Oh, [Music] hey. [Music] Number [Music] n. [Music] Down. [Music] Heat. [Music] [Laughter] [Music] Double down. Dang it. [Music] Ble. [Music] Ning [Music] heyday. [Music] Heat. Heat. Heat. Heat. [Music] Hey, hey hey. [Music] Ooh. Ooh. [Music] Oh. [Music] Oh. [Music] [Music] Heat. Hey, heat. Hey, heat. [Music] down. [Music] N down. [Music] Down. Hey. Heat. Heat. [Music] Heat. Heat. [Music] Heat. Heat. [Music] Hello. Hello. [Music] Heat. Hey, Heat. Heat. Heat. N. [Music] Heat. Heat. [Music] All All right, welcome everybody to the work session. Uh we will turn it over to um I don't know, city manager or Ken Bowers who will do the first section on tax increment reimbursements. >> Yes. Good morning, mayor and council. We have two items today that are kind of related and interrelated. The first of which is the tax increment reimbursement program. We have Ken Bowers with planning and development to present this item. Thank you, Ken Bowers from Planning and Development. So what I'm going to present today is uh staff has prepared um an amendment to what to the program formerly known as tax increment grants and we have changed the name to more accurately reflect what it actually is which is special type of reimbursement based partnership that would be funded out of the tax increment generated by a development project. So why why are we looking at this? So Raleigh is a high growth city has a lot of development projects springing up all over and with that development um uh activity comes impacts but also opportunities to look at partnerships and partnerships allow the city to uh shape and leverage development in a way that you can't do with regulations alone. So, we have legal limitations as to what we can get out of the regulatory process, but if we're willing to partner with developers, we can get um we can enhance projects beyond what the regulatory environment would allow us to do. And so, um the other key thing is that uh sometimes you don't know that there's going to be an opportunity into a specific project is proposed. So, you want to as a as a organization position yourself to be able to capitalize on opportunities when they arise. And a key part of that is being able to commit funding. And so by looking at the tax recommend as a source for funding, it allows the city to act quickly when opportunities present themselves. So how does it work? You start with a site that's worth, say, $6 million. Where did I get this figure from? Um multif family land in Raleigh is worth about $30,000 a buildable unit. And a typical mid-rise apartment building like you see being built over all over town might have 200 units in it. So that produced a land value of $6 million. And when it's done, it's worth $60 million. Six, actually $600 billion because you got or 60 million is worth $60 million because those finished units are assessed by Wake County at about $300,000 a unit. And that figure actually is also drawn from reality. That's roughly what many of the new apartment buildings that have recently be completed, such as Seabort Station, have assessments a little over $300,000 a unit. So that creates a significant tax increment. And so the land before development only paid $21,000 a year in city property taxes and after development it'll pay $213,000 in property taxes based on current rates. So that that increment that $192,000 of extra money flowing into the city's uh adalorum tax receipts is the source potentially for financing stuff. So the the develop the reimbursement from developers would come out of this annual tax increment for some period of time. So like the tax increment grant, you're benchmarking it against these future tax payments. You're essentially um reimbursing the developer a certain share of that over a certain period of time. and the specific share and the length of time would be something that would be negotiated based on the size of the reimbursement that's needed to fund the thing that your developer is building on your behalf. So, a little history, the the current tax increment grant policy was adopted back in May of 2021. Um, since that time, uh, the policy has never been used. There have been no tax increment agreements um uh entered into uh between a development entity and the city of Raleigh. The original statutory basis for that was the economic development statute. Uh in October of 2023, the city council adopted some ordinance that allowed us to use some different statutory authority specifically for reimbursement um agreements. So those either are transportation projects or they are items that are uh within the city's capital program. So for example, if a greenway trail is um part of the city's capital program and uh a developer is building adjacent to that and builds the trail on our behalf and we reimburse them for that work, that would be done uh pursuant to that type of authority. Then in April, um, staff brought forward and and and this council adopted a partnership policy. And that partnership policy talked about the terms under which the city would enter into a partnership. And a reimbursement agreement is one type of partnership where a developer builds something extra alongside their development project. And we uh work to offset the cost by reimbursing them for a portion of that cost, either all of it or some of it. Um, and so that policy guided how we evaluate them, what sort of due diligence the staff does, what the public process is, and what the the process is for council involvement. And so here we are today talking about this new um replacement for the tax increment grant policy, which is the the where we have given the acronym TURP for tax increment reimbursement program. There a lot of animations here. So what are the key features of the program? It is flexible because it can fund projects from small to fairly significant depending on the size of the project, the private project that is being subject to the tax increment. So a single, say, apartment building would be able to fund several hundred,000 worth of improvements. Something the size of a downtown southscale project would be able to fund several million dollars worth of external improvements. Um the second thing is a very low risk. The city's not borrowing any money. So, this is not like tax increment finance, and we'll get into that. Um, then the payments don't start until the benefits are constructed and in public use. And then it's responsible because by basing it basing the reimbursement payments off of a share of future tax revenues, you're assuring that there'll be positive cash flow in terms of tax receipts in every year that the reimbursement is active. You're never reimbursing more than is flowing in in new property taxes. So, what kind of projects can we use this for? The first category is economic development and this is very