Commissioner says town treated itself differently from others in loan request
The Town of Wake Forest wants to complete a 500-foot street section of Grandmark Avenue that will link deadend Capcom Avenue with Rogers Road and to a signalized intersection of Rogers with South Main Street. Home of about 50 businesses including UltraElectronics/Phoenix with 110 employees, Capcom Avenue’s only entrance and exit is on South Main Street between two signalized intersections. Right turns are possible; left turns especially during rush hours are problematic and can be dangerous.
The estimated cost to complete the street is $368,218, of which $40,950 is the City of Raleigh’s Public Utilities Department’s plan to loop an existing waterline and pay for it, leaving $327,268 as the cost. The town already has a grant of $110,000 from the state Department of Commerce through the state Department of Transportation, a pledge of $25,000 from an individual, and has set $24,850 as the town’s contribution, leaving $167,418 unfunded.
The town approached the Futures Fund Committee asking for a loan of $167,500 – not to exceed $200,000 – to make up the difference. The town board has to approve all grants and loans recommended by the committee, which meant the request was on the agendas for the work session two weeks ago and last night’s town board business session.
The committee, which met on May 21, consists of Jonathan Hand, Katherine Drake, Beth Stout, Deputy Town Manager Roe O’Donnell, town attorney Eric Vernon, Jim Bell and Wake Forest Chamber of Commerce President Marla Akridge. The Futures Fund was set up to help develop the town’s commercial and industrial sectors. (See more about the fund below.)
Commissioner Zachary Donahue began questioning the use of the fund during the work session, asking why the town did not seek financing from a bank. He and Commissioner Margaret Stinnett asked to see the recommendation made by the fund committee and the minutes from that meeting. Both were in the commissioners’ information packet; during last night’s meeting Donahue asked for the written guidelines the Futures Fund committee uses to judge applications. Finance Director Aileen Staples hurried out to find the document, copy it and return to the meeting room to hand copies to the commissioners.
Tuesday night Donahue agreed, as did all the commissioners, that the street is badly needed, but bored in on the differences between the town’s application – most grants and loans are connected to employment and new equipment, not infrastructure as this loan is – and whether the town followed the committee’s application process. “Did we pay a fee [$50] to the chamber of commerce?” he asked. “It doesn’t sit well with me that we’re giving ourselves treatment that any one else wouldn’t have.” Donahue also said the loan would not look good to the public.
O’Donnell agreed during the committee meeting in May and last night’s meeting that the request is different from most but said it meets the top objective: “A project is considered eligible if it contributes to the growth and/or retention of the non-residential tax base for the Town of Wake Forest.”
“Is this loan route that we’re giving ourselves better than a bank loan?” Commissioner Jim Thompson asked, and Staples said yes. Stinnett said there could not be much difference because all rates are currently low. The town plans to repay the loan at 2.5 percent over five years, which will pay the full amount and replenish the fund.
The town’s other alternative was to take the money from fund balance (the town’s saving account) but the commissioners agreed during their winter retreat not to touch the fund balance until it is at its full amount.
After questions and statements about the possible need to go to the Local Government Commission about the project and what a bank loan might cost, Donahue asked his fellow board members, “Are you comfortable with the town being able to use these funds?” His motion to deny was voted down 3 to 2, and Commissioner Anne Reeve’s motion to approve passed 3 to 2. “This is a precedent,” Donahue said.
The Futures Fund was established after the Industrial Development Corporation (IDC) sold the abandoned Parker-Hannifin factory and land to developer Jim Adams for the planned Wake Union Place shopping center. The IDC realized $2.2 million from the sale after fees and other expenses and promptly donated the money to the town and dissolved itself.
The IDC was created to buy the land on Capital Boulevard (then U.S. 1) and build the factory for Schrader Brothers, the first large employer to come to town after Wake Forest College moved to Winston-Salem in 1956. After the bonds were paid off in 1984, the town refused to accept ownership of the property, preferring to have it on the property tax books.
The town has used the money to provide start-up funds for the Wireless Research Center of North Carolina and a line of credit. There was an initial grant of $308,312 to the center and for other economic development expenses and then a $948,950 loan to the center.
Staples sent out a note last week that said the Futures Fund balance was $1,080,826.21 on June 28 with $58,000 in interest payments by the Wireless Research Center due to be transferred in. A loan of $200,000 would leave $938,826.21 in the fund.
Also at the May meeting, the committee heard from MiPay, a start-up company that is one of the entrepreneurs at the Wireless Research Center. The committee recommended they finish their beta testing and then will review a grant request later.
And Michael Davis of Uptone Pictures told the committee about how his business is growing and the need to purchase some motion-capture equipment. He has letters of intent for more work and the equipment would add seven to eleven jobs at Uptone, which has recently signed a lease for the Tarlton Business Center. Davis was told to work on a more detailed business plan and return in a few months after he is established in the new building.
