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HomeMy WebLinkAboutAgenda - 06-21-2011 - 8f1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 21, 2011 Action Agenda Item No. SUBJECT: Resolution to Further Clarify the Intent of the Orange County Board of County Commissioners Regarding the Uses of Funds Generated by the Article 46 One-Quarter (1/4) Cent Optional Sales and Use Tax if Approved by Voters in November 2011 DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: 1.4/5/11 Resolution Calling For A Frank Clifton, 919-245-2300 November 8, 2011 Special Advisory Michael Talbert, 919-245-2153 Referendum Concerning The Levy of AOne-Quarter-Cent County Sales and Use Tax 2. 4/19/11 Resolution Regarding Uses of Potential Revenues from aOne- Quarter Cent ('/4) County Sales and Use Tax 3. 5/18/11 Letter from the Orange County Schools Board of Education 4. 6/21/11 Draft Resolution Regarding Uses of Potential Revenues from a One-Quarter Cent ('/4) County Sales and Use Tax 5. Proposed Economic Development Uses of Sales Tax Proceeds PURPOSE: To consider a resolution to more clearly and firmly establish a commitment by the Board of County Commissioners to authorize the use of funding generated by the Article 46 one-quarter ('/4) cent optional sales and use tax if approved by voters in the manner and for the purposes stated herein in accordance with guidelines established and approved by the Board of Commissioners. BACKGROUND: (A) Since the Board of County Commissioners decided. to move forward with a fall referendum on the Article 46 '/4 cent sales and use tax via resolution adopted April 5, 2011 (Attachment 1), the Orange County Schools Board of Education has requested further clarification of two points highlighted in its letter dated May 18, 2011 (Attachment 3). The first issue is the distribution methodology of that portion of sales tax revenues dedicated to educational use between the two school systems. (Basically, define "equitable".) 2 The second issue relates to a clarification and commitment that these new revenues not be used to supplant existing county revenues for similar purposes. (Board of Commissioners to decide?) On April 19, 2011 the Board adopted A Resolution Regarding Uses of Potential Revenues from a One-Quarter Cent ('/) County Sales and Use Tax (Attachment 2). The resolution established a ten-year commitment to allocate 50% of the funding to the County's two school systems and 50% of the funding to Economic Development initiatives. The Board requested that each school system furnish the Board of Commissioners with a detail list of prioritized projects that could be completed with anticipated funding over the next ten years. As of this date, the detailed list from each school system has not yet been received. (B) It may also be helpful to further educate voters on how the one-quarter ('/4) cent sales tax revenues will be allocated and to further explain the County's efforts related to Economic Development. The Manager recommended the following allocation of funds for Economic Development initiatives. The Board may want to further outline its priorities from some outlined below: 1. 60% of the funding would be allocated utility infrastructure; 2. 20% of the funding would be allocated to recruit and locate new businesses in Orange County; 3. 10% of the funding would be allocated to small business loans to help existing businesses expand; and 4. 10% of the funding would be allocated annually to Economic Development initiatives approved by the Board, including but not limited to innovation centers to provide space for new start-up businesses, funding support for the County's agricultural businesses, and Business Investment Grants. Attachment 4 is an updated Draft Resolution Regarding Uses of Potential Revenues from a One-Quarter ('/4) Cent County Sales and Use Tax. The Draft Resolution addresses the questions raised by the Orange County Schools Board of Education and provides greater detail related to funding for Economic Development initiatives. Updates are noted in bold. Economic Development Director Gary Shope has provided alternative uses and focus areas regarding the potential uses from aOne-Quarter ('/4) Cent County Sales and Use Tax outlined in Attachment 5. This information is furnished to allow the Board to consider all available options as to how best utilize possible funds from aOne-Quarter ('/4) Cent County Sales and Use Tax to