Project 20/10: City, county surge ahead with bond-funded and major capital projects (#14)

One of the biggest Durham stories of this past decade is one that's just starting to impact local residents lies in the community investments made by city and county government -- and, ultimately, voters themselves -- through a series of major bond referenda this decade.

The amounts, on the face of it, sound impressive: $110 million in City general obligation bonds in 2005 for parks, transportation, public facilities, streets, sidewalks and more. 2007's County issue of $195 million in school construction funds, including dollars for the new middle school near Treyburn and an elementary school off Hamlin Road -- on top of almost $156 million in school construction funding in 2001 and 2003.

Add to that smaller bond issues for streets and sidewalks, library expansions and renovations, growth at Durham Tech and the Museum of Life and Science. And there's more: non-GO bond funded capital projects at the starting blocks, from the under-construction Human Services Complex on East Main Street, to the massive new courthouse complex planned to abut the jail downtown.

And that's not to leave out the Durham Performing Arts Center, itself funded through the non-voter mechanism of certificates of participation, backed with revenue from the tourism tax, downtown fund and general revenues if needed.

This construction spree comes on the heels of major population growth in the Bull City throughout the 1990s and 2000s -- and in the case of the City projects, after a decade when capital projects largely didn't happen, and the City found itself falling further and further behind on deferred maintenance.

The decisions by City and County leaders to make these investments, and the voter support for them, marks what we're calling the fourteenth most important Durham story of the past decade.

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To put things in context on the City side: before the 2005 bond issue, the City wasn't exactly what you could call highly leveraged when it came to infrastructure investments. From a City FAQ on the bond project:

In February 2005, the North Carolina Department of State Treasurer showed Durham with the second lowest outstanding and authorized general obligation debt to appraised property value of the state’s six largest cities. Durham’s debt/property value was listed at 1.02 percent, with only Raleigh’s lower. It can also be looked at in a debt per person formula with Durham owing $749 per person, while Greensboro is at $933 per person, Charlotte, $1,045 and Raleigh at $734, according to June 2004 figures.

Much of that was the result of light investment in capital projects throughout the 1990s -- especially when it came to upkeep of city facilities, many of which saw mid-size to large repairs and maintenance postponed or cancelled, in what's euphemistically called "deferred maintenance."

In fact, much of the City's borrowing in 2005 was earmarked towards playing catch-up on projects that should have been funded through annual capital dollars.

That's something that hasn't escaped the attention of city manager Tom Bonfield, who this year made headlines for squeezing free extra dollars out of departmental cutbacks, and getting City Council approval to plow some of those savings back into deferred maintenance.

Among the most public recipients of bond funding: streets and sidewalks.

Street funding lagged enough in the 1990s that the City found itself at then-funding levels essentially unable to ever catch up with street repaving. 2005 and 2007 bond dollars have taken a dent out of the backlog, even as the City needs to ensure a steady revenue flow moving forward to more regularly repave streets.

Meanwhile, sidewalk construction got a boost from bond funding, and will see a spurt ahead thanks to federal stimulus dollars.

Also a focus: parks and recreation, which received some attention from a 1996 bond issue, but which press reports noted were in uneven and often poor shape earlier this decade. 

A new recreation center for Walltown figured prominently among the projects, as did a partially GO bond-funded renovation of the old Holton School in East Durham into the Holton Center, a partnership with the County, DPS and Duke. The Holton Center offers Durham's public school vo-tech courses, along with a recreation center, health and wellness facilities, and a general anchoring of the Driver Street corridor.

Not to be left out: the renovation of historic Durham Athletic Park downtown, transformed from crumbling to a point of pride for the City.

For these projects, the City turned to a strategy of using outside construction management expertise through companies like Skanska to manage large capital projects, arguing that in a time of escalating materials costs and underdeveloped competencies in in-house major project management, the City would save dollars by outsourcing much of the work to third-party bidders. In the case of smaller projects like park renovations, the City bundled those into packages for bidding.