much a carryover from the existing tax increment grant policy. This is what it was structured around. So you've got a major mixeduse project and you want to finance some public um facilities or attractions that could be a sports venue. It could be a performing arts venue. It could be, you know, a major open space attraction that's allied to a private development project. But in order to meet the test, it has to be something that creates a lot of jobs and supports economic sectors and grows the tax base. So because of the job creation, a purely residential project wouldn't have qualified for a tax increment grant under the old policy. Under the new policy, you can also use the same tool for financing smaller, more modest things. So I used the example early of a single multif family building has about a $60 million assessment. If you do some math um with a, you know, projecting say a 10-year payout based on 50% or so, you could finance maybe $700,000 worth of public improvements. What kinds of things might you do with that kind of money? You might enhance a transit stop. You might make pedestrian improvements to an intersection. If there's concern in the neighborhood about traffic calming, you can't really require off-site improvements, but you could enter into partnership to pay for, say, traffic calming on adjacent neighborhood streets to mitigate the impacts of a development. So there's all sorts of things like that that would fall into that financable range for a more modestlysized project that could be purely residential or you could enter into a reimbursement agreement using this tool. So what are the project requirements? It's got to align with city plans and goals. It has to have an agreement value that can be paid for by the tax increment. And we put a sort of minimum figure on there just because there's a certain amount of administrative overhead with doing a program of this nature. So the, you know, the value of the agreement to the city has to be at least $200,000. It's finances stuff that would not occur but for participation in the program. The the tax revenue is sufficient to cover. And we're also requiring the developer to at least make a request of Wake County, even though I think in many cases the type of stuff that would be um that would be uh uh financed could be would be financed basically through city participation only. But it's important to remember that the split between this on your property tax bill if you live in the city over 60% goes to Wake County less than 40% goes to the city. So with county participation the amount that could be financed is significantly higher and so for regional facilities or things for which there's a county interest if the county participated that could um generate a lot more financial power for this program. So, just to highlight again, risk is very low. The developer is building the thing and getting paid back. So, they're essentially assuming the risk during funding and construction. Um, reimbursement doesn't occur until the tax increment is on the books. There's capacity limits that would uh uh prevent too much of the city's tax base ending up in this program. So, 2% of annual tax levy. And then there'll be reporting in the budget of all these outstanding agreements. This is similar to what the Charlotte does with their tax increment grant program. So, it'll be very easy for the public to find out what agreements have been approved and what the what the uh financial implications have been for the city. But remember again, this is paying for stuff that wouldn't otherwise not be be existed that we're using a partnership as a way to deliver that those public benefits and infrastructure. So, what are the major changes? The legal basis is broader under under TURP than it was under TIG. the eligible projects are more numerous and can be smaller. Um the reimbursement schedule is is instead of saying this is what it is, it's it's going to be subject to negotiation based on the terms of the agreement but never more than what can be financed out of the tax increment. And then the uh instead of having a custom process that has that is different from what's in the partnership policy, we're just using the same process as for any other partnership agreement under the council adopted partnership policy process. Then I want to talk a little bit since you know this is being thrown about talked about in the context of other public financing tools or special assessments you know for the TA compared to um tax increment finance which is usually based off a larger district or an MSD which is based off again off a larger district. This is really very sight specific um in terms of who does the work. Uh most of the time in tax increment uh finance or if it's you're using an MSD to make capital projects is the city doing those capital projects. In this case, the developer is doing the contracting and construction management. The financing comes from the developer unlike borrowing against future revenues or using PGO in an MSD. and the the tax rate um that is faced by the development is unchanged in both uh TURP and TIFF. Obviously, municipal service districts isn't is a type of special assessment district and there is a higher tax rate for people inside the MSD. So the next steps are really to answer any questions that you may have and uh have discussion today and if the council was amendable, this would appear as a as a special item on a future agenda item um special agenda item and uh were you to vote it vote it out favorably, then it would be a replacement for the current uh tax increment grant program. So with that, I'm ready to take any questions. >> Thank you, Mr. Bowers. Do we have questions? uh councelor Silver and then uh councelor Patton. >> Uh thank you Ken for the presentation. Can you just clarify again go over how that future assessment is determined? Is that negotiated? I know the way county is the one that determines current assessment but just explain how that is projected out over a period of time. >> Right. So the the all this will be subject to the particular negotiation of the agreement. But the tricky part of course is that when you enter in the agreement you have typically um engineers estimates of the cost but not the actual bid. Although you could try to defer it until you add the actual bid which will give you a more accurate thing on the cost side. And then until the the building is constructed, you have an estimate of what the tax revenue will be, but you don't have it um you don't know exactly what it'll be until the building is completed and the assessor comes and does their assessment. So you have to build into the agreement uh terms that work such those numbers can be adjusted and the reimbursement still hits a target figure by the end. But but the the if you um