Friday, May 22, 2015

Property rights underlying issues at Davidson Town Hall

Davidson has a well earned reputation for being a well planned town.  The town regularly receives awards and recognition for its efforts in promoting walkability, the protecting  open space, and preserving its Main Street area.

The most ardent supporters of how Davidson does things are fond of saying “Davidson didn't happen by accident.”

However, there is a flip side to this approach that can turn into something that often looks less than welcoming.  There is an undercurrent through many town decisions on planning and development that often looks like infringement of property rights.

Take for example the onerous deed restrictions currently required by the town’s affordable housing ordinance.  Currently, the town requires buyers in the program to agree to 99 year deed restrictions that limit the price they can sell a home – regardless of what the market can bare.  That may seem reasonable to some because it's a restriction agreed to upon purchase.

On the flip side, having such long deed restrictions allows the town to maintain a level of control over the property for what is effectively the life of the building – probably longer.  One outcome of this is that buyers are limited in what they can do to actually improve their home.  If the owner wants to make improvements that make the house too nice or too expensive the deed restrictions prevent the homeowner from recouping those costs.  As an owner, one has to ask one’s self – “Do I really own my own home if I have to ask about making it more livable?”

Another example where the town seems to fear the free execution of property rights comes in its recurring opposition to bills in the General Assembly that impact planning in any way.

Over the years the town has fought efforts in Raleigh to pass legislation that limits what design restrictions a town can place on homes.  The current incarnation of this bill working its way through the Legislature is actually sponsored by our very own Senator Jeff Tarte.

According to  current and former sponsors of these bills – bills that have received strong bi-partisan support it is clear that they would have minimal impact to Davidson.  But, if you listen to the rhetoric coming out of Davidson Town Hall, you would think they gut planning ordinances across the state.

These first two examples deal with development and limits on property rights where development actually is approved, but the most obvious infringement on property rights occurs when the town attempts to prevent development altogether.

The ongoing brouhaha over the proposed Narrow Passage neighborhood off of Rocky River Rd provides a perfect example of that scenario.
The local Mayes family has owned the land for over 100 years and working with local builder, Karl Plattner, has proposed building 47 houses on roughly 59 acres at the corner of Rocky River and Shearer roads.

The proposed development will have large amounts of open space.  It fits with the other surrounding development – including River Run which is right across the road.  It will add a nice bump to the town’s tax base.

The idea that those involved are somehow intentionally proposing something that would harm Davidson is laughable.

The problem?

The proposed development goes against a belief among some that Davidson should not allow development – any meaningful development - along Shearers Rd.  To listen to some opponents of this proposal you would think they are the ones that own the land – talking about how important it is to them, talking about what it means to them.  Unfortunately for them, they don't actually own it.

The town has used its ordinances and process to throw up barrier after barrier in attempts to delay or outright prevent this development from going forward.

While not exactly the same situation, it evokes similarities to a case recently lost by NCDOT in the NC Court of Appeals.  In this case, NCDOT used something in its planning efforts called the Map Act to prevent landowners from developing their land – sometimes for decades – without compensation.  The appeals court recently said in a unanimous decision that the NCDOTs actions resulted in a legal “taking” of the property and the landowners needed to be compensated at the time NCDOT placed its development restrictions on the land.

Davidson’s zeal in opposing development in certain areas at times approaches that same threshold.

Infringing on personal property rights is something government should do with extreme caution.  In Davidson, it seems to be a standard approach to doing business.

Wednesday, May 20, 2015

CRTPO Meeting Tonight - Will they dump HOT Lanes

With Mecklenburg County now on-board with postponing the HOT lanes project on I77 until thhe contract is audited for more irregularities, our state Rep John Bradford has stepped into the fray.  After Tuesday's vote he posted the below on the LKN Election Connection Facebook page.

"I am respectfully encouraging all CRTPO members to work to amend their agenda tomorrow night and formally consider asking the NCDOT for a delay in the financial close of the I-77 project. The ground rules of this project have changed with the introduction of a possible new funding option (i.e. bonds) since MUMPO (now called CRTPO) decided back in 2007 to sanction a Fast Lanes study that would ultimately recommend express managed lanes. I do not think this group of elected officials would have made the same decision if they knew that a possible third funding option (i.e. bonds) was a possibility. It seems to me that a request for a delay in the project's closing is very reasonable and it would send a clear message to NCDOT that the decision over 7 years ago to support managed lanes was made under a very different set of funding possibilities."

