Chapel Hill News

March 28, 2014

County cautiously open to Chapel Hill development debt plan

Town and county leaders talked Thursday about ways to collaborate, starting with a cost-sharing plan for $10 million in road and stormwater improvements in the Ephesus-Fordham district.

Town and county leaders started talking Thursday about sharing costs for $10 million in road and stormwater improvements in the Ephesus-Fordham district.

The Orange County Board of Commissioners had several questions about the funding plan, the need for possible new schools and other potential effects of creating the 190-acre redevelopment district.

“It’s fair to say that we’re intrigued. It’s clear that y’all are excited, and as partners, that makes us at least somewhat excited, but I think we need to do our due diligence from our perspective with the people that we know,” Commissioners Chairman Barry Jacobs said.

The Ephesus-Fordham district could include taller buildings, 1,000 apartments and at least 600,000 square feet of new retail and office space. The primarily commercial district runs northeast from the Elliott Road shops to the Chapel Hill Memorial Cemetery on Legion Road.

Future projects in the proposed district would follow a set of new zoning rules – called a form-based code – that tells developers how buildings can look, where they can be built and how they should relate to what’s around them.

The Town Council could vote April 17 on the rules and several dozen related rezonings.

The plan hinges on $10 million in stormwater improvements and new and improved roads. The town could establish a special stormwater district tax and other funding to pay for $1.2 million in stormwater improvements. The final plan won’t be available until April 20.

Another $8.8 million for roads could be paid with financing that uses Town Hall as collateral. The summer floods that damaged the building created an opportunity to secure money for Ephesus-Fordham projects, Town Manager Roger Stancil has said.

The debt would be repaid over 20 years, using increased property tax revenues from redeveloped land. The annual debt payments would be roughly $800,000 a year, budget officials said.

The commissioners were asked to pay up to $400,000 a year from new property tax revenue, depending on how much tax money the new buildings generate. Otherwise, the town could “squeak by” using its capital improvements fund, business management director Ken Pennoyer said.

“We’re letting you in on a really good thing,” Council member Maria Palmer said. “What you guys need to keep in mind is the cost of not doing it right. Businesses are going to Durham ... people are moving to Chatham, and it’s not just Chapel Hill that loses. It’s the whole county.”

New schools

Perhaps the biggest issue for the county is how to afford new schools to serve the children whose families might live in the apartments. Roughly half the county’s annual budget pays for city and county schools.

Interim County Manager Michael Talbert said 1,000 homes could add at least $1 million a year in school operating costs. The county also might have to build new schools sooner than expected, he said.

The council will learn more about the project’s potential effect on schools at an April 9 work session.

Commissioner Alice Gordon questioned the proportion of apartments versus commercial space, because the plan is being touted for its potential to boost the local economy and tax base.

What if the new buildings remained vacant for years, Commissioner Renee Price asked.

The town has at least three developers ready to go in the Ephesus-Fordham district, Mayor Mark Kleinschmidt said. Even if those first buildings sat vacant, they still would pay more in property taxes if redeveloped, he said.

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