News Column

ACC tech center OK'd, no tax increase expected to pay for it

September 2, 2014

By Chris Lavender, Times-News, Burlington, N.C.

Sept. 02--GRAHAM -- The Alamance County Board of Commissioners unanimously approved a request Tuesday from Alamance Community College President Algie Gatewood to issue bonds to pay for a $15 millionApplied Technology Center at the college.

The board made the move official in a resolution adopted 5-0 stating, "The issuance of bonds is necessary or expedient for the county to provide funds for much-needed additional and improved community college facilities in the county."

The resolution also stated that an "increase in taxes, if any, necessary to service the bonds will not be excessive." County Finance Manager Tom Manning said he anticipates no tax increase will be needed to pay for the bonds.

Manning said the ACC Board of Trustees will rebid the construction project to get updated figures to determine whether the total cost is different than it was two years ago, when county voters approved the project. The updated bids would be returned by November, at which time the ACC board would decide whether to move forward with awarding a contract for the center's construction contingent on the issuance of bonds. Manning said the bonds would then be issued and sold in late winter 2015.

Manning said he had met with the Local Government Commission to develop a proposed calendar for debt service payments. The annual debt service payment on a $15 million tech center would be about $1.2 million.

The county's current scheduled debt reduction from fiscal 2015 to fiscal 2016 is about $1 million followed by an $800,000 reduction in fiscal 2017 and $700,000 reduction in fiscal 2018.

Manning said the county's total debt payment amounts are decreasing and that the issuance of bonds for the tech center project would not require a property tax rate increase.

"We are swapping debt for debt," Manning said. "We would not see an incremental tax increase by the issuance of $15 million in bonds."

THE COMMISSIONERS, beginning in 2012, had seven years to decide whether to issue bonds to help pay for the tech center based on voters' approval of the bond. The building will provide space for the college's machining, welding, HVAC, automotive and carpentry programs.

On Sept. 4, 2012, the board passed a nonbinding resolution that stated if the voters approved authorizing $15 million in general obligation community college bonds, the bonds would not be issued until a funding source other than an increase in real property taxes was expected to be available.

The commissioners placed a quarter-cent sales tax on the same ballot in 2012 to be used to pay for a new ACC tech center and for unspecified economic development. Voters rejected it. Manning said the voters' decision to reject the sales tax had placed the county in "limbo" on how to fund the construction costs.

Commissioner Tim Sutton said he was initially concerned about the county's financing obligations regarding the tech center and about passing these obligations onto future boards. Sutton's and Commissioner John Paisley Jr.'s terms end in November.

After further analysis, Sutton said, he believed the county's decision to issue the bonds is a "break-even scenario" since the county's bond debt is decreasing at a rate that would allow for more debt to be incurred without tax increases.

Sutton also questioned what additional operational costs would be incurred at the new tech center since more space is being added and utility costs are likely to be part of the increase. The operational cost increases are still being calculated, according to ACC Chief Financial Officer Kennon Briggs. Briggs said there isn't a "firm number yet" on what the increase might be.

Sutton also asked what was going to be done with the existing space used for the tech center. Gatewood said part of the existing space would be renovated and used for instructional purposes, including training in industrial systems technology.

BEFORE THE BOARD'S vote, Gatewood and ACC Executive Vice President Scott Queen discussed the condition of the existing tech center and how a new state-of-the-art facility would benefit the county's ability to train a workforce to meet employers' needs.

The new tech center will be about 45,000 square feet. The current space used for the tech center is 21,235 square feet.

Queen said the new tech center will allow ACC to "produce a better student." The programs offered at the tech center continue to remain among the most popular at ACC.

Gatewood said ACC's overall enrollment began to decline in 2011 as the economy rebounded from the 2007 recession. As of last Friday, Gatewood said, the college's overall enrollment had increased for the first time since 2011.

During this period, the enrollment in programs offered at the tech center didn't decline. "There is high demand for these programs," Gatewood said.

The current space at the tech center for automotive system technology was developed 30 years ago. Queen said the center's automotive service center looks nothing like what is used today at dealerships' service centers. The new tech center will offer students a real-world environment to simulate what they will encounter on the job, Queen said.


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