HomeMy WebLinkAboutMinutes 01-26-2018 Retreat1
APPROVED 2/20/2018
MINUTES
ORANGE COUNTY BOARD OF COMMISSIONERS
ANNUAL PLANNING RETREAT
Maple View Agricultural Center
January 26, 2018
9:00 a.m.
The Orange County Board of Commissioners met for their annual Board retreat on Friday,
January 26, 2018 at 9:00 a.m. at the Maple View Agricultural Center in Hillsborough, N.C.
COUNTY COMMISSIONERS PRESENT: Chair Mark Dorosin and Commissioners Mia
Burroughs, Barry Jacobs, Mark Marcoplos, Earl McKee, Renee Price and Penny Rich
COUNTY COMMISSIONERS ABSENT: None
COUNTY ATTORNEY PRESENT: John Roberts
COUNTY STAFF PRESENT: County Manager Bonnie Hammersley, Deputy County Manager
Travis Myren and Clerk to the Board Donna S. Baker.
FACILITATOR: Andy Sachs, Dispute Settlement Center
Resource Persons: Kevin Knutson, Regional Vice President, and Francine Ramaglia, Senior
Manager, Management Partners; Joe Hines and Blake Hall, Timmons Group.
Observers – Department Directors and members of the public and news media.
Desired Outcomes
• Greater awareness of the impact of any new policies, programs, and projects upon the
County’s budget and tax rate.
• Priorities for the County’s FY18-19 budget.
• Updated view of the potential and design challenges related to Orange County’s Economic
Development Districts and Commercial Industrial Transition Activity Nodes.
• Prioritized strategies for realizing the potential of our EDDs and CITANs.
9:00 Convene
Commissioner Dorosin welcomed the attendees. He invited the County staff to raise questions
and participate in today’s conversation.
Commissioner Rich asked to comment on the Board’s January 23, 2018 meeting. The meeting
lasted past midnight. She thanked the Chair for leading a good meeting. Following up on a
suggestion by Commissioner Marcoplos, she said that Board members should feel free to take
a stretch during lengthy meetings. She thanked everyone for staying engaged in the meeting,
including County staff and members of the public. We moved the needle forward on every single
topic on the agenda, she said. Commissioner Price said it was a good meeting with good
agenda items, but it was unfair that people had to sit through such a long meeting or wait for so
long to get to the podium, especially those who came from out of town. I would prefer to
continue to another time a meeting that is going over time rather extending it for so long, she
said.
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The facilitator acknowledged this year’s retreat planning committee: Commissioners Price,
Burroughs, and Marcoplos; Deputy County Manager Travis Myren, Clerk to Board of County
Commissioners Donna Baker, and David Hunt, Deputy Clerk to the Board.
The group adopted with the following changes the Desired Outcomes and Agenda developed by
the planning committee and distributed earlier:
• The fourth desired outcome was revised to “Prioritized strategies for realizing the potential of
economic development.” This placed the discussion about EDDs and CITANs in a larger
context. In reply to a question from Commissioner Price, Commissioner Burroughs said that
jobs development can be a part of the discussion.
• A stretch break was added at 10:40 AM
The facilitator reminded the group of the ground rules it used at its 2017 retreat, and proposed
that they be relied upon for today’s meeting as well. The group agreed:
• Be open to disagreement
• Be committed to sharing relevant information
• Do not surprise each other
• Be honest
• Seek truth through synthesis of all participants’ contributions
• Be present
Following a brief icebreaker intended to advance interpersonal appreciation among the Board
members, the group turned its attention to the substantive agenda.
9:40 FY18-19 budget
Presentation by Management Partners on County’s Five Year Financial Plan (20 minutes)
Bonnie Hammersley opened this agenda item by reminding the group that the County had
retained a consultant to develop a comprehensive financial forecast of the County’s operating
budget. Although the forecast is not full of great news, she said, be assured that we are on top
of this and will have solutions to the challenges we are facing. Our consultants, Management
Partners, will be presenting some options.
Kevin Knutson, Regional Vice President, and Francine Ramaglia, Senior Manager, of
Management Partners, gave a PPT presentation and led the discussion.
Orange County Long Term Financial Forecast
Services
• Operations Improvement
• Strategic Planning
• Service Sharing
• Financial Planning/Budgeting
• Organization Analysis
• Organization Development
• Performance Management
• Process Improvement
• Facilitation and Training
• Executive Recruitment
• Executive Coaching
Project Objectives and Today’s Purpose
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Construct a 10‐year financial forecast model for the County
• Provide an impartial third‐party projection of the County’s finances
• Work with staff to develop consensus on assumptions
• Forecasting is a “best practice”
Present areas for consideration in building budget strategies to address structural deficit
• Interview the County’s senior management team
• Topics included wide range of both financial and operational areas including matters such as
revenue enhancement, expenditure controls and cost shifts, service delivery changes, service
reductions/elimination
General Basis for Forecast Projections
Management Partners has created a 10‐year budget model
• History for revenues and expenditures back to FY 2002‐03
• Balances based on CAFR actuals through FY 2016‐17
• Staff estimates used for FY 2017‐18 in lieu of Revised Budget
• Basis for future projections is 95% of FY 2017‐18 Revised Budget
Applies to all department/programs except Transfers, Retiree Medical, Debt Service (where
there are specific amounts), or Education (100% of budget)
• Growth rates for FY 2018‐19 and thereafter set by department/program
• Debt Service based on Davenport & Co. debt affordability analysis (1/9/18)
Major Assumptions
Operating cost drivers:
• Health costs average 7.5% growth
• Salaries/benefits average 3.1% growth
• Education costs average 3.0% growth
• Non‐personnel costs average 2.0% growth
• Debt service costs rise from current $26.7M to $39.2M in FY 2022‐23
Declines thereafter under Davenport analysis, but forecast assumes debt service remains at
$35M, to meet future capital financing needs
• CIP‐related operating costs included (costs rise to $3.2M by FY 2027‐28)
• Loss of impact fee revenues ($3.3M in FY 2017‐18 budget)
Conclusions
If property tax rate remains at current level, operating cost trends, together with loss of impact
fees and higher debt service, would create an average $11M annual structural imbalance that
would require higher property tax rates and/or expenditure reductions to resolve
Revenues
Recessions have occurred on an average every 6.8 years since 1927
• Budget impacts often lag official recessions
• Forecast assumes minor recessions in FY 2019‐20 (starting mid‐2019) and FY 2026‐27
• Key is timing and magnitude; model allows range of assumptions to be tested
County Funding Primarily Supported by Property Taxes
-graph
-graph
Property Tax Rates Assuming Constant Tax Rate
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-graphs
Property Tax Rate
At a constant property tax rate, property tax revenue will reflect increases as assessed value
increases
• Revenues will vary if tax rate is increased to cover:
Loss of impact fees
Increased debt service
Ongoing operating cost increases (assuming continued FTE and health cost increases)
Sales Tax
Significant impact from last recession
• Assumes minor recessions in FY 2019‐20 and FY 2026‐27
• Includes added revenue and incentive payments related to Wegman’s (assumes $400K/year
from FY 2020‐21 through FY 2024‐25)
• Projection consistent with short‐term trend
Charges for Service
Big drop in planning fees related to construction activity, due to last recession
• Projection builds on FY 2017‐ 18 budget estimates, which is in keeping with the trend of the
prior 5 years
Intergovernmental
Includes $4M drop in Social Service fees (child day care funding switch to state) with
commensurate drop in expenses for child care
• $1.3M included for Lottery (was zero in original FY 2017‐18 budget)
Other Revenues
Includes Privilege Tax, Franchise Fee, Interest and Miscellaneous Revenue (excludes
appropriated fund balance)
• The large decrease in FY 2017‐18 is due to the reclassification of the State Hold Harmless
Sales Tax revenues from Miscellaneous Revenues to the Sales Tax Revenues category
Transfers In
Volatile source
• Category mostly consisted of development impact fees
Increase reflects $2 million in FY 2017‐18 per reimbursement resolution for capital projects
The flat line from FY 2020‐21 reflects the elimination of Impact Fees.
Expenditures
Staffing Growth Exceeds Population Growth Over Last 7 Years, Even Over Long‐Term- graph
Inflation
Consumer Price Index is used as general measure of inflationary pressures on wages and other
costs
• CPI relatively stable over past 20 years
20‐year average is 2.20%
10‐year average is 1.85%
• Federal reserve’s target goal is 2%
• Forecast assumes 2% annual growth rate in inflation
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Community Services- graphs
• Growth varies by individual program, ranging from 0‐5%, with net growth of 3.5% FY
2019‐20 throughFY2027‐28; assumes solid waste contribution continues at $1.0M
General Government-graphs
• Average annual growth of 3.3% FY 2018‐19 through FY 2027‐28; close fit to long‐term
trend
Public Safety-graphs
• Average annual growth of 3.4% FY 2018‐19 through FY 2027‐28; 3.5% growth is in‐
between short and long term trends
Human Services- graphs
• Ave. annual growth of 3.0% FY 2018‐19 through FY 2027‐28; State takeover of child day
care in FY 2017‐18 reduces expenditure level $4M (also revenue, hence a wash); 3%
growth projected in line with previous growth periods
Education- graphs
• Average annual growth of 2.9% FY 2018‐19 through FY 2027‐28; assumes $3M in
recurring capital funded through bonds instead of pay as you go funds; growth is
consistent with short and long‐term trends
Support Services- graphs
• Original budget includes centralized costs for wage/benefit increases which are
reallocated to departments after the budget is adopted. Those reallocations are reflected
in the revised budget amount.
