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HomeMy WebLinkAboutMinutes 09-17-2024 - Business Meeting I APPROVED 10/15/24 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUSINESS MEETING September 17, 2024 7:00 p.m. The Orange County Board of Commissioners met for a Business Meeting on Tuesday, September 17, 2024, at 7:00 p.m. at the Southern Human Services Center in Chapel Hill, NC. COUNTY COMMISSIONERS PRESENT. Chair Jamezetta Bedford, Vice-Chair Sally Greene and Commissioners Amy Fowler, Jean Hamilton, Phyllis Portie-Ascott, and Anna Richards COUNTY COMMISSIONERS ABSENT: Commissioner Earl McKee COUNTY ATTORNEYS PRESENT: John Roberts COUNTY STAFF PRESENT. County Manager Travis Myren, Interim Deputy County Manager Caitlin Fenhagen, and Clerk to the Board Laura Jensen. (All other staff members will be identified appropriately below) Chair Bedford called the meeting to order at 7:00 p.m. All commissioners were present, except Commissioner McKee. Chair Bedford explained that Commissioner McKee was representing the Board on a trip with the Chamber for a Greater Chapel Hill-Carrboro and is just getting back into town. 1. Additions or Changes to the Agenda None. 2. Public Comments (Limited to One Hour) a. Matters not on the Printed Agenda There was no one signed up to speak. b. Matters on the Printed Agenda (These matters will be considered when the Board addresses that item on the agenda below.) 3. Announcements, Petitions and Comments by Board Members Commissioner Richards said the ABC Board met today and received the results from their audit. She said they received a clean audit report. Commissioner Fowler said she attended the Board of Health Behavioral Health Subcommittee meeting on September 111", and received a presentation from Carl Johnson, PhD., with the UNC Gillings School of Public Health on the relationship between social media and teen mental health. She said the subcommittee with be working on recommendations for actions to take locally to combat anxiety and depression in teens as it relates to social media. She said the Board was alerted by an email from Melody Kramer that the UNC Coal Plant may switch to incinerating pellets that may potentially PFAS. She petitioned staff to further investigate this recent proposal by UNC and how the Board can best voice their concerns. She said she would like to know if there is research already available that can characterize the safety or danger associated with the incineration of PFAS. She said from her understanding, it looks like it requires extremely high temperatures to destroy PFAS and that incineration may disperse them instead. She said this is being studied by multiple agencies and there doesn't seem to be clear evidence yet to ensure the safety of this proposed new process. She said after hearing from staff, she would like the Board to consider sending a letter to UNC during their public comment period, and possibly hold a public hearing at a Board meeting as well. 2 Commissioner Portie-Ascott said she toured Partnership Academy today and said Principal Stan Farrington is doing a great job with the transition to a new location. She said the new gym is great and the students didn't have a gym at the previous school location. Principal Farrington said when comparing fall semester last year to spring, the discipline numbers went down, and academic scores went up. She said there is a quiet room and also areas for students to learn outside of the classroom. She said she also attended the ribbon-cutting for the Wonderful House last week with Chair Bedford and Commissioner Hamilton. She said the Wonderful House is bridge housing in Chapel Hill and is named after a peer support specialist and former resident manager, Wonderful Buie who passed away earlier this year. Chair Bedford announced that today is National Voter Registration Day and encouraged people to register to vote and check their voter registration. Vice-Chair Greene said she spent most of the day in Durham facilitating a panel as part of a summit on Clean, Connect Communities sponsored by the Southern Environmental Law Center. She said it stressed the necessary connections between transportation planning, land use planning, and affordable housing in the interest of the climate and livability. Commissioner Hamilton said she recently attended the Area Agency on Aging Aging Advisory Council meeting and the director of the voting program with Disability Rights North Carolina spoke about how to Access the Vote. She said if anyone is assisting someone with disabilities get out to vote, Disability Rights NC has a program and can visit accessthevotenc.org or call 1-888-WEVOTE-2 for more information. She said this is a non-partisan organization. Commissioner Richards said she forgot to mention that she attended the JLOW board meeting last month and they are working on a strategic plan as well as doing a lot of work on the water rules for all members. She said this is an exciting collaboration and encouraged board members to serve with this group next year as part of their committee selections. She said they will be having an annual meeting in February. 4. Proclamations/ Resolutions/Special Presentations a. Proclamation Honoring Emergency Management Professionals and Proclaiming September 30, 2024 as Emergency Management Professionals' Day The Board approved a proclamation recognizing the invaluable contributions of the Emergency Management Professionals in Orange County and proclaiming September 30, 2024 as "Emergency Management Professionals' Day" in Orange County. BACKGROUND: In 1951, the North Carolina General Assembly officially acknowledged the roles and duties of state and local governments in preventing, preparing for, responding to, and recovering from natural or man-made emergencies, as well as hostile military or paramilitary actions. Nearly 26 years later, in 1977, North Carolina legislators enacted the North Carolina Emergency Management Act. This Act solidified the responsibilities concerning the protection of vulnerable individuals and property, swift and effective rescue operations, care and treatment, and the coordination of efforts to mitigate, prepare for, respond to, and recover from disasters involving federal, state, local, private, and quasi-governmental entities. Since the terrorist attacks on September 11, 2001, the field of emergency management has seen significant growth as communities and organizations worldwide acknowledge the crucial role of professional emergency managers. Orange County has a rich legacy of maintaining an outstanding emergency management program led by skilled professionals dedicated to enhancing the resilience of the community. Emergency Managers from Orange County have often been called to serve throughout North Carolina and across the Country during times of crisis due to their professionalism, vast knowledge, and extensive experience. Many of these professionals have served in various capacities to shape local, state and federal policy, shared their knowledge by educating new emergency management practitioners, and/or continued their service in highly 3 prominent positions, such as leading the District of Columbia Homeland Security and Emergency Management Agency in the Nation's Capital (former Orange County Emergency Management Specialist Clint Osborn). Today, the Orange County emergency management program includes a robust network of professionals throughout the community including County and municipal governments, public health and healthcare, public school districts and higher education, and the Orange Water and Sewer Authority. During times of crisis, these professionals coordinate closely throughout the entire life cycle of the event or incident. These individuals manage Emergency Operations Centers, provide policy guidance, public alert and warning, and coordinate community support both inside and outside of their organizations. In non-crisis moments, these emergency management professionals possess extensive knowledge of the evolving hazards and risks that threaten the community, offer essential leadership, management, and operational expertise needed to help our communities, organizations, and agencies bolster resilience to emergency situations. Kirby Saunders, Emergency Services Director, addressed the Board. He said in our world where crises can emerge unexpectedly, the role of emergency managers has never been more important. He said these professionals are at the leading edge of disaster preparedness and response and safeguard the wellbeing of people around the world. He explained that emergency managers play a crucial role in ensuring the safety and wellbeing of communities during times of crisis and non-crisis. He said they are the guiding force in preparing for, responding to, and recovering from disasters of all kinds from hurricanes and earthquakes to human-caused crises. He said some key responsibilities include disaster planning to prepare in the event of a disaster. He said they also provide training and education to first responders, volunteers, and the public in order to prepare them for a crisis. He said in times of crisis, they oversee the coordination of response among various agencies during disasters and make sure that agencies collaborate efficiently and effectively. He said they are an essential communication bridge between the public, media, and various stakeholders. He said after a crisis, emergency managers lead recovery efforts and evaluate disaster response to strengthen response in the event of a future emergency. He said the local emergency management network is very strong in Orange County and thanked the Board for considering this proclamation. Commissioner Hamilton read the following proclamation: ORANGE COUNTY BOARD OF COMMISSIONERS PROCLAMATION EMERGENCY MANAGEMENT PROFESSIONALS' DAY SEPTEMBER 30, 2024 WHEREAS, the State of North Carolina has implemented a state emergency management program, requiring localities to develop corresponding programs to mitigate the various threats and hazards that pose risks to the state's residents; and