Oct. 7, 2012. On Monday, the Watauga County Economic Development Commission and the Watauga County Board of Commissioners will meet to discuss a proposed industrial park at the old Watauga High School property.
But two recent offers by developers to purchase the 75-acre property and build student housing with some retail space have added a twist to Monday’s meeting, and Watauga Commissioner Chair Nathan Miller said the two offers will definitely change the discussion at the joint meeting.
As for the two options proposed for the property, different lines of thought exist:
A. sell the property to immediately reduce the county’s debt while at the same time putting the property on the tax rolls
B. pay money upfront to prepare the site for an industrial park that in the long run would offer substantially higher paying jobs than the current median salary in Watauga
Better Paying Jobs with Industrial Park
Tommy Sofield of U.S. Buildings located at Industrial Park Drive off of U.S. 421 also has space in Wilkes County because of the lack of sites in the High Country. At a regular scheduled August meeting with the Watauga County Board of Commissioners he maintained that he would much rather have those other jobs here.
Last week, he said he wasn’t knowledgeable enough about the two offers on the property – which were valued at $15 million and $15.5 million and were countered by the board at $16.5 million – to make a statement as to what option is better for the region.
But generally speaking, he spoke about the stark difference between money earned in retail jobs versus manufacturing jobs.
“I think our community needs an opportunity for our young folks to have good jobs and the best jobs in the county would be manufacturing jobs,” Sofield said. “It’s clear that retail sales are between $13,000 and $15,000 payroll and manufacturing jobs are in the $40,000 and $50,000 range [where] certainly folks are making more money.”
Miller understands the differences in the payout for those jobs, and he said that is one of the main pros of having an industrial park in the region.
“We’re a desirable place to live in, but not a desirable place to work. Salaries are on the low end and cost of living is on the high end,” Miller said. “[A business park] is one way to try to fix that.”
But he adds there is no “guarantee” that those jobs will come to fruition.
Currently, the existing industrial park has has been full for 20 years. In 2008 before the recession, the park’s peak employment registered more than 500 while currently more than 300 employees work in the park.
Upfront Costs Associated with Park
The county would have to pay upfront costs for infrastructure if it were to pursue a light-industrial park, although figures – even estimates – haven’t been mentioned by members of the EDC.
These upfront costs – and the rate of return – are something that Commissioners Vince Gable and Miller were fairly adamant about at the August meeting and are something they expect to hear at Monday’s joint meeting.
The plans call for another entrance into the park, which Miller said the county would have to build and pay for. Miller mentioned the burying of utilities and the different roads that would connect the 13 parcels or “lots” on the proposed park.
In addition, after the demolition of the old high school, which will be complete next summer, only 25 acres of the 75-acre property is “relatively flat, pad-ready” land, so the contours of the remaining two-thirds of the property would need to be addressed.
“Do we want to throw more money on something that has no guarantee of return?” Miller asked.
Another “downside” that Miller mentioned was that the property is not zoned industrial or light industrial and that there is no guarantee that Town of Boone would grant the needed variances.
More Student Housing?
Both offers presented to the board last week were from developers – Place Acquisition and Campus Crest Development – that wanted to put student housing on the property and both mentioned that some “retail” space would be included as well.
The Town of Boone, which would have the final approval of any zoning and ordinances for the property, has already declared that any student housing for the site would have to be mix-use and include some sort of retail before it would be approved.
(This mix-use development is also something that the Watauga County Board of Commissioners favors as well because of sales-tax revenue, although Miller said he believes if you buy something, you should be able to do with it as you please.)
Two months ago, the High Country Press reported that the rental market for student housing is already saturated and perhaps for the first time in 40 years the rental “party is over,” as Pads for Grads owner Fulton Lovin said.
The Capstone Collegiate Communities development called the Cottages of Boone with nearly 900 bedrooms should be online by the fall 2013 semester. Adjacent to the old WHS property and accessed by the only entrance into the property off of N.C. 105 is a mix-use development that features 10,000 square feet of retail space and more than 200 bedrooms for student housing. Its estimated completion date is next spring or summer.
Just recently, the Boone Town Council voted to not approve of the Clawson and Green Apartment Complex that was to have nearly 550 bedrooms, although that decision had less to do with the saturated market than it did with the proximity of the 10-building complex to a nearby neighborhood.
On Friday, Boone Town Council Member Rennie Brantz was asked about any zoning or ordinance issues that could come up with the old WHS property. Brantz said he thinks the town would support zoning changes to get this “prime piece of real estate redeveloped.”
Brantz said the property sitting dormant for several years has been a “disappointment.”