Of course, after revealing Tuesday night that he cannot vote on the project, Mecklenburg County's, Dumont Clarke should not vote not be the project as the county's CRTPO member.  At the Tuesday MeckBOCC meeting Clarke had to admit publicly that he has a conflict of interest on the toll road project via his firm's involvement with a client.  Clarke recused himself from voting on the MeckBOCC amendment.  Clarke works for high powered law firm Moore and Van Allen.

If you are interested in supporting Rep Bradford in his request CRTPO change course, email members at the below addresses asking them to include a vote on a HOT lanes resolution in tonight's agenda.

Huntersville Commissioner Sarah McAulay chairs the body.  She can put this on the agenda if she wants to do so.  Hers is the first address.

sMcAulay@huntersville.org, brad.s.horvath@wellsfargo.com, pcnrb01@yahoo.com, vlyles@charlottenc.gov, wtwasham@cornelius.org, bjenest@colejeneststone.com, jbiggers@charlottepipe.com, gsavoie@council.indiantrail.org, ken.robertson@dsm.com, ntcarp@windstream.net, lannyopenshaw@marvinnc.org, jtaylor@matthewsnc.com, dumontclarke@mvalaw.com, dena.diorio@mecklenburgcountync.gov, msncmayor@yahoo.com, bwelch@admin.minthill.com, dnash@monroenc.org, edingler@ci.mooresville.nc.us, tracy.dodson@lincolnharris.com, lswetmore@ncdot.gov, lgladden@pinevilledsl.net, wdunn@council.stallingsnc.org, ehr413@gmail.com, michaeljohnson@earthlink.net, richard.helms@co.union.nc.us, duane.gardner@waxhaw.com, bdeter@townofweddington.com, bgbraswell@hotmail.com, reschert@aol.com, btrimbur@cornelius.org, rgraham@ci.davidson.nc.us, elong@fairviewnc.gov, jswain@huntersville.org, johnsonspartssup@att.net, joepollino@marvinnc.org, joseph.pata@bankofamerica.com, jim.puckett@mecklenburgcountync.gov, jbclivingwater@windstream.net, minthillmickey@carolina.rr.com, bkilgore@monroenc.org, lqualls@ci.mooresville.nc.us, ncurran@bissellcompanies.com, WKline@council.stallingsnc.org, ckutteh@popemcmillan.com, phenkel@roadrunner.com, lance.simpson@co.union.nc.us, steve.maher@waxhaw.com, barbarafarrison@townofweddington.com, jeanninekenary@wesleychapelnc.com, jbmoser@carolina.rr.com

Friday, May 15, 2015

I77 HOT Lanes debt should be 'Junk'

Once again, the I77 HOT lanes project has been in the news and not for good reasons.

This past week, local elected boards one after the other passed resolutions demanding answers to new questions or asking for outright delay prior to financial close of the contract.  On Monday evening, Rep John Bradford posted on Facebook that members of the North Mecklenburg delegation to the General Assembly asked Governor McCrory if it is “possible” to delay and assess other funding options.

All of this activity takes place in the final days of the re-re-rescheduled financial close date now slated for May 27th – an event which gained momentum with the recent approvals of Federal TIFIA loans and State Private Activity Bonds.  As part of the run-up to this event the public is finally getting see what the ratings agencies have to say about the project.

The results explain a lot and leave a lot to be desired at the same time.

Two agencies were required by the State to rate the project’s debt.  One of the big three agencies, Fitch, provided one rating, and a lesser known Canadian firm, DBRS, provided the other.  Those ratings were BBB- from Fitch and BBB from DBRS.

To put it another way, both firms rated the project one ratings step above “junk bond” status on their respective ratings scales.

Think about this for a minute.

A road project this important intends to be built using financing that can barely make investment grade status.  Investment grade status is required for many institutions such as pension funds and large endowments to invest in the bonds.

We can presume the I77 debt barely achieved these ratings because of a number of things that happened along the way to setting them.

