A piece of property that LabCorp owns off of Elon’s South Williamson Avenue has wound up in the sights of Elon’s town council as its members cast about for a possible place to relocate their town hall and municipal police station.
The council formally directed Elon’s town manager to make overtures to the biomedical testing firm regarding this parcel following an hour-long closed session that capped off a regularly-scheduled meeting on Monday.
Under North Carolina’s Open Meetings Law, public bodies like Elon’s town council are permitted to go behind closed doors to consider potential property purchases. This exemption to the law’s general mandate for openness nevertheless requires the public body to disclose the location and owner of the real estate up for discussion as well as the proposed public purpose the purchase would serve.
You can site city hall
In compliance with this requirement, Monti Allison, Elon’s mayor pro tem, identified the subject of Monday’s closed session as a parcel at 112 Orange Drive that belongs to Roche Biomedical – one of LabCorp’s corporate antecedents which remains the title holder to much of the company’s land holdings.
Allison went on to note that this property would potentially serve as a new site for Elon’s townhall and police headquarters, which are currently squeezed into a 7,000 square-foot building at the intersection of Williamson and Trollinger avenues. He also observed that this alternate location would provide the town with extra space for public meetings, staff training, and parking.
The property which the council has zeroed in on for these purposes is situated at the southeast corner of South Williamson Street and Orange Drive – less than a half mile away from the current location of Elon’s town hall.
[Story continues below photo.]
According to Alamance County’s property records, this 6-acre parcel is home to a 49-year-old building with roughly 56,000 square feet of floor space. The building itself appears to be occupied at the moment, although its grounds also include a capacious, park-like clearing at the intersection with Williamson Avenue whose only permanent structure appears to be a LabCorp ground sign.
The county’s tax office currently lists the assessed value of the building and the accompanying grounds at $1,852,803.
Money matters
The council went on to direct Elon’s town manager Richard Roedner to open negotiations with LabCorp about the possible purchase of this parcel. Among the items to be haggled over in these negotiations will presumably be the sale price of the property – although the assessed tax value may very well be the starting point for this back-and-forth between the town and the medical testing behemoth.
Another issue that lies entirely within the council’s purview is the means by which the town could potentially come up with the revenue necessary to acquire this site and tailor it to its own needs.
At this point, the town’s leaders haven’t delved into the payment options for this particular project, whose potential cost remains a matter of guesswork. The council has nevertheless explored this same question on a more general level ever since its members emerged from a recent budget retreat with a list of capital projects worth some $46 million.
At the time of Elon’s latest municipal audit, the town boasted nearly $12 million in “unreserved,” or readily available, savings in its general fund. Since the audit’s completion, the town has set aside $2 million of this nest egg to pay for a new firetruck – which still leaves the town with roughly a year’s worth of operating expenditures in its municipal coffers.
The town’s leaders have nevertheless been reluctant to break open the proverbial piggybank to bankroll its list of capital projects. Instead – or at least in addition to – the use of these savings, its members have increasingly flirted with the idea of taking on debt as a way to fund its capital needs over the long term.
Debt and loving it
During Monday’s council meeting, Mitch Brigulio, a consultant with Davenport Public Finance, took the town’s leaders on an hour-long deep dive into the various options for debt financing that are available to cities and towns.
Apparently unrelated to the potential real estate transaction with LabCorp, Brigulio’s report was instead billed as a follow up to some sidewalk and recreation projects that the council bandied around at its budget retreat. Roedner conceded that the sheer scale of the projects has forced the town’s administrators to look beyond their immediate ken for ways to cover their cost.
The issue of borrowing has come up as one way to manage it,” the town manager added as a prelude to Brigulio’s overview. “We know we have a significant capacity to borrow…what we invited Mitch to discuss tonight is what we have the capacity to pay for.”
The consultant, for his part, informed the town’s leaders that any form of debt financing will require a fair amount of prep work to meet the criteria set by a N.C. Local Government Commission – an arm of the state treasurer’s office that oversees city and county finances.
“Regardless of how you borrow money,” Brigulio went on to explain, “you’re going to have to go to the LGC…They – the commission – will have to make certain findings as part of the approval…One is that the borrowing must be adequate but not excessive…So, they want to make sure you have a cost in hand…They want to make sure you can manage the debt load you’re taking on, and that you can pay for the debt load.”
Bonds away?
Brigulio went on to describe several options for borrowing money that municipalities have at their disposal. He noted that one perennially popular method has been to issue general obligation bonds.
The consultant stressed that these bonds, which are based on local government’s taxing authority, tend to have lower interest payments than other forms of debt financing. They nevertheless require voter approval – which he added has been forthcoming in 92 of the 101 cases where they’ve been floated by since 2020.
Brigulio went on to caution that five of the nine referendums that failed during this period took place in the fall of 2024. He added, however, that in Elon’s case, the possibility of growing public antipathy to bonds isn’t even the most immediate obstacle to a referendum in the current calendar year.
“The downside of this is the timing,” he added. “It can only take place in a townwide election…and after the referendum is approved, there’s an additional process you have to go through before you can issue the bonds.”
Brigulio observed that, in order to proceed with a bond referendum this fall, the council would need to have a roster of potential projects ready for the LGC’s review later this spring. He added that town may have until May to get all of its ducks in a row – a timetable that didn’t exactly appeal to Elon’s mayor Emily Sharpe.
“As much as I’d love to see this in November of this year,” Sharpe told the rest of the council, “I see this as incredibly rushed.”
Loan survivor
Brigulio said that, as in lieu of general obligation bonds, some municipalities have availed themselves of “special” or “limited” obligation bonds, which are secured by revenue streams other than a local government’s general taxing authority.
The consultant added that the process involved in this financing method can be particularly complex. Although he conceded that a voter referendum isn’t part of the process, he stressed that public hearings are – and in some cases, it involves other complications like the creation of a special tax district.
Brigulio nevertheless noted that, when it comes to interest rates, limited obligation bonds currently exceed their more generalized kin by a mere five “basis points” – which amounts to .0005 or 5/100th of a percent.
The consultant insisted that town’s interest payments wouldn’t be all that much greater if council were to obtain a direct bank loan as an alternative to some form of municipal bond. He went on to acknowledge that bank loans involve far fewer procedural hurdles and are therefore more suitable for projects with price points of just a few million dollars.
“If you want to do a park project for $2 million,” he added, “there are banks that will do that for not much difference in cost.”
Brigulio proceeded to present the council with some cost estimates for debts ranging from $2 million to $4 million with repayment terms of 10, 15, and 20 years. He added that, based on a theoretical interest rate of 5 percent, the town would need the equivalent of 3.10 cents on its property tax rate to cover the first annual payment on a $2 million debt with a 10-year repayment term. The consultant went on to estimate an introductory payment equal to 2.07 cents for the same principal amount over a 20-year term. Meanwhile, Brigulio said that, for a sum of $4 million, the first-year payment would range from 6.2 to 4.13 cents as the repayment term is extended from 10 to 20 years.
Brigulio also pointed out that some municipalities make regular annual payments into dedicated accounts that they’ve set up to cover their debt service. He added that these specialized debt service funds receive a consistent share of the municipality’s property tax revenues, allowing its leaders to borrow more money as old debts are paid off without any fluctuations in their property tax rates.
Brigulio added that these dedicated funds have allowed municipalities like Chapel Hill to present their voters with multimillion dollar bond packages that have no ostensible impact on their municipal tax rates.
“So, when you do a referendum,” he added, “it may be that there’s no tax requirement.”