support economic development in Orange County. FINANCIAL IMPACT: There is no direct financial impact from these the decisions. It is important that voters favorably consider the one-quarter ('/4) cent sales tax if the issues discussed previously are to be pursued. RECOMMENDATION(S): The Manager recommends that the Board consider the draft resolution to clarify questions from the Orange County Schools Board of Education and define priorities if new funds become available to support economic development. If the Board approves a resolution, authorize the Chair to sign the resolution as amended and approved. The Manager further recommends that the Board direct the Clerk to the Board to send a copy of the final resolution to the Orange County Board of Education. R~~~151i1 RES- aot~-oas ORANGE COUNTY BOARD OF COMM1SSfONERS RESOLUTION CALLING FOR A NOVEMBER 8, 2011 SPECIAL ADVISORY REFERENDUM CONCERNING THE LEVY OF AONE-QUARTER CENT (1/4¢) COUNTY SALES AND USE TAX -~ WHEREAS, the North Carolina General Assembly has enacted the "One-Quarter ~~ Cent (1/4¢) County Sales and Use Tax Act," Article 46 of Chapter 105 of the North Carolina General Statutes (Session Law 2007-323), which authorizes counties to levy a local sales and use tax; and WHEREAS, in order to levy the local sales and use tax, the County of Orange must conduct an advisory referendum in accordance with the provisions of the North Carolina General Statutes Section 163-287; NOW, THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners that: Section 1: In accordance with the North Carolina General Statutes, a special advisory referendum is hereby called to be held between the normal time the polls are open on Tuesday, November 8, 2011, at which there shall be submitted to the qualified voters of the County of Orange the question set forth in Section 3 of this Resolution. Section 2: The Orange County Board of Elections shall conduct said Referendum. Section 3: The ba{lot question shall be in the following form: [ ]FOR [ ]AGAINST Local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other State anct local safes and use taxes. Section 4: The Clerk to the Board of Commissioners is authorized and directed to transmit acertified copy of this Resolution to the Orange County Board of Elections within three (3) days after the passage hereof. Section 5: The Board of Elections shall publish legal notice of the special advisory referendum in accordance with North Carolina General Statutes Section 163-28.7. Section 6: This Resolution shall take effec# upon its passage. 4 ADOPTED this the 5t" day of April , 2011. f ~R I t ~ RES - 2011 - 033 ORANGE COUNTY BOARD OF COMMISSIONERS A Resolution Regarding Uses of Potential Revenues from aOne-Quarter Cent (1/4¢) County Sales and Use Tax WHEREAS, there are significant pressing infrastructure, economic development, school, and other County capital needs that are precipitated by growth pressures and the new economic reality facing Orange County; and WHEREAS, it is important to provide Orange County taxpayers with alternatives to the pressure to raise property taxes to address these and other County needs; and WHEREAS, the levy of a Article 46 one-quarter cent (1/4¢) County sales and use tax would provide a new County revenue source and would generate approximately $2,500,000 annually for the County; and WHEREAS, it is important for Orange County to plan for future economic development that will enable the County to recruit, retain, grow, and generate businesses and jobs that are desirable; and WHEREAS, it is important that Orange County .expand collaboration and cooperation of economic development efforts and decisions between- Orange County and the towns of Chapel Hill, Carrboro and Hillsborough and the cities of Mebane and Durham; and WHEREAS, it is important for Orange County to meet public school needs; and WHEREAS, the Board of Commissioners establishes aten-year commitment to allocate ArticlE 46 one-quarter cent (1/4¢) County sales and use tax proceeds as follows: a. 50% of the funding wilt be allocated in an equitable manner between the County's two school systems for the dedicated purpose of funding capital projects, including but not limited to facility improvements at `older' schools and the procurement of technology. The Board requests that each school system furnish the Board of Commissioners with a detailed list of prioritized projects that could be completed with