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2023-05-15 Regular Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 767 ASSEMBLY The New Hanover County Board of Commissioners met May 15, 2023, at 9:00 a.m. in Regular Session in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. Members present: Chair Bill Rivenbark; Vice-Chair LeAnn Pierce; Commissioner Jonathan Barfield, Jr.; Commissioner Dane Scalise; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; County Attorney Wanda M. Copley; and Clerk to the Board Kymberleigh G. Crowell. INVOCATION AND PLEDGE OF ALLEGIANCE Pastor Eddie Eaton, Wrightsboro Baptist Church provided the invocation and Commissioner Barfield led the audience in the Pledge of Allegiance to the Flag. APPROVAL OF CONSENT AGENDA Chair Rivenbark requested a motion to approve the Consent Agenda as presented. Commissioner Barfield stated that he would make the motion to approve the Consent Agenda as presented and direct staff to look at rebidding the audit services contract next year. Hearing no further discussion, Chair Rivenbark asked for direction from the Board. MOTION: Commissioner Barfield MOVED, SECONDED by Commissioner Zapple to approve the Consent Agenda as presented and directed staff to look at rebidding the audit services contract next year. Upon vote, the MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA Approval of Minutes – Governing Body The Commissioners approved the minutes of the Budget Work Session and Agenda Review held on April 27, 2023. Approval of the Contract Renewal for Audit Services with Cherry Bekaert LLP for Fiscal Year 2022-2023 – Finance The Commissioners approved the contract renewal for audit services with Cherry Bekaert LLP for Fiscal Year 2022-2023. Adoption of Budget Amendments - Budget The Commissioners adopted the following budget amendments amending the annual budget ordinance for the fiscal year ending June 30, 2022: Environmental Management 23-062 CFCC Health Program Expansion 23-064 ARPA Funds 23-065, 23-066 Bid Deposits 23-067 Sheriff's Office 23-068, 069, 070, 071 Copies of the budget amendments are hereby incorporated as part of the minutes and contained in Exhibit Book XLIX, Page 10.1. REGULAR ITEMS OF BUSINESS PRESENTATION OF SERVICE AWARDS AND INTRODUCTION OF NEW EMPLOYEES County Manager Coudriet recognized the following employee receiving a retirement award: Corporal Larry Daley, Sheriff’s Office, retiring with 14 years of service Chair Rivenbark presented the retirement award to Corporal Daley and the Commissioners expressed appreciation and thanked him for his years of dedicated service. County Manager Coudriet requested the following employees to step forward to receive service awards: Five Years: James Barnes, Parks and Gardens Ten Years: Shannon Vaughn, Library Twenty Years: Karen Graham, Health and Human Services (HHS) – Administration Twenty-Five Years: Erica Price-Pollock, HHS – Social Services Thirty Years: Kelly Redenbaugh, HHS – Social Services Chair Rivenbark presented a service award to each person and the Commissioners expressed appreciation and thanked each one for their years of dedicated service. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 768 County Manager Coudriet requested the following new employees to stand and be introduced: Alexandria Berry, HHS – Social Services Renae Floyd, Port City United Beth Lankford, HHS - Social Services Mark Mitchell, Tax The Commissioners welcomed the employees to County Government and wished them success in their new positions. CONSIDERATION AND ADOPTION OF 2023 OLDER AMERICANS MONTH PROCLAMATION Chair Rivenbark read the proclamation into the record, recognizing May 2023 as “Older Americans Month” in New Hanover County. Hearing no further discussion, Chair Rivenbark asked for direction from the Board. Motion: Commissioner Barfield MOVED, SECONDED by Commissioner Zapple to adopt the proclamation recognizing May 2023 as “Older Americans Month” in New Hanover County. Upon vote, the MOTION CARRIED UNANIMOUSLY. Senior Resource Center Director Amber Smith expressed appreciation to the Board for adopting the proclamation. A copy of the proclamation is hereby incorporated as part of the minutes and contained in Exhibit Book XLIX, Page 10.2. PUBLIC HEARING AND APPROVAL OF A DEVELOPMENT AGREEMENT FOR THE REDEVELOPMENT OF THE WILMINGTON CITY BLOCK BOUNDED BY CHESTNUT STREET, GRACE STREET, SECOND STREET, AND NORTH THIRD STREET Chair Rivenbark opened the public hearing by stating that the Board will consider the approval of a proposed development agreement with Cape Fear Development Partners, LLC, for the construction of a civic and arts facility including a library component and a museum component of approximately one (1) acre and an improved parking deck, together with proposed conveyance of a County property located within the Grace Street block for mixed-use development pursuant to North Carolina Session Law 2017-86 and North Carolina General Statute (NCGS) 160D – 1315. Cape Fear Development Partners, LLC, will manage the construction of both the public and private facilities. The private development may include residential and mixed use, will enhance tax value, and is estimated to be at least $30,125,838 in construction costs. Construction of the library and museum components is estimated at $60,524,860. The project is expressly subject to all regulatory financing approvals. The Board will now hear the staff presentation on the proposed development agreement. Assistant County Manager Lisa Wurtzbacher and Chief Financial Officer Eric Credle presented the following information on the request:  Project Grace Development Agreement:  Project history:  2017: Market and site analysis conducted  2018: Request for proposals for redevelopment  2019-2021: Development team reviewed site alternatives  March 2021: Memorandum of Understanding (MOU) with Zimmer Development  Summer 2021 – Spring 2022: Discovery, schematic design, and construction documents  Fall 2022: Financing not approved  Fall 2022: Zimmer withdrew, and County purchased design plans  Winter 2023: Cape Fear Development review of plans and project  Project Schematics:  Approximately 94,000 gross* square feet of new, purpose-built, modern facility:  A space that brings the library and museum together to enhance the visitor’s experience:  Library space will include spaces for adults, children, teens, and local history  Museum space will include an immersive theater, several galleries, space for a changing gallery  Shared space will include multi-purpose rooms and an outdoor terrace *Gross square footage to include the entire building footprint inclusive of areas such as the loading dock and bay  Proposed Development Agreement:  Construction of public and private components to be managed by Cape Fear Development  Preliminary museum/library budget of $60,524,860:  Excludes direct purchases such as furniture and exhibits  Includes developer fee of 3.5%  Includes parking deck improvements  Final budget to be approved by the Board in July 2023  Sale of south parcel to developer: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 769  Greater of $3.5 million or appraised value  Sale after completion of museum/library facility  South parcel development:  Will include mixed-use development  If residential is included, at least 5% of units would be workforce housing for at least 10 years  Private investment of no less than $30,125,838  Construction commences within 24 months of the sale of the south parcel  Parking would be shared, and a parking agreement would be negotiated between the parties  Development agreement is contingent on County’s financing approval  Project Budget: *This cost does not include direct purchases to be made by the County such as fixtures, furniture, and equipment (FF&E), special inspections, and exhibit design and fabrication. These costs are currently being developed/finalized and will be included in the July presentation on the final development agreement.  