The Southport Board of Aldermen and Planning Board held a joint meeting Monday night to hear the results of a pair of studies related to the Indigo Phase II Project.
Lucy Gallo, Managing Principal with Development, Planning & Financing Group Inc., presented the findings of a fiscal impact analysis for Indigo Phase II from two different scenarios.
Under the first scenario, the city annexes the proposed 1,542-residential unit development and the project leads to an annual revenue of $2.3 million for the city. Gallo said the study was prepared as a “snapshot in time,” assuming the city’s 2022-23 fiscal year property tax rates and fire fees remain constant. The property tax projection is $3 million, stated Gallo.
With the increased population, the study showed that Southport would need to hire three new firefighters, six police officers, three EMTs, two staff accountants and an administrative assistant.
“The net fiscal benefit of the project is expected to be at $1.4 million for the city,” Gallo told the members of the boards. “It’s assumed those costs will help offset some of the city’s fixed capital and operating expenditures or, if there was a need and desire to enhance some level of services in the areas, for example, like parks and recreation ... some additional dollars would be available to serve those needs.”
Under the other scenario, the city does not annex the development and leaves it under the existing R-20 zoning. In this case, considering only 550 single residential units, Gallo said that Indigo Phase II does not benefit Southport. The city’s fire district still would have to serve the development, and any new residents would not be paying property taxes.
“There would be a negative fiscal benefit of simply allowing the 550 homes to be developed in the Southport fire district,” said Gallo. “This would be very much a less attractive option for the city, not to mention that even though this would be a direct subsidy by the city, having growth in the (extra-territorial jurisdiction) really affects your police and parks and rec departments because that would increase visitors into the city without generating any property tax revenue.”
Eddie Staley and Shannon Moore with civil engineering firm WithersRavenel presented the findings of a 10-year analysis to examine whether or not Indigo Phase II would pay for itself. Staley said the development was financially sustainable, presented low financial risk, and benefitted from location in terms of the need for infrastructure additions, like new facilities. He said that even using cautious estimates, the project should be profitable.
“This is a cash flow positive development for the community,” said Staley. “That makes it a very low financial risk. We’re never seeing inside the financial model where ultimately the expenditures are exceeding the revenues that will be generated from the tax base.”
Staley told the boards the findings are not an indication of any position, that they are from what the firm was asked to examine.
“We looked at this development from a financial standpoint,” said Staley. “We’re not here to speak about benefit to the community (or) is it a good thing or a bad thing for this community, that’s not why we’re here. We’re here to simply understand the financial impact, and does the development itself actually sustain the investments.”
Moore estimated additional expenses from Indigo Phase II to be $1.79 million, but said the city could have a cumulative revenue surplus as high as $18 million over the next 10 years should it decide to increase its ad valorem tax by a cent annually.
“The city has very little minimal fire needs and no water and sewer needs, other than personnel,” Moore said. “The developer’s schedule definitely affects the outcome. Revenues can decline from other risk factors like Covid, high inflation, and an economic downturn.”
Following the presentations, members of both boards took the opportunity to ask questions about the findings. Planning Board member Fred Fiss asked why electrical wasn’t included in the infrastructure study, and who would pay for any upgrades to the system.
“It just seems like a really important number,” said Fiss.
Staley explained that electrical wasn’t included in the study because it didn’t fall under the expertise of WithersRavenel. City Manager Gordon Hargrove said the city would enter into a partnership with the developers on providing electricity to Indigo Phase II, but how much Southport would have to pay depends on the project’s density.
“We’re not going to be stuck holding the bag for the entire price of it,” stated Hargrove. “Obviously, if it’s a higher density the more participation the city is going to require from the applicant to help with those costs.”
Alderman Rich Alt expressed frustration with the lack of a traffic impact study on the area around 9th Street and Southport Elementary School. Alt said that after six months of discussions, no consideration has been given to how the influx of homes and residents will affect traffic to an already congested part of the city.
“We’re 210 days in and everybody has turned a blind eye to it,” Alt said. “Apparently children will not be allowed in this development because no one has factored them in. There are a lot of families starting to move in now, and we have not taken that into consideration. If you have a heart attack at the school, they will be running with their kits over the cars to get to you because nothing has been fixed here.
“We have no impact study to do that,” Alt continued. “We will not be able to do anything about this, because 210 days into it and everybody has turned a blind eye to that. We need somebody who actually understands how to do it and who is neutral to do those studies.”
Forest Oaks resident Bill Maskovich told the board members that too much information still is needed before a decision could be made. The planning board is expected to make a decision at its meeting on Thursday night.
“Put on the brakes, go back to the drawing board and figure it out,” Maskovich said. “This train is moving down the tracks and we don’t have answers. I’d like to see some answers please.”
Planning Board Chairman Sue Hodgin said it was important for her board to look at the entire project and not make a decision based solely on one thing.
“I think we need to look past the money and, I guess, in a plain spoken way, smacking our collective lips over an increase in a tax base,” said Hodgin. “That shouldn’t be enough to push us over the edge in approving this ... as we’ve looked at maps (and) the things provided to us by the developer, we’re still looking at another half-size city within our city being proposed. It’s a lot. “Obviously, revenue for the city is attractive,” Hodin stated. “It’s not the be-all, end-all for our small town and taking care of what so many of us who grew up here with or came here knowing how special it is. It’s an awful lot to take in.”
The planning board’s recommendation on Thursday will then go to the aldermen for consideration. Mayor Joe Pat Hatem said that if the board recommends moving forward with the project, the city would hold at least one town hall so the public can express any concerns or ask questions before aldermen meet next month. There was not a public comment period scheduled for the Monday night joint workshop, but attendees were given time for comments.