read the the program and we work very closely with um finance and and and others in the manager's office is that we are basing it on the actual assessment and the tax taxes flow into the county before the reimbursements flow out. >> Okay. Council P. >> Hi again. I have a few but um I might just start with um well anyway I'll just start where I start. Um so one of the conditions of the process is that the applicant will also petition the county right >> for participation. Does the county have a comparable program to this? the the county has um they have a policy that was adopted I think back in 2007 that be related to tax increment finance specifically but um and we have had conversations with the county about the we had conversations with them when we developed the original tax increment grant policy and we have had conversations with them as we've worked on this but I think um at this point they don't have a specific policy that targets this exactly So, um, if they wish to adopt one in order to have a better framework for how staff would evaluate a request that came in from a developer, at this point, we put that into the policy so that the question would be posed, but it wasn't it wasn't if the county said no, we would still work with the applicant to see if there was a viable path forward. >> Okay. Yeah. I wonder if it might be worth further collaboration with the county because I feel like if they don't have a comparable tool, then the applicant's going to ask and they're going to say, "Oh, well, we don't way to do that." >> And I I think we wanted to share this with the council at the work session before bringing it to the county um following this meeting if we want to build a little time in between now and when this comes back on a future agenda, we can have more in-depth conversations. Um, and then I was wondering if you could speak to like it seems like some of the things that could be addressed through this policy update are things we are accomplishing through some other tools. So like for instance in my district we approved a development agreement I think to construct a greenway. Um, so just different like mechanism. >> We did and in order to do that there had to be money sitting in the CIP that we could allocate. >> Oh. And so by pledging future tax increments, you're basically making a commitment in future budgets to budget for this, but you don't have to have the money banked in a CIP account in order to enter in the agreement. Now, in the case of the in case of the agreement that you're talking about, it's very similar in that it is a reimbursement, but it is not pegged at all to the tax increment. And in fact, likely when the payment goes out that year, it'll far exceed what the tax revenue goes in. It's also a one-time payment where the payment goes out at the time that the city certifies that the work on the greenway trail is completed to its satisfaction. So that's the major difference is that you know this is think of this as a subset of reimbursement agreements a special type where the reimbursement is paid to the future tax increment and occurs over a multi-year period as opposed to a lump sum. >> Okay. And so in cases where we have some other type of agreement like in that example, will these projects will we be seeking to re-evaluate whether we've used the right tool or whether we would switch to this one? >> I think that would be for future projects on a case-by case basis. Um we we there might be circumstances where we want to structure the agreement like we did on Lewisburg Road. We certainly won't be revisiting that agreement because it's already executed. >> Got it. Okay, I'll stop there for a sec. >> Councelor Jones, >> thank you so much. Uh, I want to take a look at I understand for the developer side and and the city side. I want to look at the residents portion of it. So, if we're saying that um future budgets are going to be reduced with this whatever that number is um for these projects, do we have an allocation in the budget of which we're going to take that money from or how does that work? Help me explain that portion of it. I think it's hard for residents to understand what part of the budget are they going to be see see affected because of these projects. >> Right. So all advalorum tax revenues flow into the general fund. >> Right. >> So so ultimately if you decide like any other expenditure on a capital project that comes out of the general fund, it'll reduce the amount of money available or other things in the general fund. But it's it is based on the future growth of the general fund that's being that's occurring as a result of this project. So part of the accounting is that you account for this in future capital budgets in the outy years in which the expenditures are going to occur and you cap that so it's never more than a small percentage of the city's adalorum tax levy. But it it does have an impact like any other dollar spent has an impact. I'm not sure if I'm totally answering your question, but >> you may be. That's a lot of words. Um, so I I you you may very well be answering it, but I want to make sure that I'm able to explain it, and I don't know that I can very well explain that. >> Yeah. So, sorry. So, again, the the the cap is set up as 2% of the total adorum tax revenue. If a specific question is, are we accounting for what we're not spending money on because we spent money on things that are financed this way? >> Right. So, if I'm explaining it to them, I just want to make sure that if I say we're we're going to cap it at 2%, where is that 2% coming from that they're going to either see is there a reduction in services? How do I explain that to them? >> Right. So, um what would you say is there's a there's a if if we were to get close to the 2% cap at this point, we're at zero and have been at zero since the TIG policy was adopted. If you were to get close to the 2% cap, um the implication would be is there that was that you would either have to reduce spending by a commensurate amount on some other thing, but that's always decided on an annual basis as part of the budget process. So at the staff level, we can't say what those reductions are, but it's the same it was the same impact as if you spent money directly by financing a capital project. So, so how about we have our CFO come up and kind of address that and member Jones that will make it make sense for you. >> Thank you. >> Yeah. Good morning, Allison Brad with the finance department. Um, the way I think I would answer that specific question is think of it similar to the way PIGO dollars get allocated because really in theory, you know, one of the slides talked about the fact that the city really would have plans to do this at some point in the future. And so if you think about it as the revenues are coming