Estimated Debt Impact:  Annual debt service on $60,524,861 over 20 years at 3.48% = $4,225,791: Based on June 30, 2023 estimates, including the previously approved debt issuance that is in process  Financial Analysis: * Only assumes land sale for $3.5 million + property taxes on $30.1 million private investment at current tax rate, with 3% annual growth in value. There is potential for room occupancy taxes, sales taxes, and parking space rentals.  Project Grace Comparison: * Project cost increase is due primarily to inflation, as the project scope is substantially the same  Timeline and Next Steps:  Revise designs and bid project: now through June 2023  Request Board of Commissioners approval of final budget and financing application: July 2023  Request Local Government Commission approval: September 2023  Construction begins: October 2023 Mr. Credle responded to questions as to if the delay caused by the Local Government Commission’s (LGC) recent denial cost the County $4.5 million that he thinks when comparing the two scenarios the total cash outlay is $4.5 million higher than last time and inflation has become very high over the last couple of years. In response to questions about the difference between an MOU and a developer agreement, Ms. Wurtzbacher stated that it is just a difference in the wording, but the components are the same. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 770 Discussion ensued about the parking deck. Ms. Wurtzbacher stated that the wording and structure for the parking deck will be ready for the Board to review in July, but staff may not be able to provide the final number of spaces at that time. County Manager Coudriet asked the Board what is being looked for with the parking spaces as staff has previously shared with the Board the number of spaces that were in use before the special use permit for the reservation of spaces was taken out. He further noted that as it relates to the project cost, those were estimates under Zimmer Development, but there were delays built into that which would have driven up the original top line number higher. There is no delta to argue, because the Zimmer Development numbers were the best estimate at the time that the County was before the LGC. As the project proceeds, as it is, the County will end up spending less money out of its own coffers but generating the same amount of return. That was the expectation when the County went into it with Zimmer Development that then borrowing the money would be more expensive to the County, but there was a guarantee of revenue. He does not want the Board to become myopically focused on those two numbers as that was an estimate at the last point of the bid and those numbers were continuing to go up. By the time the County was before the LGC, interest rates were raised at least four times. Those numbers are predated but it would be helpful if staff understood what the Board is looking for in parking and how it would be different perhaps, than what Zimmer Development had for residential and public purposes as well. He explained that by restriping, 40 spaces could be recaptured which would bring the total number of spaces to 660. Vice-Chair Pierce stated that she feels the development agreement language is very vague on if the developer would lease spots at market rate from the County as others have done. She feels that is important to have that language spelled out in the contract and to know which deck levels would be dedicated to the library and the museum for the public. Discussion ensued about improvements that are planned for the parking deck. Ms. Wurtzbacher stated in addition to the striping, as the library and museum facility will be built on the other side, the parking deck will be a bit more enclosed. Chief Facilities Officer Sara Warmuth stated that because the new building will be butted up against the existing deck, essentially it will be enclosing what is now an open-air deck. There are code requirements that will have to be met to ensure proper airflow in the deck. Additionally, some alternatives will bid to see if it makes sense financially to have some doorways and ramps connecting the two buildings as their floorplates are not going to fully line up. Ultimately the existing deck, depending on what is constructed on the south side could be enclosed, which she feels is a benefit because it would be nice to have beautiful buildings wrapped around it. There also would be security cameras with access control installed, which is a standard put into all the County projects. Mike Brown representing Cape Fear Development Partners, LLC (CFDP) in response to questions about plans for disadvantaged business enterprise (DBE) participation, stated he would defer to Bryan Thomas with Monteith Construction to explain the DBE outreach as part of the bid process. Mr. Thomas stated that Monteith Construction has a robust diversity, equity, and inclusion program that is adhered to when bidding the projects. The goal is 20% participation. There will be outreach programs that are done within the community like what his company did at UNCW with three other general contractors for the projects that they are bidding on that facility. The same guidelines would also be used for this type of project. It is a mission for Monteith Construction as a team and as a company for minority participation across the board. Regarding the sequence of events, Ms. Wurtzbacher confirmed that the County had an original project concept, went to LGC and the LGC gave the County notes on some things that it thought could be improved, which the County took to heart. The County purchased the plans and CFDP took the initiative to contact the County about the project. As to what CFDP did after they took that initiative to let the County know they were interested and as to why the County took CFDP seriously when they expressed that initiative to the County, Ms. Wurtzbacher stated that CFDP reviewed the plans and worked with the County on what type of value engineering items were available to reduce the project costs. She explained that value engineering is determining what items that can be taken out of the project costs while giving the County the project it wants. Also, CFDP looked at the private side in terms of what type of development would be on the private side and whether it would work for them. Those things were happening