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HomeMy WebLinkAbout2025-08-14 Agenda ReviewNEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 612 ASSEMBLY The New Hanover County Board of Commissioners met on August 14, 2025, at 4:00 p.m. for Agenda Review in Conference Rooms 138-139 at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chair Bill Rivenbark; Commissioner Dane Scalise; Commissioner Stephanie A.C. Walker; and Commissioner Rob Zapple. Absent: Vice-Chair LeAnn Pierce. Staff present: County Manager Chris Coudriet; Clerk to the Board Kymberleigh G. Crowell; and County Attorney K. Jordan Smith. Chair Rivenbark called the Agenda Review meeting to order, explaining that the purpose was to review and discuss agenda items for the August 18, 2025 Regular Meeting. However, the Board would first hear a staff update. STAFF UPDATE Chief Financial Officer Eric Credle introduced Amy Vitner, Managing Director at First Tryon Securities, noting that Ms. Vitner works with the County on debt issuances, and then presented the following information about the County’s debt capacity:  New Hanover County Debt Capacity:  Types of debt:  General Obligation Bonds:  Backed by full faith, credit, and taxing power of the county  County is required to assess a tax rate that provides for the full repayment  Requires voter referendum  Must be issued within seven years of voter approval; can be extended by three years with Local Government Commission (LGC) approval  Limited Obligation Bonds (LOBs) / Bank Debt:  Subject to annual appropriation in the county budget  Bondholders have limited rights in the event of default  Not voter-approved  LOBs generally carry a one notch lower bond rating, and the interest rate is generally 20- 25 bps higher vs. General Obligation Bonds  Outstanding debt as of June 30, 2025:  Premium on debt:  Generally included in debt outstanding amount in prior discussions:  Classified as a liability in notes to financial statements  However, commonly excluded in the analysis of debt outstanding:  Excluded on all remaining slides  Current status vs. Debt Policy:  Based on debt outstanding at 6/30/25 = $411,486,945 (Par Value)  Total debt capacity based on $2,200 per capita = $541,360,600  (1) Based on the population of 246,073 at 6/30/25 - Source demograph.osbm.nc.gov  (2) Based on Assessed Value of $81,428,360,000  (3) Based on FY26 Debt Service of $63,633,469 & Net Budgeted Expenditures across all funds of $552,640,614 NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 613  Principal paydowns by year:  Debt Per Capita Peers (as of FY 2025):  Debt Per Capita Policies:  Provided below are some example debt per capita policies for North Carolina entities  Many entities do not have a formal debt per capita policy, though some policy documents note that the metric is tracked internally as a benchmark  The County’s policy is in line with others in this group:  Debt to Assessed Value Peers (as of FY 2025): NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 614  Recent NC School GO Referendums – all passed: In response to questions, Mr. Credle noted that Johnston County is nearly the same size as New Hanover County, with a population of 241,000. County Manager Coudriet stated the County ranked around 14th in population after the 2020 Census, noting counties such as Union and Gaston have since grown larger. He also noted that the presentation is about debt capacity, not tax rate projections.  Recent history of NHCS/CFCC General Obligation Bond issuances:  New Hanover County School capital needs:  New Hanover High School only:  Other identified needs: During a brief discussion, Mr. Credle responded to questions stating that the school system believes the figures are based on the latest information available. However, some costs may need updating before the January 31 deadline. County Manager Coudriet added that he did not believe additional property purchases were necessary. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 615  Capital Projects requiring debt: In discussion about future capital projects requiring debt, County Manager Coudriet responded to questions stating that there is no definitive answer for the Cooperative Extension yet, as several plans exist. A clearer recommendation would come closer to the design phase. Mr. Credle confirmed in response to questions that the landfill had not been included as a category. He noted it could replace one of the placeholders, since there was no explicit line item for it. In response to concerns about the closure of the existing landfill and its remaining 20-year capacity, he confirmed that a single storm could shorten that timeframe. In response to a question about how capital projects fit into the bond discussion, Mr. Credle explained that some capital must be reserved for county projects in addition to the schools. He noted that the placeholders illustrate this reserve, which reduces the otherwise available debt capacity for schools. He emphasized his intent was to reflect the amount being held for County needs.  Debt Scenarios: County Manager Coudriet commented on the debt scenario slide that the numbers show the County’s total debt capacity over 10 years, and Mr. Credle suggests reserving about $450 million for the County. The figures to the right represent the school system’s allocation, added on top of the $450 million. In scenario two, that equals $450 million for the County plus $233 million for the schools, for a total of $683 million in debt capacity over 10 years.  Baseline – no new GO Bond issuance:  Scenario 1 - $137 million of new GO Bond issuance: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 616  Scenario 2 - $233 million of new GO Bond issuance:  Scenario 3 - $300 million of new GO Bond issuance:  Scenario 4 - $400 million of new GO Bond issuance:  Scenario 5 - $400 million of new GO Bond issuance: In further discussion about the debt scenario slides and whether additional funds should be added to the debt capacity figures, County Manager Coudriet and Mr. Credle explained that only one scenario would be chosen, with $455 million reserved for County projects and separate scenarios for school needs. Mr. Credle reviewed debt capacity projections, noting debt per capita would peak at $1,787 in 2034, within policy limits. He outlined options of $137 million for renovations, $233 million for a hybrid plan at New Hanover High School, or higher amounts for additional projects. Commissioner Scalise highlighted that each scenario stood alone as he understands it, and the Board must decide whether the bond should address only New Hanover High School or broader school needs. County Manager Coudriet added that once the amount for New Hanover is determined, other projects could be layered in, which might require adjusting debt policy. Commissioner Scalise noted that under a $300 million bond, the hybrid plan would leave $67 million for other projects, while the