2015-04-23 Special Meeting
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33
SPECIAL MEETING, APRIL 23, 2015 PAGE 279
ASSEMBLY
The New Hanover County Board of Commissioners met for a Joint Special Meeting with the Wilmington
City Council on Thursday, April 23, 2015, at 4:00 p.m. in the Blue Room of the Wilmington Police Department, 615
Bess Street, Wilmington, North Carolina.
Members present: Chairman Jonathan Barfield, Jr.; Vice-Chairman Beth Dawson; Commissioner Skip
Watkins; Commissioner Woody White; and Commissioner Rob Zapple.
Staff present: County Manager Chris Coudriet; County Attorney Wanda M. Copley; and Clerk to the
Board Teresa P. Elmore.
City of Wilmington Councilmembers present: Mayor Bill Saffo; Mayor Pro-Tem Margaret Haynes;
Councilmembers Neal Anderson; Kevin O'Grady; Charlie Rivenbark; and Earl Sheridan. Councilmember Laura
Padgett was absent.
City of Wilmington staff present: City Manager Sterling Cheatham; City Attorney William Wolak; and
City Clerk Penny Spicer-Sidbury.
Chairman Barfield and Mayor Saffo called their respective Boards to order for the Special Meeting
reporting that the purpose of the meeting was to hear an update on two of the priority items from the Garner Report
– Pathways to Prosperity.
County Manager Coudriet reported that the Boards have been working on priorities identified in the August
2014 Garner Report and Staff is prepared to provide detail information on the following: 1.) A build-out analysis
for the US Highway 421 economic development project of extending water and sewer to the Pender County line;
and 2.) A clearly defined incentive policy that would be integrated and mirrored between the governing boards to
provide guidance to Wilmington Business Development, Inc. in recruiting new industries and businesses to the area.
Progress Update on Priority Item: Rebuild New Hanover County – Bringing Water and Sewer to the US
Highway 421 Corridor
County Strategy and Policy Manager Beth Schrader presented the following analysis and information on
bringing water and sewer to the US Highway 421 corridor:
For illustrative purposes, the US Highway 421 corridor was divided into five zones of immediately
developable acres as follows. These zones do not include wetlands, flood zones or conservation district overlay:
Zone 1: 384 acres (close to the Pender County industrial park with large tracts of land; highway and
natural gas access): food processing, precision manufacturing, cold storage
Zone 2: 420 acres (highway and rail access, significant size parcels): distribution, heavy equipment, pet
food, pharma, chemical, precision manufacturing, injection molding and boat building
Zone 3: 67 acres (smaller parcels; rail and highway access): tool and die, metal fabrication, cold storage
Zone 4: 98 acres (large parcels with river bluff views): high value office operations/headquarters
Zone 5: 13 acres (small properties along highway access): service companies, small warehouse facilities,
boat building
Total: 982 acres available
Model Assumptions:
Uses regional industrial forecasts from FOCUS project
Weights suitability of Highway 421 sites relative to other NHC, Pender and Brunswick sites
Investment value estimated based on appraised value/acre and floor-to-area ratios
Area attractive for development based on access to new residents, average job growth, access to
existing jobs, proximity to transportation infrastructure and higher education opportunities
Model Limitations:
Reflects existing industry mix/project size
Future investment valuations based on existing industry appraisals
Understated/excludes business personal property (furniture, fixtures, and equipment)
Employment projections at aggregate level
Quantity and quality (no job totals) and not by specific industry
Average
Quality of Jobs/ Job Type Illustrative Industries Earnings/Job*
Lower skill/technology industrial Self-storage warehouse $29,485
Automotive parts, accessories $32,931
Higher skill/technology Professional/Scientific Instrumentation $45,313
industrial Boat and Ship Construction $66,172
Chemical and Plastics Manufacturing $111,963
Commercial Legal Services $59,893
Medical and Diagnostic Laboratories $68,406
Insurance and Employee Benefits Funds $132,687
*Garner Economics Competitive Realities Report
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33
SPECIAL MEETING, APRIL 23, 2015 PAGE 280
Projected Development Through 2040
Investment Scenarios
Do-Nothing
Conservative Most Likely Optimistic
Scenario
Square Feet 478,750 957,505 1,816,263 2,675,022
Jobs by type:
Lower skill industrial 239 100% 110 10% 209 10% 308 10%
Higher skill 0 0% 771 70% 1,462 70% 2,153 70%
industrial
Commercial 0 0% 220 20% 418 20% 615 20%
Total Jobs 239 1,101 2,089 3,076
Ms. Schrader pointed out that with the completion of I-140 and better road access in the northern part of
Brunswick County in 2017, New Hanover County (NHC) would lose some new development to surrounding
counties. Under the most likely investment scenario, a cohesive policy is needed to bring in industry. Under the
optimistic investment scenario, the County would have to have a strategic, coordinated and cohesive policy for
development where the bulk of the jobs would be for the higher skill industrial jobs.
