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HomeMy Public PortalAbout10-22-2012 Workshop MeetingOctober 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 1 of 24 MINUTES Board of Commissioners Monthly Workshop Monday, October 22, 2012 — 7:00 p.m. Town Barn PRESENT: Mayor Tom Stevens, Mike Gering, L. Eric Hallman, Brian Lowen, and Evelyn Lloyd EXCUSED ABSENCE: Commissioner Frances Dancy STAFF PRESENT: Town Manager Eric Peterson, Town Clerk/Director of Administration and Human Resources Donna Armbrister, Planning Director Margaret Hauth, Public Works Director Ken Hines, Finance Director Greg Siler, and Town Attorney Bob Hornik 1. Open the Workshop 7:01:43 PM Mayor Tom Stevens called the Workshop to order. He stated they would be having a Public Hearing and asked each person who wanted to speak to sign up. He added that they did not have the public charge tonight but he did ask that anyone speaking be brief, to the point, and respectful. Decisions are not usually made at these meetings so it's more of a time to listen. 2. Agenda Changes & Agenda Approval 7:02:51 PM Town Manager Eric Peterson added a Resolution to appoint two volunteers to the Orange County Human Relations Commission as Item 6.A. Commissioner Mike Gering moved to approve the adding of this item. Commissioner Brian Lowen seconded. Upon a unanimous vote of 4 -0, the motion was carried. 3. Committee Updates and Reports 7:03:34 PM There were none. 4. Public Hearing on the proposed canoe /kayak or non - motorized boat launch in Kings Highway Park as part of the Lake Ben Johnston dredging project. 7:03:39 PM Mayor Stevens opened the Public Hearing. Ms. Hauth said Kings Highway Park is on the banks of the Eno where it is called Lake Ben Johnston. As the damn located there across the river and the town's water intake is just above that, the utilities department has a dredging utilities project in place to clear out the sediment behind the damn to improve the quality of the water going into the water treatment plant. As they own the land that surrounds it, the intent is to take out that sediment and deposit it in a depressed area within Kings Highway Park. Part of the environmental permitting for that process involves stabilizing a portion of the bank October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 2 of 24 routinely used by non - motorized boaters now and which is fairly muddy. Since they're doing the permitting review with the environmental regulators for the dredging project, it is a convenient time to ask for a small portion of that bank to remain stabilized. The area would be approximately 100 square feet or smaller to create a somewhat better location for non - motorized boats to go into the water. This would be bounded by wood timbers on three sides. Ms. Hauth told the Board there had been some concerns raised by folks who live across the lake whose backyards back up to the lake. They're concerned about the increased access and visibility and some of the impacts of the project on their neighborhood. The Town Board agreed to call this Public Hearing following their September meeting. There was a very productive meeting at the site among Staff, folks who live in the neighborhood, and folks who are advocates for the boat launch. The Board's packets contained a number of recommended requests including a locked gate at the parking area, some increased police patrols, and so forth, all of which were reasonable and could be easily accommodated. Ms. Hauth said the Police Chief told her he was comfortable with a locked gate on the parking area. They can key it the same as the lock at Gold Park. 7:06:54 PM Bridgette Booher and Brooks Graham came forward. They both live on Dimmocks Mill Road and had shared a letter with Ms. Hauth. Ms. Booher thanked the Board for calling the Public Hearing and said it set into motion a really productive meeting with the boaters. They had some folks from the Town, including Stephanie Trueblood and Terry Hackett, and it was instructive for them to learn about the permitting that had taken place in order to make the dredging project possible. It makes sense to have the boat launch where it's being proposed and they are confident it will be a relatively minor impact and a small launch. Ms. Booher said they do have some recommendations and requests for things they hope to see to increase security and privacy at that location. She brought to the Board's attention Resolution B. It's currently difficult to see cars and visitors from the road which is a safety concern. They had originally asked that the flora by the entrance to the park be cut back so the parking area is not hidden from view but in the last week, there's been a substantial amount of tree clearing near it. It was a bit of a surprise to them but now cutting may or may not need to happen as far as additional clearing. Ms. Booher explained that one thing that was accentuated to them through this process was the need for them as residents to stay apprised of the plans for the park. Ms. Hauth gave them recommendations for newsletters they can sign up to receive. She said they wish they'd known then what they know now about the amount of trees coming down but all in all, the process was a good one and was educational for them. They also feel confident if the recommendations they're asking are implemented, it will be a win for both boaters and residents. 7:09:16 PM Ms. Graham added that they had recommended in the request that there be signage at the boat site to alert visitors of the strong currents and the proximity to the damn. She thinks that would be important. Since they live on the river, they can see how strong the river gets when there's heavy rain. She feels the 10' x 10' size Ms. Hauth mentioned would be reasonable. 7:09:53 PM Commissioner Gering asked the guests to explain their Resolution B and what they expect to happen after six months. Ms. Booher explained this was suggested wording by Ms. Trueblood when they walked the land with her. It's such a minimal installation that if they do find there are a lot more people using it and they're not being responsible stewards of the river, and if it's causing additional problems, they can easily remove that. It was wording Ms. Trueblood suggested to reassure them that it didn't have to be a permanent thing if it started creating problems in terms of privacy and security. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 3 of 24 7:09:59 PM Commissioner Gering commented that the wording of it seemed to be that they can request it be removed but it would still leave the decision up to the Town Board. Ms. Booher agreed. She said in terms of the period of time, they don't have one in mind. 7:11:24 PM Commissioner Eric Hallman asked Ms. Hauth about the tree clearing. Ms. Hauth said it was a utility project so she wasn't terribly familiar with it but she understood the depressed area where the sediment will be placed was a depressed area before. It's been about 20 years since they've done a dredging project so they went inside that area and removed the volunteer trees. They also had to clear additional space at the driveway to allow the equipment to get on the site. That's why Kenny Keel asked that they not put the gate in before the equipment gets there and before it leaves to make sure it can come and go without having to take out a gate. 7:12:26 PM Commissioner Gering moved to close the Public Hearing. Commissioner Evelyn Lloyd seconded the motion. Upon a unanimous vote of 4 -0, the Public Hearing was closed. 5. Public Hearing on the possible right -of -way closure on North Hassel Street 7:12:45 PM Mayor Stevens opened the Public Hearing. Ms. Hauth said the packets contained a request from residents at 309 North Hassel Street who also own the house at the corner of West Queen and Hassel to close a portion of the right of way in front of their properties. The streets in the historic district were laid out many years ago and depending on which source you consult, they either have a 60' or 66' wide right of way. On a 12' travel lane, that's five travel lanes minimum in a 60' right of way and most of the streets are maybe paved to 24' or 30' wide at most. There's a lot of excess right of way not being actively used as road access. Some of it has utilities and some does not. Ms. Hauth explained that these particular owners had made a lot of improvements to the adjoining lot including landscaping, orchards, installation of a new building, which is what brought this to the Board's attention. The street does not run parallel to the right of way or in the center on this particular block of Hassel Street. Now that their building is in place, it's no longer compliant with the zoning ordinance or setbacks. One of the options available to them was to come to the Town and ask for the closure of a right of way. It turns into a triangle that's roughly 3,600 square feet, 27' wide at the base of triangle, and covering some of the frontage of the two lots. Hassel has a very steep bank. They did check with utilities on that side to make sure there are not any public utilities under the area that would potentially be closed and there are not. Ms. Hauth told the Board their packets also contained a memo from the Town Attorney indicating this may be a policy question for the Board to discuss as it is not a unique situation. There are many like this throughout the historic district and other places in town where there are rights of way that are much wider than what they're using. They should discuss what they will do about that if anything. 7:15:17 PM Mayor Stevens asked if the triangle still leaves plenty of right of way. Ms. Hauth said it doesn't close anything that is currently paved or any currently active ditches. They don't have a survey of the other side to exactly tell where the eastern side of that right of way is but if they calculate how wide the pavement is, and how much they're closing, the pavement on the other side is clearly still in the public right of way although it's certainly getting tight especially at mid - block. 7:16:04 PM Ms. Hauth clarified that this process is specified in state law and is required any time a town wants to close a right of way. It's all spelled out in the signs posted out there and the ad being placed in the Herald Sun for four weeks. