New plan for capital projects

Apr. 16, 2013 @ 05:00 PM

The Union County Board of Commissioners were presented a six-year county capital projects plan for new buildings, facility maintenance and technology upgrades Monday.

If all projects are approved, the county would take on a total of $119 million, with the largest amounts borrowed between 2017 to 2019, Union County Finance Director Jeff Yates said.

“There are four basic principles to the plan,” he said.

First, to be conservative with county money.

“The commission has stated that they want to focus on fiscal sustainability,” he said.

The finance staff added new debt to the plan’s timeline after old debt was paid off. They considered the estimated available cash flow each year and weighed whether the county should borrow money or pay in installments during which years.

Second, the plan also needed to maintain existing county facilities. Several projects addressed expansion of library buildings, improvements to department technology systems and park development.

Third, Yates said the plan has to plan for changing services.

“The kind of human services building we would have built ten or 15 years ago is certainly not the same building we would build now because our population has changed,” Yates said.

Lastly, the plan balances needs of all departments through the years instead of focusing on one service area at a time.

County administration asked each department to submit a capital needs request. Each project was prioritized and matched with potential funding sources by the finance department staff. They compiled the projects by program, included justifications for each expenditure and stated a rough estimate of cost.

While the plan maps out how the county can best fund and construct the projects, the plan is also malleable. If the unforeseen happens, commissioners can choose to delay or substitute projects as needed, Yates said.

And though the complete list looks daunting, the county will approve one year at a time.

“And if we need to, we can revise the rest of the CIP plan based on what we can get done in a particular year,” Yates said.

The plan recommends using general obligation bonds to fund the largest capitol improvement projects. A new jail and Union County Sheriff’s Office is estimated to cost $55.5 million, Jesse Helms Park development estimated

See Projects/page A2

at $6.5 million, library expansion and improvements estimated at $19.8 million, parks development and renewal at $6.5 million, a new South Piedmont Community College multipurpose building estimated at $22.7 million and renovation for a new SPCC technology and health building is estimated to cost $8.4 million. Together, these projects mean a 5.14 cent impact on the county’s tax rate.

When new debt is necessary, the county can use general obligation, revenue bonds, installment financing or N.C. Clean Water Revolving Loans. General Obligation bonds, decided by public referendum, provides the largest amount of borrowed money in the plan.

“Based on the Union County Capital Improvement Program Management Policy and the County’s Debt Policy, it is assumed that when voters approve the referendum debt, it also reflects affirmation of the related tax rate necessary to support the annual debt service,” the plan states.

If all general capital projects are approved, Union County would take on $31.1 million in general obligation bond debt, which is secured by county tax revenue. That represents an increase of about 1.34 cents on the current tax rate, but would change after revaluation.

The proposed plan includes no new Union County Public Schools facilities. The school board provided the county only one year’s worth of capital projects instead of a longer period as requested, Yates said. Finance staff had to use the limited information to outline a school funding plan.

Of the current $535.3 million of county debt, $450 million, or 84 percent, is education capital debt. Each year, the county pays $47 million in debt service toward that education debt and $3 million for general capitol projects.

State statute requires county governments to provide and maintain school buildings. The county can reasonably afford $3 million annually to UCPS for capital needs. About $8.3 million will go toward school site safety/security projects, but the amount will be funded over several years at about $1.4 million annually.

Besides the new building and renovated facility for SPCC starting in 2017, the county would appropriate money for structural maintenance and structural improvement to county schools.

Two major capital projects - a new human services building and an expanded jail and sheriff’s office - are unavoidable expenditures, but officials are looking at build-to-suit agreements with private construction companies for both. Commissioners already approved holding $35 million of hospital lease money for construction of a new home for the public health and social services departments.

But there are plenty of other county capital needs. According to the plan, there are $39,464,471 in expansion projects and another $6,855,883 for improving existing facilities. Those range from a new chiller for the Monroe branch of the Union County Library, construction of a new firing range for the UCSO, updated tax department software, health department records automation, historic courthouse renovation master plan, an energy-savings project and a host of other improvements.

Last year, the commission approved a water and sewer master plan that plotted the county’s 20-year utility need, when the Public Works department should raise customer rates and tap fees and when to borrow for necessary expansions and improvements. While Public Works will take on debt for capital projects, utility revenue will cover annual debt payments.

Commissioners meet in a second workshop about the capital program on April 26 and vote on the proposal on May 6.