By Hugh Fisher
hfisher@salisburypost.com
KANNAPOLIS ó With the recession blocking its first option, the City Council voted Monday to explore an alternative financing plan for projects tied to the N.C. Research Campus.
The council voted 5-1 to direct City Manager Mike Legg and city staff to begin planning a bank-placed tax-increment financing agreement with BB&T, in place of the original open-market tax increment financing plan.
With the collapse of financial markets since December 2007, the city’s plan to raise $168.4 million by selling bonds has been delayed. Under tax-increment financing, the bonds would be repaid with increased tax revenue tied to development at the N.C. Research Campus.
Now, the city will investigate an idea to raise $30 million in order to pay off projects already completed using the city’s savings and money put forward by Castle & Cooke, developer of the Research Campus.
About half of that will pay for a Cabarrus Health Alliance facility on the campus, to be owned initially by the city and used as collateral for the financing agreement.
Four options were originally discussed. Legg said the bank-placed financing was the most attractive.
“We’ve done a lot of work to date, lots of work” toward a tax-increment financing agreement, he said. “There’s some minor tweaking that needs to be done. … But we can probably get this done within 75 days.”
Unlike other methods of financing, such as certificates of participation or bond anticipation loans, very little legwork would be required.
“It’s still the same TIF transaction we started with, just a smaller amount and a single buyer of the bonds,” Legg said.
And an agreement with Cabarrus County is already in place. The Cabarrus Health Alliance building was the Cabarrus County Board of Commissioners’ request in exchange for supporting the original financing with the county’s share of property tax revenues from Research Campus-related development.
Constructing that building, Legg said, would bring several hundred jobs to downtown Kannapolis and encourage the long-term mission of the biotechnology research complex.
But Councilman Richard Anderson opposed the plan, casting the lone vote against the measure. He said it involved too much uncertainty and that the economy should be grounds for taking stock of whether or not this was the right time to proceed.
Legg responded by painting the potential tax-increment financing agreement as a first step in a longer recovery process.
“As the economy turns around and the campus continues to build out, we will issue additional TIFs to build additional infrastructure, and build it out as it was originally meant to be built out,” Legg said.
And Misenheimer reminded members that the bonds would be repaid by Research Campus tax revenues and would not become a burden on the citizens of Kannapolis.
Mayor Pro Tem Randy Cauthen was one of several to bring up questions about who would pay for maintenance and upkeep on the Cabarrus Health Alliance building if the city, instead of the health care agency, owned the structure.
“I think we’re taking a tremendous chance here unless we have all these side issues tied down,” Cauthen said.
For now, Legg and city staff will simply investigate those issues. Whether or not to actually proceed with a tax-increment financing bond sale will be determined in the future.