in from the increase of the assessed value which is typical right on an annual basis our property tax number is increasing and we're taking a little bit of that increase similar to the way you think about our payo process and we're allocating it to support that initiative. So that that project that's the way I would >> so I'm gonna say it back to you so that I make sure that I'm understanding it correctly because of the whatever the project is that whatever they're bringing in we're hoping that that is softening that blow into our general fund so that absolutely okay yes >> I appreciate that thank you so much um I'm sorry councelor Melson did you have a question I saw your hand raised and I don't want to interrupt >> oh my question was sort of a part two to yours I always understood it um the project requirements has the but for condition. So really what we're talking about is to even qualify for this, it has to clear the threshold of this project would not occur but for the program. And so then we have this new uh property tax revenue that will come in and it's like a rebate on the property tax revenue. So it's not money that's coming out of our coffers where we're looking at a cut in services. This is anticipated future revenue that would not exist but for the program encouraging the development. >> Is that right? Yes, >> we're just legally not allowed to to do a rebate. >> I didn't mean that in the legal term. I just >> understood. >> Good catch, Allison. Yes. But that's exactly what it is. Um, Council Member Lambert Melton. Um, really making investments to ensure that private investment is made in the community that otherwise would be a public responsibility at some point down the road if it were to happen at all. >> Awesome. Um the I'm so sorry. Did you have something? >> Council member, might I add just a couple quick additional points? Pat Young with Planning and Development. Uh first is Ken said this, but I want to emphasize it. Council will get the opportunity to review carefully each of the terms and approve any of these. And the second thing I'll I'll mention is that even though the private developer would be subject to public bidding requirements and other public requirements, um it has been proven um that very close to 100% of the time the private sector because of existing relationships with contractors can do these projects faster and cheaper than than we can. So it's just something to consider as you weigh out the different opportunities. The other question that I had um and I'm not sure if if Ken this is for you or not, but when we talk about increasing, so right now we're at zero. You're saying we have no no partnerships, no TIG policies, and we want to increase that to that 2%. Um do we have the staff capacity to do that? Are we going to need to hire more people? This seems like a lot of tracking, and I know as we talk about other areas in planning, we say that we need to follow and track metrics over time. Do you see an increased need in staffing for doing this policy or do are we covered? >> So there's two bits of overhead. One is the negotiation of the agreement itself. >> That's kind of what my division urban projects is already doing. >> Okay. >> Um if we started doing many more of these than we're doing, I wouldn't rule out a future budget request for an extra staff person. >> Um but that would because the work we're doing is useful and the council would wish to support it. Um on the uh budget and finance side, I'll defer to our CFO. >> Thank you. >> Yeah. Good afternoon again, Alison Brader with finance. Yeah, from an administrative standpoint, we can absolutely manage this uh from an administrative perspective. So, I think we're okay. >> Okay. Fantastic. And then lastly, I think there were a lot of uh I know you mentioned in the backup materials, there was an ordinance that you mentioned here that we enabled in 2024. Um there is the pol the I'm sorry let me find my notes as to where I had that the my whole overall point because I can't find where that note is is policy there it is the partners polish partnership policy um I don't know that I saw those as we go towards this can we make sure that all those documents are there just so that I can reference it and I can see how we got here and then >> absolutely >> thank you I appreciate [Music] Hello, me again. Um, just one more from me. Um, I wondered if h housing benefits will be a considerate considered uh public benefit as under this. I I've seen that some others well while we often use the term inclusionary zoning that's like unfunded. I've seen some papers from other states about funded inclusionary zoning. I believe they use a tool or approach similar to this to offset uh costs of that and I wonder if that is a thought on how we might use this tool. That's that's a good question. um we haven't written it specifically with that purpose in mind. And I think the the reason is is that the the in order to put public money into a affordable housing project, you need an inclusionary threshold of of at least 20% of the units. And we're not sure that this is enough funding to support that level of inclusion. Um but it's something that we could look at. and uh tax, you know, in in communities where formal tax abatement is legal or if something is publicly owned and can be tax abated because it's publicly owned, that can be a very powerful tool for affordability. So, it's a very good point to raise. >> Uh I have a question just about the general assembly and local government commission. So all of Are we the only city doing this or what are the other cities? You may have already mentioned that. Um and then all of this is copacetic. >> Yeah. So no special authority is needed for this because again it's we're using existing reimbursement authority that'll either fall under those two those ordinances will be adopted the economic development statute or be executed through a development agreement which might be a common tool. The original model for this tax increment grant policy was the tax increment program in Charlotte and Charlotte has been doing this for for many years. Um so they have a lot of experience with it. They mostly execute them through development agreements. >> But they may exclusively it's been when we were researching the tax increment grant they had all been done as development agreements. So um because and I don't believe there's any um involvement in local government commission because the city's not doing any borrowing. >> Thank you. >> Uh one more question. I saw in the uh backup materials that this would it would have to be aligned with the comprehensive plan in order for this to take effect or in order for them to be able to ask for it. So, I'm wondering if that's true, does that mean that that this requirement would prevent them from