Interestingly, today's Herald-Sun has a good story by Ray Gronberg, noting the new philosophy that Bonfield and new General Services director Joel Reitzer are bringing to that methodology. Construction manager at risk (CMAR) contracting seems destined to stay for large, complex projects like the DPAC -- which came in close to budget, and well under the cost levels seen in other cities -- but the City is demonstrating big opportunities for savings by separately bidding or managing in-house those smaller, less complex efforts like individual park rehabs.

That's also possible in part, the H-S notes, because the massive glut of bond-funded projects from 2005 is largely underway, giving City staff more time to "DIY" the remainder. Generally, projects have moved along over the past few years -- though it took a while for a number to get off the starting blocks, as the Capital Projects Advisory Committee complained.

Not to be left out: long-neglected investments in water and sewer infrastructure, long hampered by the fact that Durham's water rates were in the lowest decile of all North Carolina cities. The decade's droughts provided political cover to raise water and sewer rates, encouraging conservation while also providing a better base of funding for water supply expansion, from new connections to Jordan Lake to sewer line replacements to automated water meters.

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On the County side, school construction has been the most noticeable beneficiary of bond-funded initiatives. New elementary schools opened at Creekside (South Durham) and Spring Valley (Brightleaf at the Park), while DPS has continued major renovations at a number of middle and high schools to accommodate both small high-school options (like the City of Medicine Academy) and other new initiatives.

A new high school is in the planning stages, though site selection already proved controversial when a site adjacent to Duke Forest was proposed. And more middle and elementary schools are on the way, including Durham's first-ever Montessori magnet middle school at the old Lakewood YMCA site.

Also highly visible: Durham's libraries have been in a major growth pattern, the most significant expansion since the main downtown library was built in the late 1970s.

New branch libraries opened, first in eastern Durham County and then North Durham, replacing in the latter case leased space in a shopping center. The Southwest branch is under renovation while the new South library is under construction near RTP.

The main downtown library saw exciting plans drawn up -- but its construction is on hold until the 2010s, as a new bond issue is needed to fund the project.

The Human Services Complex is under construction on the eastern edge of downtown, though not without controversy over its displacement of older commercial buildings to become surface parking, and a fear that surface parking plus a design that isolates green space to the building's interior fails to activate the structure for human-scale activities.

Meanwhile, the county is steaming ahead with plans for its new courthouse. It says something about the fact that the 1990s-era county jail was such a prominent addition to the skyline that the County Commission was eager to see the new courthouse configured in such a way as to be tall enough to mask the sight of the jail from the Durham Freeway.

Both the Human Services Complex and the new "Justice Center" will likely be built using short-term debt, with the County leveraging its AAA bond rating and a favorable interest rate market to construct now at a time of low costs, then use take-out financing to provide longer term dollars.

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The most important factor in this spending: voters, who supported a range of bond referenda over the decade.

Only a 2008 proposal to implement a local-option sales tax to pay for trails, museum projects and other cultural amenities -- itself not a bond issue, but a revenue stream option to support borrowing -- failed.

2007's school, museum, streets and sidewalks bonds all passed with 70%+ of the vote. The 2005 City bonds hovered between the low 60s (parking decks) and low 80s (water/sewer, streets and sidewalks, public safety) in winning approval. Similar margins supported the 2003 and 2001 County issues.

The strength of support for the County issues in the early 2000s came at a time when confidence in City government was significantly lower than it is today, which certainly means it wasn't a bad thing that the City held off until '05/'07 with its own debt package. 

We'll talk more about the regaining of voter confidence at the City (and school board) level later on in our countdown.

Comments

[Todd P]

Although the city and county have made some good first steps in catching up with the prior neglect that many of our long-term elected officials had a hand in creating, there is still a long way to go.

Schools, roads, sidewalks, parks, rec centers, fire stations, bus shelters, etc - whatever your priority, there are many more projects that need to be done than there is money in the pipeline.

Our elected officials need to keep the capital money flowing to keep the backlog from getting even worse. Paying for basic maintenance like street paving and painting schools out of the general fund instead of bonds needs to be part of that.

[wishing upon a star]

Here's to hoping in 2020 at the next lookback, the disaster known as the Loop has been fixed along with restoring the N/S one-way thruways to two-way streets.

And some significant dollars and efficient follow through put towards taking greenways from plans and ideas to finished and linked up realities.