Water, Water, Everywhere…

Tuesday, March 1st, 2011

After a very long day and a very long evening. I finally got a chance to ask Council to take a more measured approach to approving OWASA’s proposed modifications to the agreement controlling access Lake Jordan’s water.

The proposal might have appeared technical in nature but, at the heart of it, had policy ramifications impacting our community’s environmental commitments, fiscal health and pledges of sustainability.

Unfortunately Council, by a 7 to 2 vote, passed the resolution tonight without reviewing those wider issues and doing due diligence.

What might the future hold then?

1) Non-emergency use of the 5 million gallons per day (5MGd) to meet unsustainable growth patterns.

Current utilization is 6 to 7 MGd per day. No justification was made for doubling our water usage profile by tapping Lake Jordan for new non-emergency uses. Sadly, Council decided not to limit water allocations to clear emergency conditions.

UNC has already stated several times that it is keenly interested in securing this supply. If the new supply is only to function as an “insurance policy”, why that sharp interest?

2) As OWASA Chair Merklein put it so well this evening – there is only room for one more straw into Lake Jordan.

Any of the 5MG/d we draw down from Lake Jordan will have to come through either Cary’s or Durham’s infrastructure. OWASA clearly suggested that Chapel Hill will eventually rely on Durham’s “straw”.

Given that, I don’t think there’s any scenario involving long term draw downs through Durham which don’t incorporate significant additional costs to the OWASA customer base.

Why? As Durham has already signaled, as recently as 2008, it wants its Lake Jordan intake partners to participate in the financing and build-out of that new “straw”. If OWASA doesn’t directly underwrite its part of the project, it is hard to imagine that Durham and its other partners won’t charge a higher fee for water in order to recover their expenses. Either case, the fiscal impact was totally ignored this evening.

3) When OWASA’s 2010 Long Range Water Plan was presented to the Sustainability Task Force last year, we were told that supplies were sufficient for the next 50 years. The only “tight spot” were the years just prior to 2035 when the Rock Quarry reservoir comes online.

That point was reiterated this evening by Gene Pease, who spoke of a meeting he had just last week where he was told the same thing. The maximum anticipated shortfall is well less than 15%, very much less than the 5MG/d Council just approved, so why the hurry to move ahead?

OWASA stated approval was needed this year to secure the allocation, and I accept that, but that doesn’t excuse Council from putting some constraints on non-emergency allocations.

4) Water is required for growth. That point was well-understood when our joint community’s financed OWASA’s acquisition of a watershed that was supposed to meet our very long term needs. This community has fought hard – continues to fight hard – to maintain the best environmental standards within that watershed.

Council repudiated that tough fight this evening when they essentially agreed that OWASA could “borrow” as much as 5MG/d from Lake Jordan (an impaired water source).

Worse, we don’t know what constrains OWASA from tapping Lake Jordan for “non-emergency” reasons. If Council or Carrboro approves one too many East54 type developments – is that considered grounds for purchasing resources to fuel inappropriate growth?

5) Finally, as Council member Jim Ward pointed out this evening, just knowing we can tap another 5MG/d makes it tough to sell even more stringent water conservation policies. An important negative feedback loop has been removed.

Tonight’s misstep, of course, is part of a wider problem which our community and, especially, its current leadership has yet to successfully grapple with – are there constraints to growth?

Are we willing to purchase resources on the open-market to fuel an unsustainable level of growth? What, exactly, are we willing to trade away in building our future?

Unfortunately, the answers this evening were loss of local control of our water, loss of community reliance on local resources, loss of a commitment to live within our own footprint.

AAA Bond Rating: Don’t Bet Against Clemson

Wednesday, January 26th, 2011

Chapel Hill’s AAA bond rating is noteworthy. The care our elected folks have taken to maintain it over a decade laudable. But is it fair to say, as Mayor Mark Kleinschmidt did yesterday, “it is almost, but not quite, as rare for a town our size to have a AAA rating by Standard & Poor’s and Moody as it is for Clemson to win in the Dean Dome”?

Well…

As one municipal bond specialist noted, today’s ratings aren’t quite the same as a decade ago:

Since early last year [2009], the number of “AAA”-rated localities has more than doubled, according to a newly released Standard & Poor’s report. Over the last 1 ½ years, despite the withering economic downturn, changes in rating criteria combined with a number of first-time rated “gilt edge” communities served to produce an increase of 86 communities now rated in the top “AAA” category.