WHEREAS, emergency management safeguards communities by organizing and combining all essential activities to enhance the ability to prevent, prepare for, respond to, and recover from potential or real natural disasters, acts of terrorism, and other human-made disasters; and WHEREAS, emergency management professionals perform a vital yet often overlooked role in offering the essential leadership, management, and operational expertise needed to help 4 communities, organizations, and agencies create emergency plans and procedures, ensure staff are well-trained and drills are conducted, issue emergency warnings and alerts, and obtain resources to safeguard lives and property while bolstering resilience to emergency situations; and WHEREAS, emergency management professionals play a crucial role in directing or assisting emergency operations, ensuring that emergency operations centers are constantly ready 24/7, and actively participating in operational activities throughout the entire emergency event cycle; and WHEREAS, emergency management professionals collaborate and communicate with a wide range of partners across federal, state, regional, and local government levels, the private sector, non-governmental organizations, and the general public; and WHEREAS, emergency management professionals possess extensive knowledge of the hazards and risks that threaten Orange County and our communities, the specific programs and strategies available to address them, applicable federal, state, and local laws and compliance guidelines, and the roles of critical partners essential to effective preparedness, response, and disaster recovery; and WHEREAS, emergency management professionals assist allied professionals in the medical community and in emergency response, business, nonprofit, and faith organizations to achieve preparedness, response, and recovery capabilities; and WHEREAS, the Orange County Board of Commissioners is proud to honor the service and commitment of its emergency management professionals and recognize their contributions to the lives, health, and safety of all who live, visit, and do business in Orange County. NOW THEREFORE, we, the Orange County Board of County Commissioners, do hereby proclaim September 30, 2024, as Emergency Management Professionals' Day in Orange County, in honor and recognition of Orange County's Emergency Managers. Adopted this 17t" day of September 2024. Jamezetta Bedford, Chair Orange County Board of Commissioners A motion was made by Commissioner Hamilton, seconded by Commissioner Fowler, to approve and authorize the Chair to sign the proclamation. VOTE: UNANIMOUS 5 b. Orange County Emergency Preparedness Month Proclamation The Board approved a proclamation declaring September 2024 as"Orange County Preparedness Month". BACKGROUND: National Preparedness Month is recognized each September to promote family and community disaster planning now and throughout the year. The focus of this year's Preparedness Month is on empowering Asian American, Native Hawaiian, and Pacific Islander communities to act today to prepare for future risks and disasters. North Carolina continues to experience an unusually high volume of disasters, to include severe weather, flooding events, and extreme temperatures. So far this year, Orange County has experienced multiple watches and warnings issued by the National Weather Service for severe weather and flooding. The 2024 Hurricane Season outlook continues to be above normal in predictions for both severity and frequency of storms. Asian American, Native Hawaiian, and Pacific Islander communities face unique barriers when it comes to accessing disaster preparedness information and resources that take their languages, experiences, and cultures into consideration. A 2024 Federal Emergency Management Agency (FEMA) survey of households across the country reported that 65% of Asian Americans and 58% of Native Hawaiian or Pacific Islanders surveyed indicated that they did noy believe taking a step to prepare would make a difference and were not confident in their ability to prepare. The Asian American, Native Hawaiian, and Pacific Islander communities in Orange County have grown by over 22% since 2010. It is critical as a community to work together to ensure that all residents are connected and prepared to remain resilient in the face of future disasters. Sarah Pickhardt, Chief of Emergency Management thanked the Board for the previous proclamation. She said September is National Preparedness Month and agencies across the country come together to emphasize the importance of preparedness. She said preparedness involves the collaboration of the private sector, government, non-profits, and individuals. She said this year they are specifically focused on Asian American, Native Hawaiian, and Pacific Islander communities. She said they face unique barriers when it comes to accessing disaster preparedness information and resources that take their languages, experience, and culture into consideration. She said this community has grown by 22% in Orange County since 2010, so putting a special focus on reaching them and developing plans is very important. Commissioner Portie-Ascott read the following proclamation: ORANGE COUNTY BOARD OF COMMISSIONERS PROCLAMATION September 2024 - "Orange County Preparedness Month" WHEREAS, it is critical for every community, business, family, and individual in Orange County to be prepared for natural and man-made disasters, including tornadoes,flooding, and hurricanes, as well as disease outbreaks like COVID-19; and WHEREAS, in 2018, Hurricane Florence brought significant rainfall in September, and was followed by Tropical Storm Michael in October; both storms causing widespread power outages and flooding,with Florence resulting in more than $26 million in damages while Michael exceeded $500,000; and 6 WHEREAS, the National Weather Service has confirmed three separate tornadoes have impacted Orange County since 2019; and WHEREAS, the National Weather Service issued nineteen Severe Thunderstorm Warnings, five Flash Flood or Flood Warnings, and one Tornado Warning for Orange County in 2023; and WHEREAS, year to date, Orange County has already experienced significant severe weather activity to include twenty-three Severe Thunderstorm Warnings and ten Flash Flood or Flood Warnings; and WHEREAS, community members can take a few simple steps — creating an emergency supply kit, making a family disaster plan, and staying informed —to help make preparedness a personal priority and improved health a goal in our community; and WHEREAS, this year's Preparedness Month focus is on empowering Asian American, Native Hawaiian, and Pacific Islander communities to act today to prepare for future disasters, as we know that these communities face unique barriers when it comes to accessing disaster preparedness information and resources that take their languages, experiences, and cultures into consideration; NOW, THEREFORE, we, the Orange County Board of Commissioners, recognize Orange County Emergency Services - Emergency Management Division along with emergency managers throughout the nation, who have collaborated to recognize September as National Preparedness Month, and the Board joins with them in encouraging Orange County residents to stay informed and prepared; FURTHERMORE, the Orange County Board of County Commissioners hereby declares September 2024 as "Orange County Preparedness Month." This the 17th Day of September 2024. Jamezetta Bedford, Chair Orange County Board of Commissioners A motion was made by Commissioner Portie-Ascott, seconded by Commissioner Fowler, to approve and authorize the Chair to sign the proclamation. VOTE: UNANIMOUS c. Adult Education and Family Literacy Week Proclamation The Board approved a proclamation designating the week of September 16-20, 2024 as Adult Education and Family Literacy Week in Orange County and commending Orange Literacy for its 40 years of dedicated service to the community. BACKGROUND: The week of September 16-20, 2024 is considered Adult Education and Family Literacy Week by several organizations on a national level. In addition, Orange Literacy is celebrating its 40th anniversary this year promoting literacy, and has positively impacted the lives of thousands of adults and families in the Orange County community. Vice-Chair Greene read the following proclamation: ORANGE COUNTY BOARD OF COMMISSIONERS PROCLAMATION Adult Education and Family Literacy Week—September 16-20, 2024 and Orange Literacy 40' Anniversary WHEREAS, literacy is a fundamental skill that empowers individuals and strengthens communities; and WHEREAS, adult education and family literacy programs provide essential education and support to adults and families, enabling them to achieve personal and professional goals; and WHEREAS, Orange Literacy, celebrating its 40' anniversary this year, has dedicated four decades to promoting literacy and has positively impacted the lives of thousands of adults and families; and WHEREAS, the commitment and efforts of Orange Literacy in providing educational opportunities and fostering a love for reading and learning are commendable and deserve recognition; and WHEREAS, Adult Education and Family Literacy Week serves as a reminder of the importance of literacy and the need to support literacy programs in our community; and WHEREAS, it is fitting and proper to recognize the achievements and contributions of Orange Literacy and to encourage continued support for literacy initiatives; NOW, THEREFORE, we, the Orange County Board of Commissioners, do hereby proclaim the week of September 16-20, 2024, as Adult Education and Family Literacy Week in Orange County, and commend Orange Literacy for its 40 years of dedicated service to our community. This the 17t" day of September 2024. A motion was made by Vice-Chair Greene, seconded by Commissioner Hamilton, to approve and authorize the Chair to sign the proclamation designating the week of September 16- 20, 2024 as Adult Education and Family Literacy Week in Orange County, and commending Orange Literacy for its 40 