate solutions) - March 2015  Presentation of Results - April 2015  Deliverable Product:  A plan that includes short-term and long-term goals for small and new business development to include:  Specific solutions  Timeframe  Recommendation for agency assigned to carry out the mission  $25,000 total cost to be shared between City and County In response to questions, Mr. Johnson explained that the project would be different from the Center for Entrepreneurship because this project would connect entrepreneurs with local investors. The study would help determine the issues and provide solutions. Mr. Roberts explained that their role at the Center of Entrepreneurship is preparing the entrepreneurs for the capital that is mostly regional such as Raleigh-Durham. The study would help determine why entrepreneurs go out of town to get investors and why the local investor goes out of town instead of investing in local companies. The goal of the feasibility study would be to shift local investors toward investing in high technology startups that pay better wages. Sandra Bates responded that they would look at taking high growth industries, align them with the micromarketing component, address their needs, and find out why the business owners have not chosen this area to develop new businesses. It would be a public-private partnership with all the invested parties getting together to determine the resources and needs, and looking for the synergy of both groups of people. The focus of the study is to understand the needs of the investors and the needs of the high growth business owners and putting them together using creative minds to build these programs. In further discussion, Mayor Saffo objected to government being involved in private investors and private businesses. He stated that it is a private capital issue and that private businesses should find their own investors whether it is local, Raleigh or California. Dr. Porter proposed that the group come back with another type of approach in supporting new and small businesses. Developing a Realistic and Sustainable Written Incentive Policy Strategy and Policy Manager Beth Schrader presented the following update on developing a realistic and sustainable written policy: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 185  Successful History with Business Incentives:  2004 Verizon Wireless $20 million invest for 1,000 new jobs  2005 PPD - $80 million investment for 857 new jobs  2014 Castle Branch - $9 million investment with 400 new jobs  2014 Live Oak - $16 million investment for 120 new jobs  Garner Report Recommendations:  Written Incentive Policy  Transparency  Predictability  Common criteria/framework for city and county  Tied to desired outcomes  Recommended Framework: From To Why? Requiring a minimum Exceeding return on Several target sectors have low capital investment capital investment investment threshold for total but provide significant number of high wage jobs economic impact Eligible jobs Eligible Jobs Increasing average weekly wage by 10% - Paid at NHC average for - Paid 10% above NHC comparable jobs average for comparable jobs Eligible Sectors: Existing Sectors Plus: - Broadens and diversifies tax base - Manufacturing (any) - Garner Report Sectors - Creates/retains quality value added jobs (traded) - Distribution - Transportation - Additional sectors leverage existing assets and - Headquarters - Warehousing have strong wages across spectrum of skills (jobs - Research and Development - Medical Services for all) - Speculative Industrial - Identify Use NAICS codes for additional clarity Buildings and transparency Modify: - Manufacturing (some) Flexible incentive Formula based on the number - Incentive amount explicitly tied to more, better calculation and wages of qualified jobs jobs - Sliding scale; higher - Recognizes need for good jobs across spectrum of incentive per job for higher skills and wage levels wage jobs - Clarity/commitment to growing target sectors - 10% bonus for Garner Report Sectors * Illustration of sliding scale: Maximum allocation to a project based on jobs and wages Wage range ($/hour) Allocation per job $25.00 and above $5,000 $20.01 - $24.99 $4,000 $16.01 - $20.00 $3,000 $12.01 - $16.00 $2,000 Up to $12.00 $500 Must involve a facility Must produce (or supply) - Traded clusters bring wealth into the community goods/services mostly vs. just re-circulating existing wealth consumed outside county - Desire new jobs vs. paying to rehire existing - Not eligible if just workers replacing an existing local business Requiring a minimum of 75 Requiring minimum of: - Increased flexibility retaining existing businesses/ new qualified jobs created New - 25 new qualified jobs jobs Existing (Any 2 of 3 below) - $500,000 total economic impact - Minimum capital Investment - Create or retain minimum number of