#ncga: SB554, a recipe for cronyism, budget-busting AND a boon for solar goons?

On the face of it, SB554 sounds like a nice, innovative idea leasing school buildngs under creative financing schemes to cash-strapped county systems around the state. But outgoing treasurer Janet Cowell is not sold just yet — and she may have a point: 

Construction industry executives are pushing for a law that would allow Robeson and other cash-strapped counties to redirect state money used for personnel to help pay for long-term leases on new buildings they desperately need.cullen-300x225

But the state treasurer’s office is sounding alarms, saying the proposal would benefit a developer while putting Robeson County at financial risk.

Senate Bill 554 would allow school districts looking to vacate old schools and build fewer new ones to enter into long-term leases and use money saved by consolidation to help pay the costs. Leasing is already allowed, but the proposal goes further by letting districts use state money that would have gone to pay custodians, clerks and substitutes to instead be used to help pay rent.

The state treasurer’s office is opposing the bill because it allows state money reserved for school employees to go to private developers. And it doesn’t like that a developer, Robbie Ferris, came up with the plan, is one of the bill’s most active boosters and is in a position to profit.

In a June 7 letter to legislators, Treasurer Janet Cowell said the bill could force Robeson to raise its per person debt burden from $202 to $4,694, the highest in the state.

“Allowing those who aim to profit from these plans to design the financing model is a bad deal for taxpayers and a conflict of interest,” the Democratic treasurer wrote.

Among her other objections are that the bill would allow the developers be paid before other county services, would assign sales tax refunds to a for-profit company, and would not require the county to open the operating lease to competitive biddimomoneyng.[…]

Ferris, a veteran architect with oodles of school experience,  is heading up a team that includes Metcon – a politically connected Robeson County building contractor.  The bill’s main sponsor, senator Wesley Meredith, is a professional landscaper who has done business with Metcon.  The group has hired Patrick Ballantine, the former Senate GOP leader and GOP gubernatorial nominee, to do its lobbying on Jones Street.

One of the best ways to evaluate a proposal like this is to look at the record.  Let’s head south to Horry County: 

Horry County Schools is considering several ways to pay for the five new area schools that should be completed by 2017, and the architecture firm is offering a payment plan that would cost an additional $7 million.

The district’s Facilities and Finance committees heard a presentation Monday from Robbie Ferris, CEO of First Floor Energy Positive, which is contracted to build the five schools.

Ferris’ presentation focused on “alternative” payment options, including a deferred payment plan that would net First Floor at least an extra $7 million over the already over-budget price of $240.3 million for the schools.

“The situation in Horry is unique, and we didn’t know everything about the district’s financial situation,” Ferris said. “So we thought it may be of value to them to hear several different payment options.”

Hmmm. Same architect.  Same building contractor.  Same developer.  Budget overruns.  Project delays.  (Holy Cintra and I-77, Batman!)  MORE: 

[…] The alternative plan would create about $6,887,262 in extra costs and does not include any interest costs during the pay-off of the construction contract. Interest rates could range from 1 to 5 percent, depending on the market, Ferris said.moneywhirl

A few board members and district employees expressed hesitation at accepting Ferris’ proposal, instead opting for a traditional payment option.

“It’s my recommendation, as chief of finances, that we go with the traditional financing model,” said John Gardner, chief financial officer with the district.

Ferris said all the points and questions brought up by board and district members are valid, and he just wanted to make sure Horry County considered every option to finance the schools.

[…]Traditionally, the projects would be funded through a combination of general obligation bonds, equipment lease financing and sales tax funds, according to Gardner.

Equipment lease financing means the district can purchase items needed for the new schools – such as technology, HVAC units or kitchen equipment – and pay a lease over the useful life of the item, Gardner said. Because leases are not subject to the district’s 8 percent debt limitation, officials can “repay any debt or lease payments during the life of the Education Capital Improvement Sales Tax,” he said.

[…]

Ferris’ proposal extends the construction contract for nine years and allows the district to make quarterly or annual payments from sales tax rimages (3)evenue. The tax revenue is deposited into a lockbox and, after the lockbox has enough money for a payment, the tax money would be used for other district needs.