years of dedicated service to the community. VOTE: UNANIMOUS 5. Public Hearings a. Public Hearing Regarding a Proposed Economic Development Recruitment Incentive and Performance Agreement Between Orange County and Morinaga America Foods, Inc. The Board held a public hearing on the County's issuance of a proposed seven-year performance- based incentive agreement, with claw-back provisions, to induce the manufacturing expansion of Morinaga America Foods, Inc. in Orange County, NC. BACKGROUND: Local and state governments in North Carolina have the goal to promote economic development by encouraging the location of new businesses and the expansion of existing businesses. This activity serves to diversify the local tax base, increase employment 8 opportunities, and introduce desired job skills and related benefits to a community, and for the benefit of its residents. The Local Government Act, North Carolina General Statute (NCGS) 158- 7.1, outlines the requirements of public hearings, and NCGS 158-7.1(a) specifically addresses the requirement that economic development appropriations "must be determined by the governing body of the city or county to increase the population, taxable property, agriculture industries, employment, industrial output, or business prospects of the city or county" This public hearing has been scheduled in compliance. Company Background: Morinaga America Foods' current operation is based in a 101,495 square foot manufacturing facility located along Wilson Road in the County's western Buckhorn Economic Development District. This operation makes "HI-CHEW" candy, employs approximately 204 full-time associates, and has a current County property tax valuation of$31.6 million. The facility is located within the County's designated "Buckhorn Economic Development District" and Mebane's city limits. On September 3, 2013, Morinaga announced its decision to make its first major manufacturing investment in the United States, and in Orange County, as follows: • Capital Investment: $48 million • Employment: 90 jobs • Average Salary: $37,969 • Annual Payroll, with benefits: $3.4 million • Facility Size &Type: Approximately 110,000 square feet • Type of Operation: Production of the fruit flavored candy snack "HI-CHEW" Description of Proposed Manufacturing Expansion Project: • A doubling of the current manufacturing operations at the existing Orange County site to increase production capacity for"HI-CHEW" candy. • $136 million total new capital investment, with $127,077,000 million in new capital investment forecast to occur over the five-year investment period (2024-2028), as outlined in the Performance Agreement, and the remaining $9.9 million investment to occur on or after 2029. 204 additional new jobs will be created between 2026 — 2030 with an average annual wage of$48,912 (or approximately $23.52 per hour). These jobs are full-time and include healthcare and related employment benefits. New construction of an additional 132,600 square feet of production space. • Competing sites were considered in Taiwan and China (where Morinaga operates existing Hi-Chew manufacturing plants), or in a new facility to be constructed in Vietnam. • Orange County's site is the Company's existing 21-acre factory property located at 4391 Wilson Road, Mebane, NC. The site is outlined on the following location map. 9 b The proposed incentive will be performance-based with respect to the County's annual verification of Morinaga' s targeted increases in (1) employment, wages & benefits, and (2) new taxable real & personal property value over the next five years, as the Company expands. Incentives would only be paid following confirmation of the Company's required annual growth measures. Basis to Calculate the Value of Orange County's Performance-Based Incentives 1) INVESTMENT — Morinaga will increase property valuation by at least $32,806,000 in real property and at least $94,271,000 in personal property, to total $127,077,000 over five (5) years as detailed in the table below. If these real and personal property valuation targets are not achieved, the proposed annual incentive payment will be reduced proportionally. im $4,877,000 $25,778,000 $2,134,000 $17,000 $0 $32,806,000 • • $23,856,000 $45,919,000 $20,671,000 $675,000 $3,150,000 $94,271,000 • $28,733,000 $71,697,000 $22,805,000 $692,000 $3,150,000 $127,077,000 2) EMPLOYMENT— Morinaga will add net new employment consistent with the job growth chart below. If annual job targets are not achieved, the annual incentive payment will be reduced by $500 per full-time equivalent employee not hired. By the year 2030, the Company will create 204 new positions with an average salary of$48,912 per year (or approximately $23.52 per hour). ,,I-0 "411cli NEEMR, 10 New Full- 57 51 48 36 12 204 Time Jobs The proposed inducement payment will be in the form of a performance-based grant payable in up to seven installments over a seven-year period, at an amount equal to 75% of Morinaga's projected net increase in real & personal property tax valuation over the five-year investment period as outlined in the chart above for 2024—2028. Since the company's employment creation schedule (2026-2030) runs beyond the investment period, the County will withhold $500 per job that has not yet been created by December 31, 2030. The final payment will be made upon verification of job creation, with the final installment anticipated to occur in January 2031. This will ensure that annual tax revenues from this project's additional investment, net of annual incentive payments, remain positive in all years of the incentive agreement. Orange County Revenue Projections (first 5 years during the incentive period) 7 New Property Tax $24 M$84 10$3,881,197 Revenue IncentiVL_ -$185,953 -$634,519 -$738,494 -$690,344 -$661,589 -$2,910,898 Payment Annual Net $61,984 $211,506 $246,165 $230,115 $220,530 $970,300 Revenue • . . . mall • • $7,417,526 Incentive Payment -$2,910,898 Total $4,506,628 State of North Carolina— Incentives Approved on July 15, 2024 The State of North Carolina's "Economic Investment Committee" approved the State incentives for Morinaga America Foods, Inc. (see table below) during the North Carolina Department of Commerce's July 15, 2024 meeting. Immediately following this approval of State incentives, a public announcement was held on July 16, 2024 which was led by North Carolina Department of Commerce Secretary Machelle Baker Sanders, and attended by representatives from Morinaga, Orange County, and the City of Mebane. The public announcement addressed Morinaga's decision to expand the Company's existing facility located in Orange County, instead of the competing locations (Taiwan, China,Vietnam), subject to approval of local government incentives. State of North Carolina— Incentives State Tax Exemption on machinery & equipment purchases $5,936,558 One North Carolina Fund (discretionary grant) $100,000 N.C. Community College System's "Customized Training Value" $306,000 On-the-Job Training $50,000 11 Work Opportunity Tax Credit (WOTC) $146,400 Federal Bonding Program $255,000 City of Mebane— Incentives Approved on August 5, 2024 Morinaga's proposed expansion site is located adjacent to the existing facility and is currently located within the City of Mebane's city limits. Mebane's City Council approved up to $1,076,999 in performance-based grant funds and waived fees for the project at its August 5, 2024 meeting. Performance Based Incentive $576,999 Waiver of Development Start-Up Fees $500,000 Benefits of Morinaga America Foods Expanding in Orange County • Add another 204 full-time manufacturing jobs by 2030, paying approximately $23.52 per hour average wage. • The proposed recruitment incentive is revenue positive for each year of the incentive period, netting 25% per year of the actual new property tax valuation in the first five years. A ten-year revenue forecast(shown as Exhibit F in the Performance Agreement) indicates Morinaga will generate approximately$7,417,526 in additional gross property tax revenue for the County, receive up to a maximum of$2,910,898 in incentive grants, and the County will receive $4,506,628 in net property tax revenue. • Morinaga's Orange County property tax value for 2023 is listed at $31,602,085. With the projected $136 million in additional investment, the firm would likely become Orange County's 2nd largest manufacturing related corporate taxpayer (behind #1 Thermo Fisher Scientific, and with Medline Industries at#3). • Establishes another successful public/private partnership between Orange County and the City of Mebane to grow the industrial tax base and employment in a designated Rural Census Tract area. • Further illustrates the County's success applying Article 46 sales tax proceeds to fund water & sewer infrastructure in the Buckhorn Economic Development District for the goal of attracting significant non-residential tax base and employment growth. • Strengthen the County's partnership with the State of North Carolina's business and expansion efforts, as Governor Roy Cooper and N.C. Department of Commerce Secretary Machelle Sanders visited parent company Morinaga & Co., Ltd in Tokyo, Japan in October 2023 and met with President Eijiro Ota. State of North Carolina, Local Governments, &Workforce Development Partners Assisting Orange County in the Recruitment Effort • The North Carolina Community Colleges System & the Hillsborough campus of Durham Technical Community College will fund a"Customized Training Program"technical training assistance for the employees. This support will further elevate the skill level of Orange County residents who begin employment with Morinaga. 