Putting out

At last week’s Town Council meeting, a council member likened Chapel Hill giving Wegmans Nancy Oatesan incentive to locate here as “being the first girl to put out.”

Many in the community seem to agree. I see it as a risk-free way to show companies that Chapel Hill is serious about being open for business.

One community member expressed concern that Wegmans was expanding too fast and, like Southern Season, was at risk for bankruptcy. But the way the incentive is structured, we pay nothing until we receive the tax revenue from Wegmans first. If Wegmans goes under, it is left with an empty building to sell, one that would hold more appeal to a light manufacturer or wet lab than to a luxury apartment developer. We have essentially secured that parcel as a revenue producer.

Others rued what we could do with the $2 million we’ve agreed to grant back to the county. The reality is we’re competing against Durham, which has more and cheaper land. Our few remaining parcels are being snapped up by luxury apartment builders who can pay high prices because of the high profit they make.

Still others worried that Wegmans would hurt longtime businesses like Harris Teeter and Whole Foods. Both grocery chains are adept at dealing with market competition and have thrived. And if Wegmans opens in Durham, we’ll lose Chapel Hill shoppers across the county line. Rest assured, I’m not tossing out my VIC card.

Granted, our negotiations showed our inexperience. We didn’t know going into the negotiations whether Wegmans typically receives incentives. The grocer’s reps said they are turned down more often than not, but incentives aren’t unprecedented in areas that have some challenges, as the need for soil remediation on the Performance Auto site presents. I don’t know, though I hope the negotiators did, whether Performance factored that expense into its asking price.

Wegmans claimed to be looking at sites in Durham. I hope that those negotiating on taxpayers’ behalf checked with Durham’s economic development officer to verify that. We also didn’t know going into the negotiations that 30% of the jobs Wegmans will bring to the area pay minimum wage.

The council’s Community Prosperity Committee (join us at the library at 8 a.m. the first Friday of each month) has pledged to come up with benchmarks for what could trigger the council considering an incentive in the future.

In recent years council has gained a reputation as a pushover among developers of luxury apartment buildings, which produce little net revenue. Clearly, we need to change that perception, but not at any cost. From the Wegmans offer, we learned the questions to ask, and the next time a business asks for an incentive, we’ll have a template in place that spells out what the town expects to get in return.

I believe the benefit taxpayers will see from Wegmans will outweigh the incentive we’ve agreed to grant back. And council has learned valuable lessons from the experience.
— Nancy Oates

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78 Comments

  1. Terri

     /  November 3, 2016

    Will–I didn’t get any additional details on depreciation. Sorry.

    Bonnie–we don’t agree except on one point that has virtually no impact on anything. I see no problem in the boundaries of the EDD being expanded between 1994 and 2016.

    The issue of WASMPBA isn’t a problem to fix in my opinion. As I recall, you don’t support the rural buffer either, and WASMPBA is an extension of that policy. I support both, but now I have a better understanding of their impact on economic development. I support planned growth, not the random growth of Alamance. I support the existence of local farmers, not the commodification of farm land that makes it even more difficult for family farms or new farmers.

    To me what the Morinaga saga represents is the interconnectedness of everything we do. We can criticize the Wegmans deal, which I did and still do on some level, but that criticism needs to be based on conversation so that it is fully informed but those who really understand the complexities.

  2. DOM

     /  November 3, 2016

    Bonnie Hauser:

    “…zoning supports affordable development.”

    Could you tell us why this is? Thanks.

  3. Terri – first of all – I hate when people represent my policy view. I’ve always supported the rural buffer and still do. Right now, thirty years later, I see pinch points that are colliding with other goals (especially affordable housing) – and I believe its worthwhile to look and see if adjustments are needed. That’s just good policy.

    Second – if you are connecting the dots, you must realize that the county spent $4.9 million for sewer along the WASMPBA – where development is not permitted. Again money wasted on investments that are inconsistent with land use policy.

