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Arnold's Plan May Be First In Nation
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There weren't many people in the audience at the Old Guilford County Court House; there were no TV news crews present; and, for the first time in a long while, the High Point Enterprise didn't send a reporter to the meeting however, the Thursday, Oct. 1 meeting of the Guilford County Board of Commissioners was an important one.
The monumental nature of the event came from the fact that, at the Oct. 1 meeting, the commissioners took two major actions: The board voted to pass a bold and sweeping economic incentive policy, a plan that, as far as anyone can tell, hasn't been tried anywhere in the country; and the board also voted to spend almost $85 million on the construction of a new jail and on the renovation of the existing jail in Greensboro.
Vice Chairman of the Board of Commissioners Steve Arnold has been advocating a fair and comprehensive economic incentive policy for years and, this year, his plan finally gained some traction.
Arnold's original plan meant that any business in the county that added value to the county's tax base, by locating and building in Guilford County, or by expanding their business in a way that increased the tax base, would not have to pay taxes on the value-added portion for a three-year period.
"Tax rebates" are illegal in North Carolina and, to make sure the plan could withstand legal challenges, there have been several tweaks to the policy over the last few months including the addition of a $10,000 minimum increase to the tax base in order to qualify for the tax break, and the plan now requires that all of the incentives be approved by a vote of the Board of Commissioners.
Commissioner Mike Winstead voted for the plan, but he pointed out that it had changed from its original conception. He said he was less excited about Arnold's revised plan than he was when the original plan was first presented. The original plan Arnold wanted included tax breaks for those who added to the tax base by building houses, apartment complexes and even additions to homes, and that no doubt had some appeal to Winstead, who is developer. However, the final version of Arnold's plan did not include those tax breaks.
"It's not going to do all that I was hoping it would do," Winstead said.
There's been some legal dispute as to whether job creation is a necessity for any lawful incentive policy, but some incentives granted by cities and counties in other parts of the state have not been tied to job creation and haven't been challenged in court.
The state's general statute that allows the granting of economic incentives doesn't call for job creation as a necessary condition for granting those incentives though some people have argued that subsequent case law, including a ruling by the NC Supreme Court, does dictate that incentives be tied to job creation.
At the meeting, Arnold said that during his long tenure as a commissioner, he'd continuously been opposed to giving tax incentives under the system the board has used in the past, because it wasn't a fair system.
Arnold said the decision by businesses to expand or relocate takes into account many factors, and he said that, given the current state of the economy, the commissioners need to be proactive.
"Guilford County, along with the rest of the nation, is in a deep and dark recession," Arnold told the board.
"This program should help businesses who wish to expand," he added.
Arnold acknowledged that the plan is "not going to set the world on fire," but, he said, it will certainly have a positive impact on economic development in Guilford County.
"It's a targeted tax cut for business growth and expansion," Arnold said.
Commissioner Linda Shaw said some commissioners in other parts of the state had talked with her about the plan, and she said they had indicated they might take a look at similar policies for their own counties.
Shaw also said Guilford County's business leadership, real estate community and developers were, to a large extent, backers of the plan and she went on to say that the county commissioners had dragged their feet on the issue long enough.
The board began talking seriously about Arnold's plan during the first few months of 2009.
"Let's get moving forward with it instead of waiting and continuing to put it off," Shaw said.
Arnold told Shaw he hoped no other county duplicates the plan so that Guilford County would remain the only county offering the incentives.
Commissioner Kirk Perkins said Arnold's plan would cost the county $1 million to $3 million a year "depending on who you talk to" and Perkins said he had doubts about the wisdom of passing up that lost revenue in exchange for uncertain returns.
Perkins also gave another reason he didn't like the plan.
"This is really going to add more work for our staff," Perkins said.
Arnold didn't answer Perkins by making the same point at the Oct. 1 meeting that Arnold has made in previous discussions: He's argued several times that much of what has to be done such as the valuation of new business additions to the tax base must be done by county staff whether the new incentive program is put in place or not.
Perkins also argued that the plan would "take money from one set of taxpayers," and give it to others though that would certainly be nothing new when it comes to county taxing and spending.
Commissioner Bruce Davis stated that anything that could be done to enhance the county's current economic environment should be done.
"This may not be the answer to everything this may not be the cure-all," Davis said, but he added that he did think it would do some good.
Commissioner Billy Yow said he didn't like the fact that the housing industry is left out of the plan, and he said he thinks that, given that omission, the plan isn't a fair one and therefore he couldn't support it.
"That's the way to help the economy," Yow said, "do a tax reduction across the board."