Of the newly rated “AAAs,” S&P raised 65 from the “AA” category, with the remaining 21 representing communities never previously rated.

Traditionally, rating agencies have been tightfisted in their willingness to assign “AAA” ratings to municipal debt. Now, 169 local governments carry S&P’s top rating, up from 70 in late 2006.

Jay H. Abrams, FMS Bonds, Inc.

Standard & Poor’s (S&P) isn’t the only rating agency to review and relax the conditions for awarding a AAA rating:

In early April 2010, Fitch Ratings overhauled the way it assigns grades to the credit quality of state and local governments, recalibrating ratings on 40 states, the District of Columbia, the Virgin Islands and Puerto Rico. The move affects some 38,000 municipal bond issues. The rating agency’s wholesale recalibration is in part recognition that municipalities were being held to a higher standard than corporate and sovereign debt. Moody’s Investors Service also started to recalibrate its universe of municipal bond ratings in mid-April 2010, beginning with changes for 34 states and Puerto Rico.

Securities Industry and Financial Markets Association,2010

So, yes, the Town has managed to hold onto its AAA rating another year but the quality, so to speak, of today’s rating is not necessarily equivalent to that of the ratings awarded 2 or more years ago.

As far as municipal bond ratings, recall that there are three dominant rating agencies (CRAs) who manage the market for ratings (little competition), they routinely make huge mistakes (all 3 rated Enron investment grade right up to the collapse, all 3 rated many of the bundled mortgage securities highly right up to their failures), they are slow to adapt and have a poor record of understanding how to value new trading instruments (like the ARRA Build America Bonds [BABs] our Town just issued).

As I noted previously (most recently here) Chapel Hill’s Town Council has maxed out the credit card. The debt ceiling they have adopted is a reflection of previous borrowing decisions – not a prudent fiscal analysis of what is reasonably sustainable with our current tax-base.

One tool a concerned citizen can use is the Municipal Securities Rule-making Board’s (MSRB) relatively new
Electronic Municipal Market Access (EMMA) system – an analogue to the SEC’s EDGAR – to track filings.

Chapel Hill’s recent $20.1 million filing, which includes the $16+ million for the Library expansion, is here.

Lot $$$5 Lurches Forward?

Monday, November 22nd, 2010

Council has been quite patient with their development partner RAM Development.

The Lot $$$5 project has seen delay after delay, the basic tenets under which is was justified shifted substantially over that time. For instance, developers apparently didn’t need the Lot $$$5 project to whet their appetite for Downtown projects as three are on-going.

Even though Council has had opportunity after opportunity to cancel the project because of RAM’s contractual breaches, they have continued to support the fiscally imprudent project – a project which neglects the changing realities Downtown.

It is a shame that our Town’s leadership didn’t take the time to rework the project – fix its many policy and practical problems – during the long hiatus. Looks like it might be too late as, according to the Town’s PR flack, the clock has started ticking again:

Town gives 140 West go-ahead
Posted Date: 11/22/2010

The Town of Chapel Hill issued a zoning compliance permit on Friday, Nov. 19, for the 140 West project consisting of condominiums, retail and parking on Town-owned Parking Lot 5 at the intersections of Franklin, Church and Rosemary streets in downtown Chapel Hill.

This is the regulatory action that is required for the project to start work.

“Our primary interest in our review of the developer’s submitted plans was safety for all users of the public rights of way, as well as the possible impact on nearby residents and businesses and the safety of the workers on the site,” said Town Manager Roger L. Stancil.

As part of the permit review, Town staff reviewed information submitted by the developer and additional information provided by residents and business owners who were interested in the project. A public meeting was held in July to solicit comments and concerns.

The project includes 140 homes (18 of which are in a trust for affordable housing), 26,000 square feet of ground-level retail space and 337 parking spaces. Ram Development Co. is the project developer, and the general contractor is John Moriarty & Associates Inc. Completion is projected in about two years.

The 140 West Franklin building will stand four stories tall along the street and steps back to eight stories tall at the center. The project includes 140 homes (18 of which will be dedicated to the Community Home Trust), 26,000 square feet of ground-level retail space and 337 parking spaces. There will be a two-level parking deck including a dedicated public parking level which will be owned and operated by the Town of
Chapel Hill. The project also will feature a large outdoor public plaza with art by landscape artist Mikyoung Kim.