simultaneously. The County has not paid anything to CFDP for those pieces of due diligence. She further confirmed that the same opportunity to take the initiative was available to others in the community, but it was CFDP that ultimately provided that initiative. County Manager Coudriet stated that at the outset of the process, the County also went through a Request for Qualifications (RFQ) that led to the original proposal. There was an organized process when the County bought the plans and the Board was very clear in communicating that if someone had an interest, they were to come forward and staff made that explicitly known. There was not an RFP, but the County has been very publicly deliberate, because that is not how these types of projects are done by statute. There was an extensive solicitation process that ultimately led to the vision that is before the Board. The bidding of the project, the public purposes, will be a public process. It is an open-book process, just as if the County were the bidder on the work itself. Ms. Wurtzbacher further stated that one of the things that the developer also did was to look at the current library to see if it could be renovated and if it was a feasible option. In response to questions about whether a hotel built on the property would be considered part of the convention center district and receive the room occupancy tax (ROT) funds, Ms. Wurtzbacher confirmed that was correct. Regarding additional questions about other companies, businesses, and organizations stepping forward to look at the project, she reiterated that the only one to do so was CFDP. Discussion ensued about the guaranteed maximum price (GMP). Ms. Wurtzbacher confirmed that the current estimate of the GMP is $60.5 million but reiterated that it will be rebid, and final plans will come forward to the County. CFDP has committed to the County that it will not be more than $60.5 million. Commissioner Barfield stated that the County is aware of the benefits it will receive from CFDP being involved in the project based on the purpose-built government center recently constructed by CFDP. The new building will not only enhance the NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 771 streetscape but also blend with the ongoing downtown redevelopment. Due to the significant investments being made downtown by Cape Fear Community College, the City of Wilmington, the County's refurbishment of 320 Chestnut Street, the Live Oak Pavilion project, and the riverwalk extension, the projects collectively are contributing to an improved quality of life for both residents and visitors. He, along with Chair Rivenbark, grew up in the community and has witnessed firsthand the transformative changes taking place in downtown Wilmington. He explained the positive impact of libraries on the community and their versatility and provided a history of how the library branches came to be what they are today in terms of success in the community. He commended the community's strong commitment to libraries and noted the popularity of events like Storytime, particularly at the purpose-built Pine Valley library. He emphasized the distinction between purpose-built libraries and renovated ones, expressing his preference for the former. He drew parallels between the new government center and the proposed project, envisioning it as another component of the ongoing downtown revitalization efforts. He believed that the project, with its event spaces and terraces, would attract visitors and become a noteworthy downtown destination. He also compared this potential project to the development of the Coastline Convention Center, which was the sole event venue for a long time until the construction of a more upscale convention center expanded opportunities for residents. He expressed excitement about the forthcoming redevelopment of Chestnut Street, including new residences which will provide additional rooftops and create favorable conditions for items such as a downtown grocery store, like those in Raleigh and Charlotte, such as the embedded Harris Teeter in downtown Charlotte. He expressed his support for the project and his eagerness to witness its positive impact on the community. Further discussion ensued about the project design. Mr. Brown explained that the plan is to still use the solar panels as part of the canopy. He noted a recent law change from a public entity not being able to take advantage of the tax credits because of not paying taxes to now being able to benefit from a rebate for the translucent solar panels. Ms. Warmuth stated the number of solar panels being planned for will not be enough to generate electricity for the entire building. However, there will be a net positive in terms of what the electrical costs would have been for the facility. Regarding the language in the development agreement referencing 25% of the cost of construction and renovation for the private development and if that was 25% of the $60.5 million, Ms. Wurtzbacher explained that it is supposed to be 25% of all the improvements of the total block. The private side would have to be 25% of the cost of the entire block, which at $30 million is more than the 25% requirement. As to the immersive theater, she confirmed that the product to be installed can be utilized for more than a planetarium. She further confirmed that the tax revenues, increase in property tax, and sales tax from the adjacent areas have not been calculated into the figures at this point. This is strictly the property tax of $30.1 million. Commissioner Zapple stated that he would support the approval of the request. Chair Rivenbark thanked Ms. Wurtzbacher for the presentation, stating that the Board will now hear public comments on the proposed development agreement. Each speaker will have three (3) minutes to provide comments. The following individuals provided comments: Mr. Brown stated he is joined by representatives of LS3P and Monteith to answer any Board questions. CFDP approached the County last November and asked for an opportunity to independently review Project Grace. It was determined by the County that the current library is housed in a 1950s structure and the museum in a 1930s structure, and both were not purpose built for those uses. Buildings do not last forever, and it had been determined that a library and museum solution in downtown Wilmington is critical to the community. The CFDP team felt it was an important project and wanted to see it pursued here in Wilmington, which is their hometown. The team’s study of Project Grace over the past six months has been a two-pronged effort, each component running in parallel with the other. The team has been talking to basically everyone who was willing to talk to them to listen to their concerns as well as listening to the public’s concerns. They have been workshopping new ideas throughout the community, trying to understand specifically what the community wants out of Project Grace. At the same time, the CFDP team has also been thoroughly evaluating the existing plans and project costs. The public outreach discussions have been ongoing and will continue through the completion of the project. The project is