Debt Service
Projection through FY 2022‐23 based on total of:
Existing debt service
“Proposed CIP and GO Referendum” per Davenport debt affordability analysis (1/9/18)
• Assumes no less than $35M starting FY 2023‐24
This allows for up to $200M in new bonds to fund both County and Education needs
CIP‐Related Operating Costs
Tied to analysis of current CIP by county staff ($1.7M through FY 2021‐22), including:
Blackwood Farm Park (starts FY 2017‐18)
911 Center improvements/backup capability (starts FY 2017‐18)
Cedar Grove Community Center (starts FY 2017‐18)
Southern Branch Library (starts FY 2019‐20)
Twin Creek Park (starts FY 2021‐22)
• Assumes continued growth for future projects
Transfers: School Capital Projects
Averaged $4.4M over previous 15 years
• Original budget in FY 2017‐18 was zero because County substituted pay‐go with 2/3 bonds
• Long‐term this amount is equal to the $1.3M in projected annual Lottery revenue
Transfers: County Capital Projects
Amounts for County capital projects per CIP through FY 2021‐22, with 2% growth thereafter
($900K in FY 2022‐23, for pay as you go funds)
Transfers: All Other Funds
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Transfers to OPEB Trust account for high amounts ($3M in FY 2012‐13, $3M in FY 2013‐14,
and $1.5M in FY 2014‐15)
• Assumes Efland Sewer ($145K) ends FY 2019‐20
• Assumes Affordable Housing ($812K) continues at 2% growth
• Assumes Grant projects ($56K) continue at 2% growth
• Assumes Sportsplex ($168K) continues at 0% growth
Fund Balance
Baseline Forecast
Assumes property tax rate remains at current $0.8377 (see below for key property tax
assumptions)
• Before any corrective actions
• Results in structural shortfall leading to net deficit by FY 2022‐23
• 16% reserve is County policy, while 8% is Local Government Commission's minimum reserve
requirement
Sample Option A
Property Tax levy raised by $0.0576 in FY 2018‐19 (8.7% increase) and maintained at that
same rate thereafter regardless of assessed valuation growth
8% increases in FY2021‐22 and FY2025‐26 due to reappraisal years
• Requires no reduction in expenditures
• Meets 16% reserve goal in out‐years mostly with unassigned balance alone
Sample Option B
Property tax levy increase of $0.0576 phased‐in over a 3‐year period, with fixed rate thereafter
• Meets 16% reserve goal in near‐term and out‐years with combined state required reserve and
unassigned balance
• Potential expenditure reductions required in mid‐2020's to comply with County's 16% reserve
policy
Sample Option C
Property tax levy increase of $0.0576 phased‐in over a 3‐year period, with 2% tax levy growth
thereafter (rate floats up or down based on assessed value changes, to net 2% revenue growth)
• No change in expenditure levels
• Property tax revenue is inadequate to prevent future deficits
Sample Option D
Option D includes a series of expenditure reductions (eventual 6% total cut) to close the
remaining revenue gap from Option C
$10M reduction in FY 2021‐22
$2M reduction in FY 2023‐24
$3M reduction in FY 2025‐26
• Total reductions of $15M are ongoing; assumes 2% annual growth in value of avoided costs
Observations
Financial Sustainability and Best Practices
Structurally balanced budget
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• Financial forecasting
• Limited use of one‐time resources
• Established reserves
• Debt Issuance
• Employee compensation
• Fees and charges
• Capital Improvement Projects
• Grants
• Performance Measures
General Observations
New and/or enhanced revenues
• Ongoing continuous improvement process
• Expansion or revision of current practices
• Opportunities for operational efficiencies
• Opportunities to increase efficiencies through update of existing policies/elimination of
redundancies
• Suggestions from and involvement of all departments
• Role of Functional Leadership Teams
Strategic Plan & Budget
Link strategic plan to budget (countywide and at dept. level)
• Clear priorities & service levels:
Core or mandated services
Education & Economic development
Areas/populations served
• Budget direction
Ranking process, return on investment, and customer served
Expectations on goals and service delivery
• Dashboards & reporting platforms for transparency
• Clear linkage to strategic plan and budget on agenda items
Performance Reporting
Family of measures to evaluate projects/programs:
Workload
Efficiency/effectiveness
Outcomes
• Process to monitor & report progress:
Executive/Policy level
Manager level
Partnerships
UNC and other partner organizations
• Interlocal agreements with cities, schools & other agencies (fee recovery, cost sharing for
services, use of facilities, etc)
• Shared service delivery and regionalization
• Community programming through not‐for‐profits
• School Systems
Fees & Fee Studies
Formal policy for fees and cost recovery (internally and externally)
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• Underlying cost of services & targeted recovery
• General Fund subsidy levels, regardless of fund providing service (example: solid waste;
Sportsplex)
• Other governmental and related agencies
Comprehensive fee studies on regular schedule: annual internal update/bi‐annual external study
• Inflationary increases
• Benchmark to other agencies & private providers
• Desired level of competition, if any
• Audit significant revenue streams
Other Revenues
Explore all statutorily allowable revenue sources
• Economic development and code revisions
• Update existing revenue policies & ordinances
• Expand use of naming rights
• Seek additional sponsorships & grant funding and aggressively use fundraising ability of 3rd
party organizations
• Legislative Efforts
Local option gas tax dedicated to capital projects
Support for additional/separate school tax
Excise Tax (roughly $2 million annually not updated since 1980’s)
2 Keys to Operating Efficiencies
Technology
Maxing out existing technology—mandated use & greater training; seeking opportunities for
new technology (example: increase mobility and encourage more on‐line services in every dept)
Improve technology to better leverage staff resources (example: automate, motion sensors
for energy efficiency, etc.)
• Business Process Review/Redesign
Conduct workload studies and process map major service delivery areas to identify process
improvements, staff utilization & cross training and desired customer service
Evaluate opportunities for co‐location and consider centralized cost centers where practicable
and shared resources/services to eliminate duplication
Evaluate staffing levels and consider leveraging third party services/resources where
practicable
Other Opportunities for
• IBest management practices
Require departments to research and identify best practices in their fields
• Studies in process (examples: Fleet, facilities, solar energy, transfer station/recycling, P&R,
etc)
• Enterprises self-supporting (include Sportsplex and any other similar contractual
arrangements)
• Purchasing:
Updated purchasing policies and procedures
Increased competitive selections (RFP) and take a more pro‐active purchasing approach to
test market; participate in cooperative purchasing agreements
Use of P3s and performance contracts
End of PPT
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The following additional points were noted by the facilitator during the presentation:
• In reply to a question from Commissioner Jacobs, Mr. Knutson said that Management
Partners recommends that the County use a ten year financial forecasting model instead of
a five year model. They have two reasons for this. First, the longer view enables the analysis
to consider that economic recessions occur about every 4-7 years. Second, the longer view
also enables the analysis to capture the impacts of Orange County’s four-year property
revaluation cycle.
• In reply to a question from Commissioner Price about the Major Assumptions used in the
modeling, Mr. Knutson said the growth in the set of operating cost drivers reflects growth in
the number of staff as well as growth in the cost per staff person of health costs,
salaries/benefits, etc.
• In reply to a question from Commissioner Rich, the $11M annual structural imbalance does
not include any tax increase associated with the recent bond.
• In reply to a question from Commissioner Marcoplos, Ms. Ramaglia explained that the
annual half-million dollars anticipated from Wegman’s offsets the impact of future recessions
on the County’s sales tax projections.
• In reply to a question from Commissioner Burroughs, Mr. Knutson said that the divergence
(increase) of forecasted property tax revenue from the short term trend at 2021 is influenced
by the growth of development in the county over time.
• In reply to a question from Commissioner Rich, Mr. Knutson said that the property tax rate
analysis does not include fees other than those fees directly related to the tax such as late
payments and interest charges.
• In reply to a question from Commissioner Jacobs about Intergovernmental Revenues, Ms.
Ramaglia said that the $1.3M for the lottery is now included in this category after being
reclassified from Miscellaneous.
• In reply to a question from Commissioner Price, Ms. Ramaglia explained that the
Intergovernmental forecast is being driven by two changes: a decision by the State to
remove Social Service pass through fees from the County budget, and the reclassification of
the education lottery into this category. Ms. Hammersley added that child care services will
continue to be paid for, but they will be paid for by the State.
• In reply to a question from Commissioner Jacobs, Ms. Ramaglia said that the proposed
impact fee for parks is not included in revenue from Transfers In category, although it is
addressed in the study’s conclusions and recommendations.
• In reply to a question from Commissioner Jacobs, Ms. Hammersley said that Support
Services includes IT, Human Resources, and Finance. Mr. Myren added that increases in
personnel costs are assigned first to Support Services and then reallocated to the other
categories as needed.
• In reply to a question from Commissioner Price, Ms. Ramaglia explained that there is no
growth in the forecast line for Transfers: School Capital Projects after 2020 because that line
is based on the projected $1.3M education lottery revenues.
• In reply to a question from Commissioner Burroughs, Mr. Myren said that the Baseline
Forecast and Sample A Option assumes that the County does not drop to a revenue neutral
position. Other options presented today do allow for revenue neutrality.
• In reply to questions from Commissioners McKee and Price, Mr. Knudsen and Ms. Ramaglia
said the model captures revenue expected from an assumed rate of growth in population
and development, based on historical patterns. Revenue from development that would push
beyond that historical pattern is not included. Mr. Benedict, Director of Planning and
Inspections, explained that there is a 2% growth baseline built into the model.
• In reply to a question from Commissioner Dorosin, Ms. Hammersley said that even under
phase-in scenarios, such as Sample Option B, the Board retains the flexibility to set the tax
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rate each year. A phase-in scenario will give us time to make adjustments if they are
needed, she said.
• In reply to a question from Ms. Hammersley, Ms. Ramaglia said that under Sample Option B
the property tax would increase less than two cents per $100 of value per year for three
years.
The following additional points were noted by the facilitator following the presentation, during a
more general discussion:
• In reply to a question from Commissioner Jacobs, Mr. Knudsen said that Management
Partners is headquartered in Ohio.
• In reply to a question from Commissioner Marcoplos, Mr. Myren clarified that unassigned
General Fund Balance amounts are represented by the blue portions of the bars on the
Sample Option slides – this would be the “spendable” amounts -- and reserved amounts
(“not spendable” under the current 16% policy) are represented by the white portions.
Commissioner Dorosin suggested that the unassigned segments of the bars be placed
above the assigned amounts so that the spendable amounts would be easier to see on the
charts.
• Commissioner Jacobs said he would like to see a scenario with a different fund balance.
What would 14% or 15% look like? What would be the break point from AAA to the next
lower bond rating if we went from 16% to a lower reserve, he asked. If we are moving into a
more difficult financial future and we are considering an increase in the property tax rate,
then we should understand the implications of this option as well.
• Mr. Knudsen said the 16.7% recommended reserve in Orange County is based on two
months of working capital. 16% is a standard, but it does not apply in all situations. A steady
history of revenues might enable a jurisdiction to deviate from that standard. The bond rating
firms are more interested in your history and how you are planning for your future than they
are in the specific policy. The fact that you have a policy is very good, but the level at which
you set that policy is dependent upon your organization.
• Ms. Ramaglia added that the County’s other financial policies would also be taken into
consideration by the bond raters. For instance, if you lower your 16% general fund balance
standard then the rating firms might want to see how your policies enable your other funds
to be self-supporting.
• Commissioner Dorosin said that the property tax is the only progressive source of revenue
the County has access to. Fees are more regressive. There are social justice aspects to
these options that we should take into consideration.
• Discussion as needed to clarify “budget drivers” for FY18-19
• FY 18-19 Budget Exercise: “What do things cost, and how might we prioritize across new
budget items in FY18-19?”
Following a short break, Travis Myren, Deputy County Manager, gave a presentation and
led a discussion on “FY2018-19 and Beyond.”
Travis Myren presented the PPT below:
ORANGE COUNTY BUDGET PLANNING
FY2018-19 and Beyond
Board of Orange County Commissioners Retreat
January 26, 2018
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Orange County exists to provide governmental services requested by our Residents or
mandated by the State of North Carolina.
To provide these quality services efficiently, we must;
Serve the Residents of Orange County – Our Residents Come First;
Depend on the energy, skills, and dedication of all our employees and volunteers;
Treat all our Residents and Employees with fairness, respect, and understanding.
Orange County Residents Come First
Budget Context – Mission Statement
Foster a community culture that rejects oppression and inequity.
Ensure economic self-sufficiency.