The municipal parking lot at the site is expected to close on Jan. 16, 2011. The Town has anticipated a need for replacement spaces downtown and developed a plan to replace all hourly spaces being temporarily
lost due to construction. Please see attached map map.

Parking in Downtown Chapel Hill includes the following:

On-street parking spaces on West Franklin Street: The Town negotiated with the North Carolina Department of Transportation to provide 14 new on-street parking spaces on West Franklin Street.

West Rosemary Street: The West Rosemary Street Lot (formerly Lot 4) is located west of Old Town Hall. The Town has paved and striped the lot, and has installed hourly meters for 17 spaces in that lot.

West Franklin-Basnight Lot: The Town has leased 66 spaces for hourly parking in the West End behind the old University Chrysler building. (These spaces are currently being used as monthly parking. We plan to
convert them to hourly parking as need dictates.)

415 West Franklin Street: The Town has converted 8 leased spaces in this lot to hourly parking.

The developer initially proposed closing Church Street for the duration of the project, or about 24 months. They also proposed closing the sidewalk along the Franklin Street frontage of the project and installing a mid-block crosswalk on Franklin to redirect pedestrian traffic. The SUP stipulations dictated additional sidewalks for the north side of Rosemary Street and the west side of Church Street along the limits of the project. The approved SUP also includes plans that show Church Street being closed during construction.

The approved construction plan anticipates closing Church Street for about 12 to 15 months, including closing the street later and opening one lane of the street earlier than originally proposed. In addition,
the dimensions of the closed area were modified to preserve better visibility of the businesses at the corner of Franklin and Church Streets and we will provide a new, temporary loading area in front of that same building by relocating a bus stop farther west on Franklin Street.

The Franklin Street sidewalk will remain closed to allow trucks entering the site to be segregated from both vehicles and pedestrians along the street. The sidewalk on Church Street will remain open during construction so access to the offices that front on Church Street can be maintained.

The Town has created a new dedicated web page for construction information and timelines at www.townofchapelhill.org/140west

For more information, please contact:

Jon Keener, Ram Development Manager, 919-942-3381 or 888-310-1409
Jay Gibson or Mike Taylor, Town of Chapel Hill Engineering: 919-968-2833
Catherine Lazorko, Town of Chapel Hill Public Information: 919-969-5055

E-mail: 140west@townofchapelhill.org

A Bit Older, Less Grayer

Thursday, August 12th, 2010

I ended up talking about the troubling aspects of both East54 and the Lot $5 with a native Chapel Hillian after a recent community meeting. While introducing myself they exclaimed “you’re Will Raymond? I saw you speak several years ago about the Town’s Downtown project” but, they went on, I “looked different”, even younger than they recalled.

During the recent WCHL1360 “Who’s Talking” interview (140West: RAM Development’s Money Tree, Chapel Hill Taxpayers Moneypit), I had commented to Fred Black that I was a bit older and a bit grayer but still flogging the same old issues of sustainability, diversity, fiscal responsibility, community input, etc. I started with nearly a decade ago.

Turns out, though, while I might be a bit older (and heavier), I don’t look as gray without the huge beard.

Here’s a sample from Feb. 12th, 2007, the night that version of our Town Council decided to plunge ahead with the broken Lot $5 deal.



140West: RAM Development’s Money Tree, Chapel Hill Taxpayers Moneypit

Tuesday, August 3rd, 2010

Local commentator and involved citizen Fred Black invited me to do a WCHL1360 Who’s Talking segment last week.

It airs this evening (Tues. Aug. 3rd, 2010) at 6PM.

While the subject was supposed to be the Lot #5/140 West project, which is slated to finally get started later this month, Fred used this opportunity to talk about development Downtown, public engagement, and Council.

As I said then and before, I believe Lot #5 presented an excellent opportunity for redevelopment.

I and others argued for a fiscally prudent, environmentally sustainable, community-oriented development that had workforce housing, affordable commercial opportunities, an integrative tenant – like a grocery store – and real public space.

Instead of getting a signature development that met those goals from the RAM Development/Chapel Hill collaboration we got a $10M+ taxpayer funded luxury condo development with little public utility. Architecturally, the project’s look fits the Atlanta beltway more than Chapel Hill – it says little, if anything, significant about our community.

Not only was the business model flawed but so was the underlying commitment to adhere to measurable energy and environmental targets (the Council, unlike what they’ve pushed UNC to do, did not adopt and has no plan to evaluate energy usage, for instance, using ASHRAE or other quantifiable standards).