anticipated funding over the next ten years. The Board will evaluate the projects and approve aten-year plan which will be incorporated into the County's Capital Investment Plan. As part of the Capital Investment Plan annual review, progress will be evaluated annually and adjustments made according to needs agreed upon by the School Boards and Board of County Commissioners; b. 50% of the funding will be allocated to Economic Development initiatives including but not limited to: funding utility infrastructure needed to recruit and locate new businesses, small business loans to help existing businesses expand, innovation centers to provide space for new start-up businesses, funding support for the County's agricultural businesses, and Business Investment Grants. The Board of Commissioners will approve aten-year Economic Development Plan as part of the County's Capital Investment Plan; and 6 WHEREAS, if additional funding does not come from the one-quarter cent (1/4¢) County sales and use tax, the property tax will be the primary funding source available for schools and economic development initiatives; and WHEREAS, to distinguish and separate the revenues produced through this '/4 cent sales tax, if approved by Orange County voters, a Special Revenue Fund will be established to receive and account for the sales. tax revenue. These funds will remain separate from the County's general fund to allow for more accurate tracking of revenues and expenditures in accordance with initial ten-year allocation plan established as part of this resolution; NOW, THEREFORE, BE IT RESOLVED THAT the Orange County Board of Commissioners hereby states its intent to use the revenues from the Article 46 one-quarter cent (1/4¢) County sales and use tax, if approved by the voters of Orange County, for currently unfunded or underfunded economic development and public school capital needs for a period of ten years, with a scheduled implementation date of April 1, 2012. BE IT FURTHER RESOLVED THAT proceeds from the one-quarter cent (1/4¢) County sales and use tax in later years will be used to address priorities as established by the Board of Commissioners in the County's Capital Investment Plan. This the 19th day of April, 2011. Bernadette Pelissier, Chair Orange County Board of Commissioners Orange County Board o~ Education Board Mernbers: Tony I4'I. McKnight, Chair Donna Coffey, Vice Chair Eddie I4I. Eubanks Stephen H. Halkiotis Annc il4edenblik Deborah A. Piscifelli Brenda Stepl-ens G. Patrick tihodes Superintendent 200 East King Street Hilisberough, i~`C 27278 Teteptione: 9f 4-732-8I2b FAX: 9 i 9-732-SY 20 Auaa..~s May 18, 20I 1 Orange County Board of Commissioners P.O. Box 8181 Elillsborouglt, NC 27278 RE: Request for Clarification Regarding One-Quarter Cent Sales-Tax and Other School Funding Questions Dear County Cotntnissiotiers: During its May Ib, 2011 meeting, the Orange County Board of Educa#ion discussed a number of topics related to the BOCC's funding of the county school system. These -same topics were also discussed at the May 3, 2011 collaboration wotkgroup meeting attended by commissioner leadership, school board members and county and sel~ool system staff: Ouarter-Cent Sales Tax (Article 461 Refee•endufu Our board recognizes the Coutrty's-need for additional revenues and appreciates Cotntnissiotiers' willingness to make aten-year commitment to splitting anticipated proceeds fiom the proposed Article 46 sales tax revenue equally between the county and local school districts. We also-.commend the County for recognizing how a stronger public edueatiott campaign would benefit the process. Two unanswered questions, however, emerged during our Boatel's discussion. 1. The County'-s "Resolution Regarding Uses of the Potential Revenues from a One-Quarter Cent County Sales-and Use Tax" allows for "St?% of the fiordirrg...alloeated irr an equitable nrarrraer beht~eert the corrrrty's t}+o school .ri~rtenrs.... "The Resolution does not include a definition of the tettn "equitable", and our Board would like to luiow how Con~unissioners plan to distributE the Article 46 revenues between the two school systems. 