applying for a reasonzoning or will that be up to council? Like, will you as staff say, "All right, here you've met this, met this, you meet with this," or is this something that you'll say it kind of meets and it doesn't hit this one, but we get to decide? So, um it would not either to my mind it would be something that would be rel uh could be related to resoning in the case if it were a development agreement that were being brought forth alongside a resoning case. Now the standards for evaluation of resoning case if the development agreement is part of that and there are impacts you would have to decide does the development agreement create an avenue for addressing the impacts adequately that I believe that approving this resoning is both consistent with the plan and reasonable and in the public interest. I think most of most of the time those types of reasoning decisions would be based on factors that were outside of the development agreement. But there could be circumstances under which a development agreement might >> be mitigating impacts that would otherwise be of a concern about the development such that it tips the scales in the minds of the council members to to be more inclined to vote in favor of it. But that's very hypothetical. >> Got it. Okay. Thank you. >> Any other questions? Okay. Thank you. >> You're welcome. >> We will move ahead to the annexation practices and associated growth policies and Matthew Clim. >> Good uh afternoon. It is now uh mayor and council. I'm Matthew Clim with planning and development. Uh we're excited to speak to you today about what is very important issue of managing the city's uh growth at the city's edge. So the purpose of today's meeting is to share information, respond to council interest on the current annexation practices and provide options for adjustment for our annexation practice while we conduct some cost of growth analysis that I'll talk about in just a little bit. So um today we will recap our previous council engagement on the matter, walk through our existing annexation framework, uh what constitutes annexation eligibility, uh and focus on why these decisions are important and why some require more scrutiny than others. Uh staff has worked with each of our service delivery departments to discuss impacts and concerns regarding annexation practice and how they'd like for us to involve them in upcoming analysis. Uh and of course while we're starting on some annexation work now uh with our cost of growth analysis the reflecting Raleigh process will consider new policy guidance uh for the council regarding uh growth and annexation um and be part of our next comprehensive plan. So, in the last year and a half, uh there have been several council touch points on annexation, including a presentation at your January retreat, an update, uh in the manager weekly report, uh and some council action related to public utilities policies and the adoption of the fire service master plan. So, I'd like to start with our historic annexation practice. Um so, since 1792, the city has consistently grown out outward from our thousand acre William Christmas plan to the 50 square mile corporate limits that we have today. So this map shows the William Christmas plan uh in the center of the map uh here and um you can see the orderly growth patterns uh emanating from the the center and and larger tracks of land um through the 1920s50s and60s. Um uh this map shows intervals of growth over the last 233 years. uh and it may not come as a surprise that our practices have changed uh in that time. Um a particularly impactful change uh was in 2011 when uh North Carolina towns and cities uh lost the power to conduct involuntary annexation. Um so uh this map highlights uh the tracks that have been annexed uh after 2011 uh and they're shown here in yellow. Um and really the key change in how the city operates and provides services and delivers infrastructure since 2011 is um without the ability to perform uh involuntary annexation. The city is now responsible pro providing infrastructure and services upfront whereas previously before 2011 properties would develop at the city's fringe uh to city standards so that when um there was a baseline of tax generating properties in the edge of the city. The city could come in bring those properties into the corporate limits get tax revenue from them to provide the full suite of city services. Um so that was a big change in how the city grew over time. So this table shows a dip in um annexation area that can be correlated uh with the change in 2011. Um so uh yeah this table shows uh the years and the acreage uh annexed over time. Um and now uh you can see that there has been lower levels of annexation uh since 2011. Um, so under the 2011 legal structure, properties are brought into the city are less likely to have tax generating uses on them and much more likely to have lower levels of service uh on day one, but we're still responsible for providing our full suite of services. So again, city costs are upfronted uh and there more early obligations for service with a checkerboarded service area without large contiguous areas to serve. Um that makes cost higher for the city and service efficiency lower uh and tax revenue uh often lower per acre as well. Um and this highlights a fiscal disadvantage for the city in terms of collecting taxes uh to provide public services. So in short, we know that we're uh required to upfront services now um and wait for tax revenues as development increases over time. So uh regarding service costs, this map highlights the total assessed value per acre and shows where tax revenues come from across different parts of the city. Uh you can see the highest tax value generating land is in and around downtown and in high activity centers like North Hills, Crabtree Mall, uh the Village District, and the Blue Ridge corridor. Um later I'll talk through an example of uh Rivertown. And you may ask yourself, uh why can't I see Rivertown on this map? Um yeah, that's right. Uh and uh the reason you can't see it on this map is because it's undeveloped now and is generating very little tax revenue. Um so to sum up, annexations result in new tax revenue uh and density generates higher tax revenue which helps pay for city services. So our current annexation practice um how are your annexation decisions structured today? Well, there are several council adopted resolutions that dictate how and where annexations can be uh considered. Uh these council actions define what is eligible for annexation. Um we can go through each of these in more detail uh if you'd like, but I think it would be more helpful to show you uh instead. So this map shows in dark green what is currently eligible for your consideration. Um, so properties that are shown in green, those