12 • The NC Department of Commerce has now approved state incentives and will serve as a liaison for State-assisted workforce development & pre-screening of applicants by NC Works, and community college support. • The City of Mebane has recently approved its own performance grant and will waive development start-up construction fees. • The Capital Area Workforce Development Board (CAWD), which Orange County is affiliated with as a member, is expected to provide funding for employment recruiting and screening services, on-the-job training, and incumbent worker training assistance. • Governor Roy Cooper and Morinaga & Co., Ltd.'s President Ota recently met in Raleigh on July 10, 2024, when the State of North Carolina continued its active recruitment for the expansion. • Governor Roy Cooper and NC Department of Commerce Secretary Machelle Sanders visited Tokyo, Japan in October 2023 to meet with parent company Morinaga & Co., Ltd.'s President Ota, and encourage the firm to expand its Orange County factory. II • Governor Roy Cooper and the North Carolina Department of Commerce featured Morinaga's locally made"Hi-Chew" candy in a large State reception in Tokyo that included representatives from all Japanese industries currently based in North Carolina, and the State's industrial prospects. 13 Nt-CHEW Cnndy Coin n an Foods Morinnpn UAL • During Governor Cooper's business recruitment trip to Japan in October 2023, Don Hobart (Vice Chancellor for Research at UNC Chapel Hill) spoke at the Southeast U.S./Japan annual conference that featured NC and six other southeastern states, plus several hundred delegates. Mr. Hobart's presentation focused on Orange County's Morinaga HI- CHEW factory as a successful example of a Japanese industry operating successfully in North Carolina. r r J - r Morinaga's International Business Profile • Morinaga & Co., which was founded in 1899 in Tokyo, Japan, is a major international confectionary & candy maker. Global sales revenue was comprised 53% in chocolates, caramel & biscuits, 19% in ice cream & frozen foodstuffs, 16% in health products, and 12% in cocoa/cake mix foodstuffs. The firm is Asia's equivalent to a Hershey's, Mars or Nestle. It is Japan's oldest and largest confectionary maker. 14 • In Japan, which is the world's #2 overall largest candy and confectionary market (behind the USA), the Company has over 40 different product lines,where it holds the#1 Japanese domestic market-share for candy. Morinaga ranks similar to Kellogg Company, Mars and Nestle in terms of worldwide retail sales. • Among Japan's top 3 competing confectionary makers, Morinaga ranks #1 for candy and caramel products, #2 for biscuits, and #3 for chocolate products. The chewy fruit flavored snack "HI-CHEW" holds the #1 spot within Japan and is the company's current product made here in Orange County. • Morinaga is aggressively marketing HI-CHEW across the United States and has successful store displays at Target, COSTCO, 7-Eleven, and Kroger, and is found locally at the Streets at Southpoint Mall ("It's Sugar", "World Market"). Sales in the U.S. have been increasing 20%-25% annually. • Additional product lines include frozen desserts (19%), foodstuffs (10%), and the internationally renowned Weider-brand health care products such as energy drinks, nutritional vitamin/mineral supplements & protein bars, & collagen-based beauty products (16% of sales). • Morinaga America, Inc. was established in Los Angeles in 2008 for the purpose of introducing the company's various product lines throughout the USA, starting with HI- CHEW. The "Hi-Chew" logo is advertised at all Duke University sporting events and can be seen nationally on all televised Duke NCAA basketball and football games. • Overseas partners include serving as the trademark distributor, licensee, or supplier for world-class confectionary companies such as Disney Japan, SUNKIST Growers, PEZ, Perfetti van Melle (Italy), Storck (Germany), Dare Foods (Canada) and Barry Callebaut AG (Switzerland). • Management's corporate philanthropy strives to be a "company that improves the lives of children worldwide". The firm partners with international non-governmental organizations (NGOs) in developing nations, and places a special emphasis promoting healthy nutrition, and funding for school facilities and educational supplies, especially among West African countries. • Morinaga was the first Japanese corporation to be affiliated with the World Cocoa Foundation (WCF), which was established with the objective to foster a sustainable cocoa industry and prevent the use of child labor in developing nations. This is achieved through the environmental protection of regions where major global chocolate corporations cultivate cocoa, and through economic and social development. Technical guidance and training support is provided to cocoa farmers through various programs that protect the natural and social environment. • Sustainability, Diversity & Inclusion corporate principles: The Morinaga Group's Sustainability of Morinaga I morinaga & co., ltd. Additional Company Information 0 Morinaga America Foods About Us: https://morinaga-america.com/story/ 15 • January 10, 2024, Launch of Direct-To-Consumer E-Commerce Platform for Hi-Chew: https://morinaga-america.com/hi-chew-launches-direct-to-consumer-e-commerce- platform/ • Morinaga Celebrates Hi-Chew Factory Opening: • https://chapelboro.com/news/business/morinaga-celebrates-hi-chew-factory-opening 1. Japanese Candy Maker Finds Sweet Spot in North Carolina: https://edpnc.com/success- stories/Japanese-candy-maker-finds-sweet-spot-north-carolina/ Steve Brantley, Economic Development Director, reviewed the background information for this item and made the following presentation: Slide #1 f ORANGE COUNTY NORTH CAROLINA Proposal for Orange County's Financial Incentives to Morinaga America Foods, Inc. MORINAGA Public Hearing by Orange County Board of Commissioners Whitted Building-Hillsborough, NC September 17, 2024 s 16 Slide #2 Location of Morinaga America Foods, Inc. 4391 Wilson Road, Mebane, Orange County # arim] tll 1 J41 E: y ORANGE COUNTY NORTH CAROLINA 2 Steve Brantley said this business is located in the Buckhorn Economic Development District and is within the city limits of Mebane. Slide #3 Current Operations • 204 full-time jobs • $31.6 million property tax valuation • 101,495 sq. ft. building HHCHE • 21-acre site HaCHEW • Makes 7 million pieces of HI-CHEW candy every 24 hours . • In operation since 2014 • Located at 4391 Wilson Road, Mebane, Orange County ORANGE COUNTY NORTH CAROLINA 17 Slide #4 Proposed Expansion • 204 additional full-time jobs during the 2026-2030 incentive period • $136 million in g investment HI CHEW ($127 million during the incentive r period of 2024-2028) • 132,600 sq.ft. building addition at the current factory location • $48,912 average annual wage (approximately $23.52 per hour) • HI-CHEW candy manufacturing • Competing sites were Taiwan and China (where Morinaga operates existing HI-CHEW manufacturing plants), and Vietnam. ORANGE COUNTY NORTH CAROLINA Slide #5 Outline of State & Local Incentives State of North Carolina Sales Tax Exemption on Machinery&Equipment Purchases $5,936,558 One North Carolina Fund (discretionary performance grant) $100,000 N.C.Community College System's"Customized Training" $306,000 On-the-Job Training $50,000 Work Opportunity Tax Credit $146,400 Federal Bonding Program $255,000 Orange Performance Based Incentive (as proposed) $2,910,898 City of Mebane Performance Based Incentive $576,999 Waiver of Development Fees $500,000 Total $10,781,855 ORANGE COUNTY 5 NORTH CAROLINA 18 Slide #6 Forecast of Morinaga America Foods' Capital Investment Schedule New Taxable Investment $4,877,000 $25,778,000 $2,134,000 $17,000 $0 $32,806,000 $23,856,000 $45,919,000 $20,671,000 $675,000 $3,150,000 $94,271,000 ® $28,733,000 $71,697,000 $22,805,000 $692,000 $3,150,000 $127,077,000 ORANGE COUNTY B NORTH CAROLINA Slide #7 Forecast of Morinaga America Foods' New Job Creation Hiring schedule for 204 new full-timejobs, with health care, retirement and related employee benefits ($48,912 annual salary, or, $23.52 per hour) k= Total Full-Time 57 51 48 36 12 204 Jobs ORANGE COUNTY NORTH CAROLINA 19 Slide #8 Orange County's Performance-Based Incentive • Performance-based incentive on 204 new jobs and $127,077,000 in capital investment. • Up to $2,910,898 in total potential County incentive to be paid upon verification of actual jobs and investment that is added per year. (Net revenue positive in all years). • Incentive value calculated at 75% of actual new property tax valuation in the first 5 years. (Same incentive formula as previously approved by the BOCC for ABB, Medline Industries, and the first Morinaga incentive in 2013). ORANGE COUNTY a NORTH CAROLINA Slide #9 Orange County's Performance-Based Incentive Revenue Projections: Orange County Revenue Projections (first 5 years) $247,937 $846,025 $984,659 $920,458 $882,118 $3,881,197 $185,953 -$634,519 -$738,494 -$690,344 -$661,589 -$2,910,898 $61,984 $211,506 $246,165 $230,115 $220,530 $970,300 Orange County Revenue Projections (first 10 years) New Property Tax Revenues $7,417,526 Incentive Payments $2,910,898 • $4,506,628 ORANGE COUNTY NORTH CAROLINA s 20 Slide #10 Benefits of Morinaga Expandinq in Orange Countv • Proposed recruitment incentive is revenue positive for all years,netting 25%per year during the first 5 years of the forecasted net new property tax valuation. Once the final incentive payment ends after year#5,annual net new property tax revenues for the County will rise to approximately$839,499 in the seventh year. A 10-year revenue forecast indicates Morinaga will generate approximately $7,147,526 to the County in additional gross property tax revenue,the County will pay Morinaga a maximum of$2,910,898 in incentive grants,and the County will net$4,506,628 in revenue. • Morinaga's tax value for 2023 was listed at$31,602,085.With the projected$136 million in additional investment,the firm will become Orange County's 2nd largest manufacturing related corporate taxpayer(behind#1 Thermo Fisher Scientific,and Medline Industries as#3). • Establishes another successful public/private partnership between Orange County&the City of Mebane to grow the industrial tax base and jobs in a designated Rural Census Tract area. • Demonstrates the County's success to apply Article 46 to fund water&sewer infrastructure in the Buckhorn Economic Development District,and attract significant growth in the non-residential tax base