2: Would the County use revenues generated by the proposed Article 46 one- quarter cent sales tax to supplant any current revenues available to the schools? -In other words, would the County consider new revenue-from the tax as part of the its current 48.1 % school funding target? The Board of Education respectfitlly requests a tvrittenxespotise from the Board of County Comrnissionet•s and the County Manager to clarify these questions. BOCC Seltaol Funding, Debt Service, and Alternatives to the Cw•rettt 48.1% Funding Goals For several months no~v, the Collaboration Worlcgroup has discussed the Commissioners' school funding target to determine whether there would be a more stable and sustainable alternative to the existing 48.1% goal. For Example, should 8 Orange County Board of Commissioners Page 2 May 18 2©11 school funding be tied to specific county revenue sources such as property taxes? Needless to say, the Workgroup has not been able to find an alternative that anembers„colleetively, felt would work better for all partners. Given all of the present and future uncertainties surrounding federal and state funding for K-12 education, it seems premature to make changes to a -Iocal guiduig principle that all parties understand and -one that has served all parties well over the last decade. Along with the dire negative irnpact of federal and state funding reductions eve anticipate, our Board is also deeply concerned about shrinking local capital revenues and the effect ofinereased debt ser-vice an our District's already limited Iacal resources. Our concern deepened as the heard the County Manager's message of caution during the Apri126, 2011 joint rneetuig with Commissioners. A scheduled redttctiott itt delft service for schools in FY 2011-12 (refilurttcittg gains and paying off some deGt) actually rerhrces the County Futtdittg percentage, fol• FY2011-12 from 4&. 0%-itt FY 2010- 11 to atr estimated 47.4%. A NOTL-.OT Cpl UTION.• Tlris is a_ tetnpora-y redaction franc the 4&.1 goal. Netiv anticipated debt service for the Chapel Hi1T-CalrGoro Elenteltlary #11 project (expected Ztfitlttlt a fells yeal'S) N~1ll stlT7Staltttally ittCYG'aSe the COll17ty Ftlitd111g allOCatlOH t0 edt[CQti01t. Tltat il~crease in deGt sen~ice cottlcl-negatii~ely ntzpact availablo ftnzding•for cttrrettt ~rpense altd o~eratiorts once the debt is incurred With his statement in mind, our Board would encourage the Workgroup to look at funding ~forrnulas that would offer stability as ~vellas flexibility. Examples of questions and observations our Board would ask the Workgroup to explore include: 1. Would the funding formula/target (48.1%) be.a floor or a ceiling (i.e. the minimum or the maximum)? 2. What specific elements would be included i-n the fiuiding formula? For ~xa~nple, the existuig 48. I~%o target includes current expense monies, recurring and long-range capital, debt service and fair funding. Would a new formula incorporate other elements? 3. Would itbe possible-for the forrnula to decouple capital funding from day-to-day operations expenses (such as eunent expense). 4. As currently wr-itten, the County's current capital funding policy allows the three en#ities to share, equally, in-the repayment of debt, regardless of which entity receives the borrowed monies. Our Board-has analyzed an alternative formula whereby each entity would be responsible for its own debt. Would this be an alternative- formula to explore? 5. Would it be possible for CHCCS to dedicatee portion of its district tax to fund debt service related to new school construction thereby lessening some of the burden on the County's General Fund? FY 2011-12 County Managet• Recommended Fuudint= for K-I2 >Cducation ~'he Orange County Commissioners' long-standing dedication to K-12 education funding is a legacy across the state. Because of your commitment, our schools are among the hest in the State_ We have implemented programs that keep our students ni school and learning. Our district has one of the lowest dropout rates in the state, and we are proud of the fact that our graduates are prepared to either enter the global workforce or further their education at post-secondary schools. 