Chatham's agreement with Sanford

Did county’s tax-sharing deal change?

County asked for a cap on revenue sharing

BY CASEY MANN, News + Record Staff
Posted 12/12/18

The unique property-tax sharing agreement Chatham County signed with the City of Sanford last month, worth potentially millions of dollars in revenue, may have actually been structured differently than Chatham officials originally intended.

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Chatham's agreement with Sanford

Did county’s tax-sharing deal change?

County asked for a cap on revenue sharing

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Posted

The unique property-tax sharing agreement Chatham County signed with the City of Sanford last month, worth potentially millions of dollars in revenue, may have actually been structured differently than Chatham officials originally intended.

In the deal, which was lauded by representatives from both bodies when it was finalized on Nov. 5, Sanford agreed to pay the lion’s share of construction costs for a wastewater line that will connect the Moncure megasite to Sanford’s Big Buffalo Wastewater Treatment Plant.

In exchange, Chatham County agreed to pay Sanford 20 percent of the additional commercial tax revenue earned by commercial and industrial properties that are served by the line for the next 50 years. That additional revenue would only be paid after any Chatham County incentives package had been fulfilled.

But minutes from a Sept. 24 Chatham County Board of Commissioners closed session meeting show the board was hoping for an even better deal.

The agreement, originally negotiated by former Chatham County manager Renee Paschal and Sanford City Manager Hal Hegwer, was initiated because of higher than anticipated construction costs.

Sanford and Chatham County had already agreed to split construction costs for the project. The $11 million project was to be funded by a $4 million Golden LEAF grant Sanford received for the project. The remaining $7 million would be split evenly with Chatham paying its $3.5 million share with coal ash settlement funds.

Dan LaMontagne, Chatham’s interim county manager, said the bids for the project came in at about $17 million.

Sanford was able to reduce some of the costs by reducing the capacity of the project by 20 percent, but that would have still meant that Chatham would have to pay an additional $3 million over the $3.5 million it agreed to spend.

In Chatham County Board of Commissioners closed session minutes from Aug. 20 obtained by News + Record, Paschal informed the commissioners of the additional costs at that time. In that meeting, Paschal noted that Sanford was interested in sharing tax revenue generated by the Moncure megasite.

During a subsequent Sept. 24 meeting, commissioners discussed an agreement to share 20 percent of revenue for 20 years with a cap of $4 million – not the 50-year, non-cap agreement that was ultimately approved.

The board was responding to an initial draft of the agreement from Sanford, according to LaMontagne.

According to the draft document provided by Chatham County, Sanford wanted to receive 20 percent of additional commercial tax revenue for 99 years.

While the minutes of an October closed session were not made available, LaMontagne told the News + Record that under the agreement that was passed, 20 percent of revenues for a period of 50 years – with no cap on revenue – was the end result.

The agreement was passed by Chatham’s board without public discussion on the consent agenda on Nov. 5. The consent agenda was approved unanimously by the four commissioners in attendance; Commissioner Jim Crawford was absent.

Commissioner Diana Hales, who was chairman of the Board of Commissioners at the time of the negotiations noted that the agreement was the result of negotiations between the county and Sanford.

Hales explained not having a cap was an exchange for Sanford’s risk over time, noting no one has any way of knowing what or when something may happen at the site – adding the revenue “may be less, it may be more” than Sanford’s investment. She also reiterated the importance of the agreement being put in place in a timely manner. Hales said the county attorney informed her the 50-year period began the moment the agreement was signed.

“The reason for no cap was that the agreement was more of a regional partnership rather than that of a loan from a bank,” LaMontagne said.

When asked about potential revenue in the area, LaMontagne noted difficultly in making predictions on a hypothetical while emphasizing that without wastewater, it was unlikely that any industry would locate there.

“This is a proposed industrial site with 8 million square feet of development potential,” LaMontagne said. “Property taxes are assessed based on value of buildings placed on the landscape. It is impossible to estimate tax revenues until an industry locates here. Without the wastewater infrastructure realized through this agreement, it would be unlikely that significant tax growth would occur with this site or with any of the existing industries in the area.”

“I think this is a very worthwhile partnership for the county as wastewater is essential for any development in the area,” Hales said.

 

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