Tuesday, December 6, 2022

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Council approves incentives for spec building amid calls from publisher for more transparency

Burlington’s city council has extended a $400,000 incentives package to a small development firm that plans to construct a speculative industrial building along Whites Kennel Road.

During a regularly-scheduled meeting on Tuesday, the council voted 5-to-0 in favor of this six-figure inducement, which comprises up to $250,000 in funds for site preparations as well as the waiver of another $150,000 in the municipality’s planning and development fees.

In exchange for this offer, the project’s would-be developer has agreed to erect a 100,000-square-foot facility with an anticipated tax value of $12 million in the midst of an already-burgeoning industrial zone on the city’s south side.

Despite the unanimous support that it received from the council, the proposed subsidy for the new spec building didn’t go entirely unchallenged when it came up for consideration on Tuesday. Particularly questioning of the proposed largesse was Tom Boney Jr., the publisher and editor of The Alamance News, who also objected more generally to the city’s lack of transparency with requests for corporate incentives.

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Boney had raised similar concerns that evening about another incentives package that also appeared on the council’s agenda. In that case, the council was being asked to consider an even larger outlay on behalf of a locally-based company, whose name was thinly disguised by a codename in all of the materials that the city had released to the public. Although Boney easily identified this mystery suitor as Alamance Foods, the council decided to postpone its hearing on the company’s request in order to perpetuate the illusion of its anonymity.

 

WKR Burlington
There wasn’t nearly as much symbolic secrecy over the other incentives request that appeared on the council’s agenda.

Although identified in the accompanying documents as “Project WKR Burlington,” this nom de guerre turned out to be the actual name of the limited liability corporation that plans to develop the spec building along Whites Kennel Road. The company’s principals were also physically present when the council reviewed their request, while Peter Bishop, the city’s economic development director, provided a fair amount of detail about the spec building before the council approved the proposed incentives.

During his presentation, Bishop acknowledged that WKR’s project is a bit of departure from the other corporate ventures that the city has subsidized in the past.

“This project does represent a speculative building,” the city’s chief economic developer explained. “It does not involve job creation or personal property investment. That is going to be the responsibility of a future tenant, which we will work in partnership with the developer to recruit…and we feel very confident that we’ll be able to get a project in this building very soon.”

Bishop added that what WKR envisions is a versatile, 100,000-square-foot facility that he insisted “could work for a lot of prospective tenants.” He described the building itself as “a tilt up concrete facility with a steel frame and a flat roof.” Bishop also stressed that the building’s main entrance will feature at least 30 feet of clearance to accommodate “rack stack storage,” along with a variety of other potential industrial uses.

“This would be a high clear-height, ready-to-occupy industrial space,” he went on to emphasize “If you look at our market place, there aren’t a lot of those there, and in the last two years, every available building has been sold, leased or occupied by a business so there isn’t a lot of product there.”

Bishop also called the council’s attention to this building’s enviable location along Whites Kennel Road. Sandwiched between a Sheetz distribution center and the tractor purveyor Quality Equipment, the spec building’s 12.6-acre site is also a mere hammer’s throw from a plant that the sterilization specialist SteriTek has in the works. The city’s economic developer didn’t mention that both Sheetz and SteriTek had agreed to build their respective facilities after they had obtained financial commitments from the city, along with the promise of additional incentives from the city and state.

Bishop insisted that the city’s proposed incentives for WKR have been “scaled” down to reflect the project’s speculative nature as well as the absence of any employment numbers. He added that the package’s proposed sum of $400,000 is based on a generous assessment of the building’s potential tax value. Bishop claimed that the city would be able to recoup its entire investment within five years based on a tax revenue of $72,000 to $73,000 a year that $12 million building would generate.

“After the fifth year, doing some multiplication, it would get you past $400,000,” he added, apparently overlooking the fact that 5 times $73,000 comes to $365,000, short of the total he suggested.

“I get excited about Burlington because I live here. The reason we chose Burlington is because we wanted to invest where I live, and I get excited that the community wants to invest in itself…We are bullish on Burlington. I want to do business and provide opportunity where I live.”

– WKR partner Brian Denisar

“The question that I have is why would the city involve itself in this project and no other?  I don’t understand why the city would have any particular interest in investing in this rather than just letting the private enterprise invest in it, and if it’s a good project…they’d be able to rent it out quite quickly.”

Alamance News publisher Tom Boney, Jr.

Bishop’s enthusiasm for this project was echoed by Brian Denisar, who operates WKR along with his business partner Don Comer.

Don Comer and Brian Denisar

“I get excited about Burlington because I live here,” Denisar informed the council before it approved his request. “The reason we chose Burlington is because we wanted to invest where I live, and I get excited that the community wants to invest in itself…We are bullish on Burlington. I want to do business and provide opportunity where I live.”

Before the council voted on Denisar’s proposed subsidy, its members heard a few caveats from the publisher of The Alamance News.

“The question that I have is why would the city involve itself in this project and no other?” Boney inquired when the council opened the floor to the public. “I don’t understand why the city would have any particular interest in investing in this rather than just letting the private enterprise invest in it, and if it’s a good project…they’d be able to rent it out quite quickly.”

WKR’s project would be sandwiched between an existing distribution center for Sheetz and a Quality Equipment franchise.

