Carolina North: The Hole in the Taxpayer’s Pocket Live ‘blog

I’m at the roll-out of tonight’s UNC explanation of the tardy (a year late) Tischler-Bise Carolina North fiscal impact study.

The classroom at the School of Government is fairly packed with elective and governmental staff folks (about 45 from all three governmental bodies – Chapel Hill, Carrboro, Orange County). Beyond a smattering of media folks (Daniel with the Chapel Hill Herald, Jesse with the Chapel Hill News), there’s a handful of concerned citizens.

Other than those “required” to be here (if at least for no other purpose than to say they were there), some of the “usual suspects” include Penny Rich (former candidate Town Council), George Cianciolo (Chapel Hill planning board), Scott Radway (former planning board member), Joe Capowski (former Council member), Terri Buckner (former Tech board member among other civic posts) and myself.

Further comments follow as comments on this post.







28 responses to “Carolina North: The Hole in the Taxpayer’s Pocket Live ‘blog”

  1. Administrator Avatar

    Tischler Bise consultant starts by covering methodology used to create fiscal impact study. A key difference, she underlines, between this and an economic impact study is that net revenues are not being balanced against net costs.

    Base assumptions include growth trends as per 2007-2008 and governmental budgets based on 2007-2008 numbers.

    Of course, this completely misses the boat as the current economic meltdown is a real game changer (something the Orange County Board of Commissioners didn’t account for in the recent revaluation debacle).

  2. Administrator Avatar

    Direct services, Town of Chapel Hill provides fire, UNC police and Orange County schools.

    NO NEW STREETS, one of the major flaws. I and others have talked about how improvements in all modalities of transportation are required on every side of Carolina North to meet the putative goals set forth by the Horace-Williams Citizen Committee, Carolina North Leadership Advisory Committee and Chapel Hill’s development agreement.

    Already we can project required improvements on MLK, Jr. and south into the Elkins Hill neighborhoods to support pedestrian and bicycle access to main campus.

  3. Administrator Avatar

    First two questions from Jacquie Gist cover the cost of schooling. TB (Tischer-Bise) responds that this is built-into the projections but will be managed as a “pay-go” process.

    asked about covering costs of borrowing monies for schooling – no good answer.

    Joe Capowski asked about costs associated with improving/maintaining road infrastructure in the surrounding areas.

    No good answer (as I noted before last December).

  4. Administrator Avatar

    I ask what was Tischler-Bise’s thinking in not considering off-site impacts of Carolina North on the cost structure of providing services like bike paths, pedestrian improvements, stream impact mediation (Bolin Creek and elsewhere), etc.

    The T-B consultant became somewhat flustered and maintained those costs are built-in though, if you look at the study, the improvements are concentrated on the Carolina North property.

  5. Administrator Avatar

    Back to schools. Barry Jacobs asked when the property for a new school would be designated. Jack Evans said he met with the school folks last week and there was an ongoing discussion on where best to site the school.

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    Jim Ward asks about city school district tax – wants to know where the revenue stream is in the T-B assumptions.

    T-B said they have subsequently folded the district tax into the new model (which might be in the new numbers).

  7. Administrator Avatar

    Kevin Foy asks about private tax revenues. T-B says sales, property taxes, etc.

    Kevin asks what services the Town will provide in return for these revenues – not trash, not police, mainly fire. Again off-site impacts are not factored into cost structure.

  8. Administrator Avatar

    Scott Radway is asking into the indirect impacts of off-site housing growth as it pertains to the new revenue streams from property taxes. Wants to know how T-B distributed type of housing per location – Chapel Hill, Carrboro and Orange County.

    T-B responds that type and location of off-site housing which indirectly contribute tax dollars to offset Carolina North costs are based on a study of University employees going back as far as 8 years.

    They did a pretty good job covering this in their report but (BIG BUT) the scenario is fixed based on historical trends. Instead of exploring a range of scenarios – especially given the expected shifts due to the economic downturn – they have stuck with a static analysis that – as we say in the software business – is brittle.