a large undertaking and represents a significant investment not only by the County taxpayers but in time invested by County staff, design consultants, and local construction partners. Given that commitment, they wanted to make sure the community was behind the project. The CFDP team has presented to numerous community groups and individuals on the history of Project Grace and asked for their concerns, critiques, and encouragement, whatever the case may be. The groups that have been engaged include numerous rotary clubs, chambers of commerce, Cape Fear Community College leadership, leaders in the faith community, Genesis Block, Wilmington Business Development, Wilmington Convention Center, the Historic Wilmington Foundation, African American Business Council, Wilmington Downtown Inc., and many others. Discussions have also been held with literally hundreds of employers across the County, who represent an employment base that numbers well into the 1,000s in terms of taxpayers and the sentiment across all groups has been extremely positive. He thinks all groups agree that the library needs to be modernized and the museum is lacking in its function and would gain a great deal from being downtown. In addition to presentations and meetings with these groups, there have been numerous meetings and exchanges with Ms. Diana Hill, who represents the Save Our Library Group. She has challenged them to revisit renovating the current library, which they did, and though the conclusion reached is not the conclusion she and her group feel compelled to support the interactions have been very positive. He stated he just wanted to publicly thank Ms. Hill for what has been a very respectful and positive debate, which he thinks is lacking on a lot of issues in public discourse these days. Chair Rivenbark informed Mr. Brown he was out of time. Brian Eckel, representing CFDP, stated he would cede his time to Mr. Brown. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 772 Mr. Brown stated the team also evaluated the project and identified 27 areas of opportunities to reduce costs in the project that equate to approximately $3 to $4 million in cost reductions. The plans are currently being updated and will be competitively bid as mentioned earlier by Mr. Thomas and then the team will return before the Board in July with the numbers. They are also proposing a $3.5 million floor for the purchase of the southern parcel, which is $1 million higher than the previous floor, and then submit themselves to a two-appraisal process of which they will pay the higher of the two appraisals provided they are within 5% of one another. Finally, CFDP is committed to the greater of $30,125,838 on the southern parcel in terms of value or 25%, so 25% under the development ordinance is more like $20 million. As such, the commitment of $30 million exceeds that by almost $10 million. As someone who grew up in Wilmington, he is very proud to be before the Board today and to be involved with this project. He and his team think this would be great for the community and CFDP does appreciate the Board’s time and the consideration of the community. Mr. Brown responded to questions about CFDP looking at taking the library down to the walls and rebuilding it stating that the team looked at the Durham library which was a “renovation”. As with the Durham library, just to meet modern code, basically the library’s structure must be taken all the way down to the concrete deck and then the new building must be reconstructed on top of that. Renovation is a little bit misleading in that it would really be a full reconstruction on top of the core concrete deck within the building, like what happened in Durham, and it would also be an expansion of the facility. The use of the library would be lost for at least 24 months as with an old structure, it is unknown what will be found until the construction team starts on it. There is also the risk of spending public tax dollars on design and predevelopment work, demolishing the building back to the deck, and discovering some hidden structural issues that could cause further cost escalations. Again, the team did look at it, priced it out, and found that the solution on the northern parcel not only provides the ability to have the library be in continuous service but the least costly option. Regarding the ability to use the brick as was done with the WAVE Transit facility to maintain the historical nature, Mr. Brown stated that could be done. Diana Hill, a resident of Klein Road, Wilmington, NC stated she would have liked to use part of her allotted three minutes to address a statement made by Mr. Brown but proceeded to provide a review of the overall situation. She criticized the decision to issue a Request for Proposal (RFP) that mandated the co-location and confinement of the library and museum, believing it hindered developers from designing the best use of the property. Consequently, only one developer, Zimmer, showed interest, but they were only willing to proceed if they could finance the project, which would cost taxpayers an additional $20+ million. She also criticized the decision to amend the MOU in April 2021 to reflect the County paying $2.5 million for the plans if the proposed project was rejected by the LGC. The plans that were purchased following the LGC's disapproval, were rendered ineffective and now, the new developer is burdened by the restrictive RFP and the plans the County purchased. She acknowledged the positive aspect of potential savings of approximately $20 million due to the involvement of a different developer who is not driven solely by personal gain. However, she expressed concern that the proposed course of action would involve abandoning an existing building to construct a smaller glass structure merely 100 yards away. She argued that this approach would perpetuate the concealment of African American history, despite their significant presence in the population prior to 1898 and their subsequent resilience in overcoming obstacles. She further criticized the plan to use the valuable property at the Cape Fear Museum for research and storage, rather than utilizing it to enhance New Hanover County's history. She also raised concerns about the potential limitations on downtown parking availability, increased traffic on a major thoroughfare into downtown Wilmington, and other related issues. She urged the Board not to shortchange residents and encouraged them to discard the existing plans to allow the new developers to showcase their innovation and forward-thinking approach, as they have demonstrated throughout the community. Chair Rivenbark informed Ms. Hill that her allocated time had expired. However, Ms. Hill continued speaking, indicating that she had concluded her main remarks but wished to add that the high cost of renovating the downtown brick library could be attributed to the desire to incorporate windows into the building. She urged the Board to carefully consider its actions. Laurel Taylor, resident of Brandon Road, Wilmington, NC stated she has been involved with Save Our Library on Facebook since its creation. She recently had some out-of-town guests and went on