Of the four short-listed companies initially looking at the project, only Cintra submitted a bid – a strong indication the others could not make the numbers work.
Cintra and NCDOT started with low expectations on bond ratings.  According to an April 2014 report from the State Chief Financial Officer and NCDOT to the General Assembly (a full year before the agencies presented their preliminary ratings), the General Assembly was told that Cintra expected exactly the mediocre ratings they ultimately received.
The State and Cintra have had to put in more capital than originally planned and reduced the initial request for TIFIA debt.  One can reasonably assume both entities put in just enough capital to get over the hump.
DBRS specifically sites the “compensation event” clause regarding the addition of new general purpose lanes in the future as a supporting justification for its BBB rating.  This is the issue that has been getting a lot of attention the past two weeks at local town halls because it is now known the State would have to pay penalties to Cintra if they build any more free lanes.
Both Fitch and DBRS site the “unique” nature of the so-called DRAM facility in the contract with NCDOT.  This chunk of up to $75 million from the State serves as a backstop in early years if toll revenue comes in low.  In fact, Fitch estimates $47 million of this facility will need to be used.

Again, all of these red flags must be ignored, and all of these special provisions must be accepted to support a barely not-junk rating.

However, to the general public the most interesting information revealed in these preliminary ratings documents has to do with proposed toll rates.  From the Fitch press release it says the following:

“The initial proposed tolls in the sponsor case are reasonable for this type of asset (between $0.14/mile and $0.40/mile in 2012$)”.

“Reasonable” is relative to one’s ability to pay, but that works out to $3.84 up to $10.40 one way for a full-length 26-mile ride  - numbers surprisingly close to those presented by NCDOT consultant, Stantec.  When those numbers were made public last year, local officials did backflips trying to debunk and minimize them.

At a meeting arranged by local mayors,  NCDOT, and Cintra, a meeting initially intended to be closed to the public, then Cornelius  Commissioner John Bradford was caught on tape by WCNC saying “there is no one I have spoken to that believes an eleven dollar trip is reasonable in any way.”

In that same meeting  Cornelius Commissioner Dave Gilroy pushed Cintra’s point-man for the project, Javier Tamargo, regarding how high rates could go.  Tamargo’s response?

“Who knows?”

Based on the credit agency reports, somebody definitely knew.  They just didn't want that somebody to be you.

Multiple attempts to contact Fitch Ratings for more details for this story went unreturned.

This post originally appeared in the Herald Weekly at huntersvilleherald.com

Sunday, May 10, 2015

Mi-Connection moving forward on refinancing - facing new challenges from competitors

Facing a rapidly changing competitive environment, Mi-Connection received some good news on the financing front this week when on Tuesday the Local Government Commission in the NC Department of the Treasurer approved refunding of the system’s originally issued debt.

In recent years the cable system owned by Mooresville and Davidson has made several operational improvements to reduce expenses.  However, since it's inception the large debt used to purchase the system has been the major driving factor contributing to the company’s ongoing losses.

Restructuring the company’s debt will be another step in the right direction on the long road to break even financially.

New debt will be issued at more favorable terms – reducing interest payments and potentially reducing subsidies from the towns of Mooresville and Davidson.  The exact amount of those savings will not be known until the final transaction closes – an event scheduled to occur before the end of June.

The annual savings could be substantial though.  At the recent Davidson Board work session, Commissioners and Staff were using $500,000 as a working number for the saving when discussing Davidson’s next budget.  Based on the ownership agreement between the two towns, that would reduce the subsidy from the  towns by $150,000 for Davidson and $350,000 for Mooresville in FY2016 which starts July-1.

This is on top of about $300,000 in savings this coming fiscal year from refinancing another piece of the company’s debt.

Exactly how the towns could or should spend these savings is a topic for another day.  The good news is that Commissioners will at least be able to have that discussion while putting together the next budgets.

The potentially bad news is that all of this is occurring in a rapidly changing business and technological environment which could eat up those savings as Mi-Connection is forced to keep up with its competitors.

At the system’s quarterly board meeting last week, Mi-Connection announced the region’s first gigabit data service available to its commercial customers.  This is certainly good news, but it does nothing to help residential users who have been paying the subsidies to the company over the last several years.

It is in this area that Mi-Connection may soon be playing catch-up.