Of course, I thought that the scale of this development (which you can get a sense of from the site models I created 4 years ago) didn’t fit the human-scale dimensions of our current Downtown. That human-scale is part of Chapel Hill’s ‘brand’ – evidenced by the Town’s own logo – and shouldn’t have been casually tossed without at least a proper attempt to educate our residents and some informed buy-in from the community.

What now?

The Council had many chances to walk away from the project over the last few years as RAM Development missed contractual obligation after obligation. The majority didn’t.

The Council had 2 years to work with local businesses to minimize the impact of the next 2 years of construction. That collaboration just started and already there is some significant friction between the Town and the Franklin St. commercial district.

The public financial burden begins immediately as the environmental remediation begins though the Town’s finances are stretched to the maximum by the majority of this Council’s decision to issue $20+ M in bonds for the Library expansion among others capital improvements. There’s no plan in place to publish those costs as they mount.

Is it too late to do anything? No.

This is OUR project. WE are investing $30-40M in cash and property and have every right to expect that nearby businesses can still function, that questions of public access be finally laid to rest, that every dollar invested by our residents is accounted for and that we have a solid commitment to measuring the success or failure – in terms of tax and parking revenues, energy efficiency, growth of commercial activity – of the project

I did a quick review of my posts on the Lot $5/140 West project and have collected those from 2006 to 2010 below for further background:
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Chapel Hill Library Funding: Orange County Commissioners Respond, Kind Of…

Wednesday, June 2nd, 2010

Final bit of business from this evening’s Orange County Board of Commissioner’s meeting.

A couple weeks ago, members of the Council, Commissioners, our Town and County managers, met to discuss increasing the County’s financial contribution to Chapel Hill’s Library.

As of today, the County’s current yearly $250K contribution is out-of-line with out-of-town usage. In effect, Chapel Hill subsidizes, and has subsidized by as much as $6M over the last decade, County residents use of our facilities.

If Chapel Hill elects to expand the Library (which it seems at this point Council will do irrespective of fiscal prudence), that subsidy will swell.

Now, it isn’t the County’s fault that Chapel Hill’s Council wants to take on another $1.3M in yearly operational costs (and another $2.3M in yearly bond payments) during the worse economic downturn since the Great Depression but they did commit to answering Council’s pleas for more bucks.

Tonight the County Manager proposed [PDF] to raise the contribution to $500,000 or %50 of Hillsborough’s main library budget (which services Hillsborough and beyond). The increase to $500,000 would be graduated over time and level out.

This is below the initial $700K figure thrown out a few weeks ago and well below the $1.1 million ( of an eventual $2 million OC library services budget) Chapel Hill calculates as the County’s “fair share” of support necessary after the expansion.

FYI, Orange County’s current library services budget – which was reduced by $162,000 in all areas EXCEPT for Chapel Hill’s $250,000 stipend – is now down to $1.2 million.

In other words, while the County’s budget for services outside of Chapel Hill dropped %11.7, Chapel Hill’s, as a percentage of the available funds, increased from %18.1 to %20 – a rare increase in this year’s County budget [PDF].

Below are my notes from this evening’s discussion (video here eventually):

Note: Southwest branch refers to a proposed new facility serving Carrboro and points west. Barry Jacobs suggested opening branch at the County’s Skill Development Center on West Franklin St.
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Chapel Hill’s First Budget Meeting of 2010

Wednesday, February 3rd, 2010

I want to quickly respond to Chapel Hill Mayor Mark Kleinschmidt’s comments this evening.

First, spending $8-12M on the Lot #5 project, building luxury condos and enriching a private developer, is not the same as “protecting our Town’s infrastructure”.

The Lot #5 (West 140) project is discretionary – the push to keep it going is not based on sound economic fundamentals.

Putting Lot #5 on par with filling potholes or expanding the Library is a great political speaking point – but certainly not grounded in reality – suggestions otherwise does the public a disservice.

At the same time, other probable debt-related outlays aren’t included in the analysis. Mark suggesting the lump of general obligation (G.O.) debt covers the whole gamut of obligations minimizes the challenge before us.

Beyond that bit of misdirection, Mark knows (or should know) that our Town’s current reserves are low compared to historical reserves on a percentage basis.