    DOM – most of OC is zoned 1 acre minimum; two acres in the rural buffer. More when you add in impervious surfaces, roads and other requirements. Plus permitting and impact fees – collectively add a typical $75,000 to the cost of a home before anything is built

    If zoning allowed more density (still low density – like low rise apartment buildings, town houses or dense clusters), and if the permitting process was easier, cheaper and less risky for developers, costs would be lower and spread over more homes. That immediately makes homes are more affordable.

    IMO this is desirable in areas where there is already water and sewer, and access to schools and public transportation (Efland, New Hope, and the Southern Triangle), Each location has unique features – which further refine the nature of the housing that might fit.

  4. Point of information: There are actually two separate rural buffers. The one to the north of Chapel Hill-Carrboro is zoned two acres per dwelling unit. However, the one to the west of Carrboro, which encompasses the University Lake watershed, is more restrictive, limiting development to one dwelling unit per five acres. The greater restrictiveness was put in place to protect the quality of our drinking water supply. This, at least, is my understanding. Let me know if I’m in error.

  5. Terri

     /  November 3, 2016

    “If you are connecting the dots, you must realize that the county spent $4.9 million for sewer along the WASMPBA – where development is not permitted. Again money wasted on investments that are inconsistent with land use policy.”

    I disagree with your assessment Bonnie. The $4.9M investment in phase 1 of the Efland water and sewer build out made it possible for Morinaga to locate where it is. And now because of the $1M investment (from the CDBG grant + OC contribution) other businesses can locate around Morinaga without further investment. That is a multiplier effect IMHO and I think it was smart business by the county.

  6. David – the five acre minimum is critical watershed not the Rural buffer. I live in the CW for Cane Creek and also have a five acre minimum.

    Terri – if you look at a map, you’ll clearly see that Morinaga and everything around it garners no benefit from the $4.9 million and if expansion occurs around Morinaga, investments will be needed to build out infrastructure. I hope that happens.

    But we’ll get nothing out of the $4.9 million without structural changes to conditions on the ground.

  7. Plurimus

     /  November 3, 2016

    “if you look at a map, you’ll clearly see that Morinaga and everything around it garners no benefit from the $4.9 million and if expansion occurs around Morinaga, investments will be needed to build out infrastructure.”

    Of course extensions will be needed, but that whole area is going to be built up from this extension. Now you may not consider this sort of development progress, but to say the water/server extension is isolated and will not enable nearby development is not factual. The map shows this clearly.

    https://www.google.com/maps/place/Morinaga+America+Foods,+Inc./@36.0765462,-79.2580192,961m/data=!3m1!1e3!4m5!3m4!1s0x0:0xe40660236c6bbedd!8m2!3d36.0760197!4d-79.255414

  8. The map beautifully makes my point. It shows the kind of density that has been enabled from Mebane’s zoning and sewer infrastructure which serves Morinaga and points west. Even the industry along Mattress Factory is also Mebane’s control. The greenfields to the East are under OC control.

    The county’s investment in the Buckhorn EDD brought service to Buckhorn which is the greenfield about 3 miles to the east – and continues east from there. That’s also where ownership, zoning and land use issues, including WASMPBA are impeding development.

    Morinaga taught us that town annexation (for incentives and zoning relief) is a big help – so its likely to be a very long time before development gets anywhere near Buckhorn Road. Especially since there are so many options in Alamance that are ready to go.

    If developers showed interest in a business park in the Buckhorn EDD, I’d agree with you and Terri. Without it, there are too many obstacles to development in the area.

  9. Plurimus

     /  November 4, 2016

    Help me, I am experiencing cognitive dissonance. If water and sewer have been extended to the Buckhorn EDD, then how is WASMPBA in the way?

    I grant that there are ownership issues but that is not the county’s fault. Taxes along with inflated expectations of land value are an issue, but how can there be land use issues when the area is designated for EDD?

    I think you are attributing to government incompetence what is most easily explained by a severe and lengthy recession.

    BTW the governing water/sewer relationship I think is the Hillsborough/Orange-Alamance Water Systems.Agreement. WASMPBA prevents expansion south of West 10, but that area is not in the EDD.

  10. The sewer main and pump station runs along West 10 from Buckhorn to Mt Willing and because of WASMPBA, sewer service cannot be extended anywhere along the south side. A developer described it like this “its like building a parking lot and saying that you can only park on one side.” The investment is troubling to me.