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 4 of 24 7:16:40 PM Mayor Stevens asked about the encroachment agreements and Ms. Hauth replied they would work for the landscaping but not the building. It would have to be moved. 7:17:09 PM Nettie Lassiter and Jamie Pittman came forward. Ms. Lassiter said she wanted full disclosure. When they started building the house, they also took down an old barn in Durham. While Mr. Pittman was working on the house at Hassel Street, she was trying to place the barn and the goat pen not in the orchard, not in the garden, and not in the driveway. Therefore, she was not paying attention to this angle that went across through the orchard of the original old border. The 12' x 16' barn was built and Tom King and Stephanie Trueblood came out when they asked for a COA. They were alerted then that they were too close to that property line. They have since taken care of that. Ms. Lassiter said that for ten years, they've had several apple trees in this triangle. They have goats and chickens and a garden. They had no idea they were in the right of way when they were planting. They were surprised but when they looked at the old maps from 10 years ago and saw the error. 7:18:59 PM Mr. Pittman added they had it resurveyed and the surveyor provided them with the plat map as a potential change. Ms. Lassiter indicated it was up a steep bank six feet above the road in some places. 7:19:56 PM The Doll family came forward. Rebecca Doll introduced her family and said they live on the southwest corner of Hassel and Union Street at 317. They've lived there six or seven years and think Jamie and Nettie are very good stewards of the land they have. The kids get to help take care of the animals occasionally and they appreciate that and everything they do to give them a little farm oasis in Hillsborough. Owen Doll reiterated the height of the bank is taller than him and he's 5'8 ". Maddie Doll stated that she loves the goats that Jamie and Nettie have and she really thinks they deserve that barn. They own it. 7:21:28 PM Emily Pfaff and Adam Green came forward. They live at 310 North Hassel across from Jamie and Nettie. They view their property straight ahead and feel the aesthetics of the barn they built fits in with the historic district. They love to look at it and feel they've done an amazing job with the new construction. They also love to look at the apple trees and take care of the animals and they agree they are great stewards of the land. Mr. Greene added they've been there almost one year and being in the historic district, he finds it to be appealing. If it helps at all, they're happy to have a surveyor come out and survey the area as a whole. He was told that his property extends into the street and they can move it back a little if they'd like. He agreed with the Dolls as far as the embankment being very steep and they also get a lot of joy out of feeding the goats and listening to them. He finished by saying Nettie and Jamie are great neighbors. 7:23:08 PM Tim Lowe, Gina Baralts, and Jane Dar came forward. Ms. Dar said they all felt Nettie and Jamie should be able to keep the barn as they feel there's no way that road is going to go there. 7:23:41 PM Katie Shoemaker came forward. She said she and her husband, Charles Murphy, live on the other side of Nettie and Jamie. They have been there throughout the process of their taking over the house that was Ms. Eleanor's beautiful yard and buying the lot behind them that 10 years ago was a kudzu lot. Those lovely goats have come in and helped take care of that. Now it looks like this beautiful little place right here in town. She hopes they can leave the barn as it is. 7:24:25 PM Ellen Steinberg came forward. She lives at 313. A huge reason she chose the home she did was because of the view into Nettie and Jamie's yard. She moved from Brooklyn, wanted serenity, and to not only see the beauty of a farm but learn about it. They're all inspired by it and they've learned a lot about the environment from it. 7:25:37 PM Commissioner Evelyn Lloyd said neighbors who like each other. It's a great relief hear what people in the community think. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 5 of 24 it was nice to have someone come before them who are Mayor Stevens added it was very helpful and refreshing to 7:26:29 PM Commissioner Eric Hallman said he was for this but he asked Town Attorney Bob Hornik about the issues involved. He specifically asked about gifting to a single party and the road closure. Mr. Hornik said the statute contemplates situations in which you have a length of roadway where there's a request to close the roadway for its entire width so that when it's closed, half the right of way goes to the abutter on the north and half to the abutter on the south. Here they have a request where only the portion of the west side of the right of way is asked to be closed. It's unlike the situation that is clearly contemplated by the statute but the situation still falls within the letter of the statute. They can do this statutorily. Mr. Hornik said what prompted him to look at this initially was consideration that if the Town were to close the right of way and abandon it essentially, whether the Town would be making a gift of 3,500 square feet of property to the adjoining property owner. The only way he could reconcile that was to say the statute seems to create an exception to the constitutional prohibition on giving gifts. It does this by saying its okay to give the abandoned right of way to the adjoining property owner when you close a right of way following statutory procedure. Then it came down to a policy question. Mr. Hornik said they know there are lots of other situations like this in the historic district and asked if they were concerned about opening Pandora's box. If not, then there's no problem. If they are, they need to think about it. 7:28:54 PM Mayor Stevens said the right of way extends most of the way through his front yard and probably into the neighbor's yard as well. This is not a clear cut situation. Mr. Hornik said they know or suspect these situations to be widespread but they don't know the exact degree or how much. 7:29:31 PM Commissioner Gering asked if something like this would increase their property tax base. Mr. Hornik said it ought to when you consider an additional 3,500 square feet of private ownership property that someone will have to pay property tax on. 7:30:06 PM Ms. Lassiter stated they are going to be paying taxes on it. Ordinarily, in the historic district, people aren't going to need to move a building that's already constructed even though it was a mistake. 7:30:33 PM Mr. Hornik said in order to make sure they get those additional tax dollars, the property owner will have to have a plat prepared that shows the abandonment and have it recorded in the Register of Deeds office so the Register of Deeds and the tax people can know that there has been this conveyance of the property to the property owner. 7:31:07 PM Commissioner Lloyd asked if they could deal with these on a case by case basis. Mr. Hornik said they would have to do that unless the Board adopts a policy. But they have to be prepared to articulate why they're doing what they're doing. If the case ever comes up where they say no, they have to be prepared to explain why. 7:31:38 PM Commissioner Gering said the members of the Staff need to think about the policy as well. 7:31:57 PM Commissioner Hallman asked if they need to consider this more clearly in the ordinance as far as the way they word the conveyance. Ms. Hauth said she included the Order they could enact in case they wanted to act tonight but they could do it at the next Board meeting. Staff can be working on additional language for them to go along with that Order. She didn't know if they would want to specify in the Order that October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 6 of 24 gets recorded in the Register of Deeds the logic of their thought process. That might be unnecessary but she could still provide other documentation for them that can get read into the record when they're making the decision. 7:33:11 PM Commissioner Hallman moved to close the Public Hearing. Commissioner Lloyd seconded. Upon a unanimous vote of 4 -0, the Public Hearing was closed. 6. Discussion and comments regarding Orange County Board of Health's proposed "Smoke Free Public Places Rule" 7:34:15 PM Tony Whitaker, Chair of the Orange County Health Department, came forward. Colleen Bridger, Orange County Health Director, came forward as well. 7:34:38 PM Commissioner Gering said they probably needed to discuss the jurisdiction these guests would have for Hillsborough. He said Mr. Hornik's analysis raises some serious questions about whether County policies can apply without the Board's approval. Mr. Hornik referred to NCGS 130A -498 which is the statute under which they're operating. At the lack of case law for the statute, the question remains to him whether the County or the County Board of Health can adopt this particular regulation and make it effective in Hillsborough and on Hillsborough Town property or for Town vehicles without the Town Board saying okay. Mr. Hornik said this whole section of the law was adopted in 2007 and gave different and special authority to local governments, including Town Boards, to adopt regulations banning or limiting smoking in public places. The way the statute is written, it's not clear to him that the County Board of Health or the County could make prohibition effective in the Town without the Board adopting a resolution saying they're okay with it. That is NCGS 153A -122. This is referred to in the section under which these County employees are operating. It generally says that in order for a County ordinance to be effective within the jurisdictional limits of the town, the Town has to adopt a resolution saying they're okay with it. He doesn't know whether the Board is okay or not okay with all or part of what is being proposed but having looked at it, there's a question he has and there doesn't seem to be a clear definitive answer. 