9 Orange County Board of Commissioners Page 3 May 1 S 2011 For t11e-last decade, you have solidified your dedication to funduig K-12 education by allocating, at minimum, 48% of the County's revenues to OCS and CHCCS. It is clear that State legislators intend to make substantial reduetiolls to traditional K-12-public education funding, and both school districts face massive declines in federal revenues due to stimulus Inotties going away. We would like to think that the County's overall funding level for K-12 services and programs would remain stable and not decrease. In accordance with Collutiissioners' -County Capital Funding Policy (i.e. the 60/40 split) in years past, when debt service has decreased, funding-for capital and/or operations has increased, and likewise in years when debt service increased, capital and/or operations remained either stagnant or decreased. Instead; as we face the lvorst year, financially, that our district has encountered in our lifetime, the County Manager has recommended an overall funding reduction. As a Board; we-ask you; OAI' COUnty Ct3~I1tIrI1SS10IlerS, to filliy support-the children in our county by keeping the level offunding for ccnrent ~t~e»se, capital, debt service alad fairfunrl.Ing at your 4$.1% target that has seI•ved all of us so well-over the years. Without your crnttinued strong support as we face State and-federal funding~•eductions of epic proportion, the children of tits Orange County School District are in-dangerous peril. Our Board appreciates your time altd consideration ofthese-matters, and eve optimistically look for~var-ci to receiving your response. Sincerely, j~c' f/ Ta McKnight, Chair Donna Coffey, Vice Chair !pine cc: Orange County Board of Education Pahick Rhodes, OCS Superintendent OCS PTA Council DRAFT RES - 2011 - 071 Attachment 4 1 ~ See Updates in bold ORANGE COUNTY BOARD OF COMMISSIONERS A Resolution Regarding Uses of Potential Revenues from aOne-Quarter Cent (1/4¢) County Sales and Use Tax WHEREAS, there are significant pressing infrastructure, economic development, school, and other County capital needs that are precipitated by growth pressures and the new economic reality facing Orange County; and WHEREAS, it is important to provide Orange County taxpayers with alternatives to the pressure to raise property taxes to address these and other County needs; and WHEREAS, the levy of a Article 46 one-quarter cent (1/4¢) County sales and use tax would provide a new County revenue source and would generate approximately $2,500,000 annually for the County; and WHEREAS, it is important for Orange County to plan for future economic development that. will enable the County to recruit, retain, grow, and generate businesses and jobs that are desirable; and WHEREAS, it is important that Orange County expand collaboration and cooperation of economic development efforts and decisions between Orange County and the towns of Chapel Hill, Carrboro and Hillsborough and the cities of Mebane and Durham; and WHEREAS, it is important for Orange County to meet public school needs; and WHEREAS, the Board of Commissioners establishes aten-year commitment to allocate Article 46 one-quarter cent (1/4¢) Courity sales and use tax proceeds as follows: a. 50% of the funding will be allocated in an equitable manner between the County's two school systems,. based on the Average Daily Membership of each school system, for the dedicated purpose of funding capital projects, including but not limited to facility improvements at `older' schools and- the procurement of technology. The Board requests that each school system furnish the Board of Commissioners with a detailed list of prioritized projects that could be completed with anticipated funding over the next ten years. The Board will evaluate the projects and approve aten-year plan which will be incorporated into the County's Capital Investment Plan. As part of the Capital Investment Plan annual review, progress will be evaluated annually and adjustments made according to needs agreed upon by the School Boards and Board of County Commissioners; b. 50% of the funding will be allocated to Economic Development initiatives as follows: 1. 60% of the funding will be allocated utility infrastructure 2. 20% of the funding will be allocated to recruit and locate new businesses in Orange County 3. 10% of the funding will be allocated to small business loans to help existing businesses expand 11 4. 