    Orange-Alamance provides water only. The sewer was provided by Hillsborough – but was switched to Mebane sewer to reduce rates for the Efland habitat community. Again an area is east of Buckhorn- but a big win for the Habitat homes – which I was proud to be part of.

    Back to the topic. I for one, am thrilled about Wegmans – and hopefully we all have a better understanding of the economics behind the incentives.

    I also think its important to critically look at what’s working and what’s not – without blaming anyone. For Morinaga and Wegmans, town plus county tax incentive worked, and for Morinaga, it was the rapid response on the extension of Mebane’s sewer to the site – which was completely unrelated to OC’s investment in sewer in the Buckhorn EDD.

    My other point is that the county’s $4.9 mm sewer investment was further east in the original Buckhorn EDD, and is not paying off at all. There are many obstacles – including zoning, WASMPBA, and permitting.

    If the county opts not to correct things (a legitimate choice), its fair to assume that it will be a very very long time before Mebane comes east and employs the sewer infrastructure. If that’s the direction, the county might consider other options for housing or development. Or take the loss and attribute it to education.

  11. Terri

     /  November 4, 2016

    I hope anyone who reads this thread recognizes that no one persons opinion should be taken as truth. I choose to believe the county’s economic development officer but others may prefer another person’s version.

    The WASMPBA agreement in not an easy read, but for those who are interested, it can be found here: http://www.orangecountync.gov/document_center/PlanningInspections/WASMPBA.pdf
    It is a major factor in economic development in Orange County.

    To make any changes to this agreement, including the boundaries, all parties have to agree (Orange County, 3 towns, and OWASA). Realistically that would take years. In the meantime, I’m glad the county is looking for light industry opportunities and still keeping an eye open for productive retail like Wegmans.

  12. Bonnie Hauser

     /  November 5, 2016

    Terri

    Lol. my view aligns fully with the county’s ED. I thought you understood that

    Oh well

  13. Bonnie Hauser

     /  November 5, 2016

    So as not to be misinterpreted- the county’s ED director is committed to feature all of OC’s assets to prospective businesses. That’s his job.

    He’s also been candid with the commissioners about the obstacles in the EDD and how it fares competitively. That’s where he and I agree and that’s especially why I’m so excited that he is involved in alternatives like Wegmans which promises to be much more rewarding.

  14. Plurimus

     /  November 6, 2016

    OK help me again. South of West 10 is not in the Buckhorn EDD. So how is it your view fully aligns?

    Yes it is very hard to change WASMPBA, Apparently intentionally so. You might think that is good or bad, but the land you are complaining about is not in the EDD currently and that was known when the water and sewer agreements were inked with Alamance-Orange Water.

    Hearsay about the commissioners being “obstacles” are unfair without examples. I expect there are arguments on both sides of the development issues, but my sense is that the real roadblocks are high expectations of price and a great difficulty negotiating with many land owners for a suitably sized parcel.

    The issue with Wegmans is transparency. People do not understand the benefit/cost model. It does not take an MBA to see that Wegmans is going to take customers form Trader Joe’s, Whole Foods, Harris Teeter, etc. Will Wegnams bring in enough new customers to justify the investment? Where are the numbers that explain the business justification? How do you know Wegmans “promises to be much more rewarding” without the facts?

  15. The Buckhorn EDD is at West 10 and Buckhorn and continues east to Mt Willing (where the 80 acre Sim Efland property sits (which BTW was the first property that Morinaga looked at). The $4.9 million sewer investment goes from Buckhorn and West 10 east and ends at the Sim Efland property – on the eastern end of the EDD about 4-5 miles east of Morinaga –

    It was a big surprise to me that WASMPBA extends to Efland- and I’m sure most people have no idea. My gripe is that if land south of West 10 cant be developed, why did the county service it with sewer.

    And I don’t blame the commissioners for obstacles. My point is that taxpayers have invested millions in the Buckhorn EDD and if no action is taking on the obstacles (some which were not known at the time of the investment) – then no benefits accrue and the land will remain undeveloped. Its a choice.

