August 16, 2012On Wednesday, August 15, the Board of Delegates of the Piedmont Triad Regional Council (PTRC), ignoring a resolution from the High Point City Council asking for a one-month delay, voted 72 to 2 to start the process of having a $4 million headquarters constructed in Kernersville.
The PTRC plans to buy the building. Wednesday's vote was to authorize a lease, which is merely a step required to get approval from the North Carolina Local Government Commission so the PTRC can get financing to build.
"The vote today was overwhelming to move ahead with a lease which they are hoping will turn into a purchase," said PTRC delegate and High Point City Councilmember Latimer Alexander. "It was clear from the comments that members of the body feel that ownership would be the best way to go."
Alexander said he made a substitute motion to delay the vote. Alexander's motion was seconded by Denton Mayor Scott Morris. No one but Alexander and Morris voted for the delay. Alexander said, "When the original motion came up, the vote was 72 to 2 again."
Greensboro City Councilmember and PTRC delegate Yvonne Johnson, who before Wednesday's meeting of the Board of Delegates said she was against the $4 million building, voted for it rather than voting to delay the project for more debate.
Johnson had earlier said she thought the PTRC was still looking for a site and that she would vote to support the delay. She said she had problems with constructing a new building in Kernersville.
"She either had laryngitis or changed her mind or was silent," Alexander said. "Because only two people spoke."
The PTRC proposed the building of a $4 million new headquarters at 1394 Carrollton Crossing Dr. in Kernersville, near the intersection of I-40 and NC 66. The PTRC plans to combine the employees of the former Piedmont Triad Council of Governments (PTCOG), who work in an office building off High Point Road in Greensboro, with those of the former Northwest Piedmont Council of Governments (NPCOG), who work in Winston-Salem, in the new building.
The vote was forced by a resolution adopted by the High Point City Council on Monday, August 6 and emailed to all the member governments of the PTRC by High Point Mayor Becky Smothers on Monday, August 13, 2012.
The resolution asked for a delay of any decision on the PTRC acquiring office space "pending further consideration and review by the membership of PTRC."
The resolution stated that the High Point City Council has "significant questions and reservations concerning the current plans under consideration by PTRC, including concerns about whether PTRC should own or lease office space, the cost of current plans under consideration, the length of the lease period under consideration, and the location of the proposed new building."
In her letter accompanying the resolution, Smothers notified the delegates that High Point would offer a motion asking the Board of Delegates to delay action on the headquarters for one month.
"It is our opinion that all member governments should have the opportunity to evaluate the financial commitment," Smothers wrote. "In our opinion a key question to be answered by the participating governments is: Should ownership of a $4 million building … be assumed by our citizens at this time? Our delegate has expressed his concerns over the past months. We believe that the financial package that is before the Board of Delegates should be vetted by member governments BEFORE it is final."
In recent years, High Point has strongly supported the COG system, and Smothers said the High Point City Council still does.
The PTRC was created in July 2011 by the merger of the NPCOG and the PTCOG. The PTRC's main job is to apply for federal grants, and to use the grant money to provide services to 74 member governments, including numerous cities and towns in a 12 county region as well as the 12 counties: Alamance, Caswell, Davidson, Davie, Forsyth, Guilford, Montgomery, Randolph, Rockingham, Stokes, Surry and Yadkin. Guilford County stayed out of the merged organization for a year, joining in July 2012.
The resolution, and the Thursday, August 9 article in The Rhino Times reporting it, prompted an impressive flood of material from the PTRC supporting the construction of the headquarters.
The material included an 11-page document titled, "Questions and Answers Regarding Proposed Facility at Carrollton Crossing Kernersville," which details the history of the PTRC's search for a headquarters for the newly merged COG, and a financial comparison of the agency's estimated costs of leasing versus buying.
It also included a six-page refutation of the article in The Rhino Times, which the PTRC described as, "a local periodical, the 'Rhino Times.'"
The refutation was kind enough to say the writer had limited information from the August 6 meeting of the High Point City Council's Finance Committee and no doubt didn't intend the 'glaring deficiencies' in the article.