10% of the funding will be allocated annually to Economic Development initiatives as approved by the Board, including but not Limited to innovation centers to provide space for new start-up businesses, funding support for the County's agricultural businesses, and Business Investment Grants. The Board of Commissioners will approve aten-year Economic Development Plan as part of the County's Capital Investment Plan; and WHEREAS, if additional funding- does not come from the one-quarter cent (1/4¢) County sales and use tax, the. property tax will be the primary funding source available for schools and economic development initiatives; and WHEREAS, to distinguish and separate the revenues produced through this '/4 cent sales tax, if approved by Orange County voters, a Special Revenue Fund will be established to receive and account for the sales tax revenue. These funds will not supplant funding for the Board's endorsed funding target of 48.1% for annual spending on both school systems. The funds will remain separate from the County's general fund to allow for more accurate tracking of revenues and expenditures in accordance with initial ten-year allocation plan established as part of this resolution; -NOW, THEREFORE, BE IT RESOLVED THAT the Orange County Board of Commissioners hereby states its intent to use the revenues from the Article 46 one-quarter cent (1/4¢) County sales and use tax, if approved by the voters of Orange County, for currently unfunded or underfunded economic development and public school capital needs for a period of ten years, with a scheduled implementation date of April 1, 2012. BE IT FURTHER RESOLVED THAT proceeds from the one-quarter cent (1/4¢) County sales and use tax in later years will be used to address priorities as established by the Board of Commissioners in the County's Capital Investment Plan. This the 21St day of June, 2011. Bernadette Pelissier, Chair Orange County Board of Commissioners PROPOSED ECONOMIC DEVELOPMENT USES OF SALES TAX PROCEEDS Focus Area Percentage Estimated Example Activities Frequency of Funds1 Annual Expenditures Debt Service on 60% $750,000 • Installation of water and sewer infrastructure in Annually for 10 years Infrastructure EDDs Collaborative 1.5% $15,000 - $20,000 • Trade shows targeted to specific industry Annually for 10 years; Outreach clusters amount of funding will • Industry Appreciation events businesses vary • Local "Economic Health" Summit Collateral Materials 1.5% $20 000 • Updated Internet interface Funding only required , • Utilization of appropriate social media tools every 2 to 3 years • Develo ment of informative brochures Innovation Space 5 -10% $75,000 - • Up fit of a county-owned innovation space Funding will vary with site $125,000 Rent subsidies and/or leasehold improvements improvement on rivatel owned leasable s ace re uirements Agricultural 2 - 20% $25,000 - • Focused counseling for food-based businesses 10 years, but funding will Economic $250 000 ~ graduating from PFAP ' vary with program Development facility to • Creation of a'culinary kitchen requirements rovide facilities for PFAP raduates Business 8% $100,000 • Advanced site preparation 10 years, but funding will Investment Grants • Relocation assistance vary with project Small Business 0% -16% Up t0 $200,000 • Start-up capital and expansion funds for Orange After several years, Loan Program for next few County small businesses program will be self sufficient years Establishment of 12 -16% Up t0 $200,000 • Develop public-private stand alone economic Expenditures in Years 2 - 501c (4) entity fOr Several years develop entity 5 for start up funding ' Reflects the percentage of economic development funds, rather than overall funds a n x rn z .r Sales Tax Initiative -Orange County Economic Development June 13, 2011 DRAFT Page 1 of 1 N Proposed Uses Over 10 Year Tax Period, Economic Development Uses of 1 /4 Cent Tax Proceeds $1,400,000 $1,200, 000 $1,000,000 $800,000 $600, 000 $400,.000 $200, 000 $0 rt-. _ i r ~`~ ~,e*' F`~ x ~ a K «~ r~ 5;~.. *e 4~ -t''jA "~ • ,`r3c'+w g ,.,~'~.i .k., ~4 ^1 ~~3.u~.}' {. ~+~ r ~'~„'~'r1i t,. 7 F V f' h, i+-.~.. . ~.k~.. 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H i . ,_ I I I Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Debt Service on Infrastructure Collaborative Outreach Small Business Loan Fund Collateral Materials Innovation Center ^ Agricultural Economic Developmen Business Investment Grants Establishment of 501 c4 Entity w Total Estimated Proceeds from 1 /4 cent Sales Tax, Annually ($2,500,000) Proposed Uses of Economic Development Portion of 1/4 cent Sales Tax Proceeds, Annually ($1,250,000) .'' i h yt. ) ~~t h y ~y,, ~,, , ~ ~:.r.-.`.~ r ~ ~~~ 50% for Economic Development ($1,250,000 annually) ~Ilaborative :reach, 1.5% I Business Fund, 10% Collateral serials , 1.5% Innovation Center , 9% Created 06/13/2011 .~ Business Agricultural. Investment Economic Grants, 8% Development, 10%