Mooresville seeks more data on Langtree financing plan

The Town of Mooresville has taken the next step in determining whether to finance millions of dollars in infrastructure improvements to the $800 million Langtree at the Lake project.

In a 4-2 vote on Monday, commissioners approved a contract up to $48,000 for a consulting firm to gather “additional information about the project to be at the commissioners’ disposal,” said Maia Setzer, deputy town manager.

The firm, Municap, Inc. will charge between $135 and $250 an hour, depending on the seniority of the consultant doing the work, and will do it in three phases.

In the first phase, said Setzer, Municap will prepare a debt estimate for the financial improvements on the Langtree project, assist with an evaluation of the budget for the project, prepare a special assessment to allocate costs of the improvement, research and estimate revenues available to apply to the repayment of the debt and prepare an estimate of the fiscal impact of the project, including tax revenue, job creation and economic output.

The second and third phases include obtaining government approval for the project as required by the financial plan and modifying and implementing the financing once approved.

Commissioners Rhett Dusenbury and Eddie Dingler were against the approval of the consultants, with Dusenbury adding he wanted to “remain consistent” with his opposition to the overall Langtree financing plan.

The commissioners also held a public hearing to gain public opinion about the proposed financing of Langtree infrastructure. Setzer gave a brief presentation outlining the installment financing that would fund the project.

“Proposed financing would be for $7,400,000, with $5,931,450 million reserved for construction, engineering and appraisals, $587, 065 for contingency, $766,485 for capitalized interest and $115,000 for issuance costs,” said Setzer.

For Tract B of the project, which is 57.7 acres and had a 2008 tax value of $10.5 million, $1, 014,340 million of the approximate $5.9 million would be for grading and erosion control; $465,000 would be for shoreline park and pathway; $2,680,543 would be for water and sewer mains and stormwater; curbs, gutters sidewalks and paving would be $701,960; and engineers, architects, insurance, bonds and construction management fees would total $1,069,579.

The town would use installment financing for the infrastructure improvements.

“As the Town is moving forward with the refinancing of an existing installment financing, the Town may combine the refinancing and the new money so that property to be refinanced, the Mack Center and Town Hall, is collateral for the combined deal,” explained Setzer. “There is no downside to the Town if we pay the debt service. If we fail to pay, the collateral would be subject to foreclosure, but we will pay.”

The obligation to repay the debt would not rely on the success of the Langtree development, but would be the town’s responsibility regardless of the development’s outcome.

“The Town would recover the costs of making improvements by imposing special assessments on the properties benefitted by the improvements,” she said. “We can’t finalize that yet, as we have to know the actual costs of the project, which I believe is supposed to be completed in October of 2013.”

The board would have to approve the financing and special assessment process in March for the process to move forward. If approved, the town would secure financing in April and construction would begin. Langtree would complete construction in October 2013 and the Town would complete the special assessment process in August 2014, according to the plan.

The debt service would be $790,000 per year and the full debt payment would begin in November 2014 and finish up in November 2023.

Dusenbury, who has been outspoken in his disapproval of financing the project, asked if financing was possible without using town buildings as collateral. Setzer said no.

“For this type of loan, we must offer up safe collateral, or in other words, something we would want to keep and that is vital to the town,” she said. “If we pay our debt services, we will have no problem with the collateral.”

The public was given an opportunity to speak after the presentation and citizens lined up to voice their disapproval.

Larry Gregory stated that the town “is not a bank” and that commissioners should “stop thinking like one.”

“If this project is so good, let (Langtree) pay for it,” he said. “Don’t put the town on the hook again. I would prefer to see a tax cut if you have all that money lying around. It would help the citizens a lot more than financing this project. The citizens need a break and we don’t have to do this.”

George Mullins, who said he was a consulting engineer for 43 years, agreed.

“I have never experienced a town that used tax money like a bank,” he said, shaking his head. “It bothers me. Why not put the money in the stock market or gamble it in Vegas? It’s just as foolish. If we have $6 million laying around, let’s pay other bills and IOUs the town has.”

Roy Harris said he “couldn’t imagine when government got into business.”

“Government is supposed to govern and businesses run their business; they shouldn’t mix,” he said. “We are in debt up to here.”

Harris added that Langtree has had “grand plans” for several years now, but all he’s seen the development do is “move dirt.”

“If they have the money to build great things, well God bless them, but the town is not a bank and you do not need to be enablers of more debt,” he said.

Rick Howard, president of The Langtree Group, was present to defend the project.

“We’ve been in this for six years and this journey has had its ups and downs,” he said. “Let’s take a step back and remind people what’s good about this project. Jobs will be created as well as a strong property tax base and an unbelievable amount of sales tax revenue.

“The residents in the apartments will use water and sewer, as well as MI-Connection. We’re opening five miles of lake-front property to the general public; how often does that happen? It’s invaluable to the citizens and the region.”

He also addressed the financial aspect of the project.

“Since you have brought up financing, when it comes down to it in the real world, it’s not available,” he said. “This financing was a vehicle brought to us, and I know installment financing is new to North Carolina, but it’s been used forever. There’s risk in all we do, every day, but I truly do not believe there is risk here.

“It’s a rare opportunity for the community. With the installment financing, we’re allowing you to help us build, then we’re giving it back to you. It’s built to town specifications and you’re reaping the benefits.”

Although Howard pointed out the potential increase in property tax revenue, Commissioner Mac Herring stated that it’s only as good as the payment – since Langtree still owed approximately $248,000 in unpaid town property taxes as of Jan. 31. Howard said that would be “fixed immediately.”

Commissioners could vote on financing Langtree infrastructure improvements at their first March meeting.