“Most Likely” Scenario
Estimated Investment Horizon:
Cumulative Assessed
Tax Base (in millions)
Year 0 $5.1
10% land value increase associated with water and sewer
install Year 5 $48.0
Level of tax base investment needed for ad valorem to support
Year 10 $90.8
debt service occurs after less than 15 years
High-value industries accelerate this timeline
Year 15 $133.6
Year 20 $176.4
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
Service Area with Estimated Project Cost:
Leg A - northern river crossing near I-140 (return loop) $5.0 million
Leg B - upper US 421 $4.5 million
Leg C - lower US 421 $2.5 million
Total (assumes 20% contingency) $12.0 million
Design Capacity:
12-inch water line = 1 million GPD
Available Capacity = 815,000 GPD
Existing Demand = less than 185,000 GPD
Illustrative Example of Usage:
Large chemical manufacturer =400,000 GPD
Small or precision manufacturer = Four 60,000 GPD
R&D or process design facilities = Six 20,000 GPD
Equivalent of 2,200 employees for warehouse, distribution and logistics, high value office,
headquarters type operations
Cape Fear Public Utility Authority (CFPUA) Director of Engineering Carel Vandermeyden was present
and responded to questions concerning the design and capacity of the water lines.
County Finance Director Lisa Wurtzbacher presented other funding opportunities for bringing water and
sewer to the US Highway 421 corridor:
Grants:
Reviewed Grant Opportunities: HUD, CDBG Economic Development, Brownfields Area-Wide
Planning Grant, Brownfields Cleanup Grant (EPA), Brownfields Training, Research, and Technical
Assistance Grants; Brownfields Economic Development Initiative
Grants not viable due to purpose of grant or requirement criteria:
Must own land or must provide jobs that benefit low-income
Possible opportunity for Public Works Economic Development Assistance Grant:
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33
SPECIAL MEETING, APRIL 23, 2015 PAGE 281
Average award of $1.4 million per project
Staff to verify all required criteria
Boards would need to approve grant application by mid-June
Loans:
Other State loans available but most do not meet needs of the project
Staff to continue searching for possible low rate loan opportunities such as general obligation bonds,
revenue bonds and limited obligation bonds
Traditional Funding Option of Limited Obligation Bonds:
Estimated Project Cost of $12 million with term of 20 years:
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
Impact on Debt Policy Limitations:
Average Increase in Debt Service: $797,856
No debt service expected until FY2017
Estimated Impact on debt per capita: 55
2016 Total Projected: 2,044
Impact on debt to assessed value: 0.10%
2016 Total Projected: 1.5%
Impact on debt service to Operational Expenditures: 0.3%
2016 Total Projected: 17.7%
County Manager Coudriet reported that the Garner Report designated the US Highway 421 corridor water
and sewer project as a main priority for economic development and the project is included in the County’s FY15-16
Recommended Budget and the Capital Improvement Plan for the $12 million investment. The debt service would
not require a property tax increase as the County would have $30 million available for new investments as old debt
is retired. An Interlocal Agreement among the three parties of the CFPUA, City of Wilmington and the County
would be needed before proceeding or the project may be considered as a part of CFPUA’s long-range capital
improvement plan. The business community should respond to the investment with building new businesses that
would increase the tax base. As the economy continues to improve, the County would have a natural growth rate in
the tax base of 1.1% per year, but that increase would not be sufficient to handle the $160 million school bond.