There is one glaring deficiency in the article – a simple typo. The planned headquarters is described as a 250,000-square-foot building, when it is actually planned to be a 25,000-square-foot building. The larger number was clearly incorrect.
The rest of the passages in the article to which PTRC Executive Director Matthew Dolge took exception were as reported by High Point city councilmembers and High Point City Manager Strib Boynton. And the fact that many of the figures cited differed from Dolge's was the very point: Some High Point officials disagree with the PTRC's numbers, the need for the new building and the process by which it was planned. Their cost estimates for the building differ from Dolge's.
The questions and answers document claims the highest authority for building the new headquarters, the approval of the PTRC's 74-member Board of Delegates.
"The PTRC Board of Delegates voted unanimously on June 20, 2012, to enter into contract for construction of office space at 1394 Carrollton Crossing Drive, Kernersville for the price of $4,000,000," the document states. "Arden Group was selected through an open bid process and has developed a build-to-suit construction project to fit our custom needs. The staff, with the knowledge and support of the Board of Delegates, have been moving forward with this project since September 2011."
The PTRC Board of Delegates is a 74-member board, containing one representative from each county and municipality belonging to the PTRC. Which means Danbury, population 189, has one vote, as does Greensboro, population 269,666, and Guilford County, population 488,406.
The PTRC also has an executive committee comprised of 27 delegates, one from each member county and a delegate from one member municipality in each county.
Greensboro, Winston-Salem, High Point and Burlington also have guaranteed seats on the executive committee.
Alexander is both a delegate and a member of the executive committee, and has used both positions to oppose the construction of the $4 million Kernersville building. Alexander and other High Point councilmembers argue that High Point and other cities and towns in the PTRC region are full of empty office buildings that could be outfitted to meet the PTRC's needs for less than $4 million.
Dolge argues that the PTRC has studied the issue and determined that building is cheaper than leasing in the area the PTRC staff was told to consider. Dolge said the PTRC was instructed to locate the headquarters within five miles of I-40 at the Forsyth/Guilford County line, in the geographic center of the newly merged COG.
Dolge wrote, "The direction of the board was to look at space centrally located and easily accessible to all parts of the region – the options considered are in the airport submarket."
Smothers questioned the PTRC's cost assessment, even in that market.
"We have fully supported the formation of the PTRC and our request for this delayed vote is NOT to be construed as a lack of support for the PTRC," she wrote.
The PTRC staff presented a cost analysis, prepared by Greensboro-based Triad Commercial Properties, in February 2012, that compared the cost of leasing each of four different properties with the PTRC's current lease cost and the cost of the proposed building. That analysis replaced an earlier comparison of 14 properties done in August 2011.
According to that analysis, the two COGs that merged to create the PTRC are now paying a combined $22,197 a month to lease 30,014 square feet of office space in Greensboro and Winston-Salem. The analysis compared that cost with the cost of leasing slightly smaller office spaces at 4035 Premier Dr. in High Point ($37,720); 7900 Triad Center in Greensboro ($37,916); 7736 McCloud Road in Greensboro ($32,802); and the cost of leasing the proposed 25,000-square-foot Carrollton Crossing Dr. building if it were built but Arden Group retained ownership ($36,667).
According to the PTRC, the cost of buying the proposed Carrollton Crossing Drive building would be $3.6 million at 3 percent interest over 20 years, or $28,286 per month. According to the analysis, that includes $8,333 in operating and maintenance costs calculated at $4 per square foot per month.
Dolge said that most of the cost of the mortgage payments for the proposed building would be paid for as "indirect costs" by federal grants the PTRC manages, and only a small percentage would be paid for by member dues.
Alexander said that works only as long as the federal grants keep coming.
In his prepared statement for Wednesday's meeting, Alexander wrote, "Taking all politics out of this statement, I believe that we can agree that with potentially unprecedented changes in the federal budget and a completely new healthcare law, our federal grant revenue streams for health and human services are far from certain over the 15 year life of the debt service or lease being proposed."