That $1.9M increase Mark bandied about sounds big but isn’t considering the $55M hole we’re in. No matter how hard fought the battle to get that $1.9M last year, weighed against future operational and capital demands – like trying to expand the Library – the percentage improvement in overall reserves was slightly better than negligible and doesn’t position us any better to deal with MAJOR outlays (if you use a more reasonable debt ceiling).

To use the credit card example several Council members relied on this evening, there is a qualitative difference between the following two scenarios:
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WCHL Commentary: Library Expansion Next Year or Lot #5 Project, Not Both

Monday, February 1st, 2010

Ron Stutts and WCHL 1360 invited me to do a commentary on a Chapel Hill issue.

I chose to speak out on the fiscally imprudent idea that we can “have our cake and eat it too”.

Run this and the following four year’s budget numbers, look at anticipated impacts – funding Town retirees’ health-care, fixing Police Headquarters, meeting our clean water responsibilities under the Lake Jordan compact, the doubling in demand on our social services, etc. – and it becomes clear – we can walk away now from the discretionary Lot #5 project – at little additional cost to the taxpayer – or do the Library expansion next year.

We can’t do both.

Thanks to Ron and crew for somehow squeezing 10 pounds of commentary [MP3] into a 5 pound bag. Amazing!

Jan. 25th the Council considered two projects with major financial impacts – the Library expansion and the problematic Lot #5 private/public development project.

After discussing their options at length, they decided to postpone approval of the Library expansion pending a more thorough review of the Town’s spending priorities during the Town’s normal budget process which, by the way, kicks off Wednesday, Feb. 3rd.

This was a reasonable and prudent course of action given the serious fiscal condition of the Town, the weakened economy, continued expectations of poor revenues and Council’s touted commitment to public participation.

Unfortunately, the Lot #5 project didn’t get the same level of concern.

The Town’s debt has doubled to $55M over the last 5 years. It’s been used to fund necessary and discretionary capital improvements like the construction of the new Aquatics Center – which at about $7M was almost on budget – and the Town Operations Center – which at $52M went roughly $10M over-budget.

Supporters claim the typical household will ONLY pay $40 more a year but that $40 only covers the increased cost of operating the Library and not the cost of discharging the $16M bond debt.

The Town Manager says that as we payoff existing obligations we can issue new bonds without increasing taxes. This might be true through 2011, but as the Town’s finance director pointed out, from 2012 on the construction debt pushes our overall debt very close – maybe even exceeding – the level necessary to keep our Town’s AAA bond rating.

At that point a tax increase is certain.

The Town Manager’s analysis is also rather one dimensional – challenges like the Town’s rapidly growing unfunded retirement obligations – projected to be as much as $56M or replacing Police headquarters – $10M if Council had purchased Dawson Hall – were not considered.

So what about Lot #5? Lot #5 requires 8 to 12M taxpayer dollars and represents the Town’s greatest, riskiest discretionary fiscal liability.

Part of the sales pitch for Lot #5 was the supposed need to stimulate development Downtown.

With Greenbridge nearly built and other Downtown projects on the way it’s clear that we didn’t need a stimulus. In fact, directly across Franklin St. the University at University Square is already putting forward a much more interesting, integrative proposal which better fulfills the goals of the Lot #5 project – and at little cost or risk to our taxpayers.

Given that the cost reductions that allowed RAM Development to lower their gold-plated condo prices haven’t been passed on to the taxpayer, that the number of pre-sold units hasn’t grown in-line with those price reductions, and that the Town still doesn’t know how it plans to borrow that $8 to 12M – now is the time to drop Lot #5.

Three years out – three contract extensions granted – no significant improvement in proposal.

What does this have to do with the Library?

We can have a Library expansion – hopefully starting next year – or we can have Lot #5 – we can’t handle both.

Contact Council – ask them to pull the plug on the Lot #5 project now so that we can take on projects that are more central to Council’s charter.

More information on my website, CitizenWill.org.

Library or Bust? Laurin Easthom’s Concerns

Tuesday, January 26th, 2010

The Council decided to postpone the Library expansion decision pending further data and discussion.

Council member Laurin Easthom pointed out on Monday, once again, “We need to make some real serious decisions about citizens who use our library and don’t pay.” Laurin has been on-top of this issue for some time. She has also been quite clear in her concerns (THE LIBRARY AND THE FREE LUNCH) unlike several of her colleagues.

Laurin is not alone.

Her colleague Penny Rich added “Citizens in Chapel Hill are quite generous, but I think the endless supply of money in our wallets is not there anymore.” (Daily Tar Heel, Jan. 26th, 2010).