property owners, developers, uh, have the right to petition the city council for annexation. Uh, and you at the end of the day have the decision whether or not to annex them. Um, these properties qualify for annexation consideration for being inside of our extr territorial jurisdiction or ETJ uh, and being contiguous to corporate limits. Um, so why does this matter? Well, the more land that is annexed at the city's edge creates more land that becomes eligible for future annexation petitions. So, um under this structure, uh this will continue our trend of spreading further into the fringe as more properties are annexed, more properties become eligible. Um and so the story goes uh out into the fringe. So, there are currently 23,000 acres of land eligible uh to be annexed by the city. Uh that's a big number uh to put it into perspective. Um that's about three night dales worth of land area uh or five zebulons. Um our current eligibility does not represent a significant expansion in service area as most of this land that's eligible has been in our extr territorial jurisdiction for a really long time. What that means is that our plans and service departments have been preparing and planning to serve these areas in the long term. Um and based on current trends, we anticipate that this eligible land uh represents about 20 years of voluntary annexation um to accommodate uh demand for growth in the near term. Um and also additional revenue in existing service areas uh can improve the ability of the city to provide highquality services. So, when you get an annexation petition and it's a small single lot that is surrounded by developed area, a subdivision somewhere, those properties are uh people living or using those properties are benefiting from city services. They're using our streets and sidewalks. They're visiting our parks, but those areas uh and properties are not contributing to the tax base. So, they're they're getting city service and not contributing to to how we provide them. So, um back up to Rivertown. Um this map shows our planning jurisdiction in light blue and our corporate limits in dark blue. Uh and the the burgundy color is what um is eligible on this map. Uh you can see Rollsville to the north and Nightdale to the south. So uh Rivertown was annexed in 2006. Um and earlier this year a joint resoning annexation uh request was approved on March 4th. Um, so the parcels in red on this map show what was eligible before uh the annexation and resoning was approved. Um, this is the new annexation eligibility uh based on that action. So based on North Carolina law and our adopt resolutions, this annexation uh decision has activated the next generation of annexation creep into the fringe. So um the pattern can continue. Uh if these properties uh are annexed then more properties at the fringe gain eligibility and so uh and so the story goes there. So um above all else the city provides public services. Those services are paid for by tax revenue. Um some types of development uh generate more tax revenue, some less. um some types of development cost more to serve and some less. So pairing high cost of services with low tax generating uses puts the city at a fiscal disadvantage um to provide services uh in the long term. So we generally know that the cost of services per acre downtown are less per capita and per acre um because of the grided street network, the amount of belowground infrastructure needed to serve dense development uh trash collection, police and fire services uh multimotal access to parks, jobs and services all support lower per acre service costs for the city. Um those areas also produce far more tax revenue per acre uh compared to other areas of the city. Meaning that excess tax revenue from low cost to serve areas is effectively subsidizing high cost to serve areas with lower tax generating value. So these pockets of more fiscally productive developments around the city are essential for providing quality public services everywhere in the city. Um right. So now uh on to what's next. We're um working through the reflecting rally process. Um we have a clear uh information on tax revenues coming from and less specific information on the cost disparity uh of service provision across the city. We know that some areas cost more to serve than others. Um so through the work of reflecting Raleigh the next comprehensive plan uh we are working to solicit consultant proposals for a cost of growth analysis. Um this work will include cost and revenue information for the whole city and help to inform annexation and development decisions throughout the city as well. Um and that work will include a capital needs assessment and analysis on all city fees. So some t uh key takeaways for you today. There's plenty of land eligible today for annexation to accommodate near-term near-term growth. Um, annexing existing eligible land does not create significant new service challenges, those infill annexation sites. and conducting a cost of growth analysis will give us more fiscal information regarding our long-term service commitments uh and provide council more detail on the cost of expanding the corporate limits at the fringe um beyond what is currently eligible for annexation. Um so again next steps uh we are working to solicit um consultant bids for a cost of growth study that will be a part of our reflecting Raleigh uh planning process and when that work is done we'll have more cost and revenue information to help you make um annexation and growth decisions. Um what does that look like? Again we know where the revenue is coming from. Uh we know what the overall city budget is. uh our overall cost to serve. What we're working towards um is understanding the difference of cost in different areas of the city. Um what locations cost more to serve um relative to uh tax generation per acre. So um this is some data that we have regarding some transportation costs. It's it's two-dimensional. So um looking at at a skewed aspect will help understand it better. But what we want to know is where in the city does it cost more to serve our full suite of services um and what the disparity is across uh the geography of the city. Um and that work is coming. Um so we're looking for council guidance regarding annexation eligibility. Um and some potential options include establishing a fixed area for an uh annexation eligibility based on the current conditions. Um and if we do that, uh staff recommends a period of 12 months so that we may conduct our cost of growth analysis uh and come back with more detailed information on um what the fiscal impacts of those decisions are. Uh this will allow uh us to again conduct the study and give you better information to help inform these decisions going forward. Um and with that, happy to take questions. >> Okay. Um