and employment. • Reinforces the County's partnership with the State of North Carolina's business and expansion efforts, as Governor Roy Cooper and N.C.Department of Commerce Secretary Machelle Sanders visited the company in Tokyo,Japan in October 2023 and met with parent company Morinaga&Co.,Ltd.and President Ota. ORANGE COUNTY NORTH CAROLINA Slide #11 Proposal for Orange County's Financial Incentives for Morinaga America Foods, Inc. Questions & Discussion ORANGE COUNTY NORTH CAROLINA Noriyuki Nishikawa, President and CEO of Morinaga America Foods, Inc. addressed the Board. He said that they intend to construct a second facility next to their current facility in Orange County. He said construction would begin in October 2024, and production will begin in January 2027. He expressed appreciation for the support of their investment. He said that Hi-Chew is the top selling candy in Japan, but recent US sales have surpassed those in Japan. He said that H- 21 Chew candies produced in Orange County are sold overseas. He said that the company is convinced Orange County is the best choice for a second factory due to the tremendous support from the local community and reliable employees. Steven La Sota, Partner of Brooks Pierce Law, made the following presentation: Slide #1 MORINAGA Orange County Board of Commissioners—September 17,2024 Slide #2 Overview: 1. Morinaga Background 2. Morinaga and Orange County 3. Expansion Project 4. Our Future Slide #3 22 Morinaga Background: • FounderTaichiro Morinaga begins selling candy in 1899! • Morinaga&Company formally established in 1910. •Japan's first modern candy company and first chocolate producer(1918). •Worldwide company with multiple first-in-class confectionary products and wellness snacks. Slide #4 Morinaga and Orange County: - rHhCHEW Slide #5 Morinaga Background: MORINAGA Group Network ,3oe 23 Slide #6 Morinaga Background : The Morinaga Group' s Corporate Philosophy Delicious, Fun, and Healthy The Morinaga Group will continue to create healthy foods 1 that can be enjoyed beyond generations,thereby bringing smiles to the faces of people around the world now and in the future. Good quality Only-one value Act globally Pursue quality Create new value Expand the scope and with integrity and inspiration possibilities of activities 1 � 1 Link together Sustainable society Strengthen relations of Contribute to trust with stakeholders a sustainable society Our Give first priority to customers Be a pioneer Have an indomitable spirit *QW-FITIPME A?a Value ties between people Align our business imperatives with social challenges Slide #7 Morinaga and Orange County: • 2013 - Morinaga America Foods, Inc. established as U.S. subsidiary • 2014— MAF, Inc. announces NC manufacturing facility • 2015— Hi-Chew production begins!!!! Amanda Hoyle By Amanda Hoyle—Staff Writer,Triangle Business Journal Mar 12,2014 Morinaga America Foods Inc.,the American affiliate of the Japanese candy maker of Hi-Chew candies,has finalized its purchose of 21 acres of land in western Orange County where it plans to begin construction of a manufacturing plant that will employ 90 people. 24 Slide #8 Morinaga and Orange County: Slide #9 Morinaga and Orange County: • 2024: • 204 Full Time Employees • Estimated Total NC Investment to date:approximately$47 Million • Hi-Chew Demand is GrowingH • U.S.sales up to$137 Million lost year? • Due to explosive growth of demand far Hi-Chew, current maximum manufacturing capacity will be reached in under 5 years. 25 Slide #10 Morinaga and Orange County: • Community Involvement Alp r S Slide #11 Morinaga and Orange County: • Community Involvement 26 Slide #12 Morinaga and Orange County: • Community Involvement — • Elementary School Donations • Mebane Christmas Parade • Adopt-a-Highway Clean-up • Other Charitable Activities Slide #13 Expansion Project • MAF to double the size of current production facility in Mebane. • By 2030— • 104 ADDITIONAL FULL-TIMEJOBS • ANTICIPATED CAPITAL INVESTMENT IN EXCESS OF$136 MILLIONH 27 Slide #14 Expansion Project • Alternative Considerations— • Expand existing facilities in China or Taiwan • Establish new facilities in Vietnam • Approximately$1.3 Million in tax abatement incentives available in Hanoi and Ho Chi Minh City • Establish new facilities in California, United States Slide #15 Expansion Project • Primary Considerations— • Project total investment cost/predictability of operating costs • Lead time for bringing additional capacity online • Workforce availability/recruiting/reliability • Geography of consumer demand/support from local community • International Relationships • Corporate Strategy—Wellness Products 28 Slide #16 Our Future - Proudly produced Locally In Mebane,North Carolina S t A motion was made by Commissioner Hamilton, seconded by Commissioner Fowler, to open the public hearing. VOTE: UNANIMOUS PUBLIC COMMENTS: There was no one signed up to speak. A motion was made by Commissioner Fowler, seconded by Commissioner Hamilton, to close the public hearing. VOTE: UNANIMOUS Chair Bedford welcomed representatives of Morinaga and expressed appreciation for this partnership and the jobs they bring to Orange County. A motion was made by Commissioner Richards, seconded by Commissioner Fowler, to approve the performance-based incentive agreement between Orange County and Morinaga America Foods, Inc., subject to final review by the County Attorney, and authorize the Chair to sign the Performance Agreement on behalf of the County. VOTE: UNANIMOUS b. 5311 Rural Area Formula Grant, 5310 Enhanced Mobility of Seniors & Individuals with Disabilities Formula Grant, and 5307 Urbanized Area Formula Grant for FY 2026 The Board held a public hearing on FY 2026 Transit Grants and approved the applications, program resolution, and local share certification. BACKGROUND: Each year, the North Carolina Department of Transportation (NCDOT) Integrated Mobility Division (IMD) accepts requests for capital, operations and administrative needs for county-operated transit programs.Additionally, the Federal Transit Administration (FTA) through NCDOT-IMD awards discretionary federal resources to states and direct recipients to replace, rehabilitate and purchase buses and related equipment and to construct bus-related 29 facilities including technological changes or innovations to modify low or no emission vehicles or facilities. Orange County Transportation Services (OCTS) is eligible to make application for administrative, operating and capital projects funding and seeks, including the Orange County local match, a total of $1,117,627 in combined federal and state transit project grant funding for FY 2026. Public Hearing notices were published in English and Spanish (Attachment 1). A Detailed breakdown is outlined in the table below: Grant 5311 Admin 5310 Operating ARP 5307 Operating Totals Total $ 206,794 $ 595,550 $ 315,283 $ 1,117,627 Federal $ 165,435 $ 297,775 $ 315,283 $ 778,493 State 1 $ 10,340 1 $ 0 1 $ 0 $ 10,340 Local 1 $ 31,019 1 $ 297,775 1 $ 0 $ 328,794 The 5311 Administrative, 5310 Operating, and American Rescue Plan (ARP) 5307 Operating grants provide financial assistance for public transit system services that promote economic and mobility self-sufficiency to the general public, the elderly and individuals with disabilities. The funds additionally support a system that enhances the access of residents in the urban and non- urbanized (rural) areas to health care, shopping, education, employment, public services, and recreation. Nishith Trivedi, Transportation Director, reviewed the background information for the item. Commissioner Portie-Ascott asked what education sites will be accessible. Nishith Trivedi said it will provide transportation to Durham Tech. Commissioner Richards asked if staff receives written comments from the public. Nishith Trivedi said staff has not received any comments. Commissioner Richards asked about using remaining ARPA money. Nishith Trivedi said there is a last amount that they are trying to use up. A motion was made by Chair Bedford, seconded by Commissioner Richards, to open the public hearing. VOTE: UNANIMOUS PUBLIC COMMENTS: There was no one signed up to speak. A motion was made by Chair Bedford, seconded by Vice-Chair Greene, to close the public hearing. VOTE: UNANIMOUS A motion was made by Commissioner Fowler, seconded by Chair Bedford, to approve the 5311 Administrative grant application for $206,794 with a local match total of $31,019, the 5310 Operating grant application for $595,550 with a local match total of $297,775, the ARP Section 5307 Operating application for$315,283 with no local match required; and approve and authorize 30 the Chair and staff to sign the FY 2026 Program Resolution (Attachment 2), Local Share Certification (Attachment 3), and Public Hearing Record (Attachment 4) as appropriate. VOTE: UNANIMOUS 6. Regular Agenda a. Approval of a Professional Services Contract with CPL for the Design of a New Crisis Diversion Facility The Board reviewed the cost proposal submitted by CPL for design services related to the construction of the Crisis Diversion Facility, and approved and authorized the Chair to sign the contract after final review by the County Attorney. BACKGROUND: The Crisis Diversion Facility is intended to divert individuals experiencing a behavioral health crisis from hospital emergency departments and the County's Detention Center by offering 1) behavioral health urgent care services for assessment, stabilization, treatment, and aftercare planning for patients 4 years old and older; and 2)facility-based crisis services for adults for longer-term treatment. In the FY 2023-33 Capital Investment Plan (CIP), the Board approved $2,047,155 for design services for the Crisis Diversion Facility and $22,952,845 for construction in FY 2024-25. Additionally, in the FY 2024-34 CIP, the Board approved $1,100,000 to acquire land for the facility. The County is negotiating to purchase property, but needs to begin design work so construction can begin in the summer of 2025. The County issued a request for qualifications (RFQ) for the design