Create a safe community.
Establish sustainable and equitable land use and environmental policies.
Enable full civic participation.
Budget Context – Social Justice Values
Goal 1
Ensure a community network of basic human services and infrastructure that maintains,
protects, and promotes the well-being of all county residents.
Goal 2
Promote an interactive and engaging system of governance that reflects community values.
Goal 3
Implement planning and economic development policies which create a balanced, dynamic local
economy, and which promote diversity, sustainable growth, and enhanced revenue while
embracing community values.
Goal 4
Invest in quality County facilities, a diverse work force, and technology to achieve a high
performing County government.
Goal 5
Create, preserve, and protect a natural environment that includes clean water, clean air, wildlife,
important natural lands, and sustainable energy for present and future generations.
Goal 6
Ensure a high quality of life and lifelong learning that champions diversity, education at all
levels, libraries, parks, recreation, and animal welfare.
Budget Context – Board Goals
FY2017-18 Expenses as % of Total Expenditures
Budget Context – Expenditures by Category
FY2017-18 Revenues as % of Total Revenues
Budget Context – Revenues by Category
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Five Year History of Actual Expenditures and Revenues
Budget Context – Year End Results History
Property Tax
No rate adjustment; 1.5% Growth in New Assessed Value
$2.2 million projected increase
Sales Tax
6.5% Growth Above FY2017-18 Budget
$1.6 million projected increase
Charges for Services
Historic growth of 4%
$300,000 projected increase
Intergovernmental Revenue
Historic Growth of 1.8%
$320,000 projected increase
Grant/Intergovernmental Losses
Soil and Water Conservation positions in DEAPR
CARES Grant in Department on Aging
FY2018-19 Revenue Projections
Personnel Costs
Employee Salary and Wages
Across the Board Wage Adjustment – Each 1% Increase is $550,000
Living Wage Funding - $15 per hour regular employees - $20,000 to annualize
Compression Adjustment - $250,000 consistent with FY2017-18
Employee Benefits
Health Insurance – projected 7.5% increase $875,000
Dental Insurance – projected 2% increase $6,200
Education Funding Targets
Current Expense Funding Level Options
48.1% of General Fund Revenues – target achieved with new debt funded
Class Size Ratio Reduction in K-3 - $900,000 in OCS; CHCCS has waiver until
2020
Continuation Budgets - $7 million based on FY2017-18 cost to continue and
mandate requests including class size reduction in OCS
Health and Safety Contracts – 2% increase $67,000
FY2018-19 Expenditure Projections
Outside Agency Funding Target
1.2% of County Expenditures (Excluding Education)
$20,000 projected increase
Debt Service
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Debt Service Increase Related to Bond and Approved Capital Investment Plan
$5 million projected increase
Unassigned General Fund Reserve
16% of General Fund Expenditures
Projected Revenues vs. Projected Expenses
Approximately $7 million without any rate adjustments (taxes and fees) or expenditure
reductions
FY2018-19 Expenditure Projections
Budget Direction to Departments – Status Quo
No General Purpose Revenue/Tax Funded Positions
Reallocation or New Revenues
No Operating Expense Increases
Exception for current contractual obligations
Reallocation or New Revenue
Recurring Capital – Replacement Only
Analyze Expenditure Levels vs. Historic Spending
Functional Leadership Team Engagement
Identify Resource Sharing and Collaboration
Streamline Performance Measures and Department Objectives
Management Reports
Policy Reports – Focus on Outcomes
FY2018-19 Budget Planning
County Manager Initiatives
Enhance Functional Leadership Team Interactions
Identify mandated and core services
Identify Redundancies
Evaluate/Update Policies
Process Improvement
Department Five Year Operating Plans – informed by Cost of Service Study
Link Department Plans to Board Policy Priorities and Goals
Use for Long Range Budget Forecasting Model
Leveraging Technology
Focus on Existing Technology Resources – Break in New Projects
Operating Cost Reductions – Solar Energy, Fleet
FY2018-19 Budget and Beyond
Operating Budget Policy Issues
Funding Mechanism for Recurring Capital
Transfer School Recurring Capital ($3 million annually) to Capital Budget
Provides Operating Budget Flexibility in Short Term
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Property Tax – Compensate for Increased Debt Service
One Time Increase vs. Incremental Increase
Each 1 cent generates $1.8 million
FY2018-19 Budget and Beyond
Operating Budget Policy Issues
Enterprise Department Subsidies
Solid Waste Subsidy - $1 million annually contained in model
Sportsplex Subsidy – debt service ranges from $170,000 to $350,000; currently
no indirect costs
Intergovernmental Services Provision
Opportunities to Expand Shared Services
Regionalization of Programs and Services
Charges for Services - Cost Recovery
Examine Fully Loaded Costs, Benchmarking
Payment in Lieu of Taxes for Parks and Recreation
Building and Inspections Permit Costs
Services Provided to Municipalities
Register of Deeds Fees – Legislative Agenda
FY2018-19 Budget and Beyond
Operating Budget Policy Issues
Use of Outside Agencies
Contract for Specific, County Directed Services
Outside Funding Sources
Grants
Sponsorships
Naming Rights
Fundraising
Economic Development Priorities
Clarified Later in Retreat
FY2018-19 Budget and Beyond
Capital Budget Planning – Debt Affordability
Based on Approved Capital Investment Plan & Tax Rate Adjustment Options
FY2018-19 Budget and Beyond
Capital Budget Planning – Long Term Debt Capacity Model
FY2018-19 Budget and Beyond
Questions and Comments
FY2018-19 Budget and Beyond
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• In reply to a question from Commissioner Price, Mr. Myren said there is no requirement for
the County to continue funding the Other Post-Employment Benefits (OPEB) account. In
fact, last year the County did not make an OPEB contribution, he said. OPEB contributions
could increase as the County’s Full-Time Equivalent number increases. We know the
potential liability and are including it on our balance sheet. Commissioner McKee said he
feels the Board is obligated to fund OPEB. Ms. Hammersley said that everyone who is
eligible is receiving their benefits. The OPEB account is a savings tool we have to ensure, if
there are not enough “pay as you go” funds, then our retired employees would still be able
to receive their benefits. We are one of only two counties in the state that maintain an OPEB
account, she said. In states with greater economic challenges such as California and
Michigan it is needed more. I’m not opposed to the idea of the account, she said, but there
is a challenge to us when we’re trying to figure out whether to serve residents or fund this
savings account. Last year when we faced that challenge, we chose not to put additional
money into the account. Commissioner McKee said he supported last year’s decision, and
that there is no guarantee that we will not be faced with the same economic challenges as
the places where OPEB accounts are required. We have an ethical obligation to provide for
the former employees we have made promises to, he said. Ms. Hammersley said that the
County is indeed providing for them.
• In reply to a question from Commissioner Price, Mr. Myren said that “the break” anticipated
in new technology projects means the County will complete innovations that already have
been budgeted. This will enable the administration to continue with improvements that will
pose no burden on the budget.
• In reply to a question from Commissioner Dorosin, Mr. Myren said that a one-time increase
in the property tax rate of 4.56 cents would be combined with increased revenues from other
sources and/or reductions in expenditures.
• In reply to a question from Commissioner McKee, Mr. Myren said that Sportsplex operations
are indeed generating a surplus. The surplus is plowed back into operations to help the
organization absorb operational cost increases and stabilize its user fees.
• In reply to a question from Commissioner Dorosin, Mr. Myren said the County’s current
practice is to recapture through fees a little better than 80% of the costs of issuing building
and inspections permits.
• In reply to question from Commissioner Burroughs, Mr. Myren said the long term debt
capacity model he presented – in which as much as $200M of additional borrowing over six
years begins to be available in FY2024-25 if the County chooses to maintain $35M in debt
capacity – also assumes one of the two tax increase scenarios he presented earlier.
• Commissioner McKee said that the state of local school facilities, the increasing age of
County facilities, and population increases will require continued or increased capital
investment by the County over time. He asked the County staff to provide information on
what the expected demand will be for school and County facilities into the future, and how
that will impact borrowing and the tax rate. Ms. Hammersley said the chart on Capital
Budget Planning – Long Term Debt Capacity Model illustrates when (i.e., FY2024-25) the
County could afford to do another bond referendum if the Board so chooses.
• In reply to a question from Commissioner Price, Mr. Myren explained that while both of the
tax-increase scenarios are designed to pay for peak debt service ($39M) in FY2021-22, the
one-time tax increase generates more than is needed in the year it’s collected. The
additional revenue from the one-time increase would be placed in a capital reserve account
to pay for the debt service when it peaks. The incremental model collects revenue to cover
expenses “as you go” each year they are in effect.
Travis Myren’s presentation ended and the group continued its discussion:
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Commissioner Price said she is concerned about residents’ ability to live affordably. Tax and
fee increases are going to make it more expensive to build and to live here. We could be
moving in the direction of making Orange County too exclusive. It’s heart-wrenching to hear
that long term residents have to move to Durham or Alamance because taxes and fees here
are too expensive for them.
Commissioner Burroughs agreed that social justice is a factor. And, she said, there is an
$11M structural imbalance that we are required to address. I believe we will have to raise
taxes, either using the one-time or the incremental scenario. And I would make the case
now that we should go with the one-time increase option. She offered the following reasons:
first, no one likes tax increases, so doing it three years in a row is more painful than doing it
once. Second, this Board cannot bind future boards. We cannot count on future boards to
join us in fixing the structural imbalance. It is our responsibility as the Board today to provide
the solution. Third, we told folks who voted for the bond that there would be a tax increase in
FY18-19. The farther in time we get from the bond referendum that generated this need, the
more distant the tax payers will be from those made the decision to raise their own taxes. A
one-time increase would maintain a closer connection between those who incurred the
obligation and those who are going to pay for it.
Commissioner Marcoplos said he feels strongly that a recession will occur in the not-too-
distant future. At the same time, our relationship with the State and federal governments has
never been worse. In my household when a big storm is predicted we get conservative
about how we handle our resources and how we make our plans. I want to take a more
conservative approach to the County budget until after the next recession and after the next
elections give me a firmer feel about the future, he said. My instinct right now would be to
agree with Mia, and have a full increase now before there is a crisis, and hope it will help us
to build up a cushion to weather the storm. Her other reasons were valid as well: a one-time
increase would be more palatable and predictable for people. Most people do not have a lot
of time in their lives to follow everything we do, so doing it once will be less of a burden on
them.
In reply to a question from Commissioner Dorosin, Ms. Hammersley said that in the absence
of any changes there will be a budget shortfall in FY18-19 of $7M. Commissioner Dorosin
said that a tax increase is too narrow a frame for the Board’s discussions today. The
broader discussion is whether our policies and practices have created an unaffordable
situation for residents. I don’t think it’s fair to say we don’t like tax increases – I believe in
providing the funds the government needs to provide services. But the taxes here are very
high. It’s easy when a lot of wealthy people tell us to raise their taxes, but there are people
moving away because they cannot afford to live here. We need to have three elements in all
our discussions: efficiencies, potential revenue increases -- like a tax increase -- and
potential cuts, he said.
