The Vance County Board of Commissioners met in special session yesterday at 5:30 p.m. in their chambers at the County Administration Building.
The purpose of the meeting was to approve the use of ADM (corporate tax funds) funds and for school land acquisition.
County Manager Jerry Ayscue explained that there are three options to buy three tracts of land for the purpose of school construction. He said that there was a commitment to exercise the options by the end of the month.
On Tuesday evening, the Vance County Board of Education voted to give those options to Vance County.
The total cost of the land acquisition is $1,215,000. Of that total cost, $962,724 will come from North Carolina Education Lottery proceeds. ADM funds will cover $148,676, and pre-paid capital reserve funds will cover the remaining $103,600.
In order to secure ADM funds, the County must make an application jointly with the Board of Education.
The motion to make the application for the funds passed without opposition.
County Finance Director Jerry Tucker then explained three budget amendments associated with the construction project. The budget amendments essentially transfer monies from the state funds to the County’s capital reserve to pay for the land purchase.
County Commissioner Tim Pegram asked about the interest accruing on the state money. Ayscue answered by saying that the money is in the state treasury until drawn and that, although he did not know the exact rate of investment return, he supposed it was better than that which Vance County could get.
Deborah Brown, Chair of the Vance County Board of Commissioners, asked for an explanation of the $16,000 allocated for closing costs. Tucker responded that it would be used for legal fees, land surveying, or any other incurred expenses.
Assistant County Attorney Jonathan Care speculated that the fees would not be as much as was budgeted.
The transaction is scheduled for September 26, 2007.
When Brown asked whose name the property would be in, Ayscue replied that the school board had voted to assign the land options to the County. He explained that there is an advantage to the County holding the property under the GASB 34 rule which holds that government debt that is not offset by real property will be held against that government’s fund balance.
Ayscue maintained that County ownership of the school property would improve the County’s fund balance. He also noted that County ownership of school property was precedented by the acquisition of the Administrative Services Center and the transfer of deed to the County of Henderson Middle School.
Henderson Middle School is being used a collateral for a low-cost loan which has been used for major school renovations in the past few years.
Ayscue also informed commissioners that the County would be able to recoup sales taxes paid on the construction project, whereas the schools cannot apply for a refund. He said that hundreds of thousands of dollars would be saved on construction costs.
The county manager explained that the disadvantages to the arrangement were those of potential liability. He said a lease agreement would be entered into with the schools, and that lessors have liability insurance as well as the County.
A document prepared by County staff on the advantages and disadvantages of County ownership may be viewed here.
“I have some grave concerns about [liability],” Brown said.
Brown also stated displeasure with the Board of Education assigning the options to the County.
“Who said we wanted them?” she asked.
Pegram added that a future government body could take the school facilities away from the Board of Education.
Ayscue countered that if the County did that, it would have to pay over $1.2 million to the schools, since state funds were used.
Commissioner Dan Brummitt moved to pass the three budget amendments. Commissioner Scott Hughes seconded.
The motion passed with only Brown opposed.
Another motion to accept the land purchase options and to authorize the County Attorney and County Manager to negotiate the lease to Vance County Schools, also introduced by Brummitt and seconded by Hughes, Brown cast the only dissenting vote again.