Friday, August 19, 2022

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Burlington city council ponders how to spend $10.5 million surplus

An unexpected surplus in Burlington’s current annual budget has posed what may seem like a rather enviable dilemma for the city’s elected officials.

During a regularly-scheduled work session on Monday, Burlington’s city council spent nearly an hour contemplating how best to expend this $10.5 million excess, which is expected to still be available when the city wraps up the current financial cycle on June 30.

David Cheek, the city’s interim manager, attributed this eight-figure surplus to the $11.5 million in federal pandemic relief that has poured into the city’s municipal coffers over the course of the year. He added that the city ultimately plowed $10.5 million of this haul into public safety salaries, which were already part of the current annual budget – and which created a corresponding surplus in the city’s general fund.

Cheek went on to encourage the council to split up this excess among three different initiatives. He suggested using $3 million to create a funding pool for economic development projects, allocating another $4.5 million for a proposed expansion of the Paramount Theater, and earmarking the final $3 million for upgrades at the Burlington-Alamance Airport.

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Cheek told the council that the city’s administrators gleaned these three items from a whole galaxy of potential outlays based on a short list of guiding principles that they decided to use for their recommendations.

“The reason we started doing this is that we were looking at a list of projects that totaled $185 million,” he said as he presented the three recommendations during the council’s latest monthly work session on Monday, “We were a little bit stuck, and we decided to come up with some principles to see where that took us.

“This was intended or framed as a starting point for discussion,” the interim city manager added.

”You may not like these ideas. You may like part of them. We were just trying to get the conversation started.”

Cheek told the council that, in making their selections, the city’s administrators tried to identify allocations that would have a “transformative” impact on the city, promised some sort of payout on the city’s investment, and that the city could leverage to secure other potential sources of funds.

Cheek told the council that the prospective creation of an economic development fund ticked all three of these boxes for the city’s administrators.

“It is a concept that would send a message to investors that Burlington is serious about bringing development in,” he explained. “You might attract new and expanding industry, which creates jobs, which creates tax base…They’re probably going to be paying property taxes here for a very long time…It would produce sales tax from the construction equipment…And leverage – private developers are investing a lot of money in your city when they decide to come here.”

Another staff consensus was to set $4.5 million aside for the proposed expansion of the Paramount Theater – a project that the council has previously agreed to pursue, although on a more modest scale.

“This project corrects a lot of operational and functional issues with the current theater operations,” the interim city manager said. “It also allows the possibility for a lot of other events. It keeps that property active and draws people downtown, which gets into why it’s transformative.”

Cheek also urged the council to use the remaining $3 million to help finance a newly-approved master plan for the Burlington-Alamance Airport. The interim manager insisted that this magnum opus of the airport’s governing authority could also be a particularly lucrative opportunity for the city’s municipal government.

“This is hot off the presses,” he added of the plan, which the airport authority approved at its monthly meeting in May. “It’s their blueprint or guide for the next phase of growth, and it allows for more manufacturing and aerospace corporations to come in…with an improved landing system, longer runway, bigger hangars, and all kinds of things that can attract these kinds of clients.”

Cheek added that the airport’s proposed expansion is especially well poised to take advantage of two massive manufacturing plants that Toyota’s electric car division and Vietnamese-based Vinfast Automotive have announced in Randolph and Chatham counties.
“This airport is the closest regional airport to them,” he said.

Peter Bishop, the city’s economic development director, told the council that the airport’s proposed upgrades would also make the most of a new trend in aviation toward the “electrification” of aircraft.

“As [automotive] vehicles are moving away from internal combustion engines,” he added, “aircraft are moving in the same direction, and the list is long and varied of companies that are looking for locations at airports that can support their research, development, and manufacturing of these different systems.”

Dan Danieley, the executive director of the Burlington-Alamance Airport Authority, was also on hand to provide some additional insight into the airport’s new master plan.

Danieley assured the council that any funds it contributes to this plan would be well particularly spent thanks to the 80 and 90 percent matches that the federal government tacks on to the airport’s locally-generated investments. He added that the city’s elected leaders won’t have to wait long at all to get on board with some of these potentially transformative projects.

“We’re looking at some projects to start in the next 12 months,” he added. “The enhancement of the runway – the lengthening of it [to 7,000 feet]– we’re just wrapping up the engineering and design of it right now.”

Aside from the three recommendations, Cheek touched on some of the other items that the city’s administrators considered as potential candidates for the surplus funds. He noted that these projects included a prospective new headquarters for the police department, a rec center in the western part of the city, and other big-ticket initiatives that the council has previously mulled. Cheek added, however, that these various ventures didn’t make the cut when they were assessed under the staff’s aforementioned guidelines.

The council, for its part, proved more than just a passive receptacle for Cheek’s recommended expenditures.

During Monday’s work session, the five-member group expressed some reservations about the criteria that the interim manager had used to make his selections. In particular, Burlington’s mayor Jim Butler suggested that the council should give serious consideration to projects in so-called “opportunity zones” – a federal designation for less affluent areas that applies to portions of east Burlington.

The mayor’s proposal on this point received a distinctly enthusiastic response from councilmember Kathy Hykes.

“That’s a good idea,” she told the rest of the council. “When I thought about this money, I thought it should be used to help the people who need it the most.”

Meanwhile, Harold Owen, the city’s mayor pro tem, pointed to the large number of potential infrastructure projects that the city has previously entertained to the south of I-85/40.

Butler also second-guessed Cheek’s proposal to increase the scale of the Paramount Theater’s expansion. He suggested, instead, that the council should stick to its original budget for that project and divert the remainder of the proposed $4.5 million allocation into the aforementioned economic development fund.

Yet, when all was said and done, the one thing that the council didn’t dispute was Cheek’s entreaties to make the most of the city’s budget surplus while the funds are available.
“This truly is a windfall,” Butler said of this financial boon, “and we’re not going to see it again.”


Read the newspaper’s editorial page opinion on the council’s dilemma here: https://alamancenews.com/burlington-looking-to-fritter-away-surplus-that-should-go-to-taxpayers/

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