New member Gene Pease, who has been a stalwart supporter of the library for many years – raising significant funds as a member and leader of the Friends of the Library president of the Chapel Hill Public Library Foundation [thanks Fred!] to support its mission – said “To have no conversation about this and about how to attack this problem in the operating budget, I think it’s irresponsible to make the decision tonight” (Lauren Hills,NBC17) in justifying the delay.

I’ve watched this issue unfold for several years, called on former Council’s to show some fiscal restraint over the last 4 years so we could accommodate this project. It is clear that given the current economy, a prudent assessment of our Town’s revenue stream, the core fiscal liabilities and obligations we must discharge (which does not include that Lot #5 money pit), the Library expansion must wait.

Of course, that’s my considered opinion which is based on the data at hand, my entrepreneurial experience and a financial philosophy that emphasizes “living within our means”.

Laurin Easthom foresaw these same issues and tried to set several plans in motion to address this unfortunate juncture – the public’s growing desire for a new facility coupled with a bare public cupboard.

Last April, in fact, she directed the Town Manager and staff to come up “with a financial cost sharing plan” to help ameliorate the anticipated rise in operational costs. To date, no plan has emerged from Town Manager Roger Stancil and crew.

A quasi-plan did emerge on Monday from new Mayor Mark Kleinschmidt and Jim Ward – pressure the Orange County Board of Commissioners and, as Jim put it, make adequate library funding a “litmus test the winners are going to pass, period.” in this year’s county-level election cycle.

Given the County budget mess, the incredible pressure to fund the schools, existing debt obligations, new costs and lost revenues, threats are a non-starter. And, as Jim and Mark seemed to have forgotten, when the county commissioners (BOCC) pushed through election districts, Chapel Hill citizen’s leverage was somewhat diluted.

Our leadership must work with the BOCC on adequately funding the library using a more positive approach. Sure, we shouldn’t continue to accept “nice words that … are worth zero” as Jim Ward said of the Commissioners (Greg Childress, Herald-Sun, 01/26/10) but we also can’t expect to get blood from a turnip.

The best approach, I believe, is to jointly identify sources of funds, possible cost savings made possible by collaborating on other issues, to find the money we need for operating the facility.

That said, “absorbing” additional debt alone should push the start date of the expansion off until next year.

The Town Manager is recommending that as the Town retires existing debt we take on new debt by issuing the Library bonds. That might be a sensible approach if our Town wasn’t already burdened by an incredible debt load – historically unprecedented – during such a troubled economic time. The Town needs to retire existing debt, bring our reserves back up and take a small breather before launching into another spending spree.

Library or Lot #5?

Monday, January 25th, 2010

Here is what I meant to say at this evening’s Council meeting.

Like a lot of my remarks, I find myself editing on the fly, so what I managed to get out in less than 3 minutes wasn’t quite what follows but I believe I made the points I needed.

The simple summary?

We can’t do the Lot #5 (140 West) project and the Library expansion together. Lot #5 hasn’t met its goals, the cost/benefit ratio is decidedly out-of-whack, the necessity quite clearly not there anymore.

Further, the Library expansion project needs to be delayed until taxpayers can bear the total cost. Beyond that, we need to request an extension from the North Carolina Local Government Commission to allow issuing bonds beyond the current deadline so when it is fiscally prudent we can move expeditiously.

Finally, public participation, once again, is barely considered.

Tonight’s remarks:

In 2010 you will be making several key budgetary decisions whose impacts will span the next decade – the Lot #5 (West 140) and Library expansion – two examples.

Lot #5 represents the greatest and riskiest fiscal liability going forward that can be safely dispensed with.

Part of the sales pitch made by some on this Council is we needed this project to kick-start development Downtown.

With Greenbridge nearly built, University Square poised for redevelopment, approval of Grove Park – which will displace the affordable Townhouse Apts. on Hillsborough St. with luxury condos – and other Downtown projects on the way it’s clear that we don’t need that supposed stimulus Lot #5 brings anymore.

It’s time to reconsider this troubled project especially given that:

1) the cost reductions that allowed RAM to lower prices haven’t been significantly passed on to the taxpayer,

2) the number of units pre-sold hasn’t grown in-line with price reductions (33 units pre-sold so far, down from the reported 2008 commitment of 35).