Councilmember O’Grady expressed concern that the Boards would need to consider all debt service and
other investment needs of the City and County such as schools, road improvements and fire stations before
committing to the Highway 421 infrastructure. He questioned that the tax rate would not be affected by incurring
more debt and requested to see the numbers of the projection.
Commissioner Zapple commented that proceeding with the project has the potential of taking the first
major step of undertaking the Garner Report and supported proceeding with the economic investment project.
Commissioner White supported the project stating it would have a major economic impact to the region
and said that the County should find other alternatives in paying for the project and suggested selling surplus real
estate property. Although the County may decrease debt by $30 million a year, the County continues to add more
debt.
Chairman Barfield supported the project as it provides opportunities for growth and new business
development along the corridor thereby increasing the County’s tax base.
Mayor Saffo suggested that private investors from major manufacturing companies should be encouraged
to participate in the project so that it could be done more quickly as with Duke Energy participating in the water
infrastructure under the river.
Progress Update on Priority Item: Incentive Policy Discussion
Strategy and Policy Manager Beth Schrader presented the following update on developing a realistic and
sustainable written incentive policy:
Context for the proposed incentive policy with the maximum allocation to a project based on jobs and
wages:
Wage range ($/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
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33
SPECIAL MEETING, APRIL 23, 2015 PAGE 282
200% Federal Poverty Level
Household Size Level Annual Salary Implied Hourly Wage
1 $23,540 $11.32
2 $31,860 $15.32
3 $40,180 $19.32
4 $48,500 $23.32
5 $56,821 $27.32
Bureau of Labor Statistics – Quarterly Census of Employment and Wages (QCEW) Third Quarter 2014 Data:
US = $949/week, $23.73/hour or NHC weekly wage = $39,000 annual
200% of the Federal Poverty level is the point at which an individual or family would no longer qualify
for benefits from entitlement programs
North Carolina average weekly wage = $839 (or $20.98/hour)
NHC average weekly wage was $750 (or $18.75/hour)
Past Incentives Compared to Draft Policy
:
nCino / Live Oak Castle Branch
Company Investment $16 million real property $9 million real property
120 jobs (≥ $80,000 average) 400 jobs (≥$35,000 average)
Awarded Incentive NHC: $325,000 NHC: $250,000
City: $250,000 City: $250,000
$575,000 $500,000
Estimated Incentive Under New $515,000 - $545,000 $670,000 - $737,500
Policy
nCino – has 29 remaining hires to Castle Branch has 282 hires
make (targeting average salary of remaining. Based on hires over the
$80,000 which narrows range) past year, would predict incentives
would run $673,000
Payroll 120 jobs* Payroll 400 jobs *
$85,000 = 10,200,000 $35,000=14,000,000
Ms. Schrader explained that nCino would not have received any additional credit for jobs above $52,000.
The proposed formula treats a $100,000 job and a $52,000 job the same way.From a policy standpoint, the Board
would need to determine to what extent should the policy value the different wage levels and if the appropriate
allocations are provided. Additional credits could be provided for salaries above $25/hour. When looking at Castle
Branch, a higher incentive could be paid, suggesting that the policy might be overweighing the value of jobs with a
salary of less than $16/hour.
