HOLLY SPRINGS — As his counterparts in neighboring Wake municipalities are having to make wrenching decisions about staff layoffs and service cuts, Holly Springs Town Manager Carl G. Dean knows he has it pretty good.
Despite the recent downturn in the national economy, the budget Dean proposed to Town Council members last month is up about 6 percent. That translates to about a $1.4million cushion that is allowing Dean to add four staff members, expand sewer capacity and build a new recreation center.
Compare that to the situation in nearby Fuquay-Varina, where the manager's proposed budget shrank 7.3 percent and includes no cost-of-living raises for staff and the elimination of five full-time employee positions.
In Cary, the manager's recommended budget cuts operating and capital expenses by a whopping $73million, or about 25 percent, from the current year because of sinking tax and fee revenues.
"I know some people have got it a lot worse than we do," said Dean, who has been town manager for eight years. "We often say we're blessed, but a lot of hard work has also gone into getting us into the position we are in right now."
Holly Springs is one of three Wake towns eyeing budget increases for the coming fiscal year instead of deep cuts; the others are Apex and Wake Forest. In Holly Springs, more than half the increase in the town budget is the result of a single economic development project: a Novartis vaccine plant now under construction in the business park off N.C.55. When the factory opens later this year, Novartis is expected to add $213million to the town's property tax base and, eventually, 400 new jobs paying an average salary of $50,000 a year.
To land the plant, the town pledged about $20million in road improvements, water and other infrastructure upgrades. Holly Springs also took out an $8million bank loan to pay for the land where the plant is being built.
Spending so much to lure a single corporate citizen was controversial when the deal was struck about five years ago. But now the massive commercial project is nearing completion just as the residential construction that had fueled the town's explosive growth in the last decade has slowed.
Residential vs. commercial
Signs welcoming visitors to Holly Springs still tout its former status as the fastest growing municipality in North Carolina. In 1990, the population was less than 1,000. Now it's about 21,000.
Many newcomers were attracted by housing prices that were cheap compared to those in nearby Cary or Raleigh. The migration was aided by the opening of the N.C. 55 Bypass, which cut the commute to Research Triangle Park and other employment centers in the region.
That rapid expansion was facilitated by a solidly pro-development Town Council. Not so long ago, it was not unusual for several new neighborhoods to win approval in a single night from the panel, only one member of which is a Holly Springs native.
The relationship between the town and homebuilders grew so cozy that the mayor saw no problem working as a paid "community consultant" for the developer of a massive residential project he helped shepherd to approval.
Town officials see the current economic crisis as little more than a speed bump. Even with the slowdown, the number of Holly Springs residents is expected to surge to 45,000 by 2020.
But all that new housing skewed the town's tax base to where 90 percent of all the property in town was homes, a trend planners consider unsustainable. With the addition of Novartis, as well as a recently opened Wal-Mart and a new shopping center anchored by a Harris Teeter grocery store, the ratio of residential-to-commercial is more like 80-to-20.
"When we started talking about trying to get Novartis in here, we realized we weren't going to be able to keep building houses forever," Dean said. "The year the Novartis deal went through, we added 800 new homes. You just can't keep that kind of pace up."
Within three years, the town hopes to have 30 percent of its tax base as commercial property.
"It's a timing thing," said Tim Sack, a member of the Town Council. "We have been struggling for so many years with residential growth that our commercial growth has taken a long time to catch up. Ours is coming to fruition now when everybody else's is sort of slacking off."
But Holly Springs officials stressed last week that they are working diligently not to get ahead of themselves.
Incorporated in 1877 and named for the holly trees that grew near a natural water source, the town has seen boom turn to bust before. The local economy surged during the early 1900s until a series of economic reversals crippled the town. In 1924, the Bank of Holly Springs went belly-up -- five years before the Great Depression. The town remained sleepy and largely stagnant until the early 1990s, when the current residential housing boom began.
Dean said the town's strategy for the next year is to use the boost from the new commercial projects to ride out the recession without wavering from the community's long-term vision.
"We're still trying to be conservative with our budget," Dean said. "At a time when a lot of towns are having to cut services, our goal is to maintain our current level of services as we continue to grow."
michael.biesecker@newsobserver .com or 919-829-4698