Commissioner Jacobs said that he agreed with Commissioner Marcoplos’s perspective
regarding “the coming storm” and with Commissioner Dorosin’s suggestion that the group
consider a range of solutions. We also have to look at the undesignated fund balance, he
said. I’ve been on the Board during periods when the property tax rate increased for eleven
years, and for the past eight years when it only went up once. We have come to the point in
terms of affordability where I think a tax increase is a last resort. The fund balance should be
the fourth part of the equation. My goal would be to pay for the school bonds without raising
taxes; I don’t think we can answer today whether we can do that or not. It’s a little early to
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figure out what we are going to do. I would like to say that we have a priority order for
decision making, where a tax increase is at the end. We might have to raise the tax, and it is
part of our responsibility to meet our fiscal obligations, but there are different ways that we
can get there.
Commissioner Rich said she was thinking along the same lines as Commissioner Jacobs.
Different residents of the county have different expectations of what our budget should be
and what we should be spending money on. Not everybody is going to be happy when we
start cutting or if we raise taxes. We should balance out as best as possible all that is before
us. Commissioner Jacobs added that the tax equity study’s presentation of the difference in
income across the different areas of the county is eye-opening. That’s a factor we never
really discuss, but it’s an underlying current in everything we do.
Commissioner McKee said that when he joined the Board seven years ago he was
adamantly opposed to any tax increase, because of the ten or eleven years of constant tax
increases. I have evolved in my thinking, he said. I don’t see how we are going to be able to
go forward long term without some tax increase. But I also don’t see how we can remain
healthy and affordable without cuts; and those cuts are going to be painful and they are
going to be adamantly opposed. We are going to have to be prepared for that. We’re not
going to see the storm that Commissioner Marcoplos referred to earlier, before it hits.
Commissioner Burroughs expressed appreciation for Commissioner Dorosin’s broadening of
the conversation. We definitely should look at efficiencies, cuts, and “selling the cow” by
making a short term adjustment in our reserves. We can talk at a high level about all these
things, but when we come back to this conversation after today we will be responding to the
Manager’s budget, she said. In fairness to the Manager, and as leaders, we need to give the
Manager some specific direction. In reply to a question from Commissioner Marcoplos. Ms.
Hammersley said it would be helpful to hear specific suggestions for cost efficiency
opportunities from the Commissioners, perhaps after the lunch break.
Commissioner Price said she agreed with the broader look suggested by Commissioner
Dorosin. We also have to be mindful of approaches that others can take to help the county
address the local economy, which impacts the County budget. She acknowledged the work
Commissioner Rich is doing on the living wage, for example. Economic development that
brings in jobs and additional development are factors affecting our budget as well, she said.
Commissioner Rich asked the staff to present after the lunch break on the actual dollar
amounts that would be added to the household budgets of owners of differently valued
homes under the two tax-increase scenarios.
12:00 Lunch Break
12:45 Continue Budget Exercise
We’ll focus on the set of items favored by a majority of the Board for the next
discussion:
• What Board values/goals is advanced by this set of potential priorities, and how?
• What concerns would staff or Board members have if this (majority) set of budget
priorities were adopted by the Board?
• How might the Board or staff address those concerns?
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• Do you need to prioritize further? If so, do one more round of votes and discuss, as
needed and time allows.
The conversation continued after the lunch break, as follows:
• Mr. Myren presented a slide showing the information requested by Commissioner Rich just
before the break. He agreed to distribute the slide to the Commissioners, including
information on houses valued at $150,000 and $200,000.
• In reply to a question from Commissioner Dorosin, Mr. Myren said that the incremental
scenarios would bring in 2.3 cents per $100 valuation more at the end of five years than the
one-time tax increase. Commissioner Dorosin said that if we have an amount to cover, then
the tax increase should be set to bring in that target amount and not any more. In reply to a
question from Commissioner Jacobs, Mr. Myren said that in the years following Year 5, the
increase would be “embedded” unless the Board changed the tax rate.
The facilitator asked the Board if it was ready to brainstorm specific suggestions for efficiencies,
revenues, cuts, and reserves. Commissioner Rich said that it might be premature. We don’t
know what the discussions are within each of the Departments, she said. We don’t know what
they need to keep services at an acceptable level. Ms. Hammersley said that the Functional
Leadership Team will be identifying core functions and mandated services, to clarify the areas in
which there is flexibility. We would be interested in hearing today if the Board had specific items
or general areas that it would like the staff to look into. Doing it now would give us all more time
to investigate our options, she said. And it doesn’t all have to be done today. Board members
can follow-up with an email of ideas to me and Mr. Myren, she added.
• Commissioner Rich said she wanted the County to continue its commitment to a living wage.
I’d like for the people who work for the County to have the opportunity to live in the county,
she said. Ms. Hammersley said that the lowest paid non-temporary County employee now
makes $15.00/hour. The lowest paid temporary position is at $13.75/hour. Commissioner
Marcoplos said that the Orange County Living Wage is calculated on rental housing; it is a
“housing wage.” There would be another number for home ownership, he added.
• Commissioner Rich said she would like the County to look at how to better address the
services for the aged. People providing caretaker services for the elderly need our support,
for example opportunities for finding some free time for themselves.
• Commissioner Marcoplos noted that 80% of buildings and inspections permitting costs are
covered by the consumer, and 20% is subsidized by the County. I don’t think it would
unpalatable to most builders in most cases if 100% of the cost were covered by the
consumer. Although it is not meaningless, it is a relatively small part of the cost of projects,
he said. Commissioner Jacobs said that he thinks the County should charge 100%, now that
the County no longer can charge impact fees for housing.
• Commissioner Marcoplos suggested that the staff consider the economics of the County
running its own solid waste transfer station.
• Commissioner Jacobs suggested that the staff look at the Hillsborough circulator for
possible cuts. Also, when we meet with Hillsborough in February we might want to raise the
idea of the Town participating in the funding. If we’re only seeing a few hundred people a
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month and paying six figures for that, then we might want to look at more efficient ways of
serving them.
• Commissioner Jacobs suggested that the staff look at programs the County has invested in
after the recession and after the State cut funding to those programs. For example, the
Family Success Alliance. Like the rest of us, he said, I am a “do-gooder” and in general
supportive of such investments to keep these programs robust. But, for example, our
support to FSA is currently structured as an open-ended cost to us. It is a County function
only because we have chosen it to be. I don’t think we should pull the rug out from under the
people already hired, but we need to get a handle on future costs. Commissioner Burroughs
added that FSA is getting outside grants. Let’s look at programs we have added in the last
five or six years, he said. Let’s also look at the percentage increases in per pupil funding, he
added, compared to historical averages. The schools should understand that we are looking
at everything. I would not deny the schools their due, but we should be trying to keep things
in some kind of proportion. Unless we want to cut these other programs so we can give
more to the schools, we need to be clear about what we have and what we can invest in.
• Commissioner Dorosin said that it will be important to manage expectations, with the
schools and with the larger community. Everyone needs to understand that we have a $7
million gap that we have to close. We need to have the conversation with the schools now
rather than on May 1 when the budget is released.
• Commissioner Dorosin said that the Board also should look at “non-do-gooder” budget
items. The universe of things we will be reviewing should be broad, and not limited to items
we picked up because of the recession or Legislative cuts. It should include not only cuts,
but also delays, reprioritizing, etc.
• Commissioner Dorosin said that a tax increase should be the lowest priority across the
general options discussed so far at today’s retreat.
• Commissioner Dorosin said the County needs to frame a message immediately about how
the County has gotten into this fiscal situation, including an explanation of the bond and the
education that took place earlier informing voters that the bond would lead to debt and a tax
increase.
• Commissioner Burroughs said that Family Success Alliance might need about $100,000
more in FY18-19. It is getting outside funding through a Blue Cross Blue Shield grant to
Empowerment, Inc. They are working on raising additional non-County funding.
• Commissioner Burroughs said that while parks are “super important,” she thinks the County
could defer improvements slated in the CIP until the County gets on the other side of the
current fiscal squeeze.
• Commissioner Burroughs also asked that the County consider what would happen if the
$1M subsidy to the solid waste fund were temporarily suspended.
• Commissioner Price said that the focus on the Hillsborough circulator should be on
efficiency and not doing away with the service. The circulator carries people to Durham Tech
and other offices that people need to get to in order to receive essential services.
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• She also said that the County’s investments in social programs not supported by the State,
such as the Family Success Alliance, are critical. She said that FSA’s intergenerational
model for defeating poverty is especially important as the income gap in society widens.
• Commissioner Marcoplos agreed that messaging is important. Many people are under the
misconception that we “let the schools deteriorate,” for example. We need to do a better job
at explaining.
• He and Commissioner Price said that cuts in social services programs will have
consequential costs. We should try to understand those costs, he said. How much will it cost
the Department of Social Services to make up for the costs we might make to FSA, for
example?
• Commissioner Jacobs said that in messaging, the County also should explain the loss of
impact fees, the impact of State mandated class-size reductions, the State’s interest in
providing construction funds to charters and private schools, and the disincentive State
policies are having on some parents’ decision to send their children to public schools. Our
fund balance actually helps us to stay ahead of these deprivations, he added.
• He read an email about the housing living wage sent to Board members by Mr. Myren in
June 2016. It said there are 97 employees who are earning below the hourly rate needed to
provide 30% or less of annual earnings dedicated to housing costs for a one bedroom
apartment. The cost of increasing those employees’ earnings to $15.31/hour would be
approximately $157,000.
• Commissioner Rich asked for “solid numbers” from staff for the cost of the ideas being
brainstormed today or otherwise under consideration. Commissioner Price agreed.
• While agreeing that a tax increase would be a last resort, Commissioner Burroughs said the
County probably will have to do it. A one-time increase will be less expensive to
homeowners than the incremental scenario, she added. She asked what other Board
members thought. They responded:
o Commissioner McKee said that a one-time tax increase would override any positive
or explanatory message the County tried to communicate. The conversation will be
dominated by the counter-message, that the Board is raising taxes by over four
cents. From that perspective, we would be better off phasing in the tax increase.