7:37:12 PM Dr. Bridger agreed and said if this were a county ordinance it could not apply to the municipalities. Boards of Health have authority to pass rules that encompass the entire area of the county where they serve. Mr. Hornik replied, however, there are special statutory authorities on smoking prohibitions which are different. Dr. Bridger said those are the two worlds they're dealing with. Commissioners can't; Board of Health can. There was a hybrid rule of law that was created when House Bill 2 passed and Boards of Health were given back the authority to enact smoking prohibitions but only with the agreement of the County Board of Commissioners. Mr. Hornik said the statute specifically refers to the County Board of Commissioners adoption of the ordinance approving the rule. Dr. Bridger replied Hillsborough would be the second county to be doing this as Durham has already passed a rule that was "adopted by ordinance" which was what the School of Government recommended in order for the rule to apply to the entire county. The guidance they've been given by the School of Government is if a Board of Health rule is "adopted by ordinance" and it's not a separate ordinance adopted by the Board of Commissioners, then it does indeed apply to the entire county and all the municipalities. That is what they applied in the Durham County example. She told Mr. Hornik Jill Moore would be the contact person at the School of Government. 7:39:23 PM Dr. Bridger added they've discussed this with the School of Government to make sure they do it correctly. At the legal conference in April, there was an entire session about this, and very clearly, the guidance was if the Commissioners "adopt by ordinance," then it is a Board of Health rule which does apply to the entire county. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 7 of 24 7:39:58 PM Commissioner Gering asked if state rights of way were considered under this. Dr. Bridger said no. Nothing owned by the state is covered by this. Commissioner Gering asked then if the establishments along Churton Street downtown that allow smoking outdoors at the restaurants would not be covered. Dr. Bridger replied that in the definition of the rule, they specifically talk about sidewalks and the definition of a sidewalk is if it is owned, maintained, or controlled by the county or a municipality. In her mind, the question is, if there's a problem with that area in front of the storefronts on Churton, who pays to repair it. Commissioner Gering said that would be a question for Staff to provide guidance on. Mr. Peterson added that historically any repairs that have been necessary on Churton, for example, the Town has paid for. They've spent tens of thousands of dollars on maintenance costs in the last couple of years but that doesn't mean that's correct. 7:41:16 PM Commissioner Gering asked Mr. Hornik if he agreed this would be covered by that qualification. Mr. Hornik replied that he's not sure. They maintain it as far as repairs but he doesn't know whether that's by arrangement or just by them deciding it's in the best interest of the town to do so. Commissioner Gering said he brings this up because it seems like an equity issue for them to consider what businesses in Hillsborough would be affected or if it would be applied evenly to everyone or to no one. 7:42:15 PM Mr. Whitaker stated the situation along Franklin Street in Chapel Hill was the same as Churton Street. The state DOT right of way essentially goes to the storefronts so the entire sidewalk along the frontage of Churton and Franklin, while in the DOT right of way, is a municipally controlled sidewalk for practical purposes. Mr. Whitaker added by way of clarification with regard to the equity issue that any dining area or area that's outdoors on private property, or private dining patio that is not on the public sidewalk, would not be covered by this rule. If they're enclosed, however, it's covered by the restaurant law. 7:43:48 PM Commissioner Lowen said it just seems counterproductive to walk down the street through town and smoke. He asked if they were not subject to police enforcement since they are on town property. He asked if he would be breaking the law if he stood in the right of way that is fifteen feet from his house and smoked a cigarette. 7:44:37 PM Dr. Bridger said the analogy they like to use there is the open container law. If he's standing in the front area of his home that is actually owned by the town and he's drinking a beer, he is technically in violation of the open containers law. However, no one is going to come enforce that. The same analogy applies with the enforcement of the smoke -free public places rule. Dr. Bridger said they are pulling together the Chiefs of local law enforcement and the Sheriff to talk about consistency in enforcement of this rule if it does pass. Like a lot of other laws, the police have discretion in how they enforce it and if a simple reminder from someone that an area is smoke -free is sufficient, that person can move away, and the other person who doesn't want to breathe the smoke is good. There's no need to involve law enforcement. She believes it will be a rare situation. Dr. Bridger stated the example they have is with the implementation of House Bill 2. There was a lot of concern about enforcement of this with the smoke -free restaurants and bars. In that law, the local Health Director enforces violation of that law. She's been the local Health Director since before it was implemented and never once has had to go to restaurant or a bar and enforce it. It was enough for there to be that law for the owner to say there is no smoking. They've heard the enforcement concerns and that is why they are bringing the local law enforcement leaders together to make sure they're consistent across the county. They have other precedents October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 8 of 24 they can look to, however, to say it's probably not going to be as much of an enforcement issue as it is going to be an educational issue. 7:46:58 PM Mr. Whitaker clarified within the rights of way, it is only on the sidewalk or at bus stops that this rule could apply within a state right of way. Otherwise, there's no applicability in the right of way. Many places don't have a sidewalk in the right of way so there will be no area there that this would even cover. 7:47:30 PM Commissioner Hallman said he's very much in favor of the effort. With regard to the open container law, any night of the week, someone could be cited for that if you walk down Churton Street. They see that all the time. He personally hates cigarette smoke, especially when he's eating, but people are all concerned about that one stretch of downtown Churton where people seem to respect each other. As it gets later in the evening, however, more smokers do come out. He added that they have enacted the smoke -free parks so they have it pretty much everywhere else in town but they're all focused on what happens on the sidewalk. 7:49:05 PM Mayor Stevens said his biggest concern is the sidewalk as well and that's probably an area of discussion where they could really have a debate because of this. He's thinking about when they are just walking down the sidewalk and seeing it and he doesn't like it either. 7:50:04 PM Commissioner Gering said this is an example where local jurisdiction should have more control and not be covered under a single umbrella for the whole county. He thinks they should tell people they can smoke on the sidewalk because he does not believe, despite what the Surgeon General says about second hand smoke, that the public will not be affected by someone walking down the street passing by smoking. He has a problem with that. Also, the County has a history of not abiding by the Town's ordinances and it annoys him that the County seems to want to apply this standard, this ordinance, to the Town when there's still a question about whether they have the authority to do so. He would like to understand that better and thinks it would be bad for Hillsborough to accede this jurisdiction to the County without discussing whether the County is going to abide by the Town's ordinances or whether the Town lives by theirs. Commissioner Gering said he also read the requirement regarding signage and asked who would pay for that and decide where it would go. Dr. Bridger replied they've identified $30,000 to pay for the signage but they can't implement it without the vote in their favor. Regardless, they've been softly planning a meeting with some of the Planning Directors and Parks & Rec Directors to talk about how they can equitably distribute the signs they have money to purchase. Places like Hillsborough Park, which is already smoke -free, don't need signs. Their plan is to do a thorough assessment of areas where signage needs to be placed, figure out where that signage already exists or where there are already plans for that signage, and then come up with a needs list and using that $30,000, divide up the signs and actively seek additional funding. Dr. Bridger said she was also in a meeting this week and heard about another $48,000 that they may be eligible to receive which they could use towards the purchase of signs. It's their intention to work with the County and the municipalities to provide those signs as much as possible. Commissioner Gering said it is then not Hillsborough's expense. Dr. Bridger replied not necessarily. She said they would work with everyone affected and divide up that money as much as they can. Commissioner Gering asked Dr. Bridger if her department decided there needed to be a sign on Churton Street and they didn't have the money to pay for it, if the Town would be obligated to buy one. Dr. Bridger said technically yes. Again, they're going to work with the Town and do this in a friendly way. Commissioner Gering said he just wants to understand where the boundaries are and he's not implying they won't. He wants to understand who is responsible for implementing everything. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 9 of 24 7:53:55 PM Mr. Whitaker said he is in the habit of respecting jurisdictional boundaries. He makes those distinctions daily so it's easy for him to make a mistake of equating that to the Board of Health. From the Board of Health's jurisdictional perspective and strategic and objective approach to public health, Hillsborough is as much a part of Orange County as Cedar Grove or White Cross. There is not distinction jurisdictionally between public health issues covered by Board of Health matters. 7:54:45 PM Commissioner Gering said he agreed with that but the only difference is in this case, the County Commissioners would have to adopt by ordinance so in his mind, they're subject to the County Commissioners when they adopt that ordinance. That's why he questions the jurisdictional issue because without their approval, this couldn't be done. 7:55:21 PM Mr. Hornik said the power they're trying to exercise right now is not the same power they usually have. This is not the power they have under NCGS 138A -39. This is separate statutory power that is conveyed to all of governance. The Town of Hillsborough could do it under NCGS 138 -498 so this is a different kind of power with different rules that are not clear. He added that it's so new, in the Durham example, Jill Moore said it should be a certain way but she's not on the Supreme Court. This is a different animal. This animal has certain rules that the legislature wrote in 2007 and 2009 and one of those is that in order for this to be effective, the County Commissioners have to approve it. In the same section of the law, there's a provision that says in order for an ordinance adopted by the County Commissioners to be effective in the Town, the Town has to adopt a resolution agreeing to it. He's not sure with respect to this particular rule how those all work together. They have the Durham model but that isn't necessarily what the law is. It's what the parties in Durham agreed to. 7:57:22 PM Commissioner Gering commented they could wind up in court with the County. Dr. Bridger said she hoped they would contact Jill Moore and get her legal opinion on it. The Institute of Government has said this is how they interpret the law so this is not the County attorney saying how she interprets the law. 7:57:47 PM Mr. Hornik said there are courts which have disagreed with the Institute of Government. Dr. Bridger said there are courts that have disagreed with other courts. That's what lawyers do. She didn't want them to think this was just based on the opinion of the County. 7:58:04 PM Commissioner Lowen said he'd heard Durham mentioned a couple of times and feels like this is unique. In Durham, they have the city, the county, and no other entity. If the two of them agree, it's a done deal. Orange County has Chapel Hill, Carrboro, Hillsborough, and the County. As a town, they do a good job already not allowing smoking in the parks or vehicles or on town property. He doesn't see them having a problem right now that this additional enforcement would be an issue. 7:59:30 PM Commissioner Gering asked if smokeless tobacco products were covered. Dr. Bridger said no. 7:59:42 PM Commissioner Lloyd said she didn't think any of the Board smokes but they're not arguing for themselves. 8:00:12 PM Mr. Whitaker said he identified two issues, one being the jurisdictional issue, and the second is a more intense concern about sidewalks. If the jurisdictional question didn't exist, there would still be a concern about sidewalks. 8:01:00 PM Mayor Stevens said he thinks it's pushing the regulation and he worries about it becoming counterproductive. If the sidewalk were removed from this, it's close to what they already have. The sidewalk issue seems like it's a bit too much. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 10 of 24 8:01:56 PM Dr. Bridger replied they've been trying to get public input as well as community leader input. She hoped the Board had seen the results of the survey from the community leaders but they're also about to send out the results of the residents survey. They had close to 750 responses to that survey through email and hotline and so forth and there's overwhelming support in the community for smoke -free public places. The lowest support is on the sidewalk issue but 65% of people still support it. She believes there was another 4% who didn't have an opinion. That's pushing 70% of residents who responded to the survey who are supportive of regulating smoking on the sidewalks. She doesn't know if that makes them feel better or not. 8:03:18 PM Commissioner Gering asked if those were all Hillsborough residents. Dr. Bridger said it is county wide. Commissioner Gering replied that didn't mean much to him. Dr. Bridger told him she could break it out by Hillsborough. Commissioner Gering said there may well be a difference between the responses from Chapel Hill and Carrboro versus Hillsborough. Dr. Bridger told him she would do that and send it to him. Commissioner Gering said they would like to see that information. 8:03:44 PM Commissioner Lowen agreed. He said to keep in mind they've had this discussion several times and Hillsborough goes as far out as St. Mary's Road. If they had to put something to their constituents, it's much smaller. Dr. Bridger said she lives off Walker Road in Hillsborough so she hopes they're not referring to the fact she's not a legitimate resident. Commissioner Lowen responded she's not a Hillsborough tax payer as she doesn't live within the city limits. She couldn't vote for anyone on the Board and they couldn't write their smoking law that would affect her on Walker Road. When they look at the decisions they have to make, they have to consider first the residents they affect. Dr. Bridger said she can't break it out by those numbers. 8:04:43 PM Mayor Stevens said he understands there are limits to the data and they have to live with that. Dr. Bridger replied she does feel good about the survey. She asked how many surveys they've sent out and gotten that big of a response to. She feels people were very interested in responding to the survey. 8:05:05 PM Mr. Peterson said their surveys have ranged within 23% and 31% return which anything over 20% is good. 8:05:37 PM Commissioner Gering said one useful thing might be for them to offer the County Commissioners a local opt -in option for municipalities. Dr. Bridger said she did not think they were allowed to do that. Mr. Hornik stated he would find out. 6.A. ADDED ITEM: Consideration of a Resolution asking the Board of Orange County Commissioners to appoint Mr. Gerald Ponder and Dr. Li -Chen Chin as Hillsborough's Representatives on the Orange County Human Relations Commission 8:07:14 PM Commissioner Lowen moved to make this appointment. Commissioner Lloyd seconded the motion. Upon a unanimous vote of 4 -0, the appointment was approved. 7. Consider request from Stratford Development to adopt a resolution to authorize (a) proceeding with the Waterstone Special Assessment District, (b) application to the Local Government Commission for approval, and (c) subsequent sale of up to approximately $5.0 million in bonds to pay for Phase 3 infrastructure (primarily Cates Creek Drive extension to Old NC 86), reimburse the developer for existing Waterstone infrastructure, and pay down part of Stratford's loan obligation to Bank of America October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 11 of 24 8:07:40 PM Ocie Vest with Stratford Land came forward. He said they were at this meeting a couple of weeks ago with a work session to talk about Waterstone and to provide an update on the SAD and some of the sales and other activities going on with the project. At that time, they talked about coming back tonight for an action to move the district forward. They asked Mack Paul to draft a resolution that would say what they need to get to the next step. Mr. Vest introduced Mack Paul with Morningstar Law Group, Brantley Parrott with Stratford Land which manages the project, and Ryan Bartock who is their boots on the ground, the project manager for the infrastructure construction for Phase 2. 8:09:58 PM Mr. Vest said he got a copy of the agenda with a lot of comments from the Town Manager and they can go through those. He would like to present a different view they have on almost every one of those items with the exception of one or two. The resolution they are bringing to the Town, which was provided to the Town Attorney and the Town Manager, is a resolution that allows them to get to the next step of the SAD process. What it does not do is authorize a bond sale. They've all been educated on how the SADs work in North Carolina. They've not done anything or taken any risks, any debt, or done anything with the district and won't until they issue bonds. Mr. Vest said they know there have been a lot of conversations about their lender and a lot of frustration from this Town Board about the lender, their lack of response, and the lack of communication with them. He agrees with that frustration. However, they are married to the lender whereas the Town Board is not and they have to deal with it the best they can. They are managing that relationship and feel they're doing a good job. Mr. Vest said they had two properties with Bank of America. They were both the result of the bank relationship they had being bought by BOA. These are both performing loans, both good solid projects, and when the current bank bought the previous bank they had the relationship with, they matured the loan. In any real estate loan package, the bank always has that ability to accelerate that loan if they want to. They found themselves in a prematurely matured loan status with BOA on these two projects. One was Lake Norman and the other was Waterstone. They had recently and successfully worked the Lake Norman deal out with the bank and got them 100% paid, made some sales, did some creative things like they're doing tonight, which enabled them to structure a deal with the bank that they were satisfied with. They got them signed off on it, the money in their pockets, and closed out Lake Norman. Waterstone is the second project they have with BOA. They have a track record with this group they're working with in working through these projects. They've been patient so far and Mr. Vest said he believes they will continue to be as long as they're showing hard work and progress towards meeting their goals. Mr. Vest stated the resolution provided had four conditions. The first condition allows them to go forward with all the documents they need to prepare. Some are already prepared and waiting to be submitted. The market study, appraisal, Implementation Agreement and Reimbursement Agreement have been drafted, as have the Preliminary Assessment Rolls and Final Assessment Rolls. These are ready for submittal to the Town and to the LGC and with this Board's permission as a part of this resolution, they would like to move forward with those. None of those documents obligate the Town in any way. They're merely the operational documents that get them all the way to a bond sale. The second condition is they would go to their lender and get them to agree to the creation of the special district. If they have a resolution from this Town Board, they have something positive they can take to the Bank and say this is what we want to do, this is our plan for success, and how we're going to make it work, and we need a yes or no. They believe they made this attractive enough to the bank that hopefully they'll say yes. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 12 of 24 Mr. Vest said the third condition is that they will allow, concurrently with the sale of the bonds, the sale of Ashton Woods with those proceeds going to satisfy the Phase 3 infrastructure. That's critical for their contract with Ashton Woods. The good thing that's happened in the last few weeks is Ashton Woods has shown they really want to do this project. They like this area and those particular parcels. They also told Stratford they're willing to wait if Stratford needs a couple of more months to make their sale coincide with the bond sale. That makes it a lot easier for them to make those two things happen at the same time which is basically what all of this does. Mr. Vest continued that the last condition is a statement that there will be a final determination made after all these things have been resolved and to decide whether or not to go forward with the bond sale. Even with a positive vote tonight, they still need to come back one more time and ask the Town Board for approval to issue the bonds. At that time, the Town Board will have all the documentation reviewed by the Board's administrative staff, their bond counsel will have time to go through all the documents to make sure everything is in order, everything is financially secure, and they're ready to go to the bond market. Mr. Vest said they have support from Ashton Woods and have provided the Board with a letter regarding that. Ashton Woods understands the SAD. They understand the value that Stratford Land brings to that project, what Stratford has done and will continue to do. Mr. Vest told the Board they are respectfully asking the Town Board for approval of this resolution that they will then take to their lender and ask them for a yes or no approval. Once they have that from the lender, they will come back to the Town Board, after they've done the documents, and they'll have one more final vote to actually issue the bonds. Mr. Vest said he knew this was a culmination of a lot of things they've been talking about over the last two and half to three years but they're there now and starting to make sales. They have a bank that's been very patient. They've been talking to them for a long time about this SAD. It's taken a lot longer to get the pieces in place than anyone would have ever thought. Some false starts with appraisers have not helped. The good news is they're past all that and have all the information they need now to go forward. 8:17:57 PM Commissioner Hallman said they normally don't make decisions of this magnitude in a workshop and he doesn't want to make it without Commissioner Dancy there as she's been involved in the process since the beginning. 8:18:48 PM Commissioner Lowen said he would not want the Board to wait if he were not there. Commissioner Lloyd agreed. Commissioner Gering said he wished she was there but he's prepared to move forward. 8:19:24 PM Commissioner Lowen added they had had some previous questions that have not been answered. He wanted to confirm they would still have another opportunity to get those answers if they decide to move forward tonight. Mayor Stevens added when they had the Closed Session, they did not get assurances from BOA regarding escrow funds and they don't want to feel like the rug would be pulled out from under them. Mr. Vest agreed. Mayor Stevens said he understands the resolution says they will get it and Mr. Vest said that was correct. 8:20:42 PM Mr. Hornik said the resolution reserves for a later day the decision whether to finally say yes or no to the SAD. Mayor Stevens said it would then trigger a more direct answer from BOA. Mr. Vest replied it was a valid concern and they feel the same way but it will allow them to come back with the information. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 13 of 24 They'll have information back from the LGC and the lender and a lot of the questions they have will be answered. 8:21:33 PM Commissioner Hallman said as he reads the resolution, it's no different than what they're doing already, but they're doing it in a different order. Mr. Hornik stated that in his view, the question of yes or no was more for the Board's sake. Forgetting about BOA, they need to ask themselves if they still think it's a good idea or not. If the Board is inclined not to do this, then he doesn't know why they should continue to go through all these gyrations. They should put an end to it. If the Board says it's not sure or says there may still be some value to it but isn't convinced one way or the other, then as long as Stratford is willing to keep on pushing forward knowing the risk and paying for consultants and so forth to do the work, then the bigger question becomes for the Staff how much of a burden this is for them. They need to ask if they are better off making a decision now or being willing to delay the final decision. 8:23:08 PM Commissioner Gering said when they talked about this before, he had to change his basic decision. Even if BOA were to agree to the conditions they discussed, he has some serious reservations about whether the reasons they started down the path regarding the SAD are still sufficient for them to continue. They've done nothing but prove to him that they are unreliable partners. Even if BOA agrees to anything the Board asks of them, he has to wonder whether they can rely on them to follow through. He wonders how much he wants the Town to be involved with any deal that includes BOA at this point. BOA has poisoned it for him. Commissioner Gering also stated that the Ashton Woods sale is dependent on the SAD. He basically still needs to be convinced that Ashton Woods is even a good idea for Hillsborough. If Ashton Woods didn't happen, he doesn't think the impact to Hillsborough would be great. It may be great for the Stratford developers and investors but if it doesn't get built until some later date because there's not a need for the houses, that doesn't bother him very much. He's going back to how much they need Ashton Woods and he needs to be convinced. 8:25:11 PM Ms. Vest asked if he should reply to each of the comments. Commissioner Gering replied he's at a point where he's prepared to vote no tonight unless Mr. Vest can convince him on this and a couple of other points. Mr. Vest said the Ashton Woods sale is important to them. They've worked hard to market the property to bring a residential builder on. The previous experiences with builders on that property in this town have not been good and they have left and said they're not interested in having those discussions again. They've been able to go back out to the market, find other builders, get them interested in the property, and get them to the point where they're making a good offer for the residential land. Stratford believes they're a good builder. They've seen the builder's plans and they build a great product. The builder wants to be here really bad and be a part of that community but they can't sell the property and use the money for proceeds without a release from the bank. Mr. Vest said a lot of these comments are that they've not heard anything from the bank, but just from Stratford, but that's not true. Maybe they're accused of being too honest and too transparent and they've shown the Board everything they have. However, Stratford shared with the Town an email they got from BOA saying they will not release that land for sale unless they are also paid a like amount which is exactly what he thought they were going to say. They got it directly from BOA and not just through Stratford. To them, therefore, the SAD is critical for the Ashton Woods sale to move forward. They're in the land sale business. If they can't sale real estate, there's not a lot for them to do. Mr. Vest said the best way for this project to be successful is to allow them to move forward with sales. To do that, they need this financing mechanism. It's simple math at this point. They don't have other options and they look every day. They're in the capital markets every day. He would welcome a call from someone to give them financing but it's just not out there. Their view of the commercial banking industry is a lot different than what October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 14 of 24 he read in the report. It doesn't reflect anything in reality that they see out there. If there's a different reality, they're working with all the wrong bankers. Mr. Vest concluded by saying it is the best way for Waterstone to be successful and allow them to move forward. They need the SAD vehicle to do that. 8:25:16 PM Commissioner Gering said he didn't understand. He said they have other real estate they can be selling besides these. Mr. Vest said they have office and retail but those markets are still soft. They've gotten some recent interest in one of the office parcels. 