jobs  Retain From Existing Policy:  Elected body discretion:  Add ability to consider non-conforming projects with significant number of total jobs  Monitoring and compliance  Broad use of funds (locally):  Training  Site/infrastructure/leasehold/owner occupied land or building improvements and build to suit  Relocation expenses  Machinery and equipment  Loans NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 186  Additional Policy Considerations:  Thresholds:  Return on Investment  Minimum new jobs (30 – 50)  Combination number of jobs, investment, economic impact (existing)  Participation by City outside municipal boundary and/or relative level of participation In discussion of the update, the following comments were received: :  Councilman O’Grady agreed with the concept of scaling the lower paying jobs with lower incentives and higher paying job with higher incentives, but wanted to see the working level increased from the poverty level of $24,000 per year to be eligible for incentives.  Councilman Rivenbark requested to see figures on incentives provided companies in recent years to see how they would have fared under the proposed incentive program. Ms. Schrader responded that they would get the number of jobs at each pay level to calculate the incentives and provide the information to the Boards as soon as possible.  Councilman Sheridan suggested that smaller businesses may not qualify for funding incentives but may benefit from regulatory incentives.  Commissioner Barfield suggested that a policy with a minimum threshold might allow the Boards to be more flexible in working with the State and in dealing with companies based on their specific needs.  Vice-Chair Dawson suggested that it would be important to know what the General Assembly will provide the Department of Commerce in the provision of grants, etc., and noted that those developing an incentive for a new business would need some flexibility in a policy.  Mayor Saffo suggested that staff needs to prepare additional information for the Boards as soon as possible so that they can make decisions and implement a policy. Dr. Porter summarized that a consensus of the general principles and framework were received and he requested members of the Boards to give additional feedback to the managers for inclusion into a policy for the Boards’ consideration. Making the Case for Sustainable Funding Sources for Economic Development Dr. Porter reported that the Boards may want to hear the presentation on December 4, 2014, (Garner Report: Oklahoma City as a Model) by a group from Downtown Oklahoma City, Inc. that may provide information on other funding mechanisms and insight used to revitalize the economy for Oklahoma City. Finance Director Lisa Wurtzbacher presented the following information on options for Sustainable Funding:  Must be an ongoing predictable source of funding:  Not a project based funding source  Options:  Property Tax - set locally by governing bodies  Sales Tax - Requires legislative authority:  Set to sunset after a certain time period  Requires voter approval  Potential Uses for Sustainable Funding:  Debt service for infrastructure projects = $23 million  Site Acquisition and Development = $15 million  Economic Development Incentives = $8 million  Revolving Loans for Capital for Small Businesses = $3 million  Total = $49 million  Impact on Taxpayers for a Potential need of $49 million:  Option 1: County Property Tax Rate Effect:  Five Year Accumulation = 3.3 cents:  Impact on annual tax bill for a home valued at $250,000: $82.50  Seven Year Accumulation = 2.4 cents:  Impact on annual tax bill for a home valued at $250,000: $60.00  Option 2: County Sales Tax Rate Impact:  Five Year Accumulation = 0.35%  Seven Year Accumulation = 0.25%  Current local sales tax rate is 2.25% and combined state and local sales tax rate is 7%. Dr. Porter reminded the Boards that they might want to hear the presentation on December 4, 2014 before committing to a specific funding source. In conclusion, Dr. Porter recapped each update and noted key points of discussion. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, NOVEMBER 17, 2014 PAGE 187 City Manager Cheatham recommended that the Boards plan to have another joint meeting towards the end of the first quarter of next year to give staff time to regroup, prepare support details on items the Boards have agreed to move forward, and develop some specific strategies. ADJOURNMENT Hearing no further discussion, Chairman White and Mayor Saffo thanked the facilitators, members of staff providing the updates, and those in attendance; and adjourned the meeting at 2:28 p.m. Respectfully submitted, Teresa P. Elmore Interim Clerk to the Board Please note that the above minutes are not a verbatim record of the Special Meeting of the New Hanover County Board of Commissioners.