Second, the budget changes from year to year. I would be reluctant to do an
immediate raise, because I hope that our efforts at economic development,
efficiencies, cost reductions, other revenue enhancements, etc. will alleviate the
need in years 4 or 5 for those tax-increase increments.
o Commissioner Jacobs said a similar question came up within the Solid Waste
Advisory Group regarding the recycling fee, and the Manager recommended
phasing, he said. The group approved the recommendation, thinking that a one-time
increase in the fee would be too much sticker shock. The Group took no blow back at
all.
o Commissioner Price said that phasing is better. Although the tax increase will be
easy for some people to pay, there are other people in the county living month-to-
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month. Even though residents can pay their tax bills in installments if they have to,
some cannot afford the rise. Maybe over the time period some people who do not
have a job now will have one.
o Commissioner Marcoplos said that he might change his mind, but today he is seeing
the advantages to a one-time increase. Phasing will make residents experience a tax
increase year after year; after only one increase over the past eight years residents
will find that repeated increase objectionable. The amount may not be as important
as the perception that we are in an era of tax increases. I also would like us to have
some revenue stored up front before what I expect will be a difficult future. I see the
benefits of phasing as well, he said, and I look forward to our continued discussions.
o Commissioner Dorosin said he is leaning toward phasing. It is how I would run my
home finances, he said: putting a large necessity on a credit card and paying the
amount off over time. If I thought all our residents could pay off the $7M all at once
then I would support a one-time increase, but we all can’t. The one-time increase
might be enough to displace people.
o Commissioner Rich said she supports a one-time approach, at least right now. We
told folks that if they voted for the bond referendum it would mean a five cent
increase in their taxes. Residents will have to pay a lot more under the phased rather
than the one-time scenario. I think we should continue the conversation and weigh it
out together.
o Commissioner Jacobs noted that the Board has been talking about the highest
possible increase under the two scenarios. If we actually did some of the other things
– cost reductions, other revenue enhancements, efficiencies, adjusting the reserves
– then the tax increase might be lower – two cents instead of four cents -- and more
palatable as a one-time event.
o Commissioner Marcoplos said that another option is to phase in the increase in two
increments (year one and three, for example).
o Commissioner Price said that when the tax increases stopped over the past eight
years, residents’ expectations settled around the idea that the tax rate does not
increase. She added that even if the Board decided on a one-time increase for FY18-
19, there is no guarantee that new conditions would not arise making it necessary to
increase taxes again in the next or in future years.
• Ms. Hammersley thanked the Board for this discussion. She said her thinking when
recommending phasing to SWAG was that in the later years an opportunity might arise to
help avoid the later phases. The numbers are not my primary consideration when I craft a
budget recommendation, she said. The primary consideration is the balance across
environmental sustainability, social justice, and economic vibrancy. We’re affecting people’s
lives, and we need to keep that in mind as we make our decisions. We’ll give you as much
information as we have to help you in understanding the impacts. This is the first time we
have talked about the budget before the budget, and it is giving me a greater perspective for
thinking about how I’m going to address this without surprises for you all.
• Commissioner Rich said that the County’s messaging on the budget situation has to happen
repeatedly. It used to be you had to say something three times before people remembered
it, now that number might be seven. It’s important for us not to have our message hijacked.
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Commissioner Dorosin said that the message should not be depressing, about scarcity. We
should emphasize some of the positive things we are doing around affordable housing,
around FSA, around the things the bond is allowing us to do at Chapel Hill High and for
housing. We are careful and responsible stewards of the public’s monies, and from that
stewardship we are accomplishing great things for our residents. Ms. Hammersley added
that this is a manageable situation. It is not “slash and burn;” it will help us to be even more
creative at finding better ways together to meet our residents’ needs. Commissioner Dorosin
added that the long term picture looks especially good.
1:45 Stretch Break
2:00 Economic Development Districts
After a short break, Jim Kitchen, Chair of the County’s Economic Development Advisory Board,
introduced Joe Hines and Blake Hall of the Timmons Group. Timmons Group presented on the
Economic Development Site-Related SWOT Analysis that they had conducted (PPT):
SWOT ANALYSIS
Overview
Why is Economic Development
Important to the County
Background Review
Study Findings
Study Recommendations
Wrap-up discussion
Why do you need Economic Development?
Creates “Living Wage” Jobs & Opportunity for ALL your citizens (blue collar and white collar
jobs)
Local tax revenue from Real Estate and Machinery & Tools
State tax revenue from Employee Wages & State Income Tax
Helps build resources for your locality and state
Creates wealth within your community
Social Justice - allows you to build schools, pay for healthcare and other social programs as
well as help set up training programs for your citizens
Where Orange County stands today….
Lacking “Ready to Go” Sites and Buildings
Not as much developable property as we thought once you place constraints on the
properties & remove inhabited properties
Ever increasing competitive market with shorter and shorter timelines for decisions to be
made (i.e. Need diverse “Ready to Go” Product)
Properties are overpriced compared to adjacent localities (Alamance)
Lacking water & sewer capacity (gallons per day) in districts
Missing out on opportunities for Prospects due to lack of Sites and Buildings as well as
inadequate water & sewer capacities
Desired Outcomes of Study
More “balanced” Residential vs. Non-Residential Split of Tax Revenues
Try to accomplish 70/30 Split Countywide
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Create Living Wage Jobs for existing residents
Preserve Uniqueness & Culture of Orange County
Economic Development outcomes should be a major consideration for infrastructure
investments
Better coordination with other County Departments and Utility Systems (i.e. Planning, Utilities,
etc.)
The Big Picture
Economic Development Partnership of NC and North Carolina is moving up the business
rankings
Need to align your sites & infrastructure with the market
It takes time and resource (financial and political) to commit to a long-term Economic
Development Strategy
Orange County appears to be at the intersection of Commerce and Trade with I-40 and I-85
merger
We’re bullish on the future of Orange County
Now is the time to align your resources and commit to “make your own future”
Economic Development is getting increasingly competitive
Site Selection Magazine
Site Selectors’ Top Location Criteria
Rank Location Factor Orange County
1 Existing Workforce Skills Strong
2 State and local tax scheme Marginal to Competitor Localities
3 Transportation Infrastructure Strong
4 Utility Infrastructure Lacking / Needs Improvement
5 Land / Building prices & supply Marginal / High
6 Ease of permitting & regulatory procedures Marginal
7 Flexibility of Incentive Programs Neutral
8 Right-to-work State Strong
9 Availability of incentives Neutral
10 Access to higher education resources Strong
How fast are prospects moving?
$4.93 billion investment & over 14,000 jobs
2014 – Boeing announced $1.1 billion & 2,000 add’l jobs
Orange County – Unique Assets & Opportunities
Two Interstates: I-85 and I-40 Merge
UNC Chapel Hill & Durham Technical Community College
Adjacent to Research Triangle Park
RDU and GSO International Airports
On the cusp of RTP and Piedmont Triad
Diverse Culture & Millennial “Coolness” Factor
Rural Character with Urban Access / Amenities Acts as a “Gateway” for Northeast US
(via I-85) and Eastern NC (via I-40) to Western NC and Southeastern US
Orange County – Southeastern US
Access to markets via I-40, I-85 & I-95
• Map
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Orange County – Regional Perspective
• Map
Orange County – 2015 NCDOT Interstate Traffic Counts
• Map
Orange County vs. Rest of NC Comparative Traffic Counts
County (City) Interstate 2015 NCDOT Traffic Counts
Durham (Durham) I-85 46,000 to 96,000
I-40 90,000 to 181,000
Wake (Raleigh) I-40 104,000 to 167,000
Alamance (Burlington) I-40 & I-85 111,000 to 123,000
Guilford (Greensboro) I-40 & I-85 69,000 to 135,000
Mecklenburg (Charlotte) I-85 108,000 to 178,000
I-77 74,000 to 182,000
Forsyth (Winston-Salem) I-40 52,000 to 103,000
I-40 Bus 50,000 to 77,000
Orange I-40 58,000 to 73,000
I-85 43,000 to 47,000
I-40 & I-85 98,000 to 103,000
Natural Opportunities - 8 Interstate Interchanges within the CITAN’s and EDD’s
• Map
Opportunity Costs – Does Water &Sewer Matter? What Mfgr Opportunities has Orange missed
out on…
• Graph
Opportunity Costs? What has Orange County lost out on to Alamance
• Graph
Project Sky – Large Grocery Distribution Center
$328 Million Investment
1,100 jobs
$41,000 / yr (“Living Wage” Jobs)
Orange County Submitted
4 site visits to Buckhorn Road Sites
Met in closed session to pre-authorize local incentives
TBD where they will locate….
What has Orange County had a legitimate shot to win?
Opportunities from2012 – 2017 Potential Investment Potential
Jobs
Manufacturing $1.3 to $1.6 Billion 2,400
to 2,555
Distribution / Alamance $393 Million 1,304
Project Sky $328 million 1,100
Totals $2.0 to $2.3 Billion 4,804 to 4,959
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Water & Sewer Capacities for EDD’s / CITAN’s
• Graph
METHODOLOGY FOR SITE ANALYSIS
Sites Analysis
For Sale / Vacant
Less than 5 Acres / Residential (excluded from developable area)
Greater than 5 Acres with structures on land (excluded need to approach land owners)
Environmental / Physical Constraints
Streams, Buffers
Easements
Topography
Wetlands, Floodplains
Jurisdictional
Impervious limitations
Landscape Buffers
Building setbacks
Zoning
Highway overlay buffer
Additional Considerations
Adjacent land use
Aesthetics
Engineering Judgement
Buckhorn CITAN – Case Study
• Map
Eno CITAN- Case Study
• map
Overall Summary – Developable Acres- graph
Totals 549 3,010 615 2,396
ACTUAL Developable Acreage of PODs = 668 Acres or 22%
* Assumes no property constraints, structures, setbacks or parcel boundaries
Overall Summary – Developable Acres
Total County Acreage – 272,546 Acres
EDD’s
Acreage within EDD’s – 2,379 Acres
GIS Acreage (Excluding R/W) – 1,856 Acres
Available & Vacant Lands – 832 Acres
Developable Pods - 454 Acres - 0.17% of Total land in County
CITAN’s
Acreage within CITAN’s – 1,494 Acres
GIS Acreage (Excluding R/W) – 1,154 Acres
Available & Vacant Lands – 495 Acres
Developable Pods - 214 Acres - 0.08% of Total land in County
Industrial Investment & Trends- graph
Morinaga: $48 Million for 120,000 SF ($400 per SF)
Water & Sewer Requirements: 40,000 GPD
Site Size: 21 acres
Adjacent Parcel: 55 acres
Potential Build-out: 360,000 SF (3 Morinaga’s)
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What can Economic Development afford the County? A realistic scenario…graph
Real Estate Tax Rate: $0.8377 per $100
Key Take Aways
Data Indicates Orange County has Legitimate Prospect Activities and Opportunities to close
deals
There is less developable acreage than originally anticipated in the EDD’s and CITAN’s
Water & Sewer capacity is an issue for recruiting high $$ per SF industries (Food &
Beverage, Manufacturing/Bio, IT/Data Centers)
Orange County has some legitimate properties that can be developed, however, the County
needs to be thinking beyond the existing CITAN’s and EDD’s
Economic Development opportunities can generate significant tax revenues to help pay for
Infrastructure, Schools and other key County
Services in addition to creating “living wage” jobs
Other factors to consider…
Curb Appeal & Compatible uses are factors
Ease of access to Interstates & Turning Movements
Residential Development & Potential Traffic Patterns
Land Prices Revisited
Alamance County – Comparable Land Sales- graph
Land Prices Revisited
Durham County – Comparable Land Sales- graph
Current Listings on Real Estate Market Alamance County (as of Dec 31, 2017)-graph
• Average Price Per Acre = $33,809
Current Listings on Real Estate Market Durham County (As of Dec 31, 2017)-graph
• Average Price Per Acre = $40,744
Current Listings on Real Estate Market Orange County (As of Dec 31, 2017)
• Average Price Per Acre = $51,681
Relative Comparison of Real Estate Pricing
Relative Comparison of Real Estate Pricing
County
Buckhorn EDD – Optimistic Build Out 3.1M SF
Why are projects NOT locating here?
