There has been a whirlwind of frantic activity behind the scenes this week as the Guilford County commissioners try to decide if they want to play ball with High Point by using county property tax revenue for the next two decades to help fund a proposed new stadium meant to spur downtown development in that city.
The tension over the project has become so heated in recent days that it’s almost not an exaggeration to say that a “no” vote by the Guilford County Board of Commissioners could lead High Point to contemplate an attempt to break away from Guilford County and form a county of its own. Just over a century ago, a group of High Point leaders tried to do just that and, this week, some High Point officials are saying that, if the county can’t offer its support on a “no-brainer,” “risk-free,” “extremely well thought out” proposition like the stadium proposal, then it’s not clear what purpose that city-county relationship serves.
Guilford County commissioners, on the other hand, say High Point has been pushing too hard, too fast for an answer from the board, and then say there are still a lot of unanswered questions and that High Point is now changing the financing proposal on the fly.
High Point Mayor Bill Bencini and other High Point officials have been insisting that the Guilford County Board of Commissioners make a decision at the board’s Thursday, Sept. 7 meeting in order to accommodate a proposed financial approval schedule the city already has in place. City leaders say they have to strike while the iron is hot – that is, while all the private, public and philanthropic parties are willing to move forward together – and they have already submitted a preliminary financing plan to the Local Government Commission (LGC). The LGC is a state financial oversight body that must sign off on deals when local governments assume large amounts of debt as High Point is doing in this case. High Point officials are already scheduled to meet with the LGC to get approval on this project and they want Guilford County on board by Sept. 7 so that High Point can include that revenue stream as part of the financing proposal the LGC will consider.
Guilford County Commissioner Carlvena Foster, a strong backer of the stadium proposal, did a rare end-around move on Chairman Jeff Phillips last week and placed the item on the agenda for the Sept. 7 meeting without consulting him first. For years, the practice in Guilford County government has been for all agenda item requests to go to through the chairman.
In this case, it’s extremely difficult to predict what the nine-member board will do because many of them say they have yet to make up their minds. Commissioner Kay Cashion seems to be leaning toward approval. Cashion has said she plans on attending a Wednesday, Sept. 6 announcement event in High Point where High Point University President Nido Qubein will provide an update on the stadium’s naming rights. That will almost certainly include revealing what company has chosen to enter into what’s expected to be a 15-year option on naming rights for the proposed ballpark.
Some comments made by Commissioner Justin Conrad suggest he’s leaning in the other direction.
Commissioner Skip Alston said this week, when asked about his decision, “I don’t know – I’m still thinking about it.”
Commissioner Alan Perdue, likewise, said he was still listening to the arguments on both sides.
High Point leaders want Guilford County to use tax revenue from the anticipated increase in property values to help cover some of the stadium’s cost. Though some of the cost would be covered by other revenue sources – like the team’s lease payment, a facility fee charge on game tickets, parking surcharges and the stadium naming rights – part of the city’s financial plan has, at least until recently, called for the Guilford County Board of Commissioners to create a Tax Increment Funding (TIF) zone covering about 650 acres near the proposed stadium, which would allow Guilford County’s portion of the increase in tax revenues to go toward stadium repayment for up to a 20-year period. The agreement is expected to mean that Guilford County will provide roughly $12 million in stadium debt repayment over two decades or so. If Guilford County saw the appreciation of the property values but did not use the revenues for stadium repayment, the added tax value would go into the counties budget and be used to pay for countywide services such a health and human services, schools, emergency services, etc.
TIFs are public financing methods through which local governments divert new property tax revenue from increases in property values in a certain district, for a set period of time, and use those funds to pay for an economic development project. In this case, as it has been discussed, Guilford County would take tax revenue from the anticipated property value increase and use those funds to help pay off the debt on the baseball stadium.
County officials said this week that, though all previous discussion had been about the TIF, now High Point is actually requesting “an interlocal revenue sharing agreement” that has important differences from a TIF. For one thing, it may require a public hearing with prior public notice – something that would prevent the Board of Commissioners from legally approving the matter next week even if it wanted to. That new wrinkle created a fury of research activity by the tax, finance and legal departments of Guilford County government. Guilford County Attorney Mark Payne has been checking the implications of this type of financing.
One high-ranking High Point official said the proposal is for a “synthetic TIF,” and he stated that using the shorthand language of calling it a TIF this entire time was “unfortunate,” but he added that this was essentially the same financing arrangement the city has been talking about all along.
Mark Payne, who has been reviewing the written request from High Point, said that the proposal is not a TIF but shares some characteristics of a TIF. Payne said that some of the differences are “semantic” and the agreement on his desk is sometimes viewed as a “synthetic TIF,” but he added that there are logistical, statutory and practical differences between the “interlocal revenue sharing agreement” now being proposed to the county and a TIF, which has been discussed previously. Payne said one difference is that the revenue sharing agreement now on the table, in his opinion, requires a public hearing because it falls into the category of an “economic development expenditure,” and state law requires a public hearing for those.
The plan calls for High Point to take out a loan to pay for the stadium and the loan plus interest will be paid back by the various revenue streams, and High Point officials hope Guilford County will be one of those.
