When it comes to financing the Ephesus-Fordham renewal plan, Chapel Hill leaders say they have a unique investment opportunity to offer Orange County Commissioners, if they act fast.
“We’re letting you in on a really good thing,” said Council Member Maria Palmer, at Thursday’s joint meeting of the Chapel Hill Town Council and the Orange County Board of Commissioners.
“I’ve heard that before and it doesn’t always work out so good,” replied Commissioner Mark Dorosin.
“What you guys need to keep in mind is the cost of not doing it right,” Palmer countered.
Council members hope Commissioners will sign on to the financing plan for the Ephesus-Fordham revitalization project, which calls for $10 million dollars worth of road and infrastructure improvements to the Ephesus Church-Fordham Boulevard intersection, as well as the rezoning of 190 acres to spur economic development nearby.
The improvements would be financed using Chapel Hill Town Hall as collateral, and paid off with the increased tax revenue expected to come with residential and commercial growth in the area.
But Chapel Hill’s Business Management Director Ken Pennoyer said there’s a lag between the time the town will reap the rewards of the investment and when the bills come due. He said paying down the debt will cost the town an estimated $800,000 each year, but the additional revenue won’t match that until 2030.
“That’s one of the things that we’re trying to solve for, is that gap between the town’s tax increment and our expected debt service cost,” said Pennoyer.
The town is asking the county to chip in by donating a portion of the county’s tax revenue from the redevelopment to help pay that annual debt service, a contribution of up to $400,000 each year.
Although the town has money in its debt management fund that could cover the shortfall, Pennoyer told the board Orange County’s participation in the project is vital.
“Our ability to do it would be marginal. It would be much tighter,” said Pennoyer. “The county’s participation creates the strength of a partnership that basically is a very strong, marketable debt structure. It creates a synergy there that makes it work a whole lot better, but if the town needed to do this on our own, we may be able to squeak by.”
Commissioners questioned the phasing of the plan, which anticipates mostly residential growth in the short-term and commercial development in later years.
County leaders also questioned the impact the project would have on school enrollment. Orange County Interim Manager Michael Talbert said adding 1,000 apartments would cost the county an additional $1 million each year in school funding and likely accelerate the need for new schools.
“That could also put pressure on our building capacity and may move future schools that were maybe five or ten years out up in the schedule,” said Talbert.
Commissioners expressed cautious enthusiasm about the Ephesus-Fordham project, but Chair Barry Jacobs said the board needs to know more before committing to the plan.
“It’s clear that y’all are excited, and as partners, that makes us at least somewhat excited, but I think we need to do our due diligence from our perspective,” said Jacobs.
The Chapel Hill Town Council is looking to vote on the rezoning portion of the plan in mid-April, but the financing would not need to be in place until June.
County Commissioners will discuss the plan at a future work session yet to be scheduled. The Town Council will meet with Chapel Hill-Carrboro school district administrators on April 9 to discuss the project’s impact on enrollment.