well I'll start with councelor branch and then councelor silver and patton. >> Definitely thank you for the information. A couple questions. My first one is when you come back with information, can you also include um the cost impact cost analysis of our regional partners? Because as they grow, we're providing services to them as well and there's a cost to us and my question is is the cost recovery what's the delta of that cost recovery? Um because I think for us to have a complete picture of it on some of our services, we can't just look at Raleigh proper. We have to also look at our partnering communities that we're providing services to. Um case in point, city of Raleigh truck I just saw the other day in Garner working doing work. So I know we're providing those services. And the my second question is also can we have a cost analysis on those um areas that we're providing services and they're not in Raleigh proper. They're not they're they're in our ETJ. They're getting our water and they're getting our sewer. Um and we're giving it to them already and they're paying an out of um of city fee. But what is that fee comparable to the services that we are providing? because that will also help us I think in determining the future and and how we go forward because if we're providing services and they're not really paying the cost for it but yet around them we're saying hey you're on the fringes we don't want to incor incorporate you it may be better incorporate somebody that's asking to be incorporated um who's on the fringe to help cover some of that cost recovery. >> Yeah, absolutely. So, our uh cost of growth analysis will include all of our service delivery departments, including Raleigh Water. Um, and so, yeah, we will have that back with our cost of growth analysis. >> Councelor Silver, >> thank you so much for this presentation. Others have questions. I'm excited to see this. I know there was a section, a chapter in the previous conference plan. I expect there to be a new one. And I'm also delighted to hear about the cost of analysis uh work that you're going to do. I I just want to be clear on let's say Rivertown as an example. That was not even within our extra territorial jurisdiction. It was about 2 or 3 miles from our border. And as I understand it, that was annexed in 2006, 19 years ago. We provided utilities to that track. Is that correct? If I'm saying >> I I believe I can uh have public utilities. >> Yeah. I just want to confirm because >> the point I'm making is that you know as we have this debate particularly I know we have the acronyms NASA and CESSA that I want to make sure as we have this conversation and public understands there were commitments with this resoning. This is important. It was a large track. The city provided utilities to this track and in 19 years it has not been developed. But now that it's been established, all these annexations are now being brought to us contiguous to well be careful a ghost uh of of a track that was brought into our annexation. and that we the taxpayers just want to understand the cost of how we're subsidizing a ghost subdivision that has created all sorts of implications. So I just want to be clear as you come back using that as kind of a poster child. It's important for the public to understand the implications. Will that something you do during the reflect reflecting Raleigh process or that's something that the consultant will do to their cost of uh growth analysis? >> Yeah. And those those are one and the same. The cost of growth analysis is is part of the reflecting Raleigh um planning process. So uh as part of that work, we're looking at cost of service across the city and expanding into the fringe. So getting the information on what our obligations are will help us create new growth policies for your consideration, adoption, and and how we continue to grow at the edge. >> My last question is there were some discussion when I came on board about the growth areas. I know you didn't cover it in your presentation. We have our extr territorial extr territorial jurisdiction and then we have both north and southeast of these growth areas. Uh will that be part of the analysis so the public understands what is ETJ mean? What is these service areas mean so they understand how growth occurs and the fact that all the surrounding jurisdictions have kind of claimed that territory if somebody eventually wants to annex in. So will that be part of the reflecting Raleigh or that'll be part of the growth analysis so the public understands what these these white space means? >> That's right. Yes. Uh it will be a part of both of those. Um so the northeast special study area which you see here um the borders of that were established by the annexation agreements with our neighbors um as you stated. Uh and what we need the cost of growth analysis to do to create the policies in the next comprehensive plan of how we grow is get a better understanding of what it would cost to develop these areas at various densities or when that occurs as other services fill out to serve Rivertown and Rivertown upstream here or whatever we call that um next development. Um yes, all of that will be included. >> Last question. This is kind of a yes or no. So you say we have 20 years of growth within our extr territorial jurisdiction. So as we look to this, we don't have to move into the whites space. There are 20 years or 23,000 acres of growth that could be absorbed over 20 years if you absorb a,000 acres a year. So I just want to be clear that the recommendation from staff or at least for council to consider is to communicate we have 23,000 acres, 20 years of growth. We do not have to contemplate going into the white space in the Nessa and CESA. >> Great. >> I'm confused because part of your CESSA is in the ETJ and there's a plan. So, can you help me understand what part of that cuz that's NASA, that's the Northeast study area, but the Southeast study area. >> Oh, it's within the ETJ. Yeah, >> part of that is already in our ETJ because I know when we did the the property off of um Hajj, >> which was should have been phase three, um that part was already there. So, I think that's the best map you have that shows the CESA part in the bottom. What part of that is already in our ETJ? >> Good morning. Bam Walter, planning and development. I first want to speak to Miss uh Council Member Silver's question about the 23,000 acres and the 20 years of growth. Um the what we are saying is that at the current rate of annexation of voluntary annexation of about a thousand acres a year, it would take 20 years to get all of the ETJ into the city. I don't want anybody to have the understanding that that acreage would support the growth necessary to to support population growth of 20 years. I don't know the answer