renovation plan would leave $163 million. Chair Rivenbark stressed safety at New Hanover High School as the top priority, with Mr. Credle confirming $137 million would address that, while there was discussion on the differing interpretations of whether the hybrid was a phased expansion or a distinct option. Assistant Superintendent – Operation Dr. Rob Morgan stated that, for clarification, the hybrid model is more extensive than the $137 million renovation plan, involving new additions, property acquisition, and expanded facilities, while the $233 million option would add new buildings on the existing site. He confirmed that the $137 million plan does not include new buildings. County Manager Coudriet noted the hybrid achieves many of the same functional improvements, such as a new cafeteria, perimeter security, and improved ingress/egress, as the renovation plan, with some additions. Dr. Morgan reiterated that new buildings in the hybrid model are essentially additions. County Manager Coudriet reiterated the earlier comment that both boards must first decide how much to allocate to New Hanover before selecting other projects from the broader list, which will NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 617 determine the bond size while preserving $450 million for County needs. As to the $5 million identified for Porters Neck Elementary, Dr. Morgan explained the funds would replace mobile units currently in use. In review of scenario 3, County Manager Coudriet noted that it illustrates how adding roughly $700 million in County and school debt would impact policy limits, reiterating the need to view the bond question as broader than New Hanover High School. Mr. Credle explained that under a $300 million scenario for schools, debt per capita would rise above the current $2,200 policy limit in 2034 due to a placeholder for a $240 million major project but remain under $2,500 before returning to compliance by 2037. He outlined similar sensitivity analyses for $400 million and $500 million scenarios, which push debt above policy limits longer but eventually return within range. As to the 2034 spike, County Manager Coudriet and Mr. Credle clarified it reflected a placeholder for a major capital project, such as a jail, with the amount serving as a proxy for future large-scale needs. While it was noted that the year was chosen somewhat arbitrarily, County Manager Coudriet emphasized the need to anticipate significant projects over the next 10–15 years and to preserve capacity for obligations beyond the schools, including County needs and potential community college facilities.  Projected annual Debt Service requirements: In review of the projected annual debt service requirements, Mr. Credle explained that the current debt service in 2026 is about $63 million. He noted an increase to $71 million would equal roughly one cent on the tax rate and said adjustments would likely be needed only if debt service rose above $65–70 million. Most scenarios indicate a possible rate change around 2035, or earlier under higher issuance levels. The options to address exceeding policy limits could include temporarily raising the per capita threshold, borrowing from the Revenue Stabilization Fund with repayment later, or phasing a major project, such as the jail expansion, to smooth out costs.  Other considerations:  Strategies for 2034 in $300 million and greater scenarios:  Raise Debt Per Capita Policy Limit  Borrow from the Revenue Stabilization Fund  Jail expansion in phases  General Obligation Bond calendar: As to why counties such as Guilford and Union place bonds on the ballot more frequently, Mr. Credle and Ms. Vitner stated they did not know specifically, while noting that those were school bonds and may have reflected changing needs. County Manager Coudriet added that counties often balance affordability with community support and sometimes pursue bonds in close succession. Commissioner Zapple recalled the Union County school system’s 2022 lawsuit against its county as a factor in one bond issuance, and Ms. Vitner pointed to inflationary pressures after COVID as another possible cause. As to whether inflation was accounted for in New Hanover High School’s estimates, Mr. Credle confirmed that inflation was built into the estimated numbers. As to what would happen if voters rejected a bond, Commissioner Scalise noted that while outcomes are uncertain, approval by the LGC would not be a problem if voters supported it. Commissioner Zapple emphasized the importance of spreading the school projects strategically across the County. As to whether the school system had unspent project funds, Dr. Morgan reported that it does not, as current projects were underway, and funds were being spent down. Mr. Credle confirmed the same. Commissioner Scalise stated he looked forward to the school system outlining its priorities but cautioned that financial limits would require weighing whether to devote most bond funding to New Hanover High or to other needs. As to whether an option existed between the $137 million and $233 million scenarios for New Hanover High, Dr. Morgan said the plans were interconnected and could not easily be broken apart. Chair Rivenbark suggested new schools in growth areas should be designed with expansion in mind, such as larger cafeterias, to reduce future costs. Hearing no further discussion, Chair Rivenbark moved the meeting into the review of the agenda items for the August 18, 2025 Regular Meeting. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 36 AGENDA REVIEW, AUGUST 14, 2025 PAGE 618 Regular Agenda Item #14: Text Amendment Request (TA25-03) - Request by New Hanover County to amend Articles 3 and 4 of the New Hanover County Unified Development Ordinance to change the approval process for Additional Dwelling Allowances from quasi-judicial to legislative. In response to questions, Planning and Land Use Director Rebekah Roth explained the amendment would change the review process from quasi-judicial to legislative, making it easier for residents to engage. She noted the current process was created before zoning districts allowed comparable density and that staff have received feedback suggesting the change would improve public input. The Planning Board members ultimately recommended approval but raised concerns about potential conflicts with recent downzoning legislation. Ms. Roth said the County Attorney’s Office and the UNC School of Government reviewed the proposal and found no violation. She added that the City of Wilmington’s attorney reached the same conclusion when the City’s Planning Commission considered a similar change. She clarified the amendment applies to additional dwelling allowances for increased density, not accessory units such as in-law suites or backyard apartments. ADJOURNMENT There being no further discussion, Chair Rivenbark adjourned the meeting at 5:03 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.