• Adjacent Residential Development
• Adjacent to Schools / Soccer Fields
• Limited access due to rail on north side of interstate
• Lack of Water & Sewer
• Land costs significantly higher than competing sites in adjacent locals
Immediate Recommendations
Enter discussions with Mebane to increase capacity within water & sewer agreement
Have Planning Department interact with the Economic Development Department on a regular
(monthly) basis and during infrastructure planning stages.
Work with the Towns & revisit intergovernmental agreements to make sure they are
conducive to the needs of Economic Development
Approach property owners about willingness to sell their properties within the Buckhorn,
Efland and Hillsborough EDD’s / CITAN’s
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Prioritize development of the top sites in EDD’s / CITAN’s
Buckhorn CITAN: Property on Ben Wilson Road
Buckhorn EDD: Rohl / Collins Property, Flea Market Property, Clark Property
East Efland CITAN: 304 Mt Willing Road – Rezone to align with development goals
Hillsborough EDD: approach property owner on NW quadrant of intersection of I-40 and Old
86 to gage willingness to sell. Continue activity at southwest quadrant.
Immediate Recommendations
Complete necessary due diligence to achieve Tier 4 status on top sites.
Geotechnical, Wetland Delineations, Topographic & ALTA Boundary Surveys, etc.
Tier 4 is considered “Certifiable” status and has eliminated any UNKNOWNS or
RISKS regarding site or infrastructure development that could negatively impact timeline for
development. Generally 9-12 months of development timeline.
BUDGET: Site dependent but generally $1,000 to $1,500 per Acre with infrastructure
already in place (significantly increases value of property on a per acre basis)
Immediate Recommendations
Align zoning within CITAN’s and EDD’s to be consistent with preferred development goals
Immediate Recommendations
Consider adjusting boundaries of EDD’s/CITAN’s AND Water & Sewer Districts to include large
tracts adjacent to these districts with low cost of development (utility extensions, etc.).
Significant property within the EDD’s and CITAN’s have been lost to Non or Minimal Tax Paying
entities such schools, soccer fields, solar farms, etc. In order to potentially gain that area back
there may be opportunities to expand or redraw the boundaries of the EDD’s and or
CITAN’s. There are a few larger tracts with minimal environmental impacts located near or
adjacent to the existing EDD’s/CITAN’s that could be explored; however this may mean
adjusting the water sewer agreements.
BUDGET: $10,000 to $15,000 in Consultant time to evaluate parcels as well as Staff Time
Thinking outside the EDD’s and CITAN’s - Buckhorn CITAN – Example Parcels- MAP
Study Recommendations
Complete a countywide water and sewer study to identify options to increase water and sewer
capacities.
A countywide water and sewer study would identify opportunities to increase and expand water
and sewer capacities within each service area. A full study would help the County to better
understand the limiting factors and what the cost and timelines are needed to increase the
availability. The ED staff is losing opportunities regularly based on not being able to meet the
demands for water and/or sewer.
This needs to be completed on behalf of the County, and not the jurisdictions or authorities who
own and manage the water & sewer systems.
BUDGET: $75,000 to $100,000
Study Recommendations
Complete a GIS Site Selection Study to identify sites with greatest development potential near
or adjacent to development corridors.
A GIS site selection study is a non-bias computer based site selection study that can look over
all parcels within a county or selected area to determine developability based on selection
criteria defined. For example, if the parameters were to identify all parcels with XX acres of
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developable acres adjacent to rail within XX miles of the interstate, queries would be run to find
the best parcels available. Once the data is assembled running queries can be run quickly.
BUDGET: $15,000 to $25,000
Study Recommendations
Consider advantages of developing “Ready to Go” product. Could form a public-private
partnership.
Shovel / Pad Ready Sites
Spec Buildings
Approximately 60-70% of inquiries come in for Shovel / Pad Ready Sites and/or Existing
Buildings. Shovel ready and speculative building has some risk based on the financial
investment needed to develop sites; however, it is best way to reduce development timelines
and has proven to be a successful model in other locations throughout the state.
BUDGET: $50 to $100 per SF for Spec Buildings (including site work)
$50,000 to $100,000 per acre for Shovel / Pad Ready Sites
Study Recommendations
Consider gaining “control” of properties (i.e. option agreements) with high development
potential. These sites would be identified with the GIS Site Selection Study.
Approximately 60-70% of inquiries come in for Shovel / Pad Ready Sites and/or Existing
Buildings. Shovel ready and speculative building has some risk based on the financial
investment needed to develop sites; however, it is best way to reduce development timelines
and has proven to be a successful model in other locations throughout the state.
BUDGET: $100 to $200 per acre for options
Study Recommendations
Reinitiate Discussions & explore developing a research park with UNC Chapel
Hill and taking advantage of the research and entrepreneurial culture of the Research Triangle
Park (RTP).
Developing a relationship with UNC and developing a common goal to create a research park
could be an easy step to help the County and University attract talent and industry to the region
similar to other Universities throughout the Country.
BUDGET: Staff Time
Comparable University Parks- graph
Other Considerations
Re-evaluate and potentially reallocate funds for existing water and sewer projects that appear
to have minimal ROI.
Evaluate and enhance the “express” review process to make sure it is consistent with “fast-
track” permitting in the site selection market.
Pursue grant opportunities for top sites (this will most likely require property “control”).
Gold Leaf
Duke Energy Site Readiness Program
Evaluate underdeveloped interchanges in the county (Exit 263 & 266 in particular).
Recommendation Per Area
Buckhorn EDD
Work with Flea Market property owner on land price vs comps
Complete due diligence items for available properties
Work with the City of Mebane to increase water and sewer availability
Hillsborough EDD
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Meet with land owner for property on northwest quadrant to gage willingness to sell
Extend sewer south of interstate 40
Complete Due Diligence items such as environmental investigation
Recommendation Per Area
Eno EDD
Investigate willingness to sell large tracts on western side of district,
(potential rail sites, although these do not have sewer, long term goals show
providing sewer to this area).
Look at reducing size of district to minimize residential
Work to develop option to make the 70/85 interchange more user friendly Buckhorn CITAN
Work to rezone parcels to protect them from development that is not in the best interest of
Orange County and Economic Development staff.
Secure the land south of Morinaga to prevent from residential development.
Look to expand water and sewer boundary agreement and extend boundary south of
Bowman Road
Look for opportunities to extend water service within the district.
Recommendation Per Area
West Efland CITAN
Study options to provide access to site
Review site to determine if rail service is possible
Complete an environmental investigation to determine if streams and buffers are correct.
If the above can be accommodated look to extend sewer service to the properties.
East Efland
Work to provide access from exit 160 at Ben Johnson Road to extend to the large pod to the
west.
Work with Orange-Alamance water to expand serviceability for new users in the area
Complete environmental assessments for the largest developable property
Look into options to support one large user (may require relocation new sewer)
Recommendation Per Area
Hillsborough CITAN
Look for site options to expand the existing facilities should the existing user want to remain
on site
On the smaller site to the north, work with residents to see willingness to sell although this is
a small parcel with heavy environmental constrains make this site challenging for development.
Cornelius
Look to market vacant properties for redevelopment
Improve aesthetics within the district.
Add sidewalks and bus shelters at bus stops
Improve main intersections
Focus on creating pedestrian connections from neighborhoods to Cornelius Street
Look for grant opportunities for redevelopment
A Site Selector’s Perspective
Additional Consultant Recommendations
Regional Cooperation and Collaboration is a Major Key to Economic Development Success.
Abandon the EDD & CITAN names – confusing to the Site Selection professionals relative to
other localities. Label them “Economic Development Corridors” or “Development Corridors”
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Look at developing supplier / logistics parks for OEM’s and other manufacturing companies.
Orange County has a tremendous opportunity given the logistics network in place with I-40 & I-
85 and proximity to RTP & Research Universities
More swiftly implement Article 46 Funds for infrastructure related projects.
Study Conclusions
Lacking “Ready to Go” Product
Not as much developable property as we thought once you place constraints on the
properties & remove inhabited properties
Ever increasing competitive market with shorter and shorter timelines for decisions to be
made (i.e. Need diverse “Ready to Go” Product)
Properties are overpriced compared to adjacent localities (Alamance)
Lacking water & sewer capacity in districts
Missing out on opportunities for Prospects due to lack of product & inadequate water & sewer
capacities
In reply to a question from Commissioner Dorosin, Mr. Hall explained that vacant properties
were included in the site selection methodology regardless of whether the properties were for
sale; properties greater than five acres with housing structures on them were not included.
In reply to a question about living wages from Commissioner Marcoplos, Mr. Hines said that the
County’s first step is to have a product, a suitable parcel with water and sewer available. That
way the County would be in the position to say No to undesirable prospects as opposed to the
prospects rejecting the County. Once the County has suitors, it can be more selective, for
example by using living wages as a criterion, he said.
Commissioner Jacobs said he has a mixed reaction to the report. For the most part what you
are describing is positive and hopeful, he said. I think we can address most of the concerns that
Timmons Group has raised. But it reads as though it does not understand Orange County’s land
use plan, its environmental ethics, some of the reasons why we have done what we have done.
For example, siting a school in an EDD was the only way we were able to extend water and
sewer to the EDD at that time. Instead of looking at that as a negative, you should understand
that the school was how we got water and sewer to the area. Second, the two Interstate
interchanges you recommend for development are in the Rural Buffer, which for 25 years and
as an essential component of our land use plan is not to have water and sewer extension. Third,
you should not be referring to a countywide water and sewer plan; I think you mean a water and
sewer plan that is inclusive of the development corridor. We have watersheds into which we
decided 35 years not to extend water and sewer. Some of this just feels like boiler plate.
The other ideas – trying to get property ready for sale and trying to have property pre-zoned –
may be worth exploring, he said, although we just approved a development on a property that
was pre-zoned and the neighbors did not understand; we would need to accompany this
approach with a public education process.
Steve Brantley, Director of Economic Development for the County, said the county has some
theoretically developable properties, but they are disbursed across buffers, utility lines, streams,
homes, and properties that are not for sale. We don’t see a lot of projects looking for one acre
sites, he said, and there are not a lot of one-acre sites contiguous to each other that can be
combined to support a larger footprint. The average site per acre of developable properties is
quite low, he said.
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In reply to a question from Commissioner McKee, Mr. Hines said the limited availability of water
and sewer is most significant factor is making the County’s EDDs unattractive.
In reply to a question from Commissioner Price, Mr. Hall said if there was not a sufficient supply
of willing land owners within an EDD then the availability of willing land owners adjacent to an
EDD might open up new opportunities.
In reply to a question from Commissioner Price, Mr. Hines said that “legacy issues” were factors
in the ability of the Planning and Economic Development Departments to collaborate. We want
to ensure that both departments are on the same page, he said. He referred to a transportation
study conducted by Planning that had not engaged Economic Development. A collaboration gap
exists between Orange County and Hillsborough as well, said Mr. Hall.