and related services for the Crisis Diversion Center, with only one firm, CPL, responding to the RFQ. CPL was previously selected to perform preliminary and schematic-level design and analysis services for developing the Crisis Diversion Facility. CPL's proposal was reviewed by the evaluation committee, consisting of County Manager Travis Myren; Interim Deputy County Manager Caitlin Fenhagen; Tony Maripietri, Chair of the Crisis Diversion Facility Subcommittee of the Behavioral Health Task Force; and Asset Management Services Director Alan Dorman. CPL was selected based on the strength of its response to the RFQ, and submitted a final proposal of$1,719,650. Within the proposal, $143,890 is devoted to schematic design services to evaluate up to two (2) different sites for the Crisis Diversion Facility. No funds beyond those will need to be expended until a final site has been purchased. Alan Dorman, Asset Management Services Director, made the following presentation: 31 Slide #1 ORANGE COUNTY NORTH CAROLINA Crisis Diversion Facility Project Update September 17, 2024 Slide #2 WHERE WE STAND • Tonight (9/17/2024) BOCC will review and approve a contract with CPL for the design of the Crisis Diversion Facility. • The County is evaluating a property in Hillsborough and should start negotiation soon on its purchase. ORANGE COUNTY NORTH CAROLINA 32 Slide #3 SELECTION OF CPL & PROPOSAL • In 2022 CPL was selected to provide preliminary/advanced planning services for the future Crisis Diversion Facility. • Final recommendation included a 27,000 sq.ft. facility with 18 patient care bays. • RFQ was issued in July 2024 and CPL was the only firm to respond. • Their proposal was selected based on their strong performance during the preplanning phase and their knowledge of the project. — Task I: Site Selection and Evaluation. $143,890 — Task Il: Construction Documentation thru Construction- $1,575,760 ORANGE COUNTY NORTH CAROLINA Slide #4 NEXT STEPS Next Steps: • Fall/Early Winter2024 Site Evaluation and Purchase Design Development by CPL Board Approval of Construction Manager At Risk Process RFQ for Construction Manager at Risk • Winter/Spring 2025 Construction Documents Preparation by CPL Bid of steel and electrical components (Requires Board Approval) Submission to Health Service Regulation (°NCDHSR") • Summer 2025 Biding Construction • Winter2026 Grand Opening ORARN GE�AROLINA COUNTY NOHCommissioner Richards asked if there is more than one site under consideration. Alan Dorman said one site is being considered at this time and up to two sites can be considered in the contract. Chair Bedford said a previously considered site is no longer available. 33 Commissioner Richards expressed concern about the cost of investment without a firm location. Alan Dorman said the cost of the contract is $145,000. Commissioner Richards asked how many sites that would cover. Alan Dorman said two sites. Travis Myren added that the county would not spend additional design funds if neither location works out. Commissioner Hamilton asked why other companies didn't bid on this project. Alan Dorman speculated that other companies may not have bid because CPL did the pre-planning for this project, and there was an assumption that the competition would be too stiff. Commissioner Hamilton asked how many other companies looked at it. Alan Dorman said they only received one proposal from CPL, and he does not know how many other companies reviewed the request. Commissioner Hamilton said she noticed that a retention pond was included on one of the proposed designs. She said a site where retention pond isn't necessary would be even better for safety concerns. She said it would be good to get an understanding of staffing in the evening. Travis Myren said there will be staffing 24 hours a day, which will be provided by the behavioral health contractor. Commissioner Hamilton said she would like some more information on staffing in the future. Commissioner Fowler said the plans look like this is a two-story building, thought it would be one story. Alan Dorman said this is due to negotiations with the property owner and future development opportunities. Commissioner Fowler said she also noticed the number of private rooms is smaller. Travis Myren said decrease in beds is because of a revised needs assessment in the community. Commissioner Portie-Ascott asked if there have been other instances in the past when only one bid was received. Alan Dorman said he isn't aware of one for design-bid services. He said it's common for construction projects, where they would have to go back out to bid. He said it is not required to get more bids for design projects, and they did not go back out to bid for this project. Chair Bedford said the same is true for schools. She said you have discretion for professional services. She said that they did receive multiple bids for the original proposal and a committee selected this company. John Roberts said this is a request for qualifications, different than request for proposals in construction and not obligated to take the lowest bid. He said he can't think of an instance that additional requests for qualifications went back out to bid. Chair Bedford clarified that at a couple of points in the presentation it was stated that RHA would operate the facility, and that has not been determined. She said a proposal for a facility operator will go out to bid. She asked if there was a way to negotiate for a one-story building instead of a two-story building. She said that it seems safer and better overall for this facility. She said this site is very good and close to an emergency room. She asked about Town of Hillsborough approval. Alan Dorman said hospital zoning has been approved by Town of Hillsborough. Commissioner Portie-Ascott asked when the closing date is. Alan Dorman said they are still in negotiations. Chair Bedford asked if it would come to a closed session. John Roberts said yes. Chair Bedford said that staff will need to keep the Board informed on the process for buying property. 34 Commissioner Hamilton said she would like to have an analysis from the experts about what is safe in terms of a one-story or two-story facility. Commissioner Fowler said she was asking about why it had changed. Commissioner Richards said this is an important opportunity to get it right. She said she hopes the facility won't be force fitted to this site. She said that was why she asked how many sites were included. Robin Washco of CPL said if there are multiple sites being analyzed, they determine the pros and cons of each site. Commissioner Portie-Ascott asked if the county has to pay additional money if the two sites fall through. Alan Dorman said there would be an additional expense if they have to find another site outside of the two currently being considered. He said there aren't that many large sites close to Hillsborough that could be used for this purpose. A motion was made by Commissioner Hamilton, seconded by Vice-Chair Greene, to approve the contract with CPL and authorize the Chair to sign it after final review by the County Attorney. VOTE: UNANIMOUS b. Opioid Settlement Funding Discussion The Board reviewed the cashflow analysis of the Opioid Settlement Funds by County staff, discussed different strategies for spending these funds, and provided direction to staff and the Opioid Advisory Committee. BACKGROUND: The County is a recipient of the NC Opioid Settlement Funds and will receive $12,296,286 over the course of eighteen (18)years. The structure of these funds is unique based on the specific repayment plans in each defendant's settlement (See Attachment 2). Because of the unique frontloaded structure, the County is faced with two distinct facts that it must balance over the coming fiscal years. The first is that the County has a significant reserve of funds on hand, $2.3 million, that could be allocated directly to nonprofit agencies or to County programs that provide high impact opioid abatement services this fiscal year. The second is that as settlement payments decline in future years, the Settlement Fund will not be able to sustain the five (5) existing County programs. By the last three (3) years of the Opioid Settlement Fund, FY 2036-39, the cost of the five (5) programs would exceed new annual payments by over$1 million. Therefore, the County will need to have a general plan to either end those five (5) programs (See Attachment 1)or transition those programs into the General Fund. Those programs currently support seven (7) time-limited positions. Based on the realities of this funding trend, County staff recommends removing the County programming from the Opioid Advisory Committee's awards. The County programs would be reviewed annually based on performance during the annual budget process. The exact timing of this transition or termination of programs would be determined by the allocation of funds for other initiatives. These could represent funding allocated to nonprofit organizations or to provide annual support for the operating subsidy of the new Behavioral Health Crisis Diversion Facility. Once completed, the Crisis Diversion Facility will require an estimated $2.8 million annual County tax supported subsidy based on current assumptions. The County can use Opioid Funds to offset some of that subsidy. In addition, the annual community meeting identified the Recovery Housing Support as the most critical need. The County could pursue this type of resource in partnership with Alliance Health using Opioid Settlement Funds. 