3) the open-ended nature of the cost of the environmental cleanup is still being underplayed,

4) the University at University Square has already put forward a much more sound, interesting and integrative proposal (123 West Franklin) for that stretch of Franklin St. than the expensive – at least to the Chapel Hill taxpayer – Lot #5,

5) still up in the air how we will borrow the money – COPs, TIFs, etc. In any case, however we borrow the $9-10M or more it will limit the Town’s ability to prudently respond in funding core needs,

6) and from what I can see in RAM’s recent missive ( RAM Dec. 22nd, 2009 letter [PDF]) no effort has been made to involve the nearby business and residential community in discussing mitigation of the type of construction-related problems that have plagued Greenbridge or even apprise their future neighbors of current developments (let alone present a coherent and consistent story to the local press).

Three years out and no significant improvement in the proposal. Three extensions to the contract granted by Council. Lot #5 should be shelved now so that the Town can take projects that are more central to its charter.

What does this have to do with the Library?

I want to see the Library expanded but now is not the time.

The memos before you [here] paint a fairly rosy picture of the borrowing in terms of adopting new debt but they don’t do a very good job in putting that increased debt in context of our already astonishing – at least by historical Chapel Hill standards – debt load.

Memo #A, in fact, disingenuously characterizes the increase to homeowners using examples of property valuations well below ($200K) the Chapel Hill baseline.

Look at the chart in Memo #A. The rate of increase in the debt load – that rapidly increasing impact on the Town’s flexibility in borrowing – running our debt right up to the debt ceiling for our AAA bond rating – starts in late 2012 and zooms steeply from there.

Of course, besides adding new debt that and anticipated G.O. additions will account for roughly several cents on the current tax rate while the real kicker is the growth in cost of Library operations – which appears to be even more significant.

Worse, the continued structural instability and weakness of our economy gets short shrift.

Now is not the time to take on a large forward liability.

Making a decision based on these figures tonight will be guaranteeing a tax increase or steep cuts or just ignoring basic obligations two years hence.

Here are my suggestions:

1) Shelve Lot #5. We can have a Library expansion – hopefully starting next year – or we can have Lot #5 – we can’t handle both.

2) The Library borrowing should be delayed until prevailing economic conditions show signs of improvement – strengthened sales tax revenues, stable fund markets which will lend money at a more favorable rate – say less than %100 of the 20 year Treasury bond ratio.

3) Have staff prepare a request to NC Local Government Commission to extend Chapel Hill’s time limit for issuing these bonds so the Council and community have adequate time to plan.

4) Use the established public budget process which kicks off next week [2/3/2010 7:00 PM Council Chambers Townhall) to discuss the Library in light of all our Town’s needs – competitive staff wages, affordable housing reserve funds, the growing retirement fund deficit (Unfunded Liabilities: Pay As You Go Not Sustainable) among many others.

Last Fall many of many on Council obligingly participated in a special “emergency” meeting to acquire Dawson Hall for police and other key Town services. That urgent need hasn’t gone away – the police department’s facility still needs attention – why isn’t that part of the rosy projections?

Our citizens deserve a diligent evaluation of the cost of the Library expansion and operations within the context of our total budget and foreseeable needs – not wants.

They also deserve to participate – not just get an agenda item 3 days before a decision is scheduled.

5) Finally, postponing tonight will give you the opportunity to carefully consider this proposal in light of all your priorities, give you time to evaluate the rosy picture drawn by these memos against your own understanding of the economy and think about how to engage the community during this weekend’s Council retreat.

In addition, it buys needed time for the public to review the current proposal, attend the budget sessions, ask their questions, get their answers and finally weigh in in a thoughtful manner.

Thank you.

[UPDATE: Council Postpones Consideration]

From tonight’s Council flash report:

Consideration of Proceeding with the Library Expansion Project: The Council considered the project schedule and associated costs for expansion of the Chapel Hill Public Library. The Council delayed action and indicated its desire to discuss the expansion costs in greater detail and in the context of the entire Town budget. The Council stated it wants to know what level of funding Orange County will provide toward Library services.

Orange County provides no capital support toward the Town’s Library expenses; this includes all past and present Library construction costs, debt service for same, equipment or special project costs. County support toward Library operating expenses has remained at $250,000 since 1995 and represents 11 percent of this year’s Library operating budget. About 12,000 of the Library’s patrons live in Orange County outside Chapel Hill limits. The number of materials borrowed by these patrons was 386,000 items last year. This represents approximately 40 percent of the Library’s annual circulation.

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