Voters approved $39.6 million bond referendum, but now ACC officials say that won’t cover cost of the projects they had planned
Officials with Alamance Community College have presented the county’s elected leaders with some stark choices that, on the one hand, would allow them to either fully-fund several much-publicized construction projects or, on the other, force them to remain within the original cost ceiling for these endeavors.
This dilemma, which ACC’s representatives posed to the county’s board of commissioners on Monday, concerns a package of construction and renovation work that the county’s voters agreed to fund in 2018 through the sale of $39.6 million in revenue bonds.
The commissioners have, so far, pressed the college to keep the total cost of these projects within the ceiling that the voters had set when they signed off on the revenue bonds four years ago.
The commissioners wouldn’t even budge from this position last year when the rising cost of construction added another $2.4 million to the anticipated expense of the bond package’s two flagship projects – a student services center and a biotechnology center of excellence. Although commissioners allowed ACC to increase the combined budget for these projects from $24.8 million to nearly $26.2 million, they nevertheless insisted that the college make up the difference by scaling back their plans for other bond-funded ventures.
But the uncompromising stance of the county’s governing board didn’t prevent ACC’s top brass from making another pass at the commissioners on behalf of a third major project – an emergency services training center that they plan to set up in the town of Green Level.
“One of the top things we would lose [if ACC is forced to cut back the scale of the project due to insufficient funds] is the firing range. And without a firing range, we would not have a training center.”
– ACC president Dr. Algie Gatewood
During a regularly-scheduled meeting on Monday, the college’s president, Algie Gatewood, told the commissioners that the soaring cost of construction and labor has driven up the training center’s estimated expense from $10.4 million to $12.9 million. Gatewood added that, without an additional $2.5 million for the training center, the college would have to substantially roll back its plans for this facility.
“One of the top things we would lose is the firing range,” he added. “And without a firing range, we would not have a training center.”
Gatewood went on to yield the floor to other officials who tried to persuade the commissioners to take the steps necessary to salvage the training center. The center’s boosters included Alamance County’s sheriff Terry Johnson, who has been intimately involved in the development of this multi-agency project.
“If we’re going to build this thing, let’s build what we need.”
– Sheriff Terry Johnson
“If we’re going to build this thing, let’s build what we need,” Johnson told the county’s elected leaders on Monday.
The commissioners also heard a plaintive plea from Green Level’s mayor Sandra McCollum, who stressed just how important the proposed training center would be to the small, historically black community that she represents.
“The training center will provide a focus point…and this will set goals and planning for businesses in Green Level. We want to proud of people saying that in this small town there is a wonderful training center for Alamance Community College.” – Green Level mayor Sandra McCollum
“The training center will provide a focus point…and this will set goals and planning for businesses in Green Level,” McCollum declared. “We want to proud of people saying that in this small town there is a wonderful training center for Alamance Community College.”
Yet, ACC’s representatives weren’t content to just provoke an emotional response from the commissioners. They also came armed with a prospective solution, which they proceeded to unload before the county’s governing board.
C.D. Krepps, the college’s finance director, went on to inform the commissioners that ACC has two potential sources of revenue to cover the increased construction costs of its projects. One source is a surplus of roughly $3.9 million that the college has in its capital reserves over and above the amount required to fund its annual, pay-as-you-go maintenance needs.
Also on the table is some $3.1 million additional bond revenue that the county obtained last year when it issued the first chunk of ACC’s $39.6 million bond package.
Thanks to historically low-interest rates, the county was able to issue this bond “premium” on top of the $20.66 million in principal that it was originally slated to get during last year’s bond issue. The commissioners agreed to take this premium in order to cover the cost increases for biotech and student services center. They did so, however, with the understanding that they would scale back the college’s next bond issue, which is scheduled to take place in September, from its original sum of $18.935 million to $15.84 million.
Krepps told the commissioners that the last year’s bond premium could be used to fill the gaps in the community college’s larger construction projects if the county agrees to revert to second bond issue to its original level. The $3.1 million in bond premium would, then, really be extra revenue for the college’s construction projects. Krepps added that these funds could ultimately be combined with $2.4 million from the college’s capital reserves in order to fully fund the proposed training center as well as the smaller projects that were part of the bond package.
As an alternative to the proposed use of the bond premium, Krepps said that the college could draw $2.5 million from its capital reserves in order to plug the shortfall in the training center’s budget.
The college’s finance director also gave the commissioners a third option – to withhold both of sources of revenue and force ACC to live within the original constraints of the bond package. As a result, the college would have a mere $500,000 left over to fund the smaller, miscellaneous projects that were initially part of the package.
Gatewood conceded that, under the third option, the community college would be forced to dispense with many of those smaller projects in order to bring its larger endeavors to fruition.
“If we go with scenario three,” he told the commissioners, “we would leave off [a proposed expansion of the] nursing program, the upgrade to the main building, we would leave off the library, and we would leave off the satellite centers – both east and west.”
Gatewood didn’t ask the commissioners to select one of the finance director’s three options before they adjourned their meeting on Monday. He instead told them to think through their choices and promised to return when they’re ready to render a final decision.
There were nevertheless hints that at least some of the commissioners were already leaning in the direction where Gatewood intended to steer them.
“I hate to have us keep shortchanging ourselves to the degree that we don’t meet the future needs of the residents of Alamance County.”
– Alamance County commissioner vice chairman Steve Carter
Steve Carter, the vice chairman of Alamance County’s commissioners, voiced what seemed like a fairly clear endorsement of the community college’s goals for the training center.
“I hate to have us keep shortchanging ourselves to the degree that we don’t meet the future needs of the residents of Alamance County,” Carter told his fellow commissioners.
Meanwhile, Gatewood’s predicament also seemed to elicit some sympathy from commissioner Bill Lashley, who assured his colleagues that the community college isn’t to blame for the skyrocketing cost of its projects.
“I think you got stuck between a rock and a hard spot, and when you’re building, inflation has you over a barrel.”
– Alamance County commissioner Bill Lashley
“COVID didn’t start inflation; we did,” the commissioner said before addressing Gatewood directly. “I think you got stuck between a rock and a hard spot, and when you’re building, inflation has you over a barrel.”