Commissioner Marcoplos suggested that the Board revisit the Eno EDD during a future work
session. We might no longer be looking at that area in the same way as we did 30 years ago, he
said. Perhaps some modifications are in order. There are a lot of residents near there, sensitive
environmental areas, a blighted Scottish Inn property which I can’t imagine much better
replacing right now, and uncertainties about water and sewer. Maybe at that work session or
another time the Board can talk about boundary adjustment for the Buckhorn EDD.
In reply to a question from Commissioner Dorosin, Mr. Hines clarified that sewer service is an
even greater constraint than water supply. There is a limit on capacity now, and a further limit
imposed by the cost of providing that capacity, he said. If Mebane is going to spend $20M
upgrading its treatment capacity, for example, is Orange County going to pay for a proportion of
that cost in order to gain access to a proportion of that capacity? In addition, there are costs
associated with extending the water and sewer systems to the properties. Commissioner
Dorosin then asked f would make more sense to raise the profile of properties where there
already is water and sewer, beyond the EDDs.
Commissioner Dorosin wondered how realistic it is to think in terms of “getting another
Morinaga.” Perhaps we’re not competitive for developments like that, and instead should be
more strategic about realigning our approach to another model. Mr. Hines said that it would be
smart to prepare for the next Morinaga – at least to know the costs of water and sewer
extensions to likely sites -- so that when it appears the County is positioned to act. You won’t
have time to act when the opportunity shows up. You need 12 months or less to extend the
utilities.
Commissioner Jacobs said that during negotiations with Mebane about the Buckhorn EDD, the
City opposed future water and sewer extension below NC-10. If Timmons is recommending that
kind of expansion, then the implementation is going to be much more complicated than
Timmons appears to appreciate.
Commissioner Jacobs said that Duke University might be interested in a research campus at
the Eno EDD. It’s so expensive to bring water and sewer to that area that we will need a
partner, and the only partners possible are Duke and Durham. We tend to be focused on
Carolina, but Duke is Orange County’s largest property owner.
Commissioner Jacobs said that “big game hunting” needs to fit into a larger economic
development strategy. Part of that is, how much are we willing to invest in a framework for “big
game hunting.” We never have had that conversation. It would be good to have numbers to
inform us on what that would mean. Settlers Point was already zoned, but people still were very
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unhappy that we were changing the way in which that property is going to be used. We should
not speak lightly about changing the borders of an EDD without doing a lot of outreach in
advance with the public. People here have a more aggressive attitude than elsewhere in the
state about how they want to be treated with regard to their land. I felt reading the report that
Timmons was doing what it was supposed to do, but that it was not as tuned to local conditions
as we are.
Commissioner Burroughs said she was struck this morning by the immediate impact the
Wegman’s project has on the Orange County budget. “Big game hunting” can make a difference
on the budget, on the quality of life in Orange County, on taxes, and on the resources we have
available to do what we want to do.
In reply to a question from Commissioner Burroughs, Mr. Hall explained that sewer service
already exists on NC-10. In order to make the 95 acres south of NC-10 next to the Buckhorn
EDD available, the water and sewer boundary needs to be updated, he said. Water would need
to be extended from the Morinaga site. Mr. Benedict added that the land use plan would need to
be changed in order for the water and sewer boundary to change. Commissioner Burroughs
said she thinks it is time to have a discussion about changing the water and sewer boundary in
that area; 35 years is a long time, she added. She also said she is open to another conversation
with Mebane. I don’t want us to assume that what we have done in the past in what we will do in
the future. On a smaller note, she added, I’m open to eliminating the name “CITAN.” Every time
I see it I have to look up what it means.
Commissioner Rich said that the Board needs to have a work session to follow-up from today’s
discussion. I would like to learn at that work session how much we are paying to support our
economic development efforts, and what the payoff is from that investment. I’ve been on this
Board for six years, and other than Morinaga and Wegman’s I’ve not seen the needle move
forward, she said. In addition, at the work session we need to discuss Article 46 funding, she
said. The Towns have been asking for Article 46 funding, but we tell them we cannot give any of
it to them because we are investing it into economic development infrastructure.
I also agree with my colleagues here who already have said that we can think much further
outside of the box. Lots of smaller development might be more fitting than another Morinaga,
for example. Another research campus such as Carolina North might not be an appropriate
model for us, she said; that effort fell apart. And let’s be careful about referencing Amazon as
the kind of business we would want to attract. Amazon has destroyed Seattle. It gentrified the
City, chased away the artists and grunge community, took away its charm, and raised the cost
of living to a ridiculous level.
Finally, she said, Mebane has a $4M surplus because it is directing its non-residential
development to its Alamance side and its residential development into Orange. Commissioner
McKee said that Mebane is directing non-residential development into Alamance because the
timeframes and cost of development are lower in Alamance than they are in Orange.
Commissioner McKee said that the County’s fiscal situation calls for an approach to economic
development that is optimistic, hard headed, and realistic. Some of the decisions might get us
unelected, but let’s not do the same things over and over and expect different results; that’s the
definition of insanity. We’ve been doing the same thing with EDDs for 30 years. It’s only recently
that we have put water and sewer in Buckhorn. Only in the past few months has this Board
moved forward with a sewer system in Hillsborough. The Eno EDD is still “on the books,” but I
don’t have a clue as to what that means. There are sites across Old NC-10 from the Buckhorn
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EDD that we won’t touch, but we all say it needs to be included. Let’s pick a number – a
thousand feet, two thousand feet – and draw a line. A couple of years ago, he said, we added
five words to the Unified Development Ordinance that almost eliminated development at every
intersection with I-40 in Orange County: “where sewer and water exist.” Those words were
added on the fly. Those words eliminate the otherwise prime developable properties at the I-40
intersections with NC-86 and New Hope Church Road, because those areas are in the Rural
Buffer. I don’t have an issue with the Rural Buffer, but I do have an issue with a conversation
dominated by “you cannot touch this.” We have to revisit this sacrosanct attitude. We can use a
little common sense here.
We’re not going to catch a lot of “big game,” he said, but we caught one with Morinaga and
another with Wegman’s. They will have an immediate impact. Maybe we need a lot more along
the scale of USA Dutch. I agree with that. I have no problem with all sizes. And they are paying
decent wages. It’s disconcerting to me to hear phrases like “Orange County values” and
“Orange County vision.” Orange County is gentrified. We are not a rural county. Chapel Hill is
not a village. Hillsborough is not a mill town. If we don’t take a different path with our economic
development then we are going to become an elitist, gated community.
I want to know what my fellow Board members mean when they say we need to realign our
strategy, he said. Does that mean we walk away from what we have been doing? I hope that
means we need to go out to get everything we can get. Commissioner Rich said that to her it
means an inventory of what we already have and what we have not yet gotten, of thinking of
new ideas for what we are doing. What we’re doing now – what we have been doing for 30
years -- is not working. We need to start thinking at a higher level than how we have been
thinking. Commissioner McKee said that we should not change our approach just because there
will be a backlash in the community. I don’t want to impinge upon the established residential
community next to the Eno EDD, he said, but we can take an area out of Eno, put water and
sewer there, and support some development. We have to have the willpower to stand up to the
backlash that’s coming, he said.
Commissioner Price said that the Board has tried to protect the existing residential community
next to the Eno EDD. We’ve tried to put transitional kinds of development across the street from
residential areas so people are not living across from a manufacturing plant. Any plans should
be flexible. We need to reassess areas that have been stagnant for 30 years and decide anew
what to do with these chunks of land.
Commissioner Price said she was not seeing anything in the Timmons study about incubators,
cottage industries, small technology, etc. Those are the kinds of projects Jim Kitchen has been
working on with people in Chapel Hill. She noted that some of the Article 46 funds are being
used for small businesses. But most of the Timmons report is about manufacturing. I find that
kind of narrow, she said. Mr. Hines replied that Timmons looked for the “game changers” - the
big components and opportunities being missed for the small sites in Orange County if you had
the appropriate water and sewer infrastructure in place. There are a lot of indirect benefits to the
kinds of development Commissioner Price is talking about, he said. But we saw you already
taking steps to implement those sorts of things and wanted to show you the kinds of things you
are missing out on. Commissioner Price said she thinks the incubators, cottage industries, and
small technology businesses do not have to be indirect players, but significant components of a
diverse economic ecosystem.
Mr. Hines said that while sub-economies can underlie a local economy, Orange County will not
attract the kind of development it needs if it does not solve the water and sewer infrastructure
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issues Timmons is raising. We are aware that UNC-CH said no to that site, but times change,
people change, and there are too many of these university parks popping up around the country
to say that Orange County should not revisit that kind of development. American Underground
in downtown Durham is a phenomenal success story that contains Google and Apple and other
components. The business school at Duke University has an international footprint of over 60
countries that are alumni. I’ve had conversations with NC Commerce Secretary Copeland about
using that network as a path to attracting international companies to North Carolina. There is so
much here in the Triangle.
Commissioner Dorosin said that it would be relatively inexpensive for the County to address the
marginal rating identified on p. 7 in the Timmons report regarding “ease of permitting and
regulatory procedures.” If there is other lower hanging fruit like that then I think we should
identify and address them, he said.
On the macro scale, he continued, I think a realigned economic development strategy means an
expansion of our options. If we have to do something different to make the EDDs successful,
then we have to determine what that is, such as extending water and sewer where we can, and
how much that costs, and then whether that cost is worth it. But I’m not sure it is worth it.
Wegman’s is not in an EDD, it’s in Chapel Hill. American Underground and Amazon want to be
close to a community and a downtown and things like that. I think we need to identify the most
valuable parcels in the County and focus on those. And where are the other opportunities?
There’s the NC-54 study taking place that might identify potential in that corridor for commercial
development. There are issues associated with Old NC-86 we can discuss. I don’t have the
answer, but I think there is a more comprehensive context to set before we agree to extend
water and sewer to these big parcels in order to better market them for economic development.
I worry that we might have over valued the highway as the greatest lure. I’m hearing that
Amazon wants an attractive social setting for its employees, where people can go to restaurants
and bars and cultural venues.
Commissioner McKee said that in the late 70’s through to the early 2000’s his perception of
“Orange County values” was that it was anti-business. We got behind our neighbors because of
that. Shopping centers located just beyond our borders would have provided millions of dollars
for us to use for parks and social services. I’m not interested in turning our intersections with I-
40 into Myrtle Beach. I am interested in determining whether a small foot print is available at the
Eno EDD that would not have a negative impact on the existing residential area, and in deciding
about whether to expand Buckhorn, and in looking elsewhere in the county including the Towns
for economic development. Wegman’s wanted to be in town; I have no problem with supporting
the effort where ever it needs to be. But this Board is going to have to push forward.
