Golf lessons

While on vacation last week, I spent quite a bit of time on mini-golf courses, where Nancy OatesI had ample opportunity to observe how parents and grandparents dealt with children who could not putt a ball into a hole if their life depended on it. Time after time, adults would use their own club or their foot to guide a child’s ball closer to the cup, or record only half the number of strokes, then exclaim what a talented golfer the child was. Not once did I see a parent instruct a youngster on how to hit the ball or let the kids swing away without keeping score. The kids probably left the course with puffed-up self-esteem but no better at the game than when they started.

It’s hard to teach exuberant kids how to play a game that takes patience and discipline. But those adults missed teachable moments by opting for immediate gratification rather than putting in the time and effort to foster traits that would be useful throughout life.

In thinking about the town’s fiscal status, I wondered whether Roger Stancil or anyone on the current Town Council had been taught to play mini-golf as a kid.

The town is living pretty much hand-to-mouth in paying its bills through the General Fund. As Matt Czajkowski pointed out repeatedly, the town has no money socked away to put toward long-term obligations, such as what we have promised retired municipal employees for health-care and retirement benefits.

Many towns the size of Chapel Hill have in reserve enough to meet as much as 70% of their long-term obligations. Why have we fallen so short?

The town’s debt service — what it costs to borrow the money we have been loaned — is 13%, which means 13 cents of every dollar the town brings in goes to cover the cost of borrowing money. The rule of good governance is to keep debt service no more than 10%, and the state average is 6%. To reduce our debt service percentage, we would have to hold the payment constant — not borrow any additional money — and grow revenue at the same time, or cut costs to live within a scaled-back budget until the debt is paid down.

But where to cut? Transit, parking, public housing and stormwater are operating at a deficit. And Stancil wants the town to borrow more money for a new police station and some fire stations.

That looming fiscal implosion may be fueling Town Council’s panic to approve every development proposed, without considering that those with substantial residential components cost the town money. Most recently, the town manager has proposed giving away the town-owned parking lot at 415 W. Franklin St. to a developer who would erect a 5-story commercial building with 15 affordable rentals on the top floor.

Didn’t council learn from the sale of the museum, which sold for twice its appraised value once council opened up bidding? I appreciate the town putting forth a vision of how to use the land. But the town could get the same building and twice the revenue by using the Special Use Permit process.

Immediate gratification? Or patience and discipline? Which will council choose?
– Nancy Oates

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6 Comments

  1. TERRY D.

     /  August 10, 2015

    Ms. OATES
    “That looming fiscal implosion may be fueling Town Council’s panic to approve every development proposed, without considering that those with substantial residential components cost the town money. ”

    Are you sure about this? Someone told me that, per sq. foot, Greenbridge is the town’s best net tax resource.

  2. Nancy

     /  August 10, 2015

    Terry, I’d need to see figures on that. The town hired technical advisers to calculate costs of various types of development. Single-family residences cost the town the most, followed by multifamily residences. Office/retail and light industrial, on the other hand, made money for the town.

  3. James Barrett

     /  August 10, 2015

    The Greenbridge info I’ve seen was about sq ft of land (ie, it was the most dense at the time, therefore most tax $ per land use). That doesn’t say anything about costs — fire coverage, police coverage, etc are all related to people, not just land.

  4. many

     /  August 11, 2015

    Not to mention that Greenbridge tax valuations are generally much higher than market value.

    Right now borrowed money is historically cheap. If an entity is in good financial shape otherwise (exactly how good are Chapel Hill’s capital reserves?). it can be a good time to deploy capital for the long term.

    Depending on what the money is for, 13% may or may not be a bad thing amortizing cost over the life of the asset. For context, the US government borrows ~40% (which is a bad thing in my estimation). OTOH that’s 13% that is not available for other things.

    Bottom line as you point out, it depends on what the money is being spent on.

  5. Terri

     /  August 11, 2015

    “Someone told me that, per sq. foot, Greenbridge is the town’s best net tax resource.”

    You should ask that person to provide the details for that statement. My recollection is that the town has resisted all requests to provide a metric for the cost of services.

  6. Deborah Fulghieri

     /  August 13, 2015

    James Barrett is right. Dwight Bassett’s presentations on “economic development” (he is the town’s Economic Development Officer) are without exception about increasing tax harvest on building lots, without regard to the resulting increased cost of services. Incurred costs are a post-facto result of build-out, especially that which increases population, and the entire county bears the resultant increased taxes and borrowing.

    One example is Obey Creek, which generated much discussion on council because it did not conform to the “Chapel Hill 2020” Comprehensive Plan. The original zoning was Low Density Residential, which with stream buffers and steep slopes would result in about 80 homes there. 80 single family homes would generate $913,840 of school impact fees and bring an estimated 67 students into the school system, or $13,639/student.

    Now, the high-density residential building planned will bring $1,007,360 in impact fees (here is where the economic analysis by the town stops; it is more money than the prior zoning would bring in) and bring an estimated 104 students, or $9,686/student, with the “student generation” number acknowledged by Orange County as underestimated for Chapel Hill multifamily housing. But as a council member so memorably said on April 30, “I’m so tired of talking about Obey Creek.” Watch in the next 3 years what taxes do.

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