local tours and the tour guides stressed that Wilmington is a city that prides itself on its history and in its renovation and preservation it tore off the pavement to reveal the brick below and keep everything looking historic. She asked why the Board is so insistent on spending $60 million to tear down a serviceable library and build another destination block. Many citizens have voiced an opinion that they do not need or want another set of shops, another downtown hotel, and a token library and museum. They do not want the traffic, or the construction mess, and do not need all the tons of material dragged off to some landfill in the state. There appears to be no answer as to why this project is a favorite child. Chris Boney with LS3P stated that it has been an honor to work on this project for the last several years with the Board and staff. The staff has been exceptional and truly, the Board has one of the greatest staff anywhere in the state if not the country. This project is a passion project. On behalf of his brother, Charles Boney, and the LS3P design team, he stated it has been a great honor to work on it. The Cape Fear team has taken great pains to challenge the LS3P team in ways that they were not before and really push for innovative solutions to find the best bang for the buck for the taxpayers in this situation. They have uncovered and really dug very deep into the project along with Monteith Construction, and he thinks what has come up is a great solution. He thanked the Board for its consideration. Hearing no further public comments, Chair Rivenbark closed the public hearing and opened the floor for Board discussion. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 773 Hearing no further discussion, Chair Rivenbark asked if based on the discussion there was a motion to approve the development agreement between Cape Fear Development Partners, LLC, and New Hanover County. MOTION: Commissioner Barfield MOVED, SECONDED by Commissioner Zapple, to approve the development agreement between Cape Fear Development Partners, LLC, and New Hanover County. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chair Rivenbark stated that the staff is hereby directed to take any and all steps to finalize the development agreement. PRESENTATION OF THE FISCAL YEAR 2022-2023 THIRD QUARTER FINANCIAL RESULTS Mr. Credle presented the following highlights of the Fiscal Year (FY) 2022-2023 third quarter, which includes financial activity through March 31, 2023:  Third Quarter of FY 2023:  Overview:  Property tax rate per $100 of assessed value:  FY 2023 = 45.5 cents  FY 2022 = 47.5 cents  Property tax bills mailed in late July:  Payable by citizens without interest until January 5, 2023  Tax receipt peak period is December - January  Sales taxes:  Received in the third month following the sale:  July-December sales tax receipts were received prior to March 31, 2023 and are included in the accompanying slide  January and February 2023 sales taxes were received in April-May 2023 and are only reflected in the immediately following slide:  General Fund Revenues versus Expenditures:  Revenues of $302.6 million through March 2023 represent 80.9% of total budget (77.8% for prior year)  Total expenditures of $273.6 million represent 67.0% of budget (70.7% for prior year)  General Fund Revenues:  Property tax revenue up slightly, even with the lower tax rate:  98.6% of budgeted property tax received (97.2% in the prior year)  Sales taxes up from $42.4 million in the prior year to $49.4 million in the current year:  56.9% of budgeted sales tax received (51.1% in the prior year)  Other revenues include Investment Income which amounts to $5.8 million 2023 versus $1.7 million in the prior year:  Partially offset by lower Intergovernmental Revenue NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 774  General Fund Expenditures:  Total expenditures of $273.6 million represent 67.0% of the budget (70.7% for the prior year)  Most functions’ actual expenditures are higher than the prior year due to an increase in their budgets  Debt Service Fund Revenues and Expenditures:  Total revenues collected of $48.5 million, or 83.9% of the budget (82.2% in the prior year):  Revenues are primarily property tax and sales tax allocations  Expenditures represent actual debt payments  Transfers from General Fund bridge any gap  Recycling and Solid Waste:  Fund runs under a stand-alone business model:  Fees for services comprise substantially all revenue  Increase in tipping fee has been partially offset by lower tonnage:  287,288 tons in 2023 versus 289,302 in 2022  Revenue of $13.0 million fiscal year to date is lower than the prior year amount of $14.1 million:  Prior year includes $1.7 million in hurricane grants  Expenditures year to date of $15.1 million versus $17.9 million in the prior year:  Capital project expenditures down $4.7 million from the prior year  Fire Services:  Total revenues of $18.0 million through March 31, 2023 represent 89.2% of the budget (79.1% in the prior year)  Revenues are primarily property tax and sales tax allocations  Total expenditures of $15.8 million, or 76.5% of the total budget (71.4% in the prior year)  Stormwater Services:  First full year of this fund running under a stand-alone business model:  First year of the full fee being charged  Fee is included on property tax bill: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 775  Revenue is front-loaded, whereas expenses occur throughout the year  96.5% of the total fee budget has been collected through March 2023  Expenditures of $3.1 million year to date versus $2.5 million in the prior year:  66.1% of the total budget in the current year versus 63.7% in the prior year  American Rescue Plan Act (ARPA) Fund:  $45.5 million received in total  $25.8 million spent to life to date:  $8.1 million spent in the first nine months of FY 2023:  Primarily on physical and mental health initiatives  Substantially all the remaining funds have been earmarked and will be committed by 12/31/24  Other:  Investment Portfolio:  Unrealized losses amount to $30.4 million at 3/31/23:  $4.3 million higher than at 6/30/22  $6.8 million improvement versus 12/31/22  Due to interest rate increases  Investments that are included in unassigned general fund balance have improved by $139,000 since 6/30/22  Credit risk remains sound (no commercial paper holdings)  Will result in unrealized losses reversing and recognized as earnings as the investments approach maturity  Investment income through 3/31/23 = $5.8 million versus budget for total year of $2.6 million:  Expected to result in favorable variance at 6/30/23 of $6+ million Mr. Credle responded to questions stating that as the County has met its budget for debt service, the fourth quarter collections would remain in the debt service fund and be set aside for the next year. As to the eventual closure of the landfill, there will need to be careful planning around closure costs, and he understands that the staff does not need to wait to start planning for the landfill to close. Hearing no further discussion, Chair Rivenbark thanked Mr. Credle for the report. PRESENTATION OF THE FY 2023-2024 RECOMMENDED