Commissioner Marcoplos said that he used to imagine EDDs all built out. I now believe that’s
not going to happen. Another way to look at this for the 21st century is to set a target of, say,
three larger businesses, to ask what kinds of businesses would have the impact we need in
terms of taxes and jobs, instead of trying to fill up all the EDDs. Then we can focus on those
while at the same time providing the kind of support needed by local businesses and some of
these other creative ideas. Then we might say, where is the land today that would generate the
most interest now among the kinds of two or three larger businesses we are interested in. Never
mind the lines they drew in the 80’s when these EDDs were being created. That would help us
to shift our attention to the land that is going to get us where we want to go. Maybe we take the
east side of the Buckhorn district out, for rural land.
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And if we got a minor league baseball team here, he added, we could call it the Orange County
Values.
Commissioner Jacobs said that no Board member has ever opposed the extension of water and
sewer to the EDDs. Some of us worked hard to change the perception of Orange County from
being anti-business, and to a large extent I think we have succeeded, he said.
I would like to define a holistic view of economic development for Orange County, he added.
“Big game” has to fit into a context. There is a broader mosaic that we’re working on that
includes the arts, tourism, agricultural economic development, etc. W e need a conversation
about how all these things fit together and how we want to use our resources.
In addition, he said, it is no small thing for the people who are affected for us to change the land
use plan and have an effect on properties that people live on. We must talk with the residents
adjacent to the Eno EDD, and have a public component to this conversation.
Finally, he said, I do believe there are untouchable places here. We don’t want to be like Wake
County or Durham County, and we sure don’t want to be like Alamance County. It doesn’t even
have zoning. We want to look like Orange County ten years from now, and fifty years from now.
We’re way ahead of those counties in a lot of respects. We should be talking about the things
we have that we are proud of, not what we lack. Instead of talking about our land values being
so high, let’s talk about how beautiful our land is. That’s where tourism comes from.
Mr. Brantley thanked the Board for devoting time at the retreat for discussing economic
development. I’ve been here for over six years, and this is the first time we have had this level of
discussion. Please recall, he said, that the SWOT analysis was not intended to be a county
economic development review. It is specific to the EDDs and CITANs, which necessarily comes
with an industrial and warehousing focus. Also please recall that Article 46 was passed in 2011
in order to create a funding mechanism for extending utilities to economic development districts.
Recall that the 2005 economic development plan set 2010 as the target for when all the EDDs
would have infrastructure. The County did not have the funding, or start the Phase 1 Efland-
Mebane sewer line until 2010-11. It will be two years from now before the Hillsborough EDD line
is completed, before the Efland Phase 2 line is completed, and maybe before the Eno EDD is
completed. We have not been waiting 30 years for the EDDs to generate economic value,
because in truth they have had no zoning up until recent years, no incentives until 2011, no
marketing, and no utilities. Article 46 also created funding for small business. That includes
PFAP, Launch, the small loans and grants, and arts and tourism. We’re not discussing those
areas. I was hired in 2011 to be the Big Game Hunter. It was specific to not only managing the
Department’s overall functioning and budget and to include these other areas, but also for the
first time to try to layer in some larger businesses recruitment in which Orange County had been
deficient for decades. We were fortunate in 2013 to get Morinaga. Our office sees new
prospects knocking on the door on a daily basis. We’ve gone over six years from getting zero
inquiries to now having seventy to eighty qualified inquiries a year that could help us meet the
budget that would have us paying at or beyond the living wage, creating job opportunities,
slowing or reversing gentrification, especially among blue collar residents. We’re at a point in
market interest now that we should have been at 25 or 30 years ago. I get impatient when I see
projects, like Lidl -- $110M-$150M, 200-300 jobs -- that should be here but go somewhere else.
It could have been on one of our sites. We need to have utilities in place, and land that can have
houses on the sewer line paid for with Article 46 funds to serve Morinaga and other companies.
We do have some projects that max out our sewer capacity. The irony is that many of these
projects represent the tax base or the salaries at high levels that we want. We need to a have a
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piece of Orange County economic development in addition to agriculture, tourism, and small
business, which we do well, focused on larger scale industrial recruiting. When we hit on that
regard we are going to be having a big win. When Morinaga announced here, they needed 90-
100 people; 900 people showed up at Durham Tech to apply for those jobs. In the first week of
February, I’m going to be meeting with two clients. One wants to put a hotel in one of our EDDs
and a large warehouse in another. The other has a 200 job, $20M project to make a medical
product. These are the kinds of projects that can fit here: we have the land, the sewer capacity,
the zoning, and the quality of life. So, that’s what we should be focusing on in addition to all else
that we are doing. Let’s not throw in the towel in terms of industrial recruiting at this level. Even
though we are not Alamance County, in the past three years they’ve announced 2,000 jobs and
a $1B in investment. We can get a piece of that. RTP is east of us and Alamance to our west.
Chatham to the south of us has the new Chatham Park. We can’t afford to be in a vacuum. We
have to be prepared to try to get what we want to attract.
Commissioner McKee said that the Board needs to have an honest conversation moving
forward. We will be walking into a buzz saw if we activate the Eno EDD, but we need to have
the conversation. I agree that there are Orange County values to uphold, he added. And I agree
that there are untouchable areas. I just don’t think the land immediately to south of Old NC-10 is
untouchable.
Commissioner Rich said she is not ready to throw in the towel on “big game hunting.” But none
of the current members other than Commissioners Jacobs and McKee were on the Board when
the Article 46 funds were designated for EDD infrastructure. I don’t know why people from the
Towns did not speak up for those funds then, but it’s a problem now when they ask for those
funds. I think that’s wrong. There is economic development in the Towns that could be
encouraged with those funds. That’s where businesses like Google want to be. I would like to
talk more about the Article 46 funds when we get back together to talk about economic
development.
Commissioner Marcoplos said he does not think it is all that risky to activate the Eno EDD.
While there may be a “buzz saw” on one side, somebody else will be handing us flowers. We’ll
be thanked for expanding the tax base, for thinking about jobs, for making use of a district that
was set aside for economic development purposes.
Commissioner Price thanked Mr. Brantley for his remarks. She said she would be interested in
hearing from a university expert about the trends in entrepreneurship. I hear about young
people inventing things, starting businesses, and then moving from Orange County to expand.
Why aren’t they remaining here when they expand? I want to hear about trends other than those
related to “big game hunting.” I’m interested in economic development for the urban areas. Eric
Hallman has asked me why the County is not interested in this. I think Chapel Hill and Carrboro
would be interested in this as well. I also hear from people living near the Eno EDD: they are not
opposed to all development. They wouldn’t mind a bank, for example. Or maybe drug store.
They just didn’t want to see manufacturing. So we should continue to talk to people there.
Commissioner McKee said that he would be open to considering a proposal from the Towns to
use the Article 46 funds. If Wegman’s had needed a sewer line, for example, then I would have
supported it, he said. Commissioner Jacobs said that it is only recently that Article 46 funds are
available. We told the towns that they would benefit from the tax revenues that would come from
the EDDs, and they supported our proposal to use Article 46 funds for the EDDs. We can
evaluate proposals from the towns on a case by case basis, but the philosophy is to use those
funds to catch up our capacity to support economic development in the EDDs by providing
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infrastructure. If we want to change the formula, then also should be talking about our small
business loan program, which is not as active as I had thought it would be. Let’s put all this in
the context of a larger economic development strategy.
3:45 Retreat Wrap Up
Last thoughts from each person at the table reflecting on the retreat, including what worked well,
what to consider doing differently in future retreats?
Each person at the table had the opportunity to share their last thoughts:
Commissioner Rich – I always get something good from our retreats. It is helpful to talk freely
and to learn. The room does not have good acoustics, so I don’t think I would want to return to
this location. Otherwise a good day.
Commissioner Dorosin – I appreciate everyone’s candor. I think it would be better to have more
engagement from staff, at least to have staff sitting closer so that it would be more conducive for
staff to participate. There was more presentation today than I would have wanted. I value the
back and fourth among us. I wonder if next year the presentations could be provided at a Board
meeting prior to the retreat or as material to review in advance. Resource people could be
available for questions, but not to present. I liked having the focus today on a single or two
related topics; these were the right topics to take up now. Finally, I think we need to consider
our messaging: how what we talk about gets talked about. The facilitator did a good job.
Commissioner Burroughs – The “appreciation” ice breaker at the start helped us to disagree
comfortably later in the day. I liked the presentations here, in real time. They focused my mind
and kept the material fresh for our conversations. I wish you all luck next year!
Commissioner Marcoplos – I find it valuable and satisfying to have these kinds of discussions,
to have ancillary ideas arise from our back and forth. I think we should have a conversation
about our communications: how we communicate, how our ideas get communicated, how our
policies get explained, how we operate in this new media environment. Thanks to all in
attendance. This was a great event.
Mr. Myren – It was a great discussion. We got sufficient direction. I look forward to putting
together the budget.
Ms. Hammersley – This was very helpful to us, and for the team that is here today. We do not
see the challenges as a negative. It is always the case that there are not enough resources to
do everything we want. This meeting today was beneficial because the Board’s input to us is
very important. We heard from you today, before we enter the budget process, and that will
make the coming process even better than the ones we have had before – which you have told
me you have appreciated. It is scary when you see gaps, but we’re going to balance the budget.
It does not have to be painful as long as we are honest about what we can do and what we
cannot do. Thank you for today.
Commissioner Price – Today has been informative. I appreciate the Chair’s focus on “where we
are going.” That’s what retreats are for: talking about the future. Not doom and gloom. There is
a horizon ahead, and as long as we are moving toward it then we will make progress.
Commissioner Jacobs – I always enjoy the conversation. I don’t think we have ever figured out
how to involve the staff in such a way that it is worth their time to be here. I appreciate that so
many members of the staff came and listened. The more you can hear our conversations the
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better we all are as going forward as a team. The facilitator does a good job, but I would like to
have conversations that are not moderated, part of the time. It doesn’t have to be comfortable,
but it can be useful. It’s awkward to have to wait 5-10 minutes to respond to what someone else
has said. The topics on today’s agenda fit together. It may be worth having a retreat topic on
how we communicate; we have done that in the past but obviously we have not surmounted that
problem. Another topic for a future retreat might be the land use plan. The single greatest
investment of a lot of people is their home, and when we talk about changing the character of
their neighborhood through changes in the land use plan, and then it gets reported, then we are
causing uncertainty or distress, and that is not the way to treat people. So, we may need to be
more sensitized to land use, zoning, and how we work through all that. Maybe we need to do a
better job at having community meetings before we have discussions of land use, so people are
a little more plugged in. Commissioner Dorosin asked when the last time the County had a long
range visioning process. Commissioner Jacobs referenced the Shaping Orange County’s Future
process from the mid-90’s, and an effort by the Planning Director “to do the good plan,” which
“got shot down.” Commissioner Price referenced a lengthy Comprehensive Plan update
process. Mr. Benedict mentioned some small areas planning processes for Efland, Eno, and
Hillsborough.
Commissioner McKee – Appreciated the work of the retreat planning committee. You chose two
“red meat” issues. We had a good discussion today. The back and forth was respectful and
informative.
The meeting adjourned at 4:00p.m.
Mark Dorosin, Chair
Donna Baker, Clerk to the Board
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