LELAND — Leland town council members received no comments at a public hearing Aug. 1 on a public-private partnership to start a new phase of development in Brunswick Forest.
So the project will move to the next state mandated step, Leland Economic and Community Development director Gary Vidmar said.
The public hearing was required for council to approve a preliminary assessment resolution June 21 to establish a Brunswick Forest Special Assessment District (BFSAD) for Jeff Earp’s Funston Land & Timber LLC, developer of Brunswick Forest, to build infrastructure for 1,600 acres west of the Sunny Point Railroad tracks.
The cost of the project is estimated at $16 million and the BFSAD request seeks financing of the whole project.
“Typically a developer would put the cost of the improvements in the cost of the home. So ultimately the homeowner pays for it one way or the other,” Vidmar said. “In paying for it this way, it gives the developer the opportunity to accelerate the construction of these public improvements and build out this section of (Brunswick Forest in a much accelerated fashion.
“For the town, the benefit is it gets tax revenue from these built-out lots in a shorter period of time than it would if the developer simply financed it conventionally over a longer period.”
Vidmar said no council action was required after the public hearing, but holding the hearing allows town officials to proceed with the plan.
State statute 153A-239.3(a1) says board members can consider approval of a final assessment resolution to begin part or the entire project after a 10-day period.
The special assessment district would fund roads and sidewalks, water and sewer facilities, storm water, green space, parks and trails and related costs.
Vidmar said the final resolution would not be ready to present to council until September at the earliest.
A more specific version of the $16 million cost estimate also will be presented to council and Funston Land & Timber will create a preliminary assessment roll.
“So the estimate you have right now of $16 million will get further refined before an assessment roll is calculated on the individual parcels,” Vidmar said.
“Is it a different assessment value for every lot?” councilman Michael Callahan asked.
“Depending upon the size of the lot, it will be a prorated amount,” Vidmar said. “The assessment shall be a lien on the property and assessed to the same extent as a lien for the county and town property taxes.”
The assessment would then be repaid to Funston to reimburse the cost of the infrastructure the company would initially pay for.
The assessment roll will be available at the town clerk’s office for public inspection, followed by another public hearing.
Once the next public hearing is completed, council could then annul, modify or confirm the special assessments.
Councilman Bob Corriston asked how many homes would be included in the development.
Vidmar said those figures haven’t been determined yet, but will be put together before the final assessment resolution comes before council.
“You will see those before this all concludes,” Vidmar said.
State statute also allows the town to issue revenue bonds payable from special assessments to reimburse the developer for the infrastructure costs ahead.
After Funston begins infrastructure construction on the new development, it could request Leland issue revenue bonds to pay the reimbursement for costs.
“The assessments would be pledged as security for those revenue bonds (per state statute),” Vidmar said. “Unlike General Obligation bonds, these bonds are not secured by taxes. They’re secured by the assessments.”
Mayor pro tem Pat Batleman asked how the Funston request to issue revenue bonds would work.
“The bonds would accelerate the payments to the developer and pay him off for the improvements that are completed and in place that he has already paid for,” Vidmar said. “So, if it’s determined that the assessments are not coming in at a pace that is satisfactory to repay the developer for his costs, then the town and the developer may choose to issue revenue bonds.
“The town would issue revenue bonds then to repay the developer and then all the assessments that are collected by the town would be retained by the town to pay off those bonds. What the bonds would do, essentially, is front (the assessments) payment in lump sums and then the assessments that get collected by the town would be retained.”
“My understanding is, if all the lots are not sold, that assessment still would be honored by Funston or whoever is the landowner,” councilman Mike Campbell said. “The assessment would follow the property, not the property owner. So if I bought a property and sold it to Mrs. Batleman, she’s now responsible?”
“That’s correct. They follow the land,” Vidmar said.
“Basically there is a guarantee that we don’t get stuck with anything?” Corriston asked.
“The assessments are the guarantee,” Vidmar said. “And if the assessments are not sufficient to repay the bonds, for example, then we have the right to foreclose on the property. And then we would resell that property to pay off the bonds.”
“Just the other day with a couple guys playing cards, some guy made the statement, ‘How are you giving $16 million away to Funston?’” Corriston said. “We are not giving $16 million out of our pocket to Funston, I tried to explain to him.
“(Another) gentleman on the other side said it, ‘You got to spend money to make money.’”