Despite concern regarding the use of taxpayers' dollars, the Goldsboro City Council approved in a 5-2 vote an economic incentive package that paves the way for a near $11 million investment in downtown Goldsboro.
Councilmen Bevan Foster and David Ham voted against the incentives Monday that include a $300,000 forgivable city loan and property tax benefits.
Mayor Chuck Allen and Councilmen Antonio Williams, Bill Broadaway, Mark Stevens and Gene Aycock voted for the deal.
Aycock said the loan amounts to less than the city's $385,000 cost to add a 12-and-a-half-foot high granite fountain in the center of downtown.
"I've been thinking and somebody brought to my attention over the weekend, while discussing it, that the fountain in the center of Walnut and Center (streets) cost much more than (our) contribution ...," Aycock said. "While I hate the thought of the $300,000, I think, in the future, that we will regret it if we don't do it now."
Foster voiced concern that the historic rehabilitation project, involving six downtown properties, would not result in local jobs during the project's development.
Patrick Reilly, president of Rehab Development, which plans to rehabilitate the historic properties, told the council that he can't guarantee that local laborers will be hired but the company is interested in finding qualified workers in the Wayne County area.
"Our preference will be to hire local wherever we can," Reilly said. "They (will) definitely will be looking for qualified local subcontractors that can perform this work."
Rehab Development, which has completed historic rehabilitation projects in other North Carolina cities, including Wilson, Concord and Henderson, plans to invest in what is expected to become between a $10.5 to 10.7 million project resulting in the creation of 55 market-rate apartments and 12,000 square feet of commercial space. The project includes $7.9 million in direct building improvements.
The six properties, at 200, 204 and 206 East Walnut St., 106 S. John St., 135 and 139 West Walnut St., will be rehabilitated to Department of the Interior's Standards for Historic Preservation and will include more than 68,000 square feet of space.
Julie Metz, Goldsboro's downtown development director, told the council that the project will have a far-reaching economic impact that results in additional property tax revenue in future years and increased profits for downtown merchants.
"Beyond the tax revenues, it is expected that the creation of 55 plus market rate apartments will contribute approximately $612,000 annually to downtown businesses through sales revenues, based on North Carolina economic indicators," Metz said.
"The creation of over 12,000 square feet of available rehabilitated commercial space will attract additional small businesses and create or retain jobs."
The incentive agreement includes city and county property tax benefits that involve the return of property taxes paid in the form of a grant. Property taxes that will be granted back to the developer include a 90 percent return during the first five years, 75 percent in year six, 60 percent for year seven, 45 percent for year eight, 30 percent for year nine and 15 percent in the 10th year. The total amount that will be awarded to the developer during the 10-year period will not exceed $310,314.
Ham said he couldn't support the use of city tax dollars to make the project work.
"I have toiled with this decision," Ham said. "I've lost a lot of sleep thinking about it, but in the final analysis, this is my final decision.
"My concern primarily revolves around the fact that we're using taxpayer money to give to a private investor. We have had approximately $13 million in private investment downtown here since 2014, and very few dollars have flowed from the city coffers to those investors who have put their money into these projects."
During the public hearing, Kathy Cornelison, owner of the Carolina Pine Country Store on Center Street, asked Ham to reconsider, in light of his own investment to restore 201 S. Center St. where Well Travelled Beer and two upper-story apartments are located. Cornelison pointed out that Ham received a city facade grant for the building. She asked that he provide the same type of benefit to Rehab Development.
The city facade grant of $8,000 represented 2 percent of Ham's total property investment, which he received before he was elected to the council, he said.
"We feel strongly this is a good project," Reilly said. "We think the demand is here. I can tell you this, if we don't have that type of financial support, the numbers for this project won't work for us. We won't be able to do it."
Allison Platt, an urban designer who developed the city's master plan, Gretchen Reed, travel and tourism chairwoman, and District Court Judge Charles Gaylor III, also spoke in favor of the project.
"I don't see anybody else tearing down our doors trying to rehabilitate six buildings that really need it," Reed said. "I think it will bring more money into the downtown area, which in turn will give us more money to spend in other areas of the city."
Gaylor said the project will become an economic driver in the city.
"You're looking at a major economic development project here," Gaylor said. "The economic impact is significant, just like it is with any type of industry that you bring in to Goldsboro or Wayne County."
Wayne County commissioners Tuesday morning were unanimous in their support of an agreement among the county, city of Goldsboro and a private developer the downtown rehabilitation project.
Commissioners called the project a win-win that will not only bring in more taxes to the county, but that will provide it with another location for wireless internet antennas or 911 equipment.
That, commissioners said, makes it worth offsetting taxes paid by the company with county grants to help finance the project by Rehab Development of Raleigh.
Also, commissioner Chairman Bill Pate clarified that the county is not part of the city's plan to provide $300,000 toward the project.
The proposed tax incentive agreement was also the subject of a Tuesday morning public hearing.
"On the county's side it is just a reduction in property taxes," Commissioner Joe Daughtery said. "So with that investment that they are going to be making, we are agreeing not to charge the full or collect the full tax. Actually we are collecting it and rebating it back."
The county does not have the authority to refund the taxes, County Attorney Borden Parker said.
"You are giving them a grant that is based on taxes they have already paid you," he said. "It is the type of incentive you would do for an industry. They have to pay to pay the tax before you give them the grant. The grant is always less than the full amount of taxes that they have paid.
"By redeveloping these six properties, the values are going to increase even though they will get a tax break because it is a historic district. You will still ultimately get more taxes over the short term and even more over the long term."
Also, if the company does not pay its taxes, it doesn't get anything from the county, Parker said.
The main thing is that the county is not having any out-of-pocket expenses, Daughtery said.
Metz outlined the project for commissioners, and during the public hearing Platt, and Reed again spoke in favor of the project.
A fourth speaker, Constance Corum said she did not oppose the project, but questioned how it would affect residents living in the area.
She asked if the city or county would provide any grants or funds to people those residents.
The proposed percent of taxes granted to the developer from both the city and county would be:
* Years 1 to 5: 90 percent.
* Year 6: 75 percent.
* Year 7: 60 percent.
* Year 8: 45 percent.
* Year 9: 30 percent.
* Year 10: 15 percent.
The grants from Wayne County would cost the county $156,751.89.
County Manager George Wood said that even with the tax incentive the county would still collect more in taxes than it currently does on the undeveloped property.
"After year 10, you will see in year 11 that you are up to getting the full amount of taxes which is $23,222 on buildings that right now you are only getting $1,523 on," he said. "That is the payoff here that we are increasing the tax base."
The county will break even between years 14 and 15, Wood said.
Rehab Development plans to use federal and state historic preservation credits to help pay for an investment to rehab the First National Bank and adjoining building.
The project also includes the four buildings making up the county's old Senior Center that the county gave the city, along with $60,000 to fix the roof.
The property addresses are 200/202 E. Walnut St.; 204 E. Walnut St.; 206 E. Walnut St.; 106 S. John St.; 135 W. Walnut St.; and 139 W. Walnut St.
State law provides for a 50 percent property tax reduction to any property that received an historic landmark designation.
Rehab Development estimates that the properties will appraise at about $7 million after all rehabilitation, as some of the nearly $11 million is soft costs, not construction.
Consequently, the estimated taxable value after rehabilitation would be $3.5 million not $7 million.
The project remains contingent on the continuation of the federal historic tax credit program, which has come under question during federal budget negotiations.
The Rehab Development project is planned to be finished by April 2020.