Document Roadmap for Draft policy:
SectionKey Provisions
Purpose: Creating and retaining quality value-added jobs;
broadening and diversifying the tax base; increasing the region’s global
competitiveness; promoting growth and welfare of the City and
County; and encouraging capital investment
Eligible Business /Industry Clusters : Manufacturing (by NAICS codes and permitted by right in industrial
zones), Research and Development, Warehousing and Distribution,
Corporate Headquarters, Transportation, Medical Services and
Speculative Industrial Buildings
Subsectors eligible for an additional 10% bonus allocation to the
incentive formula: Life and Marine Sciences Research and
Development Subsectors, High Value Office Operations Subsectors,
Precision Manufacturing Subsectors, Aircraft Assembly, Modification
and Maintenance Subsectors
Minimum Project Qualifications: 25 net new jobs; Wages 110% of local wage for industry by
occupation; 30% Return on Investment (ROI); If ROI threshold not met
on expansion project, must have two out of three of the following:
a) ≥$25,000,000 taxable real property investment; b) Create or retain
at least 200 jobs; c) Total economic impact at least $500,000
Incentive Amount: Chart of allocation per job for eligible and bonus eligible businesses
Only counts jobs for whom company pays unemployment insurance, or
employee pays NC income tax
Project Evaluation: Assessment of competitiveness, industry eligibility, “But for”
certification and additional criteria
Exclusionary Factors: If results in net decrease in ad valorem tax, if company not current on
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33
SPECIAL MEETING, APRIL 23, 2015 PAGE 283
payments to local governments, company financial condition in doubt,
or project would have a detrimental affect
Use of Incentive Funds: Training, infrastructure improvements, site improvements, owner
occupied land and building improvements, build-to-suit and leasehold
improvements, relocation expenses. Short-term loans may be available
in extraordinary circumstances, with guarantees and in participation
with traditional financing
Performance Agreement: Written document required addressing major key elements of
agreement. Includes requirements, timing, “clawback” terms and
provisions; penalties for non-performance; etc.
Disclaimers: Policy does not establish an entitlement/right; decision and or amount
of participation at governing board discretion and subject to availability
of funding
Alternate Programs: Governing boards have flexibility to do other incentives outside of the
policy on a case-by-case basis. May reduce or preclude any incentive
normally granted through policy
Ms. Schrader handed out the draft Economic Development Jobs Investment Policy and requested everyone
to read the draft and identify questions. The policy should be considered among the individual governing bodies and
collectively at a later date.
ADDITIONAL ITEMS OF DISCUSSION
Mayor Saffo requested Council to waive the rules of order to discuss other items of business.
Motion
: Councilmember O’Grady MOVED, SECONDED by Councilmember Sheridan, to waive the rules to
discuss items of mutual interest. Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Barfield requested the Board to waive the rules of order to discuss other items of business.
Motion
: Vice-Chairman Dawson MOVED, SECONDED by Commissioner Zapple, to waive the rules to discuss
items of mutual interest. Upon vote, the MOTION CARRIED 4 TO 1. Commissioner Watkins voted in opposition.
Discussion of Shooting Ranges near Residential Properties
Mayor Saffo requested the Boards to consider removing shooting ranges away from City limits and
residential properties for safety concerns and asked that the Sheriff and the Police Chief work together to find a
suitable location that would serve both City and County law enforcement officers, as well as State and Federal
officers requiring certifications. He supported closing the shooting range located near the development of
Riverlights and the one across the river from the Wilmington Convention Center. It was suggested that a previously
considered site located on Highway 421 and property at the Sheriff’s Office on Juvenile Center Road be explored.
Discussion of Re-establishing Human Relations Commissions
Councilmember Sheridan requested the Boards to consider re-establishing the Human Relations
Commission to deal with some of the issues of crime and other matters of the community.
County Manager Coudriet reported that his office has talked with the State Human Relations Commission
to see how the County should proceed in reestablishing the Human Relations Commission. An advisory panel could
consider issues that would make the community better and the governing bodies could receive issue reports from the
community meetings. Staff will continue its investigation and provide a proposal.
ADJOURNMENT
Hearing no further discussion, Chairman Barfield and Mayor Saffo thanked staff for the updates and for
those attending the meeting and adjourned at 5:45 p.m.
Respectfully submitted,
Teresa P. Elmore
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.