    I suspect Wegman’s is looking at growth due to new development and unlike HT or WF – Wegmans is destination retail – much like Costco. The pie is definitely getting bigger – and if Wegman’s has a more competitive product, then the others will have to react. Pretty basic. As I understand the agreement, if Wegman’s incentives are contingent on making their goals. The big risk is theirs ($30 million)

    I thought somewhere along this thread, we learned that Morinaga (and most of these deals) are done in closed session. Now that its public, I’m sure if you want the details of the proposal now, you can get it from the town or the county,

  16. Terri

     /  November 6, 2016

    The county economic development officer says that the phase 1 sewer project is serving Morinaga and will serve additional development in the Morinaga vicinity. Your argument, as I read it, is that the phase 1 ($4.2M) will not serve an economic development purpose. Which implies that the phase 2 expansion ($4.9M) that is just getting started to serve the south side of Efland is another wasted investment.

    When you say you are in sync with the EDD it just doesn’t align with what you are writing.

  17. You are going to have to get a lot more precise about what’s phase 1 or phase 2.

    There has been a large investment from Buckhorn to Mt Willing – and no results. Morinaga required a new investment which extended Mebane’s sewer and came later.

    Which are you calling Phase 1 and which is phase 2?

  18. Terri – here’s what I’m talking about page 363
    – its called phase 2 – about $4.5 million for sewer between buckhorn and Gravelly

    http://www.orangecountync.gov/document_center/Finance/FY_2014_15_Approved_Budget___Capital_Investment_Plan.pdf

    Morinaga follows page 364 – $1 mm

    Enough?

  19. plurimus

     /  November 6, 2016

    Once again your complaint seems to have nothing to do with the EDD as defined or Moringa.

    WASMPBA has been arounf for a while, and if I recall correctly it was driven by the Jordan Lake rules. Those rules are being revisited at the state level now.

    You seem stuck on circular arguments. the county did not service south of West 10 because its not in the EDD and WASMPBA requires agreement. There is no nefarious plan, no conspiracy.

    You made the statement about the commissioners.. I only said that I did not think your assertions were justified by example. Extending sewer was a risk. Agree or not, there was plenty of discussion and facts presented over months. Not so with Wegmans.

    You suspect that new customers will drive Wegmans success. I certainly hope that is true, but I see very little in the way of available numbers and facts.

    Yes the deals can be private or not. I think when there are millions in taxpayer incentives there should be more transparency required. From what I understand the town has only conversations to back up any market analysis assertions. If that is so, that is not enough.

  20. Plurimus, WASMPBA pre-dates Jordan Lake rule. It was adopted by all the joint jurisdiction in order to confine urban services to areas designated as “urban” to constrain sprawl.

    Without WASMPBA Chapel Hill/Hillsborough would probably sprawl towards each other more like Morrisville/Cary.

    The urban service boundary was used by Chapel Hill developers and their Chamber lobbyists to justify higher density development, including in places it makes no sense. Now that the “cheaper” opportunities for this high profit type of development is drying up, we’re seeing attacks on the urban service/rural buffer.

    Of course, the Chamber doesn’t see it as “double-dipping” but it quite obviously is. If we weaken the sprawl protections, we’re going to see a lot more unfavorable development and an even more excessive tax burden falling on residential citizens.

  21. Plurimus

     /  November 6, 2016

    Will interesting. Since SESSION LAW 2013-395
    SENATE BILL 515 was signed, Orange County has held the line on Riparian Buffers.

    With the movement of House Bill 760, § 143-214.23, § 143-214.18 § 143-214.27 I am not sure that OC rules will hold.

    http://www.ncleg.net/Sessions/2015/Bills/House/PDF/H760v3.pdf

    I have not gone through all of the waste water section yet. I wonder if that part will weakening pacts like WASMPBA.

  22. Will – you are absolutely right about WASMPBA. Its the local urban services boundary agreement and has nothing to do with the Jordan Lake Rules or riperian buffers. The transparency issue that concerns me is how the county decided to invest in a sewer main in its EDD in an area where WASMPBA could not use it.