8:28:52 PM Commissioner Gering said he didn't care about the Ashton Woods sale and doesn't know why he should since they decided to go away. Mr. Vest replied it's a better way to a successful project. If they lose that sale, they won't be able to make any other residential sales at Waterstone. Commissioner Gering said he would extend the question to all other residential sales; why should he care? 8:29:30 PM Mr. Vest said residential rooftops drive the demand for retail and for office for the rest of the project. That's always the development pattern they've seen. He asked Commissioner Gering if he was saying he didn't care if Waterston was successful or not. Commissioner Gering told him not to read that into his comments. He's been one of the strongest supporters of Waterstone. Mr. Vest said he knew that and that was why he was trying to understand his question. Commissioner Gering replied that he understood the rooftops answer back when Waterstone was first proposed because the majority of the rest of Waterstone was retail. That was changed to a hospital and more professional buildings and anything else that they want to modify the plan in that direction. He's not been convinced that rooftops are necessary to make those uses successful. There is not a lot of retail plan for Waterstone. Mr. Vest said they don't have a lot of residential planned for Waterstone. Commissioner Gering replied, however, that at the same time, they have a bunch of residential development that is approved that started before Waterstone so that seems to him to lessen the importance of having rooftops in Waterstone for those purposes. The other reasons those rooftops were important to them when Waterstone was first presented was that was supposed to be the financial engine that would propel the rest of the development, bringing in cash, and cash would be reinvested. 8:31:12 PM Mr. Vest stated that's not true at all. He said the sale of the residential land typically happens first. The sale of the hospital was a lightning strike. You don't go out and look for those things, they just happen and they happen infrequently. You don't build a development model around a lightning strike. That doesn't change the rest of the economic model for Waterstone. It still depends on rooftops to drive the rest of the development. They have a small multi - family parcel. They have several retail parcels and several small office parcels. These are not office parcels that are going to have twenty story buildings on them. These are more likely suburban office and people who live in the area who want a professional office nearby. Rooftops are critical to that type of development. They don't have fifty acres of retail. These are small retail pads for small independent retail shop owners. They're thrilled they have a good quality residential builder who stepped up and said they want to do it and then stepped up again and said they understand the timing is a little bit off but they were willing to work with them on that. It helps them make all this work together. He believes the residential is absolutely critical to the success of this. 8:33:00 PM Mayor Stevens said he understands on a larger scale, they might want to question what the flow of residences is that are being built in Hillsborough as a whole and hypothetically what would happen if Ashton Woods wasn't going to happen. 8:33:39 PM Commissioner Gering said that was not his point. Mayor Stevens said that is what he was hearing. Commissioner Gering replied what he should be hearing is why should they have the SAD and go October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 15 of 24 through the pain and the trouble and expense for Hillsborough to enable that sale. With any normal process, they wouldn't be involved, and the land has been zoned. He said with their economic development policy and the things that Hillsborough would consider doing to promote economic development; residential development was never part of their discussion. That's the only kind of scenario he could envision them taking a more active role in developing. It's something they've not even contemplated. 8:34:48 PM Mayor Stevens said he just wanted to clarify that. Commissioner Lowen thanked him for doing that. He added that his understanding is that right now, in order to get Ashton Woods or even another homebuilder in there, this would help kick off some element of it. There aren't many houses for Waterstone. They have other projects but in Waterstone itself, it's a prime spot by the highway and with the hospital coming, once the houses start, it stands to really be a special place. He thinks Ashton Woods would help kick start some other things. 8:35:47 PM Commissioner Lloyd said she felt if they had to go through twenty years on the SAD to get Ashton Woods, she doesn't think it's fair to Staff and the Town to have to wait twenty years. They have a potential of two different entities, one which would be interested in the hospital, the medical supplies, possibilities of companies that specialized in medical needs the hospital use. Now they also have someone who's trying to sell lots and things for them. Those come along whether they are there or not. Commissioner Lloyd added that Ashton Woods doesn't seem to be the only piece of the puzzle they seem to need when there are others that seem to be interested. She doesn't like the idea of twenty years. She said supposing things didn't go well, it would make Hillsborough look bad, and then if someone decides they want a house in Ashton Woods, and they have to pay extra taxes and they don't pay them, then it would be foreclosed. She asked who would be looking out for the foreclosures and all of that. She doesn't like to start something for some other Board to have to deal with and she doesn't see the need for Hillsborough and the Staff to be involved. Commissioner Lloyd said they have been talking about this forever and she has supported Waterstone from the beginning. She hoped it would have been finished by now although she understands the problems they've had because of the bank but it wasn't involved at the very beginning. To her, she thought UNC Hospital would make it so they could get a hotel to go with it and that's her take on it. She doesn't think Ashton Woods should be what they are being held to. 8:39:20 PM Commissioner Lowen said he understood what she was saying. He added, however, he works at the hospital and he thinks people there want some place to live. He understands everyone's concerns about the different issues and how it's going to affect the tax base but people who live in Chapel Hill and Carrboro don't choose whether they're going to pay the SAD for the school district. They pay it with their taxes. He's not advocating for or against any particular thing but he supports moving this project forward. He's hearing things about why they're supporting the housing, questions about why they're doing it for Ashton Woods, and he doesn't care if it's Ashton Woods or another builder. He wants to see that component move forward just like they want to see the entire thing done. It's like the light issue which they keep talking about over and over again. He wants to move forward and stop beating the same horse. 8:40:39 PM Commissioner Lloyd said she's talking about the SAD on Ashton Woods. If they wanted to come, that would be fine with her. She just doesn't want the SAD. 8:41:06 PM Commissioner Hallman said he prepared that same list for himself. What do they really know? Depending on when he took the snapshot of it, he's been on either side of the fence. After consulting with attorneys in Closed Session last time, he thought he was willing to wait and hear what BOA had to say but that's October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 16 of 24 really not the question. If BOA still gave the Town all they need, he's not sure it makes sense to go ahead and he's having a hard time getting there. Commissioner Hallman added that one thing not in the resolution was the forbearance for at least a couple of years from BOA. It doesn't sound like there will be enough proceeds from this to satisfy that loan anyway so they're still going to need that. 8:42:13 PM Mr. Vest stated it makes a substantial pay down. He saw a $1,000,000 number in the report which is not correct. The appraisal they have is a 3:1 ratio which will allow them to do about a $4.5 million bond sale par bond amount of which about $3 million will be net proceeds. There will be about $3 million going to BOA for a loan pay down, not pay off, which will be a little less than half. 8:42:43 PM Mr. Peterson asked him to explain the math on that considering the Phase 3 improvements are $2.5 million. Mr. Vest replied the Phase 3 improvements are coming out of the sale from Ashton Woods. Mr. Peterson asked if the remaining million is to administer the SAD. Mr. Vest said the difference in the $3 million and $4.5 million is the two years of capitalized interest. There are no payments for the first two years. There's a one year interest reserve so basically the payments for the SAD are guaranteed for the first three years. He said he saw language where the Board would like two but they actually have built in the model the first three years. Mr. Vest said he also saw language about making sure the administrative costs are covered. They've always been a part of the bond issuance and cost of issuance. All the Town Board costs and outside consultants have always been a part of the Implementation Agreement and Reimbursement Agreement and they've been doing that as they go. They've been putting money in the bank to pay for the consultant's fees going forward. Mayor Stevens said they would then have the proceeds from the sale plus the proceeds from the bonds. Mr. Vest said yes. 8:44:03 PM Mr. Peterson asked how much money they still owe BOA. Mr. Vest replied the payoff they would be able to get from the bond sale would pay a little less than half. He explained that he was not trying to dance around the question but what he's learned over the past few months is that certain information about loan status is not information he should be sharing with everyone. He can't quote numbers and rates and terms and dates but he can talk to them in general terms which is what he's trying to do. He's trying to give the best picture he can without breaching their agreement with the lender. 