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09-05-2023 Closed Session Meeting Minutes BOC September 5, 2023, Closed Session #1 Page 1 of 4 Person County Board of Commissioners Minutes of a Closed Session DATE: September 5, 2023 MEMBERS OF BOARD OF COMMISSIONERS PRESENT: Chairman Powell, Vice Chairman Sims, Commissioner Puryear, Commissioner Palmer, and Commissioner Thomas OTHERS PRESENT: County Manager Katherine Cathey, Clerk to the Board Michele Solomon, County Attorney Ellis Hankins, Finance Director Amy Wehrenberg, Piedmont Community College President Dr. Pamela G. Senegal, and Piedmont Community College Chief Financial Officer Larry Coleman CLOSED SESSION #1 A motion was made by Commissioner Puryear and carried 5-0 to enter into Closed Session # 1 at 7:20 p.m. per General Statute 143-318.11(a)(5) to establish, or to instruct the public body's staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract with the following individuals permitted to attend: County Manager Katherine Cathey, Clerk to the Board Michele Solomon, County Attorney Ellis Hankins, Finance Director Amy Wehrenberg, PCC President Dr. Pamela G. Senegal, and PCC Chief Financial Officer Larry Coleman. Chairman Powell called the Closed Session #1 to order at 7:21 p.m. September 5, 2023, Closed Session #1 Page 2 of 4 Piedmont Community College (PCC) President Dr. Pamela Senegal shared that PCC has an opportunity for an investment in our community and workforce development. Senegal advised that PCC has an opportunity to expand. She expressed that the current facility is dated and inadequate for their needs, as they have outgrown the facility. She emphasized the need and the growth that would occur with the expansion. The proposed expansion will be offsite and consist of 182,000 square feet. This building will accommodate multiple classrooms and labs to include expansion of Advanced Manufacturing, Trade, and Health/Medical Programs. Senegal wanted to bring to the Board’s attention that the Board of Nursing is dissatisfied with PCC’s current facilities and has indicated that at their next review, they will not pass PCC and allow continued operation under their license unless they upgrade and do better with simulation equipment. Senegal stated that with enrollment numbers increasing for nursing programs, PCC would offer an LPN Program this fall. Senegal shared that VINFAST is a new Vietnamese Electric Car Manufacturer Company that is set to open in 2025 and is located 64 miles away in Chatham County. They would be hiring 7,500 employees. She stated that 70% of Person County residents commute out to work and PCC would like to prepare them for higher paying jobs so they will be able to make more money and bring it back to Person County. Senegal advised that Spuntech, GKN, Eaton, and Sun Rock are considering how to reposition their businesses so that they can become a supplier to the growing and emerging electric vehicle core that is coming to the heart of NC. Senegal also noted the expansion of Polywood and jobs that it will bring. Senegal advised that this request for investment has three phases. The first is to cover the costs of the monthly lease for at least 10 years, and up to 30 years. The second would be incremental costs such as housekeeping and maintenance. The third would be a one-time investment for equipment. Senegal expressed the urgent need for this to happen and discussed the option of new construction versus leasing. County Attorney Ellis Hankins had concerns about the proposed lease agreement and questions referencing the potential right to acquire or purchase the property. PCC’s CFO Larry Coleman advised that the lease option agreement does have a right of first refusal. Commissioner Charlie Palmer asked who would be responsible for the maintenance of the building to which Senegal replied that the owner would handle major maintenance. PCC’s CFO Larry Coleman advised that the roof and HVAC both have maintenance contracts for the life of the building. Vice Chairman Derrick Sims voiced concerns about funding of the lease. Sims indicated that he would rather buy than lease. He asked about the sale price of the building. Senegal replied that the owner of the building is not interested in selling the building at this time and prefers a lease option. Sims stated that there is a need for the expansion of PCC, and it is a big investment for the County; however, he is concerned that the only way to pay for it is to raise taxes and questioned how much of an increase it would be. Commissioner Kyle Puryear stated that he does not want a tax increase. Puryear stated that he wants to see what the numbers look like in the debt model to see if this investment is potentially feasible. Chairman Gordon Powell stated there is no question of need and that he liked the idea and how it would influence economic development and the workforce. September 5, 2023, Closed Session #1 Page 3 of 4 Powell inquired of upfits to the property. Senegal advised that it would take $2M in upfits to make the property useable and to bring it up to code, which would include the addition of the classrooms and labs. Powell had concerns on how to move forward without a tax increase. Powell advised that the Board would be in discussion and notify PCC on how to proceed moving forward. Senegal and Coleman left the closed session following this part of the discussion. County Manager Katherine Cathey stated that there are many different factors to consider related to this request and advised that she and Finance Director Amy Wehrenberg have met with the county’s debt consultants, DEC, to discuss this request and how it fits in the debt model along with everything else that is on the table. Cathey stated that the Board approved a Resolution earlier this evening for PCS authorizing the negotiation of up to $13M of installment financing for PHS improvement projects for FY24. She advised that no later than October 13 we would receive a rating from a bond rating agency. Discussions will take place between now and then, and additional capital financing commitments may influence ratings. Cathey advised that Wehrenberg might be able to provide