In early April, Time Warner Cable announced the rollout of its TWC Maxx service in the Charlotte region beginning this summer.  This will include Huntersville and  Mooresville, and other areas right on the doorstep of Mi-Connection’s current footprint.
When this conversion to an all digital network is complete, TWC will be able to offer customers much faster data service at the same cost.  The top announced speed will be 300mb download.  That’s 5 times faster than Mi-Connection’s current top residential offering.

In response, Mi-Connection is currently “testing” their ability to match these 300mb download speeds.  This test is occurring in Mooresville’s Oaks on Main neighborhood.   Per an email from Mi-Connection CEO, David Auger, it could be expanded to include other areas as well.

One of the purposes of the test is to determine the capital costs (if any) necessary to roll the service out to the entire Mi-Connection footprint.  Depending on the results of these tests, those capital costs could eat into some of the operational and financing savings the company has recently achieved.  That would also mean more subsidies.

And in that situation, there lies an unfortunate irony.

Readers may remember, that one of the justifications used by Mooresville and Davidson officials in buying the remnants of the old Adelphia cable system and creating Mi-Connection was that Time Warner, who was  managing the operation in receivership at the time, was unlikely to upgrade the system.

If the towns had not taken control to offer better service, then nobody would have is how the story goes.

In fact, during a discussion in recent weeks on Mi-Connection both Davidson Mayor John Woods and Town Manager Leamon Brice referenced this idea as if it still had merit.

That Mi-Connection is having to conduct tests and potentially spend more subsidized money in an effort to keep up with announced improvements from Time Warner belies that original justification.

To put it another way, if Time Warner had been allowed to buy the system back in 2007, the average citizens of Mooresville and Davidson would be about to get for free the same service they might be able to get from Mi-Connection in the future.

Along the way, they could have also avoided the tens of millions in subsidies.

This post originally appeared in the Herald Weekly @ huntersvilleherald.com

Friday, May 1, 2015

A roughy, but telling stretch, for toll road opposition

Since starting this column,, a concerted effort has been made to not write about the same topic two weeks in a row.  But for every rule, there is an exception.

This week is one of those exceptions.

The last column told you about a long-shot opportunity to stop the tolling of I77 with HOT lanes through a bill submitted at the General Assembly by local Senator Jeff Tarte.

Well, since writing that piece the project to build toll lanes has gained some momentum in its trek towards financial close of the deal between I77 Mobility Partners – the local offshoot of Spanish contractor, Cintra – and the NCDOT.

The first big piece of the financing puzzle that appears to have fallen in place is the apparent approval of $189 million in Federal loans to I77 Mobility Partners from the TIFIA Credit Council within the US Department of Transportation.

WidenI77.org – the group that has been fighting the toll project - actually broke the story on their website on Friday, April 17th.  Members were holding out some hope that their source had “jumped the gun” in providing that information, but it now appears that is only thing left to do is get the signature of the Secretary of Transportation.  That just happens to also be from former Charlotte Mayor, Anthony Foxx.

A second major financing event also occurring over the past two weeks.  This time the action took place at the state level in the office of the Local Government Commission which is part of the NC Department of State Treasurer.

After two “special meetings” called on the subject of I77 financing, this Tuesday the LGC approved an additional $105 million in bonds to be sponsored by the NCDOT on behalf of I77 Mobility Partners.

So, after multiple delays, special meetings, excused penalties, and more state money being thrown at the project it does now look like the toll road contractor is limping towards financial close on May 17th.

With all of that as backdrop, a few other events occurred over the past two weeks – both locally and nationally - which serve to rub salt in the wound for toll road opponents.  They provide a glimpse of the possible future as well as insight in how we got here in the first place.

The first event occurred in Atlanta on the I85 HOT lanes.

On a Monday, 4/21, the road hit a new record high for tolls – $10.50 for a one way trip on the 16 mile stretch of road.  That record lasted a single day.  On Tuesday the toll hit $11.

Readers may remember when WidenI77.org helped break the news that NCDOT’s own consultants predicted $11 tolls for the I77 project.  They helped pry that information from the state with repeated public records requests.  Project supporters and some local media decried publicizing those numbers as nothing short of scare tactics.  In one email between local mayors, Mayor Swain of Huntersville called the consultants’ report “old news”.

Tolls that high certainly aren't “old news” for those in Atlanta.  They are a current and very real hit to the pocketbook.