But the prospect of using public funds to support this project didn’t raise any scruples for councilmember Kathy Hykes, who made the motion to approve WKR’s request for incentives.

“We’ve thought about this a lot, and we know this is something different for us,” Hykes acknowledged before the group’s 5-to-0 decision. “But we feel it’s investing in our community…I understand the points of view that have been raised, but I think we’re doing the right thing here.”

 

Project ‘Freeze Pop’ put on ice
Boney’s concerns seemed to get more traction with the council when its members addressed the other incentives request on their agenda.

Dubbed “Project Freeze Pop,” this venture concerns the potential 200,000 square-foot expansion of an existing industrial facility at 1136 Cedar Crest Drive (The building’s address is technically listed as 1040 Cedar Crest Drive). The owner of this facility, which is never identified in the accompanying documents, apparently expects to add $42 million to the plant’s tax value with the expansion – of which, $22 million would come from the industrial equipment needed to roll out several new product lines. The company also expects to add 140 new employees to staff the expanded facility, which is predicted to be up and running within three years of its groundbreaking.

In return for a commitment to pursue this expansion, the facility’s owner has asked the city for a package of subsidies worth up to $730,000. This sum would include $630,000 in cash – to be paid out in five annual installments of $126,000 each – as well as the waiver of $100,000 in planning and development fees. The company has also asked the city to sponsor an application for a building reuse grant from the N.C. Department of Commerce that could be worth another $500,000.

Prior to the council’s regularly-scheduled meeting on Tuesday, The Alamance News had contacted the city to confirm the identities of the two companies that would be seeking incentives that evening. In regard to the aforementioned spec building, Burlington’s city manager Craig Honeycutt conceded that the codename “WKR Burlington” was also the actual appellation of its would-be developer. Honeycutt nevertheless hesitated to divulge the other suitor’s identity, and he ultimately informed the newspaper that the company’s request would be pulled from Tuesday’s agenda to avoid its premature disclosure.

Honeycutt went on to explain the situation in more detail when the company’s request came up for a public hearing at the council’s meeting on Tuesday.

“We thought that we would be able to release the name of the company instead of saying ‘Project Freeze Pop,’” the city manager informed the council. “However, the company is still going through the state incentives process, and they’re unwilling to release the name of the company.”

Honeycutt added that the company expects a “resolution by the end of the year, although he was reluctant to have the council carry over the scheduled hearing to any particular date.
The procedural acrobatics that the city manager used to preserve this company’s anonymity seemed rather bizarre to this newspaper’s publisher.

“It’s fairly obvious,” Boney said as he addressed the council that evening, “’Project Freeze Pop’ is a reference to the number one product of one of our home-grown companies – Alamance Foods.”

Boney also observed that the project’s address as it appeared in the publicly-available documents matches the location of a 500,000-square-foot facility which Alamance Foods currently operates along Cedar Crest Road.

In fact, Alamance Foods had approached Burlington’s leaders in 2016 with an incentives request for the construction of this same massive plant. The council ultimately pledged to give the company $320,000 over five years toward the $16 million project, which also received the promise of a comparable sum from Alamance County’s board of commissioners.

According to the city, Alamance Foods has met or exceeded all of the terms in this 6 1/2 year old incentives agreement. As a result, the company has received four of five proffered payments, which were increased from $64,000 to $65,774.30 apiece to reflect the facility’s slightly higher than expected tax value.

Aside from scolding the city for its pointless secrecy over this company’s latest request for incentives, Boney also raised some more general concerns about the disclosure of information about the city’s proposed corporate subsidies.

Alamance News publisher Tom Boney, Jr.

“I recognize that there is an inherent tension between our newspaper wanting to know everything right away all the time…and the economic developer and the city’s desire to keep everything top secret until the last possible moment. But I would suggest that there should be some middle ground that serves both the city administration’s and the public’s general interests. In my opinion, you need a different procedure than one which amounts to ambushing the public at a hearing like this tonight.” – Alamance News publisher Tom Boney, Jr.

“I recognize that there is an inherent tension between our newspaper wanting to know everything right away all the time…and the economic developer and the city’s desire to keep everything top secret until the last possible moment,” the newspaper’s publisher added. “But I would suggest that there should be some middle ground that serves both the city administration’s and the public’s general interests. In my opinion, you need a different procedure than one which amounts to ambushing the public at a hearing like this tonight.”

Boney went on to recommend a policy similar to one that’s currently used by Alamance County’s commissioners – portions of which were originally implemented under former county manager Craig Honeycutt, who now serves as the city manager for Burlington. The county’s policy demands the identification of any company seeking incentives before the board of commissioners sets a date for an incentives-related hearing – usually two weeks in advance. Then, a week before the hearing takes place, the county releases the location, potential tax value, and anticipated employment figures for the company’s project, along with the particulars of the county’s proposed incentives package.

Although the council took no action on Boney’s suggestion, his call for the timely disclosure of public information did not go unnoticed by Burlington’s mayor Jim Butler.

“We greatly appreciate the stewardship of our press,” Butler told the newspaper’s publisher that evening. “As long as I’ve been a member of this council, I’ve been extremely proud of the fact that we do attempt to be transparent in everything we do…Economic development is an extremely sensitive matter when you’re dealing with the state, when you’re dealing with taxpayers, and you’re dealing with the businesses requesting these incentives…It’s a delicate balancing act, and your words do not fall on deaf ears.”

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