detailed information on this. The County will be providing a lot of information and answering many questions about where we, as a County, currently stand financially and what our plans are for the next 2-3 years. Person County has not been rated in recent history, we have not had a financing along these lines in many years, and therefore having this rating done is very important and will influence the rate at which we can borrow for the school financing. Adding to our plate of obligations could have an adverse impact on the rating agency’s decision to rate us for that upcoming debt and any decisions may influence that rating. Cathey stated that DEC emphasized that timing is everything and very important. She recognized that timing is a factor for PCC as well. Cathey advised the Board that the 0.25-cent tax increase implemented in FY24 supports issuance of debt in FY24, FY26, and FY28 for various PCS facility improvement projects. She provided an update to the status of the Human Services Building. Cathey advised that Brixmor has not signed the MOU but has indicated their willingness to sell the two properties for a net price of $8.5M, which can fit in the debt model with offsetting revenues of $1.2M per year from the current lease without having to increase taxes. If the purchase cannot be negotiated, we would likely need to construct a new building, which would require a tax increase of at least 2 cents. Cathey advised of the FY23 audit needing to be completed by October 31, and it will influence the debt model and support future decision-making. She advised that Closed Session # 2 on the agenda tonight is for discussions about current options with the Megapark and the current proposal that the Wagstaff’s have made. Cathey advised that there have been conversations over time about the County’s contribution to purchase some of, or the entire property, dependent upon what gets worked out, what projects we might be able to attract. She stated that there is a scenario where the County would potentially need to put in $12.125M which can be done within the debt model. Cathey advised that in reference to PCC’s proposal to lease space, the owner of the building is requesting a decision by October 1. She advised that the cost that PCC described to the Board is roughly $1M dollars a year, which is equal to 2 cents on the tax rate. Cathey advised that LGC approval is required if there is an option to purchase at the end of the lease, and this could take three months to go through the LGC process. Cathey reported that the debt consultants recommended against entering into a lease without a purchase option. She stated that an offer to purchase the Carolina Pride property may be desirable and stated that renovation or new construction may be better in the long run, therefore making an offer to purchase look more attractive. Cathey provided two different rough projection scenarios and their September 5, 2023, Closed Session #1 Page 4 of 4 impact on the debt model. Puryear had questions about the proposed building and whether it would be big enough to accommodate PCC as well as DSS. Wehrenberg stated it would be difficult to combine PCC and DSS in to the same building. Cathey spoke on the following potential funding sources, House Bill 461, which would appropriate $17M for purchase of the Person County Megasite, Golden Leaf who has been in discussions with Economic Development Director Brandy Lynch in reference to PCC project and expressed interest for potential funding of $500,000 to $1M, and ARP funding which has $2M set aside for economic development, $2.5M remaining in broadband, and $2.4M in unallocated. Puryear wanted to see what the audit looks like before making any decision and to make a sound and responsible financial decision. Cathey advised that communication with the owner needs to reflect no decision until after November 6, which is after the audit is completed. Wehrenberg informed the Board that even if the audit comes in and we have some funds to put in the debt model to strengthen it, it is very likely that you will still be facing a tax increase because our debt model is maximized out. Wehrenberg stated that there is no more capacity as it stands right now, except for what we discussed tonight, which is the Megapark and the Human Services Building, and there is some flexibility because of the offsetting revenues. Wehrenberg stated the possibility of a tax increase and the only way to avoid it is to delay the decision to move forward with PCC. She advised that the debt model would look more favorable and stronger the longer we wait and build up funds. Wehrenberg stated that if we are talking about going ahead and doing a purchase option, it requires approval from LGC, which is a three month wait to go through, and that no money would go out the door before December. Wehrenberg stated that she is not sure that this is a good opportunity and that we know nothing about the building. Sims stated he had concerns about, “if you build it, they will come” and stated that there is no guarantee. Commissioner Jason Thomas stated that the current facility is outdated and we, as a County, need to do something. He expressed concern that if we don’t do something, how long will the current facility last. Commissioner Palmer stated that he has concerns and there are red flags due to unanswered questions. Powell stated the need to meet with the owner of the building to discuss the options and timeline. A motion was made by Commissioner Palmer and carried 5-0 to return to open session at 8:31 p.m. September 5, 2023, Closed Session #1 Page 1 of 3 Person County Board of Commissioners Minutes of a Closed Session DATE: September 5, 2023 MEMBERS OF BOARD OF COMMISSIONERS PRESENT: Chairman Gordon Powell, Vice Chairman Derrick Sims, Commissioner Kyle Puryear, Commissioner Charlie Palmer, and Commissioner Jason Thomas OTHERS PRESENT: County Manager Katherine Cathey, Clerk to the Board Michele Solomon, County Attorney Ellis Hankins, and Economic Development Director Brandy Lynch CLOSED SESSION #2 A motion was made by Commissioner Puryear and carried 5-0 to enter into Closed Session #2 at 8:33 