City withdraws application for downtown school central office

  • Posted: Wednesday, August 28, 2013 11:44 a.m.
    UPDATED: Wednesday, August 28, 2013 12:53 p.m.

UPDATED: SALISBURY — In a surprise development, the city has withdrawn its application to the Local Government Commission to borrow $7.37 million to construct a downtown office building and lease it to the school system.

Saying the city fears a court battle that could tie up the proposed school central office for years, Salisbury withdrew the application to the state but says the city is still committed to a central office for school administration.


The city has argued that the central office project at 329 S. Main St. was key to revitalizing South Main Street and landing a developer for the vacant Empire Hotel.

During a conference call with city officials Tuesday, staff for the LGC said Rowan County officials had raised questions about whether it would be legal for the city to issue debt for a school facility, according to a press release from the city.

A majority of county commissioners are opposed to the downtown location, and when the county declined to borrow money on behalf of Rowan-Salisbury Schools citing environmental contamination, the city stepped in to finance the project.

“Ultimately, the issue would wind up being decided through the court system,” city spokeswoman Elaney Hasselmann said in the statement.

Staff for the LGC “shared their discomfort” during the conference call about the risk of approving a debt issuance that could be subject to a legal challenge, Hasselmann said.

“A legal challenge could be brought by Rowan County or a private citizen and could delay the project for several years, preventing a resolution to providing RSSS employees a safe working environment,” she said. “This is not an acceptable outcome to the city of Salisbury and is the basis for the withdrawal of the city’s application.”

Gene Miller, assistant superintendent for Rowan-Salisbury Schools, said he’s “disappointed and demoralized” by what has taken place.

Commission Chairman Jim Sides, Vice Chairman Craig Pierce and Commissioner Mike Caskey form the majority that opposed the downtown central office.

“I would say to commissioners Sides and Pierce and Caskey: Congratulations, you guys have won,” Miller said. “You have and are continuing to inhibit growth and progress in Rowan County. … You refuse to do things you are entrusted to do for the school district, such as a central office building. When somebody else tried to step up and do your job for you, all you did was block it every way you could.”

Miller said he doesn’t fault Salisbury for withdrawing its application. He said an attorney for the school board told him that “there was an indication” someone would file a lawsuit if the application went forward, but he hasn’t heard a threat of legal action himself.

“I applaud the city and their efforts,” Miller said. “They were trying to step in and do what the commissioners refuse to do, which was their duty. … I wish it could’ve been different.”

Miller, who plans to retire Sept. 30, said the school system will likely have to start over in its efforts to consolidate its administrative offices.

“Next November, there will hopefully be people elected who are more forthright and more progressive in their dealings,” Miller said.

Rowan County Commissioner Jon Barber, who was one of about 80 people who spoke in favor of the central office last month in City Hall, said he did not speak to LGC staff regarding the project.

Barber said he wasn’t aware that any other commissioners spoke to the LGC.

“Am I disappointed as it relates to the potential that this project had for the revitalization and the economic growth of Salisbury? Yes, I am,” Barber said. “Do I still support this project moving forward? Yes, I do.

“But I can’t make that decision. That’s a City Council decision, and I support whatever decision they make.”

The city laid out several options “to cure the issue of a legal challenge,” including:

• Rowan County could step in and move the project forward with the city acting as the developer.  

• A private developer could step in and move the project forward in coordination with the city.

• Adequate gifts from community stakeholders could allow the city to move forward with the project without issuing debt.   

Barber said he doesn’t expect county commissioners to act on the downtown site.

“They’ll be coming right back before the county commissioners,” Barber said of the school board. “The whole process will start all over again.”

The city issued this press release today:

Today the city of Salisbury withdrew their Local Government Commission application for a downtown office building that the City planned to lease to the Rowan-Salisbury School System.

On August 27, during a conference call, LGC staff shared with City staff that Rowan County officials had raised questions about the legality of the City issuing debt for a school facility and this questioning resulted in the City’s application being delayed.

There are two legal interpretations regarding whether the City can move forward with the project.

The City maintains that the project can proceed based on general statutes rooted in a City’s ability to participate in downtown and economic development. A recent economic impact analysis by RowanWorks cited that redevelopment in the 300 block of S. Main Street will result in $1.25 million in annual retail impact. This particular redevelopment is part of the City’s larger South Main Street corridor initiative.

The second interpretation, raised by Rowan County, questions whether a City can issue debt for a school project.

Regarding the City’s authority to build a downtown office building and then lease it to RSSS there is no difference in legal opinions. The issue centers on the issuance of debt for such purposes.

Ultimately, the issue would wind up being decided through the court system.

LGC staff shared their discomfort with the City during an August 27 conference call about the risk of approving a debt issuance that could be subject to such a legal challenge. A legal challenge could be brought by Rowan County or a private citizen and could delay the project for several years preventing a resolution to providing RSSS employees a safe working environment. This is not an acceptable outcome to the City of Salisbury and is the basis for the withdrawal of the City’s application.

The LGC did not offer a ruling on the August 27 conference call, nor did they request the City withdraw their application. They did not render an interim decision, but rather indicated they would continue their evaluation of the City’s application at the end of the conference call.

Rowan County officials stated publicly that they were washing their hands of the project and wished the City well. They also stated they were not interfering in the project or the City’s LGC application.

Construction bids for the project came in $1 million under budget. Financing bids were also favorable and came in under budget. Two hundred supporters of the project attended a July 16 Public Hearing.

There are several options to cure the issue of a legal challenge:

• Rowan County could step in and move the project forward with the City acting as the developer.

• A private developer could step in and move the project forward in coordination with the City.

• Adequate gifts from community stakeholders could allow the City to move forward with the project without issuing debt.

The City of Salisbury is committed to supporting the RSSS including finding a solution for providing a safe environment for RSSS employees, despite this development.

The Salisbury City Council will discuss this topic at their regularly scheduled City Council meeting on Sept. 3.

Check back for updates today and read more about the story in Thursday’s Post.

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