8:44:58 PM Mr. Peterson said in an email Bob Jessup just got Friday, BOA indicated it could not release or discuss any of the loan information unless they had Stratford's permission yet Mr. Vest is saying he can't release specifics about it because of what BOA is telling him. Mr. Vest said BOA transmitted back to the bond attorney that they weren't going to discuss the terms of that loan with anyone from the Town under any circumstances. 8:45:30 PM Mr. Hornik said that has always confused him about this whole thing. If Stratford tells the bank it's okay to share information about this with the Town, he can't understand why BOA won't or can't do that. He analogized it to an attorney - client or doctor - patient relationship. The information belongs to the patient or the client. If they say it's okay to share it with someone, it's okay to share it. He doesn't know anything about banking regulations but it doesn't make sense. 8:46:20 PM Mr. Vest said in a lot of their banking relationships, it works exactly that way. If they were to say they're willing to share this with anyone, they would do it. This is not their bank, they didn't choose them, October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 17 of 24 and they don't have a relationship with them, except that they've worked through one set of a troubled project with them. He said they're as frustrated as the Board. 8:46:43 PM Mr. Hornik said that is part of the discomfort that has grown from this. Mr. Vest replied they're trying to get there as fast as they can. Mayor Stevens stated he wants to work with them and he's sorry they've had a bad marriage but that's not their role to be there. They're in a different spot than they were a few years ago. Mr. Vest said he's not sure what's so different now than it was a couple of years ago. 8:47:40 PM Mayor Stevens said it goes back to whether this was an economic development project but it's not. It's about Waterstone. If it was an economic development project about Waterstone, he asked if they would they be doing this now to move it forward. He's not sure if they started from scratch right now, they would even come close to doing this kind of thing. He thinks they would say thanks but we're not in a place to do it. He added that the other side is they have this history behind them and this is something they've been supporting. There is a buyer who is here. It is economic development, they have said that, and he wonders if there is a disaster if they don't do it. If they don't do it, he worries that if the Ashton Woods sales go down, this could come along next. You have a sale, someone to work with the process, and they have the opportunity to make this happen, and should they exercise that option. Lastly, they could waiver between these for another session until they get some more assurances but he thinks they ought to make a decision. 8:49:50 PM Mr. Vest replied that would help them. Mayor Stevens said it's hard for them to move forward as much as they'd like to, however, and as much as they're concerned about it, because disaster can happen or this stuff is going to happen, and it is still pretty gray. 8:50:18 PM Mr. Vest said it's not gray for them. Without the SAD, they don't have a path forward or the ability to make a sale to a residential developer. Residential markets are what are out there today and it's where they can make sales. If the office market was hot, they'd be trying to make office sales. They'd be having the same problem with the office sales as they're having with the residential sales. They have some remaining infrastructure that needs to get installed. They have SUPS and a Master Development Plan that requires those things. They understand that and are not trying to get out of any requirement to install what they said they would do. They're asking for the Town to approve a vehicle that puts no financial risk on the Town to allow them to use that vehicle. They're asking for a statutory item that North Carolina said they want to make available and they believe this is a perfect way to use that. It doesn't risk the city's credit; it's not behind it. It is only a remote possibility that it could go badly and it's something they have talked about quite a bit. The data shows about 1.4% of these types of districts ever get into financial trouble. If you talk to investors, they'll take a 98.6% chance of success every time. Stratford thinks it's an extremely low risk especially considering the value to lien ratio they would have on this. It's very favorable and that's why they believe the LGC will approve it because it's financially sound. He would hope that this risk or concern from this Board would have gone away a long time ago. They've not done a very good job if they've not erased that issue for the Board. 8:52:19 PM Mayor Stevens said he's not hearing that is the issue. Mr. Vest replied if the remaining issue is whether or not BOA is going to show up, he has to say he doesn't know. He can tell them there's a whole lot greater chance of them not showing up if they don't have this district and don't move forward with this project in sales to Ashton Woods and installing infrastructure. To them, it will mean they've failed. They failed to put a plan together and to implement it. 8:52:53 PM Commissioner Lloyd read, "The new statutory authority for SADs is set to expire in about nine months, July 1, 2013. The Staff is looking into whether this time limit is likely to be extended or not by the General Assembly." October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 18 of 24 8:53:18 PM Mr. Vest said that is a great point but they still have plenty of time to do this. Commissioner Lloyd said she knows that but she needed to say it. 8:53:39 PM Mr. Hornik said he thought it was okay but to him, it's a matter of the Board saying, forget about BOA, forget about Ashton Woods, and asking what the Board thinks about doing the SAD. If the Board says under no circumstance will it move forward with the SAD, he thinks tonight's a night to say so. If the Board is willing to say it will put off the decision until they get some more information, there's nothing wrong with adopting this resolution. All it does is say they'll keep on plowing forward with the steps that need to be done if we are going to the SAD and they'll just basically defer the final decision about doing the SAD and bonds sale until a later date. 8:54:36 PM Mr. Vest stated that what they're trying to narrow the issues to are the four points which they believe are the four points the Town was concerned about. The resolution is a tool he can now take to the lender and say they got the Town to approve this and we need BOA to do the next step. They all have to make a decision on this but he can't go to the lender and ask them to make a decision when they don't know what the Town's position is and the Town can say the same thing about them. At some point, they've got to draw a line and say this is what we're going to go with, we're okay with the SAD, and although we don't like it, we're okay with it as long as these four things are met. That's his understanding of where the Town Board is and they agree with that. If they vote for that, he will take it to BOA and do his best to get that approved but he can't guarantee they will. 8:55:39 PM Mayor Stevens asked the Board if the four points were the only things they could conceive of. Commissioner Hallman said the only thing missing was the forbearance. Mr. Hornik replied that's what Mr. Jessup was saying. Mr. Vest said they would love to have an iron clad guarantee from BOA that they would never foreclose on the property. The banking industry does not do that. Mr. Hornik stated whether that's in this resolution or not, he's most concerned with them making sure that Stratford understands and the record of this meeting will reflect that this Board is still very, very interested in forbearance. Without forbearance, the Board still may get to the end of the day and say no. Mr. Vest said that's why they've left in total discretion of the Board at any time. 8:56:45 PM Commissioner Hallman asked if they did not make a decision tonight what the timeframe would be. It took BOA ten days to say they're not answering the email. 8:56:59 PM Mr. Hornik said schedule -wise, the next critical thing to getting on the LGC agenda is getting the financials. Mr. Peterson stated that won't happen until November. Mr. Hornik said then they may be able to get on the LGC December or January agenda. If they get on the January agenda, he would expect the soonest they would be able to go would be February or March. Mr. Jessup said if the Town wants to move forward, they will move forward as quickly as they can. They will have a call or meeting with the LGC the first part of next week to say we're back in business and we're pushing this through. They will create a calendar that will take them to a bond sale as quick as they can without regard to the Town's financials. If they're ready to go and all they're waiting on is the audit to be approved, that's great. He does think though with this being the end of October they're not getting on December's agenda. They can get to the January LGC if the LGC Staff is so inclined and have money in the bank by the end of January. They will push that ahead and will be back to the Board with updates, questions about what they want in the documents, if they're going to make it a condition to settle at the closing of the bonds, and if they have the plan for the use of the proceeds that the Board approved and forbearance. What bothered him was the pressure on the Board to continue to say it's going to go ahead which continues to go up so they need to make sure if that's October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 19 of 24 in the deal. He doesn't want to be told to insist on X and at the last minute be told it doesn't matter. That's the timetable but they will be back several times with updates and asking what the Board thinks about this or that. 8:59:41 PM Mr. Vest said that would give them time to work with the lender. The LGC process is not a quick process and could run concurrent with their conversations. Mr. Jessup agreed and said he didn't mean otherwise. 