The Oct. 1 meeting was a good example of how much the nature of the Guilford County Board of Commissioners has changed. For years, the board was divided along party lines, and a lot of votes came down straight along that line. Also, for years, Yow and Arnold voted almost in lockstep.
However, at this October meeting, the conservative Yow was opposing the conservative Arnold on a tax cut while Chairman of the Board of Commissioners Skip Alston, previously an ultra-liberal, tax-and-spend commissioner, was helping Arnold make his case.
Commissioners Perkins, Yow and Paul Gibson voted against Arnold's plan, which passed on an 8-to-3 vote and went into effect immediately.
In addition to passing Arnold's incentive plan, a lot of the talk at the meeting was about the new $85 million county jail, the biggest single construction project that in terms of dollars at least the county has ever undertaken. (Though Guilford County Schools is planning to build an $80 million high school, so the new jail doesn't take that price tag prize by much.)
Tony Stoneking, a representative of Dallas-based Balfour Beatty Construction Inc., who works out of the company's Raleigh office, briefed the board on some of the details.
"We're going to bring you great news tonight," Stoneking told the board at the outset of his presentation.
He proceeded to repeat some of the information Balfour Beatty had presented to some county officials the previous afternoon at a Jail Construction Advisory Committee meeting where the price tag of $84,896,359 for the construction of the new jail and the renovation of the existing one was greeted with a round of applause by commissioners and county staff.
In addition to that money, Guilford County will still need to spend millions on "soft costs" such as desks, video cameras, exercise equipment, etc. after the actual construction of the jail is complete.
The county has already spent money on other soft costs, such as architectural work and soil tests. Not every aspect of the project has been priced yet for instance the cost of the furniture that will go in the new jail is not known but county officials say that a total cost of $100 million for the project including everything is probably a reasonable guesstimate.
Stoneking said his company was pleased to deliver the $85 million price to the county and added that he felt confident the commissioners were pleased with the price as well. The jail was anticipated to cost about $95 million to build, until the economy went due south last fall.
"Guilford County is saving $9,603,641," Stoneking told the board.
"That's a tribute to everybody," he added.
Other company representatives also spoke for Balfour Beatty and gave additional information in a brief PowerPoint presentation. But there was no need to go over all of the details, and rehash everything, from the day before. At the previous day's hour-and-40-minute committee meeting, the commissioners had gotten a lot of their questions answered. The basics of the deal, however, were repeated to the full board at the Oct. 1 meeting, largely for the benefit of the TV audience.
At this point, about $23 million is going to companies in Guilford County, but there's some hope among commissioners and Balfour Beatty staff that the amount can be higher.
At the Oct. 1 meeting, Commissioner Kay Cashion stated the obvious concerning the cost of the new jail.
"The numbers came in much lower than we anticipated," Cashion said.
Days before the price was known, Alston predicted that the board would hear the offer from Balfour Beatty and then vote on the proposal at the board's Thursday, Oct. 15 meeting.
Also, before Alston heard the numbers, he'd said he anticipated that the commissioners would attempt to "tighten up the price" prior to voting to accept an offer. County officials were guessing privately that the jail cost would come in at about $90 million, or just under that.
So, when Alston and other commissioners saw the $85 million price tag, they decided to move ahead with the project rather than wait until Oct. 15. The commissioners didn't haggle in the end because the $85 is based on hard bids that Balfour Beatty received from subcontractors, plus a previously agreed upon construction management fee for the company.
At the Oct. 1 meeting, Alston told representatives of Balfour Beatty that he hoped the project would come in at a price even lower than that. If it does come in under budget, the county gets 70 percent of those savings; Balfour Beatty and its partners would get to keep the remaining 30 percent.
The board didn't engage in much discussion on the jail construction contract. However, a few commissioners took time to thank and congratulate everyone who's been working on the project.
Commissioner Carolyn Coleman wasn't at the meeting, but she did vote on the jail by phone, meaning all 11 commissioners cast a yes vote to accept the jail contract.
In addition to the incentive package and approving the jail, the commissioners also handled some more mundane county matters. For instance, the board voted to accept a $50,000 grant to upgrade video and card swipe systems in Guilford County's existing two jails and in the county's prison farm in Gibsonville, and the board voted to allow the Guilford County Sheriff's Department to spend $10,000 in federal forfeiture funds on law enforcement equipment such as gas masks, protective vests and pepper spray refill cartridges.
At the end of the meeting, the commissioners went into closed session to interview candidates for the county attorney's job a position that's been vacant for almost a year now.
The board's next meeting will be on Thursday, Oct. 15, followed by one on Thursday, Nov. 5 to be held at High Point University.
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