BUDGET AND FY 2024-2028 CAPITAL IMPROVEMENT PLAN County Manager Coudriet presented FY 2023-2024 Recommended Budget and FY 2024-2028 Capital Improvement Plan (CIP) for New Hanover County (NHC) highlighting the following:  Recommended budget framework:  Priorities set by the Board through its adopted strategic plan and actions:  Superior Education and Workforce  Intelligent Growth and Economic Development  Superior Public Health and Safety  Community and Social Equity  Good Governance  Revenue parameters set by the Board through plan and policy:  Minimize impact on taxes and fees  Maintain fund balance position within policy goal of 18-21%  Ensure good stewardship of the Revenue Stabilization Fund (RSF)  Spending recommendations for major funds:  All funds: $590.8 million  General Fund: $444 million  Fire Services District fund: $36.2 million  Stormwater Services fund: $4.9 million  Recycling and Solid Waste: $25.5 million  Tax rates:  No change  General fund tax rate of 43.1 cents dedicated to the General Fund:  2.4 cents dedicated to the Debt Service Fund  Proposed FY24 rate: 45.5 cents NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 776  Fire Services:  No change from FY 22-23 adopted rate  Proposed FY24 rate: 7.25 cents  Fees:  No change  Stormwater Services:  Fourth year of service in the unincorporated county  Second year full fee charged to residents  Proposed FY24 fee: $5.65/ equivalent residential unit (ERU)/month  Recycling and Solid Waste:  $2 surcharge for the State of North Carolina  $2 surcharge for interfund loan payback  Proposed FY24 fee: $52/ton  General Fund revenues:  Ad valorem: $229.2 million:  Tax base: $50.6 billion (3.55% increase)  Ad valorem rate of 45.5 cents ($0.431 General Fund, $0.024 Debt Service Fund)  Value of penny: $5,036,969  Sales taxes: $116.2 million:  Assumes no growth over FY23 year-end estimates, compares to 6.5% growth over FY22 year-end projection for FY23 adoption  Currently collected 8.2% over FY23 budget estimates  Fund Balance: $5.8 million:  Uses a portion reserved for future capital projects and capital outlay, above the 21% policy limit  All uses are one time money for one-time or time limited expenses  Mental Health and Substance Use Fund: $5.3 million (initial spend - consistent with Board- approved strategy):  Interest: $2.1 million  Principal: $3.2 million  Revenue Stabilization Fund: $9.9 million (all interest):  $6.5 million (community building)  $3.4 million (replace portion of lost revenue from FY23 tax cut)  Historical Tax Base:  Historical Tax Rates: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 777  General Fund Sales Taxes:  General Fund Expenditures:  New Hanover County Schools:  Assumes 27,432 students across the traditional k-12 system and charter schools  Total appropriation: $129.1 million  29.1% of General Fund budget  Transfers between purpose/function of 10% or greater will require Board approval  Historical school funding comparison:  Historical funding per pupil (ADM Rate):  Cape Fear Community College (CFCC):  Operating: $12.4 million (8.9% increase)  Capital: $1.9 million (-8.0%)  Debt Service: $10 million (-3.1)  Total: $24.4 million (2.2% increase)  General Fund strategic enhancements:  Superior Education and Workforce:  Northchase Library construction: $8.4 million  Additional NHCS Capital: $6 million  CFCC Capital: $1.9 million + new nursing building purchase and renovations  Good Governance:  Technology advancements - $1.2 million:  Customer and professional services NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 778  Cybersecurity and ransomware protection  Intelligent Growth and Economic Development:  Various Park improvements - $8 million:  North and South College Road Trails  Smith Creek Park  Echo Farms expansion  Gordon Road Sidewalk/Trail  Trails End Pier/Kayak Launch  Ogden Park Playground replacement Regarding questions about the cost estimate for the connection between Monkey Junction and Pleasure Island, County Manager Coudriet stated there is not a need to pass a quarter-cent sales tax because of the existing Cross-City Trail, along with the Board’s priority of Monkey Junction north, staff felt it was possible to attain pedestrian connectivity from Fort Fisher to Riverside Park in Castle Hayne. It was imagined that the Monkey Junction south portion including the buildout of some systems in Carolina Beach and Kure Beach, would have come through the quarter-cent sales tax. The quarter-cent sales tax did not pass and based on discussions with the Board, staff will find a way in future CIPs to make that a priority. He noted that part of the quarter-cent sales tax was to help both beach towns with the maintenance of the greenway trail and building it to Monkey Junction.  Superior Public Health and Safety:  Health and Human Services - $1.3 million:  17 full-time positions, Medicaid Expansion, Mental Health and Substance Use Strategy, and Public Health professional services  Public Safety - $2.7 million:  Range replacement and equipment storage, 911 ethernet conversion, Emergency Services Communications Coordinator, and Public Safety Technology Supervisor and professional services  Non-County Agencies:  Social Impact funding ending FY23  Vendor status: one (1) program transitioned to vendor status in FY23 - $13,500  Non-County Agencies – Human Services: County Manager Coudriet stated that the Bread for Life Senior Panty program transitioned to vendor status. He requested that Non-County Agency Funding Committee (NCAFC) member Clare Kiley present the information on the NCAFC’s recommendation. Ms. Kiley provided the following overview of the process and recommendations:  NCAFC committee members: Shane Hartley, Buddy Brooks, Elizabeth DeBiasi, Gail Eddie, Randy Reeves, and Clare Kiley  Committee steps to improve process:  Modify applications based on key learnings  Provide training to non-county agencies on application and process  Survey non-county agencies  Review Process:  Read/review applications  Review of agency mid-year performance reports and funding history  Discuss appropriate bucket and scoring rubric  Individual scoring and questions to agencies  Question responses and final aggregated scores  Discussion and allocation decisions  Scoring Rubric, seven scoring categories:  Alignment with New Hanover County strategy and goals  Request aligned with agency mission  Request aligns with agency capability  Collaborative efforts associated with program/service  Impact of program – multiplier  Demonstrated impact of program – outcome  Degree augments or fills a New Hanover County gap in service  Evaluation:  Programs scored individually by committee members and aggregated  Discussion about areas of difference in scoring and key drivers  Approximately 100 hours of committee time spent on the process  Objective rating instrument/rubric:  Seven pre-identified criteria NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 779  Each criterion scored on a four-point scale  Equally weighted (max score 28)  Subjective Rating:  Overall rating that allows committee to capture other attributes not easily quantifiable or that may not be broadly applicable  Scored on a four-point scale (max score four)  Fund this:  Organizations that deliver a program or service  Supplies, tools, contract services, and other materials for staff to deliver programs  Salaries for staff directly providing services to clients/patients/participants, etc.  