9:00:00 PM Mayor Stevens said he was trying to bring up the different ways this could play out. If they said okay, they'll continue, BOA says yes, and he asked if the sale would go through before the bond sale. Mr. Vest said no. They'll have to happen at the same time. 9:00:21 PM Mr. Jessup stated that in other context, that's not an unusual thing. You just have a bigger table with lots of other things to do with that closing. They will have an agreement in advance with the bank and everyone else concerned that says on X date, this money will go here, this money's going to go here, and it's going to be too late to back out. 9:00:46 PM Mayor Stevens said in one sense, if they decide that's okay, they would be deciding whether they're doing it or not if those conditions are met. Technically they can say no. 9:01:01 PM Mr. Jessup said he would always advocate with the government boards he works with that if they have issues, let's try to put them out there now. They might think of something later on. 9:01:23 PM Mr. Hornik pointed out they do have an escrow agreement that's already drafted as part of the SAP process with Ashton Woods so that infrastructure just has to be updated and signed by the appropriate parties at the appropriate time. That part is taken care of 9:01:53 PM Mr. Peterson said he pulled up the open source general analysis of April 7, 2009, when they first started on this, and the hospital had not been sold. It looked like it was going to happen so there was a question posed and some questions requiring answers if the SAD was pursued. There were a lot of questions to weigh and one was how Hillsborough would be better off in five, ten, twenty years if they do this and they talked about it for a long time. When they first started doing this, they did it because they were desperate. They wanted this project to move forward and it looked like it was the only way for it to do so. They're not desperate anymore. The hospital is coming out of the ground. This is going to be a successful project whether the SAD gets shot down or whether it's going to be a residential development. From an economic development standpoint, doing the SAD lowers the value of the property. They've already lowered the tax value by having the hospital there although it is a great engine to have. From an economic development standpoint, he feels the SAD hurts them. They already have other people looking at property. If Ashton Woods is interested now, the property is going to get more and more desirable as they go along. If Stratford owns it or BOA forecloses it and decides they're going to take the project over, it's going to move forward. His opinion hasn't changed. 9:04:17 PM Commissioner Gering was hoping to have his mind changed but it hasn't been. He doesn't think there's anything that will change it. Commissioner Lloyd agreed and agreed with Mr. Peterson. She said it reinforces it in her mind. 9:05:04 PM Commissioner Hallman said he'd love to know what BOA is going to do but that isn't the driver for their decision. He said his opinion goes back and forth daily but the thing for them all is to be able to sleep at night with their decision. After their last discussion, he tends to say no, it's not worth it, and he hasn't had his mind changed either. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 20 of 24 9:05:49 PM Commissioner Lowen said if they're not going to do it, they're not going to do it, and he hopes there is a plan B and C. He takes that route every single day just so he can see progress. He definitely wants to see Waterstone progress and would like to give the SAD an opportunity to work there. 9:06:59 PM Mack Paul came forward and said they've gotten into the intent and what might happen with legislature. He's worked with a lot of local governments in North Carolina in looking at some of these same issues. The tools that are discussed quite a bit are tax increment, financing, and variations of that. The SAD originated as a tool many years ago. It's not new. It was to pay for infrastructure such as sidewalks and before they made the changes a few years ago to make it more widely available, it was for a ten year term. It didn't require any kind of public purpose test. It was a tool to finance infrastructure but a developer could impose it on themselves as a way to offset some of the costs of the infrastructure. He thinks many people feel it's been a positive evolution for towns and cities to see more mixed use development. Mr. Paul said with that comes a lot more intensive types of infrastructure. In Waterstone, they've seen over $20 million of infrastructure in the ground well before a lot of the development got going. The tool was to build off this idea of a way to allow developers to impose on themselves an assessment to help pay for some of the cost of that infrastructure. Unlike some of these other tools, there are specific public policy purposes that need to be shown when you're taking revenue that would otherwise come into a town and dedicating it for the purpose of that development. Here, the developer is saying he's willing to impose on himself an assessment to help pay for this extensive infrastructure knowing it's going to take years for this development to build out. That's not to say they don't have to come and ask the Town for their support and permission to do it but the reason they've not seen a lot of these occur yet, now that this has become available just in the last couple of years, is because of the downturn. A lot of the larger mixed use developments have not moved forward. This is an exception in seeing the positive demand and interest in Waterstone. It's a real positive that they're here interested in this tool which they're not typically seeing because it is an imposition on them. Mr. Paul felt there was a lot of discussion about a very high test of public purpose. He thinks the intent was to look at this as a tool that a developer could decide if they want to impose it on themselves to help fund some of these very high costs of these mixed use projects. It really comes down to the relationship and coming in midway through it, it seems like there's been a very good partnership between the Town and Stratford in moving this forward. This is something they have laid out as the best vehicle to continue to move forward on a very good clear path and without it no one can say what will ultimately happen. It just becomes very murky. Mr. Paul told Commissioner Gering he knows he is feeling very uneasy about BOA. They've gotten into this discussion by trying to be transparent about why they're seeking it in this case when the statutory purpose is very clear cut. Either you're using it for infrastructure or you're not. He thinks to keep Stratford here in the town moving this thing forward in a positive way this is a good way to do that. Without it, they may have the potential of having BOA much more of an entity they'll have to deal with as they assert control not having Stratford in the driver's seat keeping this project going forward. He hopes they would consider at least giving them the opportunity to answer the questions so that they're moving forward with a decision that was made last year. The only reason they got on a hiatus was because of Ashton Woods and whether or not that negated the need to do the SAD. Based on information they've gotten back, it has not changed the need to do it. It's not the reason to do it, it's a piece of this overall project that the Town has always felt was a great project and he hears they still do think that. They don't see that the conditions have changed that have made it no longer necessary to look at it as a tool. He hopes they will consider this resolution which he thinks still gives the Town clear opportunity to reserve the rights to establish the district and issue the bonds. It's the only way to force the hand of BOA and get the answers he thinks the Board wants. October 22, 2012 Town Board Monthly Workshop Approved: December 10, 2012 Page 21 of 24 9:12:08 PM Mr. Hornik said he took the liberty of preparing an alternative resolution to the one presented. It more formally says no, they're not going to do this. It seems to him that there should be some formality if the Board is going to say no. He shared the resolution he drafted and asked the Board to take a look at it. The Board took a few minutes to review the resolution. Mr. Hornik said if no is no, he thinks this tells them that that is what the Board means. 9:14:16 PM Commissioner Hallman stated that the resolution is what he heard. 9:14:20 PM Mayor Stevens thanked everyone for their remarks. He said it is murky and thinks from the Town's point of view, it feels like it may be a little bit better or a little bit worse if they go forward with the SAD. He also understands Stratford's position as well and that it could be a lot worse or a lot better for them. He thinks they have to look at this from the Town's point of view and he would expect Stratford to do that too. It may have a sale of the entire project or the company be sold tomorrow and while they have a good working relationship, they would still make whatever business decision they needed to make. He thinks they've had a positive relationship and the Town would like to see Waterstone move forward. If they say no, then plan C or D or whatever could go forward with lots of clarity. Bad news is sometimes better than good news or uncertainty. 9:16:01 PM Commissioner Hallman moved to approve the alternate resolution as put forth by the Town Attorney to not move forward with the SAD. Commissioner Lloyd seconded the motion. Upon a vote of 3 -1, with a nay vote by Commissioner Lowen, the motion was carried. 8. Other 9:16:51 PM There were none. 9:16:56 PM Commissioner Hallman moved to go into Closed Session. Commissioner Gering seconded the motion. Upon a unanimous vote of 4 -0, the Board moved into Closed Session. 9. Closed Session a. To consult with town attorney and discuss litigation regarding the matter of the Taylor -Hall property v. Town of Hillsborough at the intersection of Churton Street and Margaret Lane 10. Adjourn Upon returning to Open Session and upon a motion by Commissioner Lowen, seconded by Commissioner Lloyd, the Board moved to adjourn at approximately 9:30 p.m. by a vote of 4 -0. The motion was declared passed. Respectfully submitted, Donna F. 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