  9. Administrator Avatar

    Moving on T-B presents the employment profile for Carolina North over a 15 year horizon. In either case it is 3500+ jobs with the difference coming from when the jobs are created. These are net jobs – doesn’t include jobs shifted – like those at the Law School – to Carolina North.

  10. Administrator Avatar

    Direct impacts – major delta – at least from Tischler-Bises’ analysis – is the fire station coming online in year 9 which creates a $12 million cost – roughly $800K per year over 15 years or 1.5 cents per $100 valuation (declining as Chapel Hill grows).

    Other than the major hit Chapel Hill, it’s all gravy as T-B presents positive revenue impacts for both Carrboro and Orange County.

  11. Administrator Avatar

    The fiscal impact study shows a net surplus of $13.8 million to Orange County. The cost of schools, I argue, is extremely sensitive to both macro-economic effects (as we saw from the energy spike) and socio-economic profiles (how many families with X number of kids, etc.)

    The T-B evaluation expects that the folks living at Carolina North will have relatively small families requiring a smaller footprint school facility.

  12. Administrator Avatar

    Mike Nelson asks about the two scenarios vis-a-vis housing. Scenario one has a balance of non-taxable to taxable housing of 250/167 and scenario two 125/250 (with, obviously, different revenue streams).

    Mark Chilton pipes up on assumption of 3500 employees with only housing on-campus sufficient to accommodate 700 or so of them. Wants to know, given that folks say residential development is a net loss, where are the impacts of building housing to accommodate the 2800 other employees are…

  13. Administrator Avatar

    Mark Chilton asks how you put values on the wait time on Estes or increased air pollution or other “indirect” impacts.

    T-B says they try to factor those in but, if you look at the report, these negative impacts get short shrift while the positive – cash flow to the private side – gets the lions share of puffery.

  14. Administrator Avatar

    Mark follows up asking how the cost of maintaining/improving Estes is factored in? Does UNC expect state and federal monies to pay for %90 of the costs?

  15. Administrator Avatar

    T-B and UNC’s Jack Evans argues that road improvements, etc. – which create “big hit” impacts – isn’t fair to allocate exclusively to Carolina North.

    I agree somewhat though there is a whole laundry list of improvements required that we do know – now – that could be factored in. These impacts haven’t been adequately integrated into the model.

  16. Administrator Avatar

    Kevin Foy, question as to type and cost of Chapel Hill policing as reflected by the report. T-B says base assumption is that the policing required mirrors main campus, etc. Kevin challenges that assumption (something I did starting several years ago).

  17. Administrator Avatar

    T-B on the type of residences at Carolina North. Expectation that younger families living in smaller units that will move on as they grow.

  18. Administrator Avatar

    Sally Greene, why subtract out the 1500 jobs moving from main campus to Carolina North as a possible impact – we don’t expect those offices to remain empty.

    T-B – big argument when they modeled the impacts they decided to draw the line at new job growth since the job growth would occur whether CN was in-place or not.

  19. Administrator Avatar

    Mark Chilton to Jack Evans – “you’ve been arguing that growth can’t occur without Carolina North”.

    I’ve argued over time that Carolina North – which was originally promoted as a research campus for new projects, etc. was – in reality, in the short term – was going to serve mainly as an overflow campus for more meat-n-potatoes type development as characterized by the last 8 years of build-out on main campus.

  20. Administrator Avatar

    Roger Perry, current head of the UNC Board of Trustees, argues that there is tremendous jobs growth outside of the main campus. If the growth doesn’t occur at Carolina North then it will occur elsewhere.

    I would argue that growth is more diffuse than what is proposed at Carolina North – whose impacts are concentrated.

    Jim Ward wanted to understand better about the student generation ration of 0.7 and the character of jobs on CN.

    T-B jobs are university, support staff and private apportioned as per current projections.

  21. Administrator Avatar

    Following up on Jim’s point – the outcome of the model is sensitive to the initial conditions. There’s a big difference between 0.7 student per family or X # of on-site white collar jobs versus UNC support staff that trundle around town in their blue/white trucks.

  22. Administrator Avatar

    Pam Hemminger points out that 3,000 kids come from multi-family units – arguing that the school generation rate could be really low-balled.