to that question. That's part of why we're doing the comp plan. Right. And then uh Mr. Branch, your question was about uh this part of the uh corporate limits and ETJ. So you can see in blue in this area the corporate limits. You can see in the dark green what's currently eligible, right? And the dark green is generally what's in the ETJ currently, right? Does that help with your question? And and so, um, the Southeast study actually goes down past off of this map. >> Correct. >> Uh, you can see this line here, this dashed blue line out here. That's our right now. The state regulations say that um anything that we annex must be within a certain distance of our of our corporate limit. And so that's showing you sort of outside that line. Those things aren't eligible anyway per state law. Even though there have been some uh longheld community studies with the county that have said in the long run, Raleigh will serve way out here. But that's been the shared understanding for 30 years and it hasn't happened yet. So, >> right. Yeah. And I just want to draw the clarity of of the 23 that was mentioned because I mean on our agenda today, we have some annexations and if we approve those annexations, this map automatically changes. >> Exactly. >> I just before >> you totally got the takeaway. Thank you. >> Before we go to councelor Patton, I just want to say for the record, I did not vote for that. I got off council in '05. I was not part of Rivertown. Yeah. Just want to be clear. >> I think Councilman Silver was the only one. [Music] >> All right. Council Patton. >> Sure. And I think we can all agree that was that was a poor decision by the policy makers at that time and we're all bearing the current implications of that. Um but I have a couple questions. Can you go to the one of the Nessa zoomedin maps that you had on earlier >> here? Uh yeah, that one's a good one. Um so before I get to my question, I just wanted to um kind of put an asterisk on council member Branch's point from earlier. as you are doing cost of growth and cost of the full suite of services. Um, I'd just ask like all departments to be, it's not directed at unit, just sort of generally speaking, but um, all uh, departments to be like quite realistic about it because in some hallway conversations I've had with public safety providers, I've said, "Okay, but what really what is really going to happen on the ground if this person calls 911 today with a fire or a domestic or whatever?" And the answer is like, "We're going to get them services." is like ultimately at the end of the day we don't want someone's house to burn down and we're not really going to just like drive like ignore their house if they're you know beside the ETJ. So I just um you know I those those are just things that stick in my mind. So just if we can ask all departments to be like really realistic about what happens to these parcels that are near or mixed in or these doughnut holes and all of that. So that's kind of an aside. But then related to this map, I just want to make sure I'm understanding the question that's called does city council wish to establish a fixed area eligible for annexation for a period of time perhaps 12 months. So in a So am I understanding the question that you would kind of draw a little line around the you know like around these burgundy parcels and be like for the next 12 months only the stuff inside is eligible and all that white area is not eligible while we have this assessment. Is that kind of what you're saying? >> Absolutely. And so uh another way is any annexation action by the council does not create new eligibility from newfound um adjacency. Right. Got it. >> So you annex these but >> these are not eligible based on that action. >> Got it. Okay. Yeah. I would be supportive of of that. like just kind of drawing a firm line and saying like if you're inside of it, you can still proceed as normal. People deserve predictability, but we can't kind of continue the pattern of like peppering new ongoing new eligibility. >> Yep. >> Thank you so much. I just have two. Um, again piggybacking on uh councelor Branch's comment, I saw in the backup materials that uh we have the Raleigh Durm annexation agreement and that's that's up near me. I would love some just a debriefing on that so I can better understand as as those decisions are made. So, however you and I can meet for that, that would be great. As well as the property between 540 and Strickland Road wershed policies, those two that you noted, I would love to have a a deeper understanding and conversation about. Um and then second question uh as we look at these annexation reports and and I'm I we we I've mentioned it at different ones I feel a little bit underprepared. I'm like uh and I I look at whether it's the fiscal impact over 10 years and I'm like wait but balancing it and and how what are we what am I missing in in annexation reports so that I'm not making the decisions based on something that really shouldn't be taken into consideration. >> Yeah, two pieces to that. One, the cost of growth analysis will give you better information to inform future decisions. >> Okay? >> And two, I think if I can look at this map, >> um, like this green area here, right? This little green dot that is surrounded by city services that is surrounded by our infrastructure. Folks all around are on our trash pickup schedule. Water and sewer exist in the ground. Um I think you could think of these areas as service committed based on existing infrastructure and existing levels of service. Um areas outside or currently un ineligible for annexation or at the fringe would could be considered service expansion areas. So um where new services will be needed um to bring uh those properties into the current levels of service for the rest of the city. So I would kind of um evaluate them that way like are are these service committed areas or are these service expansion areas? >> Okay. Thank you so much. >> Just one thing that I hope we can consider too um and looking at look at the size because if you get if for some reason some big company or some someone large comes in to an area that is right on the fringe but it's taking up 600 acres. I think that's something that we might want to at least say bring that to council for council to consider or whatever. So just something like a trigger size-wise you you know you all are the experts you know what is reasonable. So something just to think about. >> Yeah and just to respond to that like there is a certain strategic scale of a decision and I think that's kind of what you're getting to. >> Okay. Any other questions for Mr. Climb but not now. >> Okay. If not that concludes uh this uh topic and also our work session. >> I got a question for you. So I got two people that are going to speak. [Music]