Cabarrus officials question NCRC future

By Hugh Fisher

hfisher@salisburypost.com

CONCORD — Cabarrus County commissioners want to talk about the future of the N.C. Research Campus in Kannapolis.

Members of the board discussed their tax-revenue partnership with the city as part of their annual retreat Saturday.

Although commissioners support the development, the consensus was that changes in the economy mean the future of the complex needs further discussion.

Four years ago, the city of Kannapolis sought a partnership with Cabarrus County to issue $168 million in bonds through tax increment financing, or TIF.

Cabarrus County agreed to dedicate a portion of its property tax revenue from a downtown tax district to repaying those bonds, with the prospect extra revenue as property values went up.

The millions were set to fund a variety of projects, including updating aging utilities to support the campus.

A number of improvements already completed or now under way have been paid for up front by the city or campus developer Castle & Cooke, with planned reimbursement from the TIF funds.

But the economic crisis has driven up interest rates for bonds and has made investors nervous.

The market for Kannapolis' TIF bonds has, for now at least, disappeared.

For that reason and others, Cabarrus County Manager John Day told commissioners he believes the NCRC plan just won't work today.

"The whole economic model on which it was based is gone," Day said. "The biotechnology industry and pharmaceutical industry is not what it was."

Commissioners themselves said they support the idea of the Research Campus but don't know if it will ever match the vision of David Murdock, owner of Castle & Cooke and Dole Foods.

"Everything's changed," Commissioner Liz Poole said.

"The TIF needs to go into some recycle bin somewhere," Poole said.

Commissioner Bob Carruth said that the revenue that the county would have given to Kannapolis to repay the TIF should now be discussed.

Kannapolis is working on alternatives to raise a smaller amount of funds to pay for the projects already underway or completed.

Carruth wondered if the county's share of money would be held in reserve pending a smaller bond issue that Kannapolis is trying to engineer.

Day said that the revenue is part of the county's general fund.

"I can tell you, from what we know, that there probably isn't going to be anything sold anytime soon," Day said.

Despite a general decline in property values, and a lack of the rapid growth expected downtown in Kannapolis, the campus is generating revenue.

Castle & Cooke agreed to a minimum tax valuation in order to guarantee there'd be enough money to pay for the original bond issue.

But Day said that minimum value agreement has no value in the marketplace when it comes to selling bonds.

At the same time, he questioned whether the county's biggest immediate gain from the partnership — funding for a new Cabarrus Health Alliance facility in Kannapolis — should still be top priority.

Commissioners asked for $15 million to fund that building as a condition of their partnership with Kannapolis in the original TIF issue.

But Cabarrus County currently faces an estimated $1.7 million budget shortfall for 2011.

"We're already delaying other projects the county was going to do," Day said. "Is that the best thing for us to do right now, if there is a finite amount of money available?"

Carruth said the situation would be different if Kannapolis leaders could forecast when the bonds would be sold.

Commission Chairman Jay White asked members if they would like to ask for a meeting with the Kannapolis City Council to discuss the issue.

Commissioner Grace Mynatt said that was a good idea.

"It seems to me that we have our board and our staff saying that this isn't going to happen, it can't happen that way, and I get the feeling that Kannapolis still thinks it is," Mynatt said.

Day said that Castle & Cooke should be brought into that discussion as well.

"It's a really big, complicated thing É What are the developer's plans? How have they changed?" he said.

And Day questioned whether or not the companies that Castle & Cooke believed would be drawn to Kannapolis by the research facilities would still relocate to Cabarrus County.

"What company can afford to walk away from the infrastructure they have elsewhere and build here?" Day asked.

Carruth noted that the original five-year plan for the campus — which included a mix of offices, laboratories, townhomes and retail space — is about 20 percent complete.

But he also said that, no matter the state of the biotechnology and pharmaceutical industries, the laboratory facilities already online there would still draw businesses to the county.

"I think it's going to be slower," Carruth said. "But something will be there, whether or not it ever reaches the complete potential that was envisioned four or five years ago."

White said the best option would be for all three parties to start a discussion.

He asked Day to contact Kannapolis City Manager Mike Legg and Lynne Scott Safrit, president of Castle & Cooke, to discuss the possibility of a meeting among the three groups.

He said that the collaborative concept of the Research Campus remains "an amazing idea."

"But, what's the idea now?" White asked. "How's that synergy, that theory, going to come to fruition?"