Not that:  Intermediaries/pass through organizations (receive funding and then redistributing it to other organizations)  Marketing money  Capital expenditures (buildings/vehicles)  Administrative salaries/administrative overhead  Funding Recommendations:  Tier 1 recommendations:  Tier 2 funding recommendations:  Tier 3 funding recommendations: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 780  Totals: *Eligible Funding – Items requested for funding that are ineligible have been deducted such as salaries for positions and overhead expenses not directly tied to service delivery, marketing, and pass throughs  Next Steps:  Survey non-county agencies re: process; incorporate feedback into FY24 process  Modify non-county agency application based on key learnings  Review scoring rubric and consider changes to evaluation criteria  Continue training for non-county agencies on the application process and in-year reporting  Set due dates and calendar for FY25 process Ms. Kiley responded to questions stating that the committee understood that the Board wanted all the funds allocated but a decision was made to be as equitable as possible in how the funds were distributed amongst the applicants. The funding tiers were set at 90%, 75%, and zero funding based on the committee’s evaluation of the applications. Again, the committee’s goal was to be equitable in the distribution of the funds. Discussion ensued on how the allocation determinations were made and the amount of funding available for FY24. As to how the $1.5 million budget was determined, County Manager Coudriet stated there are general parameters that are set year in and year out. Staff do their best to model what the prior year adopted amount was and view that the Board does not set the cap, but the allocation when it adopts the budget. Based on that, staff feels it is a prudent course because the Board included $1.2 million in capacity building in the same fiscal year for perhaps some of the same nonprofits. If accepted by the Board, the $1.2 million will continue to be repeated on an annual basis. He further confirmed that the $1.2 million were grants that were funded by the County and released by United Way. Ms. Kiley stated that each year the committee has a lot of discussion about how to improve the process. There is no perfect grant application, and no organization says the application form is completely perfect. The NCAFC members are very open about looking at changes and improving the application so that questions are answered. Discussion has been held about having larger organizations mentor the smaller organizations that do not have a person on staff with expertise in grant writing. She thinks some organizations might be willing to do that, which is why collaboration was a big part of what the NCAFC looked at to see what has been done in terms of outreach. County Manager Coudriet responded to questions confirming that in accordance with state law, the Board will have to go through the recusal process to excuse each board member from deliberation and voting on appropriations and expenditures for the non-county, economic development, and social impact agencies due to a conflict of interest. Staff will help the Board work through the unwieldy process.  Economic Development Agencies:  $197,652 for year three of a three-year plan to the Greater Wilmington Chamber of Commerce for business retention, expansion, and recruitment  $292,782 for Wilmington Business Development  $100,000 for Wilmington Downtown Inc.  $154,752 for the Wilmington Regional Film Commission  $100,000 for the Arts Council of Wilmington and New Hanover County  Recycling and Solid Waste Fund:  Revenues:  $52 per ton tipping fee (includes $2 state surcharge): no increase  $48 per ton from FY17-18 to FY21-22  FY23: $2 to repay General Fund loan + $2 new litter program  Expenses:  Total budget: $25.5 million  Capital projects: $8 million NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 781  Capital outlay: $2.3 million (vehicle and equipment replacements)  Fire Services District Fund:  Revenues:  Recommended tax rate: no change  7.25 cents per $100 of value  Expenses:  Total budget: $36.2 million  Capital projects: $15.5 million (Castle Hayne + Gordon Road Fire Station)  Capital outlay: $1.5 million (engine, vehicle replacements, and equipment)  Stormwater Services:  Revenues:  Annual $67.80 Stormwater Fee: ($5.65/ ERU/month)  No change in fee  Expenses:  Total budget: $4.9 million  Capital outlay: $1.3 million (equipment and other improvements)  Fourth year of stormwater program in unincorporated county  Second year of the full fee charged to residents  Community Building Initiative:  Funding plan initially adopted January 2022  FY24: second full year of operations  13 programs/initiatives across four priorities  $11.8 million spending plan  Funding sources:  ARPA funds: $3.9 million  Escrow funds: $6.5 million (interest only)  Fund balance: $1.4 million  Mental Health and Substance Use Disorder Strategy:  Strategy adopted September 2022  FY24 - first full year of operations  10 programs/initiatives across three priorities  $9.2 million spending plan  Funding sources:  Opioid Settlement Funds - $1.5 million  Escrow Funds - $5.3 million  Donations/Grants - $2.4 million NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 782  Personnel recommendations:  General Fund: 25 new full-time:  Five dedicated to Mental Health and Substance Use Disorder Strategy  Stormwater Services: one new full-time position  Recycling and Solid Waste: three new full-time positions  $2.5 million salary lag  FY23-24 Recommended Budget in summary:  General and Debt Service Funds:  No change to Property Tax Rate - FY 24 recommended at an assessment rate of 45.5 cents:  43.10 cents for the General Fund  2.40 cents for the Debt Service Fund  Fire Rescue: no change – FY24 recommended at 7.25 cents  Recycling and Solid Waste: no change to tip fee - FY24 recommended at $52/ton  Stormwater Services: no change - $5.65 per ERU/month  Doing what we do better: enhancements concentrated on operational performance, personnel enhancements focused on Public Health and Safety  Invests in greatest asset, our people: implementation of third-party pay study recommendations and cost of living adjustment to match Consumer Price Index (CPI)  Investments for growth: Last Frontier infrastructure, North Chase Library, two fire stations  Implementation of Mental Health and Substance Use Disorder Strategy: The Healing Place, Robin Hood, multiple substance use and mental health programs, mental health clinicians  Continued emphasis on community building: $11.8 million in total - $1 million for career and technical certification programs added, $1.4 million for boarding school  Continued strong support of education:  NHCS - $129.1 million (6.3% increase), plus school resource officers, school nurses, mental health therapists, and teacher incentives  CFCC - $24.4 