p.m. per General Statute 143-318.11(a)(4) for the purpose of discussion of matters relating to the location or expansion of industries or other businesses in the county (economic development) with the following individuals permitted to attend: County Manager Katherine Cathey, Clerk to the Board Michele Solomon, County Attorney Ellis Hankins, and Economic Development Director Brandy Lynch. Chairman Powell called the Closed Session #2 to order at 8:33 p.m. Economic Development Director Brandy Lynch provided an update on the status of the Person County Megapark and Project Lamb. Lynch advised that she has met with the Wagstaff Family and presented them with an offer prepared by County Attorney Ellis Hankins. She stated that the Wagstaff Family agreed they would move forward with a 2- year option and give the County an option on Project Lamb for a decreased price per acreage. Lynch stated that the Wagstaff Family indicated that if Project Lamb moves forward, they would offer them the acreage that they want for $17,500 per acre, and the rest of the acreage would have to be purchased by the County at a rate of $20,000 per acre. She advised that Project Lamb is requesting 850 acres of the 900 useable acres at the Person County Megapark. She stated that depending on where Project Lamb puts its final footprint, you could be looking at possibly 400 acres left with a lot of it not useable. She stated that she has not seen Project Lamb’s final footprint as Project Lamb has moved it numerous times. Therefore, without knowing exactly where the final footprint will be going, it is hard to say how much acreage will be available and useable. Lynch advised that she is in contact with Project Lamb, and they are still very active. She shared that Hankins added a provision that indicates the County would need to get approval from the LGC to pay $17,500 per acre to which the Wagstaffs did not agree. September 5, 2023, Closed Session #1 Page 2 of 3 Lynch stated that the Wagstaffs advised that the purchase price of the remaining property would be $20,000 per acre and that best efforts to obtain in a timely manner could be added, provided the purchase price of $17,500 would be removed. Vice Chairman Derrick Sims stated he had concerns about the County paying $20,000 per acre for 400 acres that are not useable. Lynch stated that she has been in contact with the Wagstaff Family and advised them of the concerns of paying $20,000 per acre for 400 acres that are not useable to which the Wagstaff Family replied that it is this or we are done. Sims stated that if he was the taxpayer, and told of the $20,000 per acre with 400 acres not useable, he would be livid. Discussion ensued by all Commissioners that a lot of time and money were spent on this project. Lynch clarified the Wagstaff Family comment, saying she is unsure if they meant that they are done period or done with Project Lamb. She advised the Board that Project Lamb met with the Wagstaff Family in 2022 and offered $15,000 per acre. Lynch stated that she spoke to the Wagstaff Family on September 1 and reminded them of the $15,000 per acre offer from Project Lamb, to which the Wagstaff Family replied, that was not an offer. She advised the Wagstaff Family that, yes, it was an offer from Project Lamb for $15,000 per acre. Sims asked that if the County is going to pay the difference of $2,500 per acre for 850 acres, what can the County gain as far as revenue from Project Lamb coming to our County. Lynch advised that if Project Lamb can bring another business/industry, as previously discussed, the County could greatly benefit, however they have not guaranteed to bring that second industry. She stated that Project Lamb had proposed it once, and then backed out, but now through discussions it is back on the table. Lynch stated that the State told Project Lamb not to come back to them until they have a final plan, as they have offered them so many different incentives. Sims had questions related to the State not allowing the County to pay $17,500 per acre. Lynch clarified that the Wagstaff Family wants the County to pay $20,000 per acre, and the State suggested in their study that $20,000 per acre was too high of a price, and according to tax value, it is an extremely high price. County Manager Katherine Cathey stated that the tax value is $1,700 per acre. She stated the current option expires December 31, 2023 and the Wagstaff Family has verbally agreed to a 2-year renewal with provisions for timbering after December 31. Cathey spoke on the proposed Economic Development Agreement and advised that the Wagstaff Family verbally agreed to sell 850 acres at $17,500 per acre to Project Lamb and the County would likely have to pay $2,500 per acre, which is the difference, as Project Lamb is willing to pay only $15,000 per acre. Cathey advised that the option requires the County to purchase the rest of the property, which is 500 acres at $20,000 per acre and if the agreement is signed, the County would pay $12.125M if Project Lamb commits to the project before December 31, 2023. Lynch stated that Project Lamb has expressed that they do not want the land timbered and the Wagstaff Family stated that they are losing revenue by not timbering. Discussion ensued amongst Commissioners about the timbering by the Wagstaff Family and potential loss of Project Lamb due to this. Lynch advised that Project Lamb wants to come to Person County, and they do not need an 850-acre site. She advised the Board that she does not need an answer tonight, just a consensus from the Board. Lynch advised that she received seven project requests in two weeks and is seeking guidance from the Board on how to proceed. Cathey confirmed that Lynch would respond to the seven project requests and advise them that the County currently has an option in place through December 31, 2023; the County will still work on options and landing a project. September 5, 2023, Closed Session #1 Page 3 of 3 A motion was made by Commissioner Puryear and carried 5-0 to return to open session at 8:59 p.m. ADJOURNMENT: A motion was made by Commissioner Puryear and carried 5-0 to adjourn the meeting at 8:59 p.m.