“One of the nice things about this option is that it would not tie up your 8 percent lending capacity, so you could use that money for something else,” Ferris said.

Gardner said the district already uses some of the 8 percent debt limits, but the majority of it would be taken up with the building projects. Though all of the debt capacity would be reserved, the district would pay off the bonds within nine years, he said.

Opting for an unsecured loan – such as the one Ferris presented – would probably mean a higher interest rate because it’s not backed by the “full faith and credit” of the district, Gardner said.

[…]Increasing the budget for the schools will not cut any other funding from current district programs or projects, Gardner said. However, additional projects in the short term facilities plan may “require additional funds upon their procurement and receipt of bids,” he said.36813907

[…]

The cost to build the schools by First Floor Energy Positive – a firm based in Raleigh, N.C. – is $220.6 million, but emergency and work funds brings the total up to $240.3 million, according to documents from the district. The new figure comes from including “owner’s contingency” costs and estimated off-site work costs, which must be factored into the final price.

And, as a footnote, we’d be remiss in mentioning that one of Ferris’s true passions is “green” construction.  Of course, that includes SOLAR.  In lobbying for the bill and the Robeson County work, Ferris has been pointing to the “success” of a Hoke county school his team completed.   (That school, as detailed in the linked article, is solar-powered.) 

And we ALL know that North Carolina has one of the most generous solar subsidy packages in the nation. This bill presents an opportunity for at least THIRTEEN new schools that will be a captive audience for the solar goons for decades.

 

5 comments for “#ncga: SB554, a recipe for cronyism, budget-busting AND a boon for solar goons?

  1. Walter B Bull Jr
    June 22, 2016 at 12:04 pm

    Robby Ferris has been pushing the tax incentivized financing program for many years and there is a lot of merit to monetize school leases by means of professional investors. It comes down to turf and a skeptics simple leap to someone taking advantage of the system to make money. Wrong reason for rejection, but in a world where profit is equal to stealing it is logical to a “progressive” mind. WBBJr

  2. AL Gore
    June 22, 2016 at 12:35 pm

    Darn! You conservatives caught us again!

    First, Civitas exposed the way our hard core environmental movement sent in big bucks to buy NC’s two progressive Republican consultants, Dee Stewart and Paul Shumaker to get our way on President Obama’s green energy policies in the NC legislature. Then, you at the Haymaker started exposing a lot of our other bought and paid for progressive Republicans in the legislature, who will do the bidding of the Obama administration on environmental issues.

    Now, even when we sneak President Obama’s green energy policies into school construction, you expose us again.

    Please go expose someone else instead. As President Obama himself said, his green energy policies will ”cause electric rates to necessarily skyrocket” but that is okay because the peons should not be allowed to afford airconditioning anyway. As long as you keep exposing us, how are we going to be able to carry out President Obama’s green energy agenda in North Carolina?

  3. Browny Douglas
    June 22, 2016 at 1:14 pm

    The GOP leadership in the U S Senate has proven, time and time again, it’s effectiveness to herd it’s O enablers when it deems necessary. We all know that – – – – rolls down hill. Ever wonder why so much of it rolls to rest in N C? As always, follow the $$$$$.

    Browny Douglas

  4. john steed
    June 22, 2016 at 4:11 pm

    Looking up Ferris’ political contributions, one finds that like many influence buyers he is a bi-partisan contributor, but he tilts more heavily toward Democrats, with a few, mostly establishment, Republicans thrown in. He did not leave out the chief sponsor of this bill in spreading around his cash.

  5. Samantha Ferris
    June 23, 2016 at 9:44 pm

    The idiocy I am witnessing in this moment is overwhelming. The facts are, that every project MY FATHER has completed, he has saved the county money on. Everyone seems to forget the $200 million that were saved in Horry County or the $35 million in Hoke County. Tax payer dollars. The numbers work on this bill and the reasons behind anybody scrutinizing it are simply naive. THE NUMBERS WORK.

    WE ARE SAVING TAXPAYERS MONEY.

    YOU ARE A TAX PAYER.

    WE ARE SAVING YOU MONEY.

    WAKE UP!!!

    -This from a conservative 14 year old girl. Watch out daily haymaker. I’m not the only conservative 14 year old… We are determined, and ready to take control of our government and media.

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