He added that he didn’t know the details of either proposals presented to the Watauga County Board of Commissioners but said his “gut reaction” to them is that a commercial industrial park would be “really very good for the community,” adding that, “I am not sure we need more student apartments.”
(No other Boone Town Council members could be reached on Friday afternoon for their thoughts concerning the property.)
Immediate Cash for Selling, Tax Revenue and Debt Reduction
Like cash sitting under a mattress – each year the old WHS property sits dormant, it accrues no revenue – whether in sales tax or property tax – because Watauga County owns the property.
In Gable’s term on the board he has been adamant about selling the property for a “reasonable amount of money if it is going to be used for economic development that will put people to work and make jobs, increase the tax base and sales tax revenue.”
He said that in July 2011 when the board received two offers for less than $10 million and then countered those with $20 million. Although the jobs in retail or those associated with student housing would be significantly less than manufacturing jobs, the board is ready to sell the property for cash.
Speaking on Friday, Miller said, “The pros of selling it are you get cash – a substantial amount of cash.
He added that selling the property for $16 million would bring in close to 36 percent of the county’s annual budget and that by selling the property the massive debt the county incurred due to building the new Watauga High School would be reduced.
“We could pay down the two loans,” Miller said. “One has a prepayment penalty, the larger one, and the other does not so we can pay that off and save interest payments in the long run and save county tax payers some money.”
Miller said by selling the old high school property, the money earned from property taxes would cushion any fall – and would add to any rise – in the property appraisal revaluation scheduled for January 2014.
“That property has not been on the tax books since the ‘50s,” Miller said. “Not just for us, but also for Boone. We will collect property tax on it and will have that money to utilize every year.”
Miller said if a business invests money into that property, that entity will not let it sit.
“They are going to build something and when that happens the tax value goes up,” he said.
He said the county “ran” some figures for Lincoln Harris’ proposal to build a large shopping center with restaurants and a movie theater in 2011. Although the board of commissioners didn’t accept the $7-million offer, Miller said the shopping center would have had a $1-million annual impact with property tax and sales revenue combined.
But the two most recent offers won’t include a shopping center with a large amount of sales revenue.
“Even with student housing, we’re going to get property tax increases,” Miller said.
A Perfect Opportunity for a Unique Piece of Land?
Where else is there another 75-acre property available in the middle of Boone? It doesn’t exist.
Miller said another con to selling the property is that if the need arose for a large parcel down the road, the county wouldn’t have to purchase it and would likely have a hard time finding one available.
Economic Development Commission Director Joe Furman said the old Watauga High School site was seen as a “good opportunity” for an industrial park because it was already owned by the county and the “infrastructure was there” that offered a “great way” to begin marketing the park.
In a business plan for the park, the Economic Development Commission stated that the “primary way to grow a local economy is through expanding its exporting sectors, i.e., produce and sell more goods and services to customers outside of the local area.”
According to Furman, only about 3 percent of employment in the county is attributed to manufacturing. That number is low when compared to other regions of the same size.
The primary reason for that low figure and the fact that manufacturing companies have not been inclined to set up shop in Watauga County are because of the lack of sites without prudent infrastructure for manufacturing use.
“You know all along that there are many other competing interests for that piece of property,” Furman said. “The main idea is if we are going to get in the game [of offering manufacturing sites that will sustain high-paying jobs] is we have to have the product, and the product is land, a park. Otherwise, we can promote ourselves all we want to, but if we don’t have anything like that to offer, we are not going to compete.”
If Not Today, Then Maybe Tomorrow
At last week’s Watauga County Board of Commissioners meeting, the Republican-led board seemed intent on selling the property before the upcoming election possibly changes the politics of the board.
Plus, the commissioners didn’t offer much room for negotiation. The highest bid of the two was $15.5 million and the board countered at $16.5 million. The board was very enthusiastic with the two bids.
Miller said that although a better idea for the property might exist, he added, “Personally, I would rather sell it.”
Before the members of the Economic Development Commission presented to Miller and the board in August, Miller recalled going into the meeting thinking, “There is no need for [a business/industrial park] at all – period.”
But upon hearing them out, he said that his mind did change and that now he feels an industrial park or business type park would be a positive thing for the county.
Both Miller and Furman said that if the old WHS site doesn’t become an industrial park that this discussion isn’t over – that the search for another piece of property suitable for a park would be prudent.
The Economic Development Commission and the Watauga County Board of Commissioners will meet on Monday, Oct. 8, at 4:30 p.m. in the commissioners board room in the Watauga County Administrative Building at 814 W. King Street.