In the case of the TIF, the actual money raised in the tax collection process would be put toward stadium loan repayment; however, this new revenue sharing agreement would mean that Guilford County would advance the money to the stadium project on a periodic basis and then recoup that money from the added tax revenue. Though it should be pointed out that, under either agreement, Guilford County wouldn’t be responsible for paying out any money if there are no property value increases in the designated area.
One of the points High Point officials have harped on over and over again is that Guilford County will only pay the revenue toward stadium debt if downtown economic development follows the stadium construction and property tax values increase, so there’s no financial risk to the county. However, this week some county commissioners said they question High Point’s assumption that no development will take place if the stadium project isn’t initiated – so Guilford County, therefore, may in effect be giving up real future revenues if the board does agree to the proposal.
Bencini said the Downtown Catalyst Project is the city’s largest single economic development initiative since the city’s infrastructure investment in Piedmont Centre, which he said worked out very well. The Centre is a large business park the city helped establish at 4000 Piedmont Parkway that now is home to 170 companies.
“We built that infrastructure and the private investment did materialize in north High Point in a big way,” Bencini said. “Piedmont Centre has been very successful, tax base-wise, for both the city and county.”
The mayor said that project had stimulated a great deal of private investment along the NC 68 corridor.
The mayor said the new Downtown Catalyst Project is meant to improve “the prosperity and livability” in southwest Guilford County, and he said a great deal of planning has gone into it.
“It is well-conceived, well-planned and enthusiastically supported by our elected board, our civic leaders and our business community,“ Bencini said, adding that both High Point and Guilford County both will benefit from the project’s success.
High Point plans to use added city revenue from the expected increase in city tax revenues to go toward stadium repayment and High Point officials are asking the county to do the same. That would mean that, for a period of up to 20 years, the county would not benefit from the property value increases and the related rise in tax revenue from the area; however, once the stadium is paid for, the county will then have the new annual revenue for its own use, if the promised economic development in fact materializes around the stadium.
One High Point officials said this week that, “While High Point is trying to play baseball, while Guilford County is playing dodge ball.”
Phillips said that he was taken aback by a widespread assumption on the part of High Point officials that the Guilford County commissioners had already decided to vote no on the project. He said that’s not the case, but he added that a public berating Bencini gave him at meeting of local economic development officials and elected officials hadn’t advanced High Point’s cause.
Phillips also said he’s concerned about changes in the financing asked for and said more questions had arisen.
Some county officials said it isn’t clear to them why they weren’t made more explicitly aware of the financing details before now and why, what has been called a TIF, is now something else. Several county commissioners said Guilford County staff was surprised to find, when they saw the proposal in writing, that the financing agreement wasn’t a TIF as they had been told all along.
Guilford County Commissioner Alan Branson also said this week that he’s just not sure local governments should be attempting to choose where development goes.
“I’m not against the stadium,” Branson said, “but I’ve never have been a fan of government getting in the development business. I said that with Project Haystack.”
Project Haystack was a major initiative, now notorious, that was supposed to transform 2,000 acres in eastern Guilford County into a giant data center park and bring over $5 billion in investment to the county. That initiative never even got off the ground despite all the hoopla and despite Guilford County spending about $30,000 to explore real estate acquisition for the project.
High Point officials argue that the current baseball plan, unlike pie in the sky schemes, has been meticulously thought out and vetted six ways to Sunday; however, some county commissioners still have their doubts.
Branson also said he had concerns about the county forgoing up to 20 years of property tax revenue in a large area of the county on a financing plan that seems to be shifting in recent days.
Branson also said it’s not at all unreasonable for the Board of Commissioners to want time to assess such a major endeavor.
“I don’t think 30 days is going to kill the project,” Branson said.
At a county commissioner work session on Thursday, August 17, Branson said he was a little perturbed High Point officials hadn’t spoken to him about the project in any detail beforehand. High Point leaders fixed that this week: On Friday, August 25, they gave Branson a tour of the blighted downtown area and answered questions he had about the project.
Commissioner Hank Henning, who represents much of High Point, also said there was much more he wanted to know about the proposal.
“They said, ‘What are your questions?’ and I said, ‘Everything,’” Henning said.
“I see a lot of risk to it, but I also see a lot of benefits,” he added.
Henning said it was mistake of High Point officials to assume he was going to vote against it.
“I can be taken at face value when I say I need more information,” he said.
Henning said that this project is supposed to be a “cash cow and they want the county to pony up,” but said that means dotting all the i’s and crossing all the t’s.
“The last time I was rushed like this was with Say Yes,” Henning said.
Say Yes to Education Guilford is a countywide college scholarship program that promised big things but left many families in the lurch due to poor financial planning.
Henning has really been hearing it from both sides. Many High Point leaders desperately want Guilford County to participate while some citizens are angry the city didn’t put the project on the ballot in the form of a bond referendum before attempting to move forward with it.
Henning said that, of the people he represents, “More people are skeptical than those who are willing to jump in.”
On Friday, August 25, High Point sent a hand delivered letter to the Guilford County Board of Commissioners that provided some more details of the plan.
One commissioner pointed out that, even though Foster has requested for the matter be on the board’s Sept. 7 agenda, a vote by a majority of commissioners can pull that item as fast as she had put it on.