The second event that could foreshadow the local experience with HOT lanes took place in the Washington, DC area.  There, local HOT lanes users are suing toll rode operator, Transurban, for illegally gouging users.  In some cases, missed tolls of a few dollars have turned into fines of several thousand dollars once penalties are applied.

Are these events that occurred elsewhere in the country, the kinds of things I77 HOT lanes users can expect over the next 50 years if this project goes forward?  Maybe.

The final event getting attention over the past two weeks occurred locally and seems likely to generate more activity.

Last Wednesday, Rep John Bradford of Cornelius announced via his Facebook page that Mayor Chuck Travis of Cornelius had been appointed to the board of the North Carolina Turnpike Authority – the body responsible for rolling out toll roads across the state.

Cornelius has been a hotbed of opposition to the HOT lanes.  The irony of the town’s mayor being placed on a board to promote toll roads was not lost on members of another Facebook page – the 2400 member and aptly named “Exit 28 Ridiculousness” page which sees frequent posts about local roads.

Kurt Naas of WidenI77.org posted to the site calling the appointment a “Slap. In. The. Face.”

The appointment seems to have spawned a renewed outpouring of opposition to the project among the “Exit 28 Ridiculousness” community and some WidenI77.org activists.   This Friday, 5/1, they are organizing a protest from 430pm – 630pm at Exit 28 itself.

If you are interested in going, it promises to get interesting

A version of this post first appeared in this weeks's Herald Weekly.

Friday, April 24, 2015

A voter referendum to stop I77 tolls?

The answer to that question is a solid maybe – if the stars align correctly, the Legislature moves quickly, and voters decide that's what they would want in the face of what would surely be massive pressure to the contrary.

With all those qualifiers “solid” probably is not the correct way to describe the possibility of averting HOT lanes on Interstate 77, but at least it is a possibility that’s on the table with a bill recently submitted by NC Senator, Jeff Tarte (R-Mecklenburg) of Cornelius.

Readers may have seen the stories recently for a bond package being promoted by Governor Pat McCrory.  The Governor wants the General Assembly to approve putting a $1.2 billion bond package on a statewide ballot this November to fund a number of road projects that fall way down on the list of state priorities – projects that would otherwise not be funded for a very, very long time under the state’s Strategic Transportation Investments Law or STI

Well, that possibility does not sit well with Senator Tarte, in an email response to questions for this story Tarte had this to say about the projects included in the bond proposal.

“They are political choices, not based upon agreed criteria in the STI for establishing priorities. We said we would take politics out of ranking road priorities, then we turned around and did exactly that. Endless supply of stupid in state government.”

As for the likelihood the bond package makes it to the ballot Tarte had this to say.

“My belief from talking to various folks was the authority to bond would not be granted. It still may not. But the idea remains on the table.”

With that as the backdrop, in late March Senator Tarte introduced Senate Bill 639 titled the “Transportation Funding Bill”.

While this bill is primarily a revenue bill proposing tax and fee increases to generate more transportation infrastructure dollars, it also includes an interesting provision requiring a local referendum prior to implementing any new toll roads. The preliminary effective date of the bill is August 1st 2015 – a date Tarte confirmed was chosen to include the I77 HOT lanes project.

So, what could happen – emphasis on could – with this proposal relative to the HOT lanes project?

After assuming the Legislature moves with jackrabbit speed to pass a complex and controversial set of new tax increases prior to recessing this summer and assuming the bill’s referendum provision survives the editing process, then you have to assume the public would even vote to stop the project for this bill to have any effect on the project.
With as much negative press as this project has received, you would likely think that a referendum shooting it down would be a no-brainier.  However, historh and the setup of the referendum proposal itself would say otherwise.

We have seen this movie before here in Mecklenburg with the transit tax repeal effort in 2007.

In that effort, the special interests which benefited from the tax poured whatever it took into an the effort to defeat its repeal via referendum.  The same thing would surely happen here if there was a referendum on HOT lanes.

In the case of the I77 project, local transportation officials have already approved how the “bonus allocation” that came with accepting tolls will be spent.

You can hear the ads now supporting tolls  - ads funded by contributions from those who will build the road or benefit from its operations.

“Vote for tolls or lose $144 million in bonus allocation dollars.”