million (2.2% increase), plus $3.6 million in renovations to the recent county- purchased building  Helping the community/partners: two CFPUA clean water initiatives, Tourism Development Authority, WAVE, economic development, non-county agency funding, capacity building grants  FY23-24 Recommended Budget in summary - $590.8 million total spending:  Next Steps: th  Public hearing scheduled for Monday, June 5  Board debate and direction to staff thth  Budget adoption between Monday, June 5 and Monday, June 19 County Manager Coudriet responded to questions confirming that the Senior Resource Center (SRC) new roof cost would be $500,000. When the renovation was done, the condition of the roof did not suggest a replacement was necessary. Time has proven that there is rot that needs to be addressed. Ms. Warmuth stated the SRC roof has a severe overhang that provides a covered walkway at the front entrance. She reiterated that when the renovation of the facility was done a couple of years ago, the roof was in perfectly good condition. The design should be completed this week. Due to having to remove the roof, the plan is to build it up to open it up a bit more and allow more natural light through the windows. In response to questions on employee compensation, County Manager Coudriet explained that for full-time employees, the pay and classification study recommends a 4.7% increase on average, but no one will receive less than 1.25%. There is also a recommendation of a 5.5% CPI. Part-time employees’ wages would also be addressed. If the Board accepts the recommendation, the minimum living wage would be $17 per hour. As to the 20% reduction in Public Safety, there are likely significant capital items (one-time costs) across Public Safety that are not necessary NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 783 to be carried forward in the new year. He noted that Public Safety includes a collection of departments, including Building Safety. The continuation budget funds are not being taken out of Public Safety. As to the County’s contribution to Trillium, the overall appropriation did not go up to bring The Healing Place online. The Board and Trillium’s governing board agreed that with the current appropriation, the amount of debt service could be redirected from Trillium into it, which is what is reflected in the recommended budget. It is the same amount of contribution but more because of buying beds and it is in support of The Healing Place. Regarding questions on the rate reduction subsidy, County Manager Coudriet stated that he thinks that the subsidy this year of $3.4 million is illustrative of the fact that organic growth is increasing because it should be $10 million. As the base continues to grow, he suspects next year the subsidy will be less or none. When the Board agreed to cut taxes, it did not direct a reduction in spending because it still wanted to present the same policies and the new things it directed be done. The County is trending in the right direction to not use interest. A general discussion ensued about the need to increase efforts to educate the public on what the County does in terms of school funding and about the teacher fellowships it funds every year. Commissioner Barfield stated that he would like the Future Teacher Scholarship Signing Ceremony to be held at a Board meeting. County Manager Coudriet responded to questions stating that there would be two public hearings; one for economic development and economic incentive appropriations and one for the recommended budget. He further stated that staff would provide the Board additional information on what the County funds beyond the $129 million for current expense, capital, debt service, and pre-k classrooms for the school district. Hearing no further discussion, Chair Rivenbark thanked County Manager Coudriet for the presentation. COMMITTEE APPOINTMENTS Appointment to the Lower Cape Fear Water and Sewer Authority Chair Rivenbark reported that one vacancy exists on the Lower Cape Fear Water and Sewer Authority with one applicant eligible for reappointment and three applicants eligible for appointment. Commissioner Scalise nominated Harry M. Knight for reappointment. Commissioner Zapple seconded the nomination. Hearing no further nominations, Chair Rivenbark called for a vote on the nomination on the floor. Vote Results: The Board voted UNANIMOUSLY to reappoint Harry M. Knight to the Lower Cape Fear Water and Sewer Authority with the term to expire May 31, 2026. Appointments to the New Hanover County Commission for Women Chair Rivenbark reported that three vacancies exist on the New Hanover County Commission for Women with one applicant eligible for reappointment and nineteen applicants eligible for appointment. Vice-Chair Pierce nominated Sheila Evans for reappointment as well as Lindy Ford and Tracey Newkirk for appointment. Commissioner Scalise seconded the nominations. Commissioner Zapple nominated Jillian Hopman. Hearing no further nominations, Chair Rivenbark called for a vote on the nominations on the floor. Vote Results: The Board voted UNANIMOUSLY to reappoint Sheila Evans to the New Hanover County Commission for Women to serve a three-year term with the term to expire May 31, 2026. Vote Results: The Board voted in the majority to appoint Lindy Ford to the New Hanover County Commission for Women to serve a three-year term with the term to expire May 31, 2026. Chair Rivenbark, Vice-Chair Pierce, Commissioner Barfield, and Commissioner Scalise voted in favor. Vote Results: The Board voted UNANIMOUSLY to appoint Tracey Newkirk to the New Hanover County Commission for Women to serve three-year terms with the terms to expire May 31, 2026. PUBLIC COMMENTS ON NON-AGENDA ITEMS Chair Rivenbark stated that one person signed up to speak on non-agenda items and invited the person to make remarks. Gail Major, a resident of Canal Drive, expressed her concerns about a grievance filed against the school district about books that are allowed to be accessed by pre-K to grade 12 students as well as its individualized education program (IEP). She does not feel children in the IEPs are being taught by federally mandated and correctly trained teachers. ADDITIONAL AGENDA ITEMS OF BUSINESS NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 REGULAR MEETING, MAY 15, 2023 PAGE 784 Commissioner Barfield stated that the County Commissioners have no jurisdiction over the New Hanover County Schools Board of Education (BOE). He encouraged the public comment speaker to have a conversation with the BOE, as it is an elected board, regarding her issues. As noted earlier during the recommended budget presentation, the Board has no ability to determine outside of function and purpose, how funds are moved around within the school district budget. Commissioner Scalise stated that he wanted to reiterate that the recommended budget does not include a tax increase of any kind. ADJOURNMENT There being no further business, Chair Rivenbark adjourned the meeting at 12:04 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the New Hanover County Board of Commissioners meeting. The entire proceedings are available online at www.nhcgov.com.