Alamance County’s board of commissioners has agreed to front Alamance Community College just over $2.4 million to allow it to break ground on two bond-subsidized projects that have already burst their original budgets.
The board of commissioners unanimously approved this seven-figure advance on Monday to permit ACC to proceed with the construction of a Biotechnology Center of Excellence and a new student services building – both of which were to be funded by a $39.6 million bond package that area voters approved in 2018.
In theory, the community college had all of the money it needed to embark on these projects after the county had issued the first $20.7 million of the aforementioned bond package in April of this year. It wasn’t long, however, before ACC’s administrators began to casting about for more revenue as labor shortages and supply chain disruptions drove up the anticipated costs of these buildings.
Last week, the community college’s board of trustees decided to approach the county commissioners for some additional funds in order to construct these facilities to more or less the same standards that were pitched to the public in 2018.
Algie Gatewood, the president of Alamance Community College, insisted that he and his colleagues had exhausted every reasonable, cost-cutting alternative when he formally presented the trustee’s request to the commissioners during their latest regularly-scheduled meeting on Monday.
“It hurts me to be here tonight making this request,” Gatewood told the county’s governing board during that evening’s five-hour gathering. “From the very beginning, I have insisted that the staff and, of course myself, work within the budget that we have for the biotechnology center of excellence and the student services building…We had everything down to a ‘t,’ as far as the price of these buildings, prior COVID-19…But when we were designing these buildings, we were at a time when the market volatility was nothing like it is now.”
Gatewood ultimately asked the commissioners to spare an extra $1,900,430 to augment the biotech center’s previous construction budget of $17.56 million. He also sought another $503,500 for the student services building, which had formerly been expected to cost $6.2 million. All told, these funds fell short of the $3.1 million that the trustees had agreed to seek from the commissioners last week, although they were sufficient to give the county’s governing board some pause before its members approved the request.
In any event, Gatewood assured the commissioners that he and his colleagues had fought mightily to keep these two projects within their predetermined financial limits. The community college’s president went on to list all of the features that he said were cut from the plans for these projects in order to limit their overall cost.
Gatewood said that, in the case of the biotech center, he and his colleagues have reduced the size of the facility’s footprint, turned the formerly furnished third floor into a mere “shell space,” and replaced a multi-story parking deck with tiered ground-level parking. He said that the college had also scaled back its plans for the building’s decorative “finishes” and nixed one of its two elevators, leaving only a shaft to allow for the lift’s future installation.
The college’s president also reminded the commissioners that he and his colleagues had previously agreed to raise private donations to cover the biotech center’s moveable furnishings.
“[The proposed cost of these furnishings] was estimated at $5 million,” he added, “and we are making really good progress on that. We’ve raised a couple of million dollars, and we will raise the remainder of this money.”
Gatewood enumerated another $4 million in cuts that he said the community college had made to its plans for the student services building. Among other things, he said that the building’s footprint has been pared down, while the amount of steel slated for the building’s floor has, likewise, been trimmed – which Gatewood acknowledged may lead to some unsettling moments if people race through the facility when it’s complete.
“If you walk more than so many feet per second you may feel a little vibration,” he explained. “But it meets code.”
The commissioners, for their part, were generally sympathetic to the community college’s predicament. Commissioner Pam Thompson recalled that ACC’s leaders had pledged to develop high-quality facilities with the proceeds of the bond package when they presented it to the general public. Meanwhile, Steve Carter, the vice chairman of Alamance County’s commissioners, offered some additional insight into the community college’s angst based on his role as the commissioners’ designated representative on ACC’s board of trustees.
“They have been pulling their hair out trying to figure out what they’re going to do,” Carter said as he joined Monday’s discussion remotely using the Zoom teleconferencing platform.
The commissioners eventually signed off on Gatewood’s request for a $2.4 million advance on the condition that the money to reimburse these funds comes from a source other than the “bond premium” on ACC’s next bond issue.
According to the county’s finance department, the county will have the opportunity tack another $3 million onto the $18.9 million in bonds that remains to be issued from ACC’s bond package. Thanks to historically low interest rates, the county can shoulder this additional debt without exceeding the annual debt payments that the finance department had forecast before the bonds were approved in 2018.
The commissioners had previously declined this so-called bond premium when they signed off on ACC’s first bond issue in April. They were no less inclined to accept the additional debt on Monday when, at the behest of commissioner Craig Turner, they prohibited the reimbursement of ACC’s requested advance using the premium that they could conceivably borrow when they issue the remaining $18.9 million of ACC’s bond package in September of 2022.
As an alternative to the use of bond premium, county staff members have proposed to recoup the community college’s advance from either the pool of capital reserves that the county maintains for itself, ACC, and the school system or from the potential cuts that ACC makes to the projects which it plans to undertake with the proceeds from its next bond issue. Gatewood conceded that he and his colleagues plan to be “incredibly innovative” with the construction budget for the largest of these projects – a proposed emergency services training center whose original cost was expected to consume about $10 million of the $18.9 million in revenue.
The commissioners nevertheless agreed to approve the community college’s requested advance without any delay – a stipulation which Gatewood insisted will be the key to prevent any additional cost increases in ACC’s first bond-subsidized projects.
Gatewood argued that the college needs to move forward on these two endeavors as quickly possible in order to lock in the steel prices that it had previously negotiated. He added that the college’s board of trustees will have to hold an emergency meeting later this week to avail itself of this guaranteed maximum rate. In the meantime, he said that the contractor charged with the biotech center’s construction is otherwise on track to begin work on the facility next month.
“So, this is time sensitive,” he told the commissioners. “We need to move now, or it will cost us more…[but] no pressure.”
The final vote was unanimous.
