Cabarrus County manager chided for calling campus an 'office park'

Published 12:00 am Wednesday, December 2, 2009

By Mark Wineka

Salisbury Post

KANNAPOLIS — Castle & Cooke and city officials have criticized Cabarrus County Manager John Day for referring to the North Carolina Research Campus as an “office park.”

They also are bristling at Day’s numerous referrals to proposed self-financing bonds as a government “subsidy” to a private developer — in this case, Castle & Cooke.

Day, Castle & Cooke President Lynne Scott Safrit and city and county officials exchanged numerous e-mails over the weekend in reaction to a letter Day sent out last Thursday.

In the memo to commissioners and county staff, Day voiced concerns about the $160 million bond financing requested by Castle & Cooke.

“I don’t know what amount the board would find acceptable or appropriate,” Day wrote, “but I contend that a $160 million public subsidy goes way beyond what one or two local governments should be expected to contribute.”

Day said when the research campus was first announced, Castle & Cooke representatives “mentioned $7 million in public money as the local governments’ contribution.”

“Since then, that number has escalated to $20 million, $40 million, $60 million, $76 million and now $160 million.”

Day’s “Issues and Updates” letter made several references to the proposed $1.2 billion research campus project as an office park.

“I suppose we have not done a very good job helping Mr. Day understand the nature of the North Carolina Research Campus,” Safrit, president of Castle & Cooke in this region, wrote in a Sunday e-mail to Kannapolis City Manager Mike Legg.

“Characterizing it as Castle & Cooke Inc.’s ‘office park’ clearly shows a lack of understanding of the monumental impact this project will have for our citizens, their economic well-being and the future of our children.”

Safrit told Day in an e-mail Sunday that if he fully understood the financing proposal, he would “know that to characterize it as a ‘subsidy’ is grossly inaccurate.”

Safrit added: “The voters of North Carolina ratified Amendment One, thus allowing this very worthwhile method of tax increment financing to accomplish exactly what is intended here: to create jobs in an area of the county that has suffered and has a wonderful opportunity for revitalization.”

Legg, the city manager, told Safrit in an e-mail Sunday that Day, of all people, should understand the project fully. If he doesn’t, Legg told Safrit, how can his recommendations to commissioners have any credibility?

“I really didn’t want to go backwards and us have to sell the project all over again,” Legg said, “but I think we might need to do that with the Board of Commissioners and the public and the press.

“We can’t assume they understand that it’s just a bit more than an ‘office park.'”

Legg added in a separate e-mail that Day’s use of the word “subsidy” is nothing more “than an attempt to paint the TIF (tax-increment financing) in a negative light.”

Kannapolis City Councilman Darrell Hinnant said in a e-mail to Safrit that Day has been against the research campus project all along.

“Everyone has known it,” Hinnant said. “We should stop trying to tippy-toe around him in hopes that he will change his mind.”

Hinnant added: “We can only hope that the BOC (Board of Commissioners) will see through the logic, the opportunity and economic impact for all the citizens of Cabarrus County.”

Day, in response to Legg, said he understood the financing plan fully.

“I still think the subsidy (or incentive) requested from the local governments is absolutely astounding,” Day told Legg.

Day also told Hinnant he was mistaken.

“I’m supportive of the project, just not the incredible taxpayer subsidy being requested,” Day said.

An important question, according to Day, is whether county taxpayers should pay a portion of the cost of Kannapolis’ municipal infrastructure — to subsidize a private development — rather that using the same money for county services such as schools and senior centers.

“In my opinion … the answer to this question is no,” Day said in his letter.

How the city of Kannapolis and Cabarrus County will share in self-financing bonds to fund infrastructure improvements related to the North Carolina Research Campus remains up in the air — way up in the air.

Castle & Cooke and its owner, David Murdock, want Kannapolis to issue $160 million in bonds — more than double the $76 million first proposed by the city’s financial advisors.

First Southwest Co., the city’s bond consultants, are crunching new numbers, trying to determine whether the bond amount could be increased and how.

Kannapolis City Council was supposed to discuss some of the new financing scenarios Monday night, but now a new proposal may not be ready until the council’s next meeting, Feb. 12.

From the start, the tax-increment financing proposal has called on Kannapolis and Cabarrus County to split the cost of the bonds equally.

But Cabarrus County and Kannapolis have yet to act on an interlocal agreement to that effect. In December, Castle & Cooke asked for a delay and made its wishes for a higher bond amount known to both governments.

The whole bond financing proposal has been on hold since then. Murdock recently invited Cabarrus County commissioners and Kannapolis city councilmen to one-on-one meetings at his Pity’s Sake Lodge to discuss his wishes for a higher bond amount.

Under the state-approved tax-increment financing, governments (in this case, Kannapolis) can issue bonds without voter approval within a special TIF district.

The bonds have to pay for public improvements within the special development district. Funds to pay off the bonds would come from increased tax revenues coming from development, which would be the research campus.

The bond money would go toward street, utility, recreation and parking improvements.

If commissioners want to dedicate a portion of the revenue generated from Castle & Cooke’s research campus to a public project in the special district, Day said last week, “then I recommend it be used for county-supported services, whether schools, a new building for the Health Alliance, a senior center or any number of other county services or facilities.”

Overall, Day recommended against an interlocal agreement with Kannapolis in relation to the bonds.

“I suggest instead taking the conservative approach,” he wrote. “That is, wait and see the extent to which the project actually develops, then decide how to proceed, rather than committing to spending money that doesn’t yet (and might not ever) exist.”

Day said there’s no guarantee that the research campus will be built as planned, even if county taxpayers’ dollars are dedicated to the project.

If the incremental tax revenue is spent to help the Castle & Cooke development, according to Day, it won’t be available to spend on needed county services and buildings for 20 to 30 years — whatever the length of the debt service on the bonds is.

Day said if commissioners felt compelled “to subsidize” the Castle & Cooke project, not to do it “in the vacuum that currently exists.”

“The magnitude of the public subsidy being sought by Castle & Cooke begs for all potential partners to be engaged together (simultaneously) to discuss possibilities and potential funding strategies,” Day said in his memo.

“I can’t think of a good reason why Kannapolis and Cabarrus County should be the bearers of the burden of subsidizing a project that is said to benefit the whole region, as well as the state.

“Others should be involved, financially and otherwise.”

Day said legislators, the university partners, Duke Energy and all local governments that will benefit from the project “should sit around the same table at the same time for discussions.”

“Surely that would lead to a better result than the disjointed, exclusive process employed thus far,” Day said.

Contact Mark Wineka at 704-797-4263, or