35 Based on this information, County staff have created a cash flow model that can predict how long existing programs could be supported by the Fund depending on allocations to other programing for outside agencies, the Crisis Diversion Facility operating subsidy, additional housing resources or other high impact opioid abatement strategies.A simplified table of the impacts is below. As an example, if the County adds $500,000 of new programming with Opioid Settlement Funds, then the County will need to begin subsidizing the programming in FY 2029: Cost of Existing County Annual Additional I I Programs Programming -- County Subsidy Required $ 787,500 $ 0 FY 2035 $ 787,500 $ 100,000 FY 2034 $ 787,500 $ 250,000 FY 2032 $ 787,500 $ 400,000 FY 2030 $ 787,500 $ 500,000 FY 2029 $ 787,500 $ 750,000 FY 2028 County staff will present these scenarios on the implications of different funding targets on the General Fund in future fiscal years. This funding plan would be reviewed annually during the budget process based on changes in the needs of the community, best practices, and the financial status of the County's General Fund. Based on this presentation, staff requests that the Board provide the broad funding priorities in adding new programs to the Opioid Settlement Funds. In addition, staff asks that the Board provide specific funding allocation for nonprofit agencies. That amount, either as an annual allocation or as an upfront amount, will be used by the Opioid Advisory Committee to issue a Request for Proposal from nonprofit agencies. Kirk Vaughn, Budget Director, made the following presentation: Slide #1 ORANGE COUNTY NORTH CAROLINA Opioid Funding DISCUSSion September 17, 2024 BOCC Business Meeting 36 Slide #2 SETTLEMENT FUNDING TIMELINE Opioid Settlement Funding By Fiscal Year $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 " $0 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 ORANGE COUNTY NORTH CAROLINA Slide #3 CURRENTLY APPROVED PROJECTS • County has currently approved 10 projects through FY 2025 for a total of $1 ,306,065. — County could appropriate another $2,328,733 this fiscal year. • 5 of these projects are directly managed by the County, and support 7 positions. — Lantern Project — NC FIT Program — PORT Team — Harm Reduction Coordinator — Narcan/Naloxone Distribution ORANGE COUNTY NORTH CAROLINA 37 Slide #4 FUTURE FUNDING • County recommends separating the funding of ongoing county programming from the Opioid Advisory Committee responsibilities. — Funding decisions about these county programs will be reviewed through the annual budget process based on performance and strategic alignment. — Nonprofit agencies will no longer compete directly with county programs. ORANGE COUNTY NORTH CAROLINA Slide #5 FUTURE FUNDING • Following slides will provide several scenarios showing the impact of adding additional programming to the Opioid Settlement Funds. — Annual awards or lumpsum RFP for nonprofits — Offset Crisis Diversion Facility operating subsidy (current estimate of $2.8 M annually) — Additional county managed programs (i.e. Recovery Housing Support) ORANGE COUNTY NORTH CAROLINA 38 Slide #6 INTENT OF DISCUSSION • NOT expecting Board to pick a specific scenario. • Instead, what balance do you want to strike between providing more programming today versus long-term funding stability? • How much specifically should the county reserve for nonprofit applications? • FY2025-26 Budget will include a more refined scenario based on this input. ORANGE COUNTY NORTH CAROLINA Slide #7 READING THE TABLE Approved FY 25-26 FY 26-27 FY 27-28 Opioid Settlement Fund Projects through FY Projected Projected Projected 24-25 Starting Balance $2,748,141 $ 2,328,733 $ 28,204 NONE Current County Programming $1,306,065 $ 787,500 $ 920,700 $ 855,600 Additional Programming $ 2,500,000 New Revenue $ 886,657 $ 986,971 $ 773,817 $ 585,119 nnual Surplus/(Deficit) $ (419,408) $(2,300,529) $ (46,883) $ (270,481) Ending Balance $2,328,733 $ 28,204 $ (18,679) N/A • Starting Balance—Available unassigned funds from Prior Fiscal Year • Current County Programing—Cost of all currently approved projects, plus estimated future costs of 5 County Managed Programs • Additional Programming—Placeholder, here$2.5 M as an example • Annual Surplus/(Deficit)—Difference between new revenue and program costs. Can be a deficit so long as there is a sufficient balance • Ending Balance—New unassigned balance of funds. Colored Red�-- when county subsidy is required ORANGE COUNTY NORTH CAROLINA 39 Slide #8 SCENARIO 1: NO ADDITIONAL PROGRAMMING Approved FY 25-26 FY 26-27 FY 27-29 FY 28-29 FY 29-30 FY 30-32 FY 31-32 Opioid Settlement Fund Projects through FY Projected Projected Projected Projected Projected Projected Projected 24-25 Starting Balance $2,748,141 $ 2,328,733 $2,52$,204 $ 2,481,121 $2,210,840 $ 2,116,249 5 2,049,874 $1,819,980 Current County Programming $1,306,065 $ 787,500 $ 820,700 $ 855,600 $ 998,400 $ 943,300 $ 990,500 $1,040,000 Additional Programming New Revenue $ 986,657 $ 986,911 $ 173,817 $ 585,119 $ 823,809 $ 856,925 $ 760,606 $ 703,466 Annual Surplus/(Deficit) $(419,408)$ 199,471 $ (46,883)$ (270,481) $ (74,591)$ (86,375)$ (229,894)$ (336,534) Ending Balance $2,328,733 $2,528,204 $2,481,321 $2,21.0,940 $2,136,249 $ 2,049,874 $ 1,829,980 $1,483,446 Opioid Settlement Fund Projects FY 32.33 FY 33-34 FY 34-35 FY35-36 FY36.37 FY37-38 FY38-39 Projected Projected Projected Projected Projected Projected Projected Starting Balance $1,493,446 $ 1,035,474 $ 391,992 NONE NONE NONE NONE Current County Programming $1,092,000 $ 1,146,600 $1,203,900. $ 1,264,100 $1,327300 $ 1,393,700 $ 1,463,4D0 %ciditional Programming ewRevenue ,$ 644,D28 $ 503,108 $ 503,108 $ 503,108 $ 416,069 Is 300,676 $ 300,676 %nnual Surplus/(Deficit) , $ 643,492 $ (700,792)$ (760,992)$ (911,231)$(1,093,024)$ 1,162,724 -nding Balance $1,035,474 $ 391,982 $ 309,9101 N/A I N/A I N/A N/A • County Funding Required in FY 2035 • Projected Subsidy of$760k to$1.2 M required starting in FY 36 � JRANGE COUNTY NORTH CAROLINA Slide #9 SCENARIO 2: $250K ADDITIONAL PROGRAMMING Approved FY 25-26 FY 26-27 FY 27-28 FY 29-29 FY 29-30 FY 30-31 FY 31-32 Opioid Settlement Fund Projects through FY 24-25 Projected Projected Projected Projected Projected Projected projected Starting Balance $2,749,141 $ 2,079,733 $2,028,204 $2,731,321 $1,210,840 $ 886,249 $ 549,874 $ 69,930 Current County Programming $1,306,065 $ 787,500 $ 820,700 $ 855,600 $ 999,400 $ 943,300 $ 990,500 $1,040,000 Additional Programming $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 New Revenue $ 886,657 $ 986,971 $ 773,817 $ 585,119 $ 823,809 $ 856,925 $ 760,606 $ 703,466 nnual Surplus/(Deficit) $(669,408) $ (50,529)$ (296,883)15 (520,491) $ 1324,591) $ (336,375)$ (479,894)$ (586,534) nding Balance $2,079,733 $2,028,204 $1,731,321 $1,210,840 $ 886,249 $ 549,874 $ 69,980 $ (516,554) Opioid Settlement Fund Projects FY 32.33 FY 33-34 FY 34-35 FY35-36 FY36-37 FY37-38 FY38-39 Projected Projected Projected Projected Projected Projected Projected Starting Balance NONE NONE NONE NONE NONE NONE NONE urrent[ounty Programming $1,097,000 $ 1,146,600 $ 1,203,900 $1,264,100 $1,327,300 $ 1,393,700 $ 1,463,400 Additional Programming $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 25D,000 $ 250,000 $ 250,000 ewRevenue $ 644,028 $ 503,108 $ 503,108 $ 503,108 $ 416,069 $ 300,676 $ 300,676 nual Surplus/(Deficit) $ 697,972 $ (893,492)1$ (950,792) $(1,010,992)$(1,361,231)$ 1,343,024]$(1,412,724 ndin Balance N1 I N/A I N/A N/A N/A N/A N/A • County Funding Required in FY 2032 • Projected Subsidy of$700k to$1.4 M required starting in FY 33 , ORANGE COUNTY NORTH CAROLINA 40 Slide #10 SCENARIO 3: $500K ADDITIONAL PROGRAMMING Approved FY 25-25 FY 25-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Opioid Settlement Fund Projects through FY 24.25 Projected Projected Projected Projected Projected Projected Projected Carting Balance $2,748,141 $1,828,733 $1,528,204 $ 991,321 5 210,940 NONE NONE NONE urrent County Programming $1,306,065 $ 787,500 $ 820,700 $ 855,600 5 898,400 $ 943,300 $ 990,500 $1,040,000 dditional Programming $ 500,000 $ SOg000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 New Revenue $ 886,657 $ 986,971 $ 773,817 $ 595,119 $ 823,909 $ 856,925 J$ 760,606 $ 703,466 nnual5urplus/(Deflcit) $""4"'$ (300,529) $ (546,883) $ (770,481) $ (574,591) $ (586,375)$ (729,894)$ (836,534) nding Balance $1,828,7. $1,528,204 $ 981,321 $ 210,840 15 (363,751)I N/A N/A N/A Opioid Settlement Fund Projects FY 32.33 FY 33.34 FY 34-35 FY35.36 FY36-37 FY37-30 FY38.39 Projected Projected Projected Projected Projected Projected Projected Carting Balance NONE NONE NONE NONE NONE NOW NONE urrem Count Programming $1,092,000 $1,146,600 $1,203,900 $1,264,100 $1,327,300 $ 1,393,700 $ 1,463,400. tlitionalProgramming $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 ew Revenue _$ 644,028 $ 503,168 $ 503,108 $ 503,108 $ 416,069 $ 300,676 $ 300,67' nnual Surplus/(Deficit) $(947,972)$(1,143,492)$(1,200,792)$(1,260,992)$(1,411,231)$(1,593,024)$11,662,724) ndin Balance N/A N/A N/A N/A N/A N/A N/A • County Funding Required in FY 2029 • Projected Subsidy of$586k to$1.7 M required starting in FY 30 RANGE COUNTY NORTH CAROLINA Slide #11 SCENARIO 4: $750K ADDITIONAL PROGRAMMING Approved FY 25.26 FY 26.27 FY 27.28 FY 28-29 FY 29-30 FY 30.31 FY 31.32 Opioid Settlement Fund Projects through FY projected Projected Projected Projected Projected Projected Projected 24-25 Carting Balance $2,748,141 $1,578,733 $ 1,028,2C4 $ 231,321 NONE NONE NONE NONE Current County Programming $1,306,065 $ 787 500 $ 820,700 $ 855,600 $ 898,400 $ 943,300 $ 990,500 $1,040,000 Additional Programming 750000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 ew Revenue $ 986,657 $ 986,971 $ 773,817 $ 585,119 $ 823,809 $ 856,925 $ 760,606 $ 703,466 Annual Surplus/(Deficit) $(1,169,408)$ (550,529)$ (796,883)$(1,M,481)$ 1824,591)$ (836,375 $ (979,894)$(1,086,534) Ending Balance $1,578,733 1$1,028,204 $ 231,321 $ (789,160)N/A N/A N/A N/A Opioid Settlement Fund Projects FY 32-33 FY33.34 FY 34.35 FY35-36 FY36-37 FY37-38 FY38-39 Projected Projected Projected Projected Projected Projected Projected Carting Balance NONE NONE NONE NONE NONE NONE NONE Current Count Pro rammin 92,000 $1,146,600 $1,203,900 $1,264,100 $1,327,300 $ 1,393,700 $ 1,463,400 dditional Programming s750'07 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 New Revenue $ 644,029 1$ 503,108 $ 503:109 $ 503,108 $ 416,069 $ 300,676 $ 300,676 Annual Sur lus/Deficit $ 1,197,972 $(1,393,492)S 11,450,792 $1,510,992 $(1,661,231)$ 1,843,024 $ 1,912,724 EndingBalance N/A N/A N/A N/A N/A N/A N/A • County