    The 2014 budget above fully describes the investment in the EDD along the WASMPBA boundary at West 10. The facts speak for themselves. Try them – you might enjoy a refreshing new point of view.

    I hate being misrepresented – I’ve always been a strong supporter of Morinaga. I don’t see a nefarious plan or a working strategy – just $4.5 million down the drain – and a missed opportunity to course correct. You could legitimately argue that Wegman’s is a course correction for the ED strategy. If so, the county should explore other ways to garner benefit from the $4.5 million.

  23. Alamance/Mebane announce Lotus Bakeries coming to town – $50 million facility/$2.9 million town/county incentives. http://www.bizjournals.com/triangle/news/2016/11/04/its-official-biscoff-cookie-maker-to-expand-with.html

  24. Plurimus

     /  November 6, 2016

    Not quite:

    The county is is offering $1.4 million, along with a reimbursement of $96,000 in fees, while Mebane is offering the Belgian company $1.6 million.

    The state also is offering a performance-based grant of as much as $180,000.

  25. Plurimus, maybe OC held the line on riparian buffers but the former CHTC bought into the Chamber-led baloney and weakened Chapel Hill’s.

    Chapel Hill used to lead the way on watershed protections, stormwater management, tree protection, etc. and mock communities like Cary.

    Now Cary, Apex and even the little burg of Holly Springs is putting us to shame.

    One further benefit of WASMPBA that I fought hard to maintain was it makes it difficult for OWASA to build a permanent infrastructure to Jordan Lake for the purpose of expanding our water supply.

    Rather than fuel the demand on that fouled contested resource with such an open-ended tap, WASMPBA helps encourage OWASA to enhance our local water supplies.

    I’m a big fan of the 2035 deep quarry option which 1) is wholly within OC, which means we only have one elected body instead of the 47 within the JL basin to negotiate protections with and 2) will give us the equivalent of 3 more Cane Creeks – more than sufficient to fuel local growth for 50-100 years.

  26. Plurimus

     /  November 7, 2016

    Will,

    “Now Cary, Apex and even the little burg of Holly Springs is putting us to shame.”

    Rightfully so. It’s their water supply. For years Cary grew more or less uncontrolled, and now Apex and Pittsboro are joining in to the development free for all. Durham tried to stop the new development off 751, but the state overrode their concerns. The irony has been that parties upstream have been more interested in keeping nutrients out of the shallow lake that the people drinking the water have.

    The history of the lake (like most water politics) is controversial. Both Duke and UNC concluded that the lake was built in a terrible place, could not be justified from a cost benefit perspective and the Hydrocomp report concluded it would be a cesspool, here we are.
    I expect Chapel Hill will lose its water allotment from Jordan Lake to the new development. I also expect a growing chorus of concern from people using the lake water

    Back to Chapel Hill, and doing some research over the years, I agree with the quarry and the need for clean water away from Jordan lake, however I also see the point that Chapel Hill and OWASA have taken a great deal from the county, giving little in return. This policy of restricting development taking has transitive effects on housing costs and jobs………

  27. Plurimus, if you’re worried about the quarry option expanding OWASA’s footprint, we already own that plot so that’s good.

  28. Plurimus

     /  November 7, 2016

    Thanks Will, I am well aware of the American Stone quarry. When it shuts down it will be a great asset and and example of forward thinking…..for Chapel Hill and Carrboro. But that has a price.

    My concern with OWASA is not so much who owns the land now, but the bad feelings left from the eminent domain land takings in the past.

    The feeling is that many of the policies in place by the towns, county and OWASA to protect Chapel Hills and Carrboro’s water have directly or indirectly led to reduced economic development, opportunity and higher costs for people that live outside the towns in the county. One major reason that the EDDs and Rural Activity nodes haven’t developed over the +20 years they have been in place is …….lack of water and sewer. Even today, ENO EDD is still waiting for Durham to extend water.

    The subject is “putting out”. The policies that drive development restrictions, tax revenues, policies, affordable housing, services and the viability of those little out of the way businesses, restaurants and stores are water and sewer. Yes, riparian buffers and the Jordan lake rules do matter…very much.

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