    Dan Coleman, are impacts of trash pickup on infrastructure factored in?

    Are retroactive costs – like staff time already put in – being considered? T-B – no, we don’t consider that as a cost.

    Jack Evans – we asked the consultants to start with 2010, that’s why it isn’t factored.

    Dan, back to housing, why should we think that there is new housing in Chapel Hill/Carrboro that comes explicitly as a consequence of Carolina North?

    T-B, based on holding development numbers constant, they see that demand from Carolina North will generate residential development above and beyond what would normally happen.

    Dan says he doesn’t buy the notion that the communities would approve anymore housing because of Carolina North then they would do in any case…

  23. Administrator Avatar

    Dan is disputing that the revenues coming from property taxes from new development cannot be attributed to Carolina North exclusively – something I have mentioned before as a possible downside of the analysis…

    T-B argues that Dan’s point doesn’t make sense – that you can apportion the residential growth to some extent – which makes sense as a traditional demand curve would dictate but since Chapel Hill and Carrboro are filling up – and, I hope, we won’t be building a solid wall of East54’s down MLK, Jr. – there is only so much supply that can be provided irrespective of the demand.

    Mark Kleinschmidt pipes in that the jobs growth at Carolina North is a significant factor….

    Funny that Mt. Bolus, my neighborhood, is once again well represented. My neighbor Jesse White and Jonathon House (former Mayor) are here.

    Usually energy and sustainability experts Tom Henkel attends, which makes for a fairly concentrated attention from one neighborhood.

  24. Administrator Avatar

    On to indirect impacts. Mainly upside for Carrboro and Orange County with Carrboro seeing $1.5M+ positive flows after 5 or so years.

    Again, the indirect impacts seem to be highly quantifiable while KNOW direct impacts – like the effects on surrounding transit infrastructure, stream health, etc. – are swept under the rug (or, at most, vaguely alluded to).

  25. Administrator Avatar

    Orange County sees a $25M to $30M positive impact after 15 years. I wonder if UNC has the confidence enough to cut a check for $25M now?

    T-B property taxes account for the lions share of positive revenues with sales tax being a minor second.

    T-B indirect positive impacts depend of a growth pattern that mirrors 2007-2008’s growth pattern (where Woodmont, East54, Greenbridge and all of Carrboro’s approved projects) are factored in.

    Ed Harrison, what is “earlier indirect impacts”? These are indirect impacts that are spurred by primary “indirect” impacts (kind of a cascading effect).

    Ed points out that there is only so much growth that Chapel Hill can accommodate – indirectly spurred or not. UNC asks the concentrated town staffs if there is room, sans Carolina North, to accommodate another 1200 units.

  26. Administrator Avatar

    Matt Czajkowski, “you say the model is demand driven” but you didn’t look at the total capacity of Chapel Hill to grow?

    T-B – no, we didn’t account for the growth or type of growth. UNC, there’s plenty of room to grow….

    Matt – “there is?” Glad to see that this flaw was taken on….

    Matt – “everday the Town council” struggles with growth, growth decisions – how can you not know what kind of and how much growth Town can absorb when claiming there will be significant positive cash flows from off-site property taxes spurred by Carolina North when you haven’t even figured out how many units the community can absorb…

  27. Administrator Avatar

    Scott Radway – wants to confirm that the model can be used to do a sensitivity analysis. Points out that there is a difference between what growth the community’s can physically accommodate versus politically accommodate.

    Points out that the %15 affordable units are not part of the 1200 projected offsite units. These units will generate a different level of property taxes.

    He wants, like I and others do, more detailed background information on the assumptions, how the assumptions were settled, etc.

  28. Administrator Avatar

    Beginning to wrap up. Essentially I was hoping that T-B would provide more detailed background on how they settled on key assumptions, set key input values for the fiscal impact model used for Carolina North.

    Instead they didn’t have ready answers – like on growth capacity – that would build confidence in this report.

    The problem is that the current schedule for approving a development agreement doesn’t have enough time built-in to tweak the model or fill in the major gaps in the assumptions.

    Not quite an “epic fail” but not the confidence builder I thought it would be…

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