Funding Required in FY 2028 • Projected Subsidy of$586k to$1.6 M required starting in FY 29 -4iT ORANGE COUNTY NORTH CAROLINA 41 Slide #12 SCENARIO 5: $2.5 M REQUEST FOR PROPOSAL Approved FY 25.26 FY 26.27 FY 27.28 FY 29.29 FY 29-30 FY 30-31 FY 31.32 Opioid Settlement Fund Projects through FY p 2425 rojected Projected Projected Projected Projected Projected Projected Starting Balance $2,748,141 $2,328,733 $ 29,204 NONE NONE NONE NONE NONE CurnentCounty Programming $1,306,065 $ 787,500 $ 820,700 $ 855,600 $ 898,400 $ 943,300 $ 990,500 $1,040,000 Additional Programming $2,500,000 ew Revenue $ 896,657 $ 986,971 $ 773,917 585,119 823,809)$ 856,,92 760,86 $ 703,466 8 {74,nual Surplus/(Deficit) $ (419,408)$(2,300,5 (4683 8 $ (63751 29,609 336,534j�:ncfing Balance $2,329,733 15 28,204 $ 18,679 N/A I N/A N/A N/A N/A Opioid Settlement Fund Projects FY 32.33 FY 33.34 dNENONE FY35.36 FY30-37 FY37-38 FY30.39 Projected Projected Projected Projected Projected Projected Starting Balance NONE NONE NONE NONE NONE Current County Programming $1,092,000 $1,146,600 $1,264,100 $1,327,300 $ 1,393,700 $-1,463,400 ditional Pro ramminew Revenue $ 644,028 $ 503,108 $ 503,108 $ 416,069 $ 300,676 $ 300,676 nnual Sur lus/(Deficit] $ (447,972)$ (643,492] $ (7fi0,992 $ 931,231]$I1,093,024j$(1,162,724 ndin Balance N/A N/A N/A N/A N/A N/A N/A • County Funding Required in FY 2027 • Projected Subsidy of$270k to$1.2 M required starting in FY 28 `�- ,-RANGE COUNTY NORTH CAROLINA Slide #13 OPIOID SETTLEMENT FUNDING • Questions? ORANGE COUNTY NORTH CAROLINA Slide #6 was re-posted for the Board to refer to during their discussion: 42 INTENT OF DISCUSSION • NOT expecting Board to pick a specific scenario. • Instead, what balance do you want to strike between providing more programming today versus long-term funding stability? • How much specifically should the county reserve for nonprofit applications? • FY2025-26 Budget will include a more refined scenario based on this input. ORANGE COUNTY NORTH CAROLINA Commissioner Richards said she appreciates this discussion before budget season. She said she supports separating county programs out from the competitive process. She said an evaluation of redundancy and opportunity for efficiencies is needed. Vice-Chair Greene said she agrees with separating the county funded programs out of the competitive funding process. Commissioner Fowler said she noticed on the timeline that when funds run out, it's about the same time that Morinaga's incentives end, and they start paying more tax revenue. She thinks PORT should continue and thinks it should be supported with this funding but agrees that some portion should be allocated for non-profits. Commissioner Portie-Ascott asked what measures are being used to ensure that the most impactful programs are being funded. Travis Myren said the PORT program has about five or six performance measures as does the NC FIT and Green Lantern Project. He said those measures will be looked at throughout the budget process to see how they are performing and then bring a recommendation to the Board as to whether they should continue receiving opioid funding or if they should be transitioned to general fund support. He said he will send the specific performance measures for the county- funded projects. Commissioner Hamilton said it is great to track the county-funded projects to ensure efficiency, but also important to evaluate non-profit programs because there are limited funds and need to make sure they have the most impact. Travis Myren said two $20,000 grants were given to non-profits in the past. He said the question for the Board is whether to increase this amount. Commissioner Hamilton said need to focus on county projects to ensure tracking and making sure they are evidence-based and impactful. Commissioner Fowler said what the county might be most interested in is prevention and programming for youth. She said when this funding runs out, there are other sources of funding for non-profits. She agrees they also need to have performance measures and demonstrate the impact. 43 Chair Bedford said she recalls one of the Board's concerns was working with youth on prevention and possibly treatment. She said they should not spend all the funding on recurring expenses. She suggested separating county programs, but tentatively reserving $100,000 so the committee can seek out applications focused on youth and prevention. Commissioner Richards said she is hesitant on the amount to reserve for non-profits. She asked if the county wants to maintain county programs for a period and then re-evaluate. She said she didn't know how to come up with number. Commissioner Hamilton said the scenarios are pointing out when more county subsidy is needed to maintain county programs. She said she wants that to happen as late as possible. Chair Bedford said she thinks there needs to be some flexibility for an evidence-based program to come along that the Board can prioritize. Travis Myren said the Board could set a not to exceed amount and if a lot of great applications come in, the Board can increase this amount. Chair Bedford said she is grateful the ABC Board funds groups that work with children in northern Orange County. Commissioner Richards looked at scenario 2 timeline and suggested that$200,000 would give some flexibility. Travis Myren said it would be a not to exceed amount. Chair Bedford said that it could be changed if needed. Vice-Chair Greene asked when they could plan to set aside operational funds for the behavioral health center. Travis Myren said that would be in scenario 4. He said if they could go with a $250,000 not to exceed amount, that would mean $500,000 available for crisis diversion programming, which would put a general fund subsidy around years 2028-2030 Kirk Vaughn said no matter how they divide it, it is $750,000 a year, but that cost wouldn't kick in until building was built. He said exact timeframes vary a little. Commissioner Portie-Ascott said they don't know what the additional programming is. Travis Myren said it's flexible. Chair Bedford it is to make sure the Board is aware of when the funding ends and finding the balance. 7. Reports None. 8. Consent Agenda • Removal of Any Items from Consent Agenda • Approval of Remaining Consent Agenda • Discussion and Approval of the Items Removed from the Consent Agenda Commissioner Richards said she has a question about item 8-c. She asked if annexation would have any impact that would result in additional costs to the county or PFPC. Chair Bedford said no. A motion was made by Vice-Chair Greene, seconded by Commissioner Fowler, to approve the consent agenda. VOTE: UNANIMOUS 44 a. Minutes The Board approved the draft minutes for the May 30, 2024, June 4, 2024, June 6, 2024, and June 18, 2024 BOCC Meetings as submitted by the Clerk to the Board. b. Proposed Sale of 0.2 Acre Property, PIN #9863668236, in Hillsborough The Board reviewed the offer to purchase a County-owned 0.2-acre property, PIN #9863668263, in Hillsborough and approved a resolution authorizing the sale of the property through an upset bid process. c. Annexation of the Piedmont Food Processing Center (PFPC) Property by the Town of Hillsborough The Board approved the submittal of a request that the Town of Hillsborough annex the Piedmont Food Processing Center property and authorized the Chair to sign the application form. d. Orange Northern Campus Stormwater Control Measure Access and Maintenance Easement and Agreement with Town of Hillsborough The Board: 1) Approved a Stormwater Control Measure Access and Maintenance Easement and Agreement with the Town of Hillsborough for the Orange County Northern Campus Stormwater Control Measures; and 2) Authorized the Chair to sign the necessary paperwork upon final County Attorney review. e. Removal of Appointee from the Orange County Parks and Recreation Council The Board removed an appointee from the Orange County Parks and Recreation Council (PRC). f. Boards and Commissions —Appointments The Board approved the Boards and Commissions appointments as reviewed and discussed during the September 10, 2024 Work Session. g. Orange County Annual Transit Work Program Reappropriation The Board approved the reappropriation of Vehicle Rental Tax to the Fiscal Year 2025 Orange County Annual Transit Work Program (AWP) fund balance. h. Fee Schedule Changes for Health Department The Board established and updated fees as recommended by the Board of Health for certain personal health, dental health and environmental health services to assist in cost recovery. i. Marketing Communications Management Aqreement with Clean, Inc. The Board approved a professional services agreement for tourism marketing and advertising with Clean, Inc. j. Ratification of County Manager's Execution of a Services Agreement with Sonark Media, Inc. The Board will ratified the County Manager's execution of a services agreement between Sonark Media, Inc and the Orange County Visitors Bureau, in which the Visitors Bureau has provided sponsorship of ten (10) episodes of"Sonark Sessions: Live from the Barn" on PBS and the North Carolina Channel. 9. County Manager's Report Travis Myren reminded the Board about the meeting with the schools next week. 10. County Attorney's Report John Roberts said NCGS 143-318-11 requires that when the Board approves a settlement agreement in closed session, the terms of the agreement must be reported in open session. He said the Board considered and approved a settlement in the contested North Carolina Office of Administrative Hearings case of Kemske v. Orange County Health Department. He said the case has settled and resulted in a total payment by the county of$54,827.12 in return for a full and final release of all claims by the Plaintiff. 45 11. Appointments None. 12. Information Items None. 13. Closed Session None. Adjournment A motion was made by Commissioner Fowler, seconded by Vice-Chair Greene, to adjourn the meeting at 8:41 p.m. VOTE: UNANIMOUS Jamezetta Bedford, Chair Recorded by Tara May, Deputy Clerk to the Board Submitted for approval by Laura Jensen, Clerk to the Board