Add to that the fact that Tarte’s proposed legislation does not require any certain course of action in the event a project fails in a referendum.  What happens then?

If the answer is simply the road doesn't get built and the next project in line gets those dollars, why would most people not vote for tolls under those circumstances?

Of course, that would be setting up the referendum as a false all or nothing choice.

The proposed legislation could say something like “in the event a toll project is defeated in a referendum all state dollars previously committed to the project must still be spent in the same transportation corridor.”

For the I77 project, that would be close to $300 million including the bonus allocation as well as the other funds the state has committed for the project in the contract with Cintra.

That would be enough to make some serious improvements to the corridor without resorting to tolls.

Then again, presenting it that way would also expose that we never needed to resort to tolls in the first place, and that's not something those who have supported the project are likely to admit.

Thursday, April 23, 2015

A new season, a new volunteer opportunity...

This column spends a lot of time looking at ways to improve our local government, and sometimes that can come off as being a bit “negative”.  So, periodically it's nice to talk about the good things people are doing in the community.  This last week saw two emails land in the inbox that are excellent reminders of that.  

A few short months ago during Christmas week, this column told you about the Room In The Inn (RITI) program run by Urban Ministries in Charlotte where local church congregations and other organizations provide a warm place to sleep for our homeless neighbors during the winter months.  In Huntersville, Cornelius, and Davidson 15 different congregations participate.

As of March 31st, this year’s RITI program has come to an end, so I wanted to pass along an update and some numbers.

Over the course of the 2014/2015 Winter, RITI provided almost the exact same number of bed nights, as it did last year – just over 17,000.   The number of families needing shelter and the total number of children actually increased slightly this winter.  The overall number of organizations participating stayed exactly the same at 135.

The good news here is that because of this program and the thousands of volunteers who helped make it a success, that was 17,000 nights people were spared from the cold.

Please keep this effort in mind next year is you are looking for a worthwhile cause that can make a real difference.

While the RITI effort was winding down, the other effort I’ll mention is just getting ramped up.  

It is an opportunity where people can really get into the weeds – pun intended – while helping others.  That opportunity would be the annual start of the Davidson Community Garden on Potts Street in Davidson behind the Wells Fargo drive through.

The garden is on land donated by Davidson College with its unofficial kickoff each year being a work day as part of the annual “Great Day of Service” put on by Davidson United Methodist Church.  This year that was on March 14th.

Five years ago, the initial garden was build during the DUMC event, and it has been added to every year.

The second summer saw the garden double in size.  For the third summer, the garden set the goal of donating a full ton of food to the Loaves and Fishes food pantry at the Ada Jenkins Center.  That goal was met and has been repeated annually since then. After three summers of watering using a 300 foot hose and crossing the railroad tracks, a fundraiser brought in more than enough money needed to install a permanent water supply going into season number four.  

Along the way the garden has brought together people from all across the community.  On any given Saturday, you will see residents from neighborhoods all across town.  Families, students from the college, seniors and young children can all be seen working together.

There are a number of groups that participate regularly such as different Scout Troops and classes from the Community School of Davidson.  There is also one group that likely never sees the fruits of their labor – local inmates.  Many of the plants that are grown in the garden get their start in the greenhouse of the North Mecklenburg Jail in Charlotte as part of a work training program.

The whole operation is coordinated by Connie and Eddie Beach of Davidson.  For their efforts, they were honored last November with the town’s annual “Jack Burney Award” for community service.

So, if you are interested in learning how potatoes are harvested, stop by in early June.  You may get to see what a hundred pounds of potatoes coming out of the ground looks like.  Or, if you've ever wondered where that odd looking southern staple, okra, comes from, then check out the tall bushy plants that seem to be growing just fine in the blistering heat of July and August.  The okra plant is from Africa, and it takes off when most other things start to wither.

Unlike most “community gardens” there are no fees or individual plots.  The Davidson Community Garden donates the bulk of the produce to the Loaves and Fishes food pantry at the Ada Jenkins Center.  It’s truly a garden for the community.

However, even though you won't have your own personal plot at this garden, there is a good side benefit to volunteering.  After a good morning’s work, you might just get to take home one of those juicy tomatoes.

Garden volunteers meet Saturday mornings at about 10am through the fall.