04/22/09 — County commission not sure if building projects will survive

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County commission not sure if building projects will survive

By Steve Herring
Published in News on April 22, 2009 1:46 PM

The state's decision to freeze lottery proceeds has thrown a cold dose of hard economic reality on the county's $4.1 million school building project stalling, or possibly even killing, the long-awaited project.

County officials had thought they had acted quickly enough earlier this year to obligate and thereby safeguard lottery proceeds protecting them from Gov. Beverly Perdue as she raided funds to balance the state budget.

They were wrong -- even though the $5 million in lottery proceeds were deposited in an account for county use.

The county had been banking on the $5 million to do work on three schools -- additions at Greenwood Middle School and at Brogden Primary School at Dudley and for renovations at Mount Olive Middle School in Mount Olive.

Commissioners were poised Tuesday morning to award the contract to Bordeaux Construction of Durham. Instead, they were forced to scramble to finds ways to keep the project alive while attempting to convince the state to release the $5 million.

Members of both boards expressed frustration and disbelief at the state's 11th- hour decision.

The state notified the school board Monday morning of the decision, said Sprunt Hill, assistant superintendent for auxiliary services. County Manager Lee Smith was informed Monday afternoon.

Nevertheless, commissioners took steps they hope will keep the project moving as the county pursues a waiver that could free up the money.

Commissioner Jack Best recommended the bids still be awarded to Bordeaux Construction contingent on the availability of lottery funds. His fellow board members agreed.

The approved motion actually covered several actions. The Wayne County Board of Education and its employees were authorized to act as agents on behalf of the county with respect to the contract.

Also, Smith was authorized to OK change orders approved by the school board.

The motion also provided that the school board convey the three properties to the county, which will, in turn, lease them back to the school board.

That, county attorney Borden Parker said, will save county residents money since it will allow the county to receive sales tax revenues, which the schools cannot.

Hill said the schools were first told the state was going to take lottery funds, but then "no they weren't."

"So then we moved quickly getting our bids in, which we did, and they came in at a wonderful price," he said.

Smith said the e-mail to the county indicates the State Office of Budget and Management had told the Department of Public Instruction it lacked authority to release the funds for a project not yet under way.

Hill said he had spoken with a state official and had "told her our plight, what we had done. I'd like to understand what the definition is of haven't started. We have not put a shovel in the ground, but there has been a lot of work and money spent by you, as well as by Wayne County Public Schools, setting up the modular units, setting up electrical setups to get ready for the construction to begin.

"I am very frustrated. It is just not right. I could understand if we were just coming to the board with a plan, but we have gone through months and months. The lottery money has been deposited, but now they are not allowing us to access it."

"We consider it under way because it has been bid out," Smith said.

Hill said he has spoken with Bordeaux Construction, which, like the county, has already encountered expenses.

Bordeaux Construction, which built Carver Elemen-tary School in Mount Olive and Tommy's Road School, will be asked to extend deadline for its bid until July 10.

Bordeaux Construction received the contract after the apparent low bidder, Blue Ridge Enterprises, made a mistake in its bid of $3.95 million and withdrew it.

Smith said he told state officials the county has spent more than $2 million and had explained what the impact of being unable to proceed means as federal stimulus money begins to filter through the economy.

"Contractors will begin work and you are going to see prices go up, and we are going to get hit," he said. "You are not going to get a price like this again. I am afraid that if we don't get this (lottery) it is going away period."

Meanwhile, work began Tuesday afternoon on a waiver request to free the funds that Smith hopes to have submitted by Thursday and no later than Friday.

Waiver information will include what has been spent thus far and all paperwork.

"We have no information as to how long that may take," he said. "Quite frankly it may not do any good. The only assumption is that things in Raleigh are worse than what we think. I cannot see anything to do but wait until July 1."

Smith said the county has been told it might be as late as July before the lottery funds are released and that he thinks the state wants the dollars for cash flow through the rest of the year.

Not receiving the lottery money "would kill the project," Smith said.

"They would officially kill it until such time money would be made available and where we are now I am not sure when that would be," he said. "There is cost associated with having to rebid the project with the recovery aid money flowing construction costs may go up and you may have to pay more."

Smith is at least thankful the county was informed before the contract was awarded.

"If we had approved the bids, we would be on line for this money." he said.

It remains to be seen what happens to the Norwayne Middle School and Eastern Wayne Middle School projects.

"Norwayne and Eastern Wayne have not been considered yet, and we have asked them (school board) to hold off on those until we can see what the sales tax and lottery do," Smith said in an earlier interview "We want to see if we get the May (lottery) proceeds, how the legislature and governor treat us and we will see if we get those proceeds."

The school board has suggested that if lottery funds are not available, the cost could be shifted to sales tax.

However, sales tax revenues have declined over the past several months and are expected to leave county revenues short by more than $2 million.

"Well, the sales tax is falling," Smith said. "The schools get their annual capital monies from sales tax to do maintenance on schools, repairs and buy vehicles and buses. If it is falling, we do not need to accept any additional debt on new schools or renovated schools until we know what that number is. The schools understand it.

"What we recommend is that we hold off to summer or late summer before we even go out to bid. Maybe May will change. However, I have a sneaky suspicion we will be sitting here in August or September deciding whether we are going out to bid if things keep moving the way they are."