Debt down, fund balance up as Henderson County eyes $150M in capital projects

Commissioners began planning the county's upcoming $178 million budget on Jan. 19, hearing that debt is falling off, and savings are piling up as it weighs capital projects that could cost the county upwards of $150 million.

At the Henderson County Board of Commissioners budget retreat, County Manager John Mitchell pointed out that halfway through the current fiscal year, the county's expenditures and revenues are right where they should be, at around 50%, while a boost in sales taxes and money saved from lapsed salaries has bolstered the county's fund balance.

Local option sales tax revenue was budgeted to raise $28.1 million in fiscal year 2021-22, and was $2.4 million ahead of pace through October, according to figures Mitchell shared.

The county budgets $2.34 million per month for sales taxes, and in just July-October of 2021, totaled more than 11.8 million, following a general trend of year-over-year growth in sales tax over the past four fiscal years.

Ahead of a 2024 revaluation that should see significant increases in property values in the county, revenues from property taxes are where the county expected them to be, Mitchell said, but the county is trending ahead in building permits and fees along with sales tax.

"The capital reserve fund is healthy, the debt service fund is healthy," Mitchell said. "And another big takeaway is that over the next four years, the outstanding principal in debt that the county owes is going to decline by a third."

That total, at $152.6 million for the current fiscal year, is forecasted to drop to $100.4 million by fiscal year 2025-26, according to numbers presented at the meeting, with payments of $16 million in the current fiscal year and $13.6 million in the following three years.

Going into the 2022-23 fiscal year, Henderson County is holding $27 million in fund balance above the 12% of its budget that county policy requires stay untouched, of which $21 million will be used to cover the gap between expected revenues and expenditures for the upcoming budget, Mitchell said.

More: Looking to 2022: Henderson County manager John Mitchell talks priorities for coming year

That leaves $6 million unassigned fund balance that the county must decide how, or whether, to spend.

Chair Bill Lapsley noted that the fund balance appropriation to cover the budget usually doesn't end up being spent.

"It's intentional," Mitchell said. "We run the county like a business, and as many families do, we set aside money for rainy days or for global pandemics or whatever may come up."

One of the ways the county has done that, he said, it by managing that fund balance.

That budget's total is up more than $13.7 million from the previous fiscal year, thanks in part to $6 million in lapsed salaries and the forecasted $4 million in additional sales tax, Mitchell said.

With a total of around 800 employees, the county is now down to fewer than 70 open positions, but at its peak, that total was around 100, he said.

The proposed $178 million budget is an increase of around $5 million thanks to debt service, added compensation for employees and general expenses, Mitchell said.

Henderson County's current $0.561 property tax rate ranks as eighth among 28 urban counties in the state, below both the average of $0.648 among those counties with more than 100,000 people, and below the overall state average of $0.671.

Henderson County Public Schools

Superintendent John Bryant updated the board on the 13,000-student school system's upcoming roughly $140 million budget, $35 million of which is the county's contribution.

He noted a number of increases including $795,000 from pay raises coming down from Raleigh.

"When the state passed a budget this year, they increased teacher salaries, they increased non-certified personnel salaries, they increased salaries across the board," Bryant said. "Those increases have an impact to our school system."

The state also raised its minimum wage increase from $13-$15 per hour set to cost the county $390,000 starting July 1, he noted, and set a 0.25% increase in the local contribution for a total $310,000.

More: Henderson County Schools votes to reinstate mask mandate

Bryant cited things like state retirement increases and state salary increases as 3.5% in "uncontrollables," that are set by the state, saying it's important for the board and general public to note that just shy of $2 million in funding follows students to charter schools.

In the upcoming budget, $1.5 million is slated for capital outlay, he said, and the school system has $4 million in fund balance.

Blue Ridge Community College

Blue Ridge Community College President Laura Leatherwood noted recent growth in enrollment at the college, saying 2022 is set to see the most students ever for the 53-year-old community college.

Adult enrollment is up 32.5% this fall, she said, following a 41% increase in the previous fall.

"We hit on something here," Leatherwood says, on efforts to spur adult enrollment, and while that's good news, it's driving further needs at the college.

The college also seeks funds from outside the county, Leatherwood said, including two special appropriations from the state for $250,000 for the Police Officer Physical Ability Test building for which the county dedicated $1 million in 2019, and $300,000 in startup funds for skilled trades education.

Another $1.6 million has come from grants, she said, and the college currently has a potential $6 million in grant funds it has applied for, including $5 million from federal COVID-19 relief funds to fund the expansion of the nursing program by 20 slots to a total 74.

Other health care programs, including for medical assistants, nurse aids, dialysis technicians, respiratory therapists, and more are being expanded at the college as well, Leatherwood said.

The college is requesting $6.78 million for capital improvements and $5.64 million in operating expenses, she said, part of the college's total $31 million budget for the upcoming fiscal year.

The college has a master facilities plan totaling $67.7 million that includes replacing the Killian and Henderson buildings for a new student union and more, she said.

$120M plus to update, expand jail, courthouse

A study and conceptual plan on expanding and updated the 1995 courthouse and county detention center by Fentress Architects showed three options for new construction and renovation at both, with the recommended combination from architects carrying an early price tag of $127.6 million.

Different options for the detention center showed new mail housing behind the current building, where the county would need to secure a right-of-way from the North Carolina Department of Transportation that was apparently secured for a road that was never built alongside the railroad there.

Other options include building new male housing for the detention center down the hill to the north, toward 4th Avenue East, where the foundations would have to be elevated to bring the structure at the same level of the current facility, adding extra costs, according to architects.

County Engineer Marcus Jones said the county has secured rights of way from NCDOT before, and agreed with Mitchell's estimate of a 95% chance of success that the county could secure the property there. The project wouldn't require encroaching onto the railroad right of way beyond the NCDOT right of way.

At the courthouse, Matt Hemphill with Fentress said the building scored a 57 out of 100 for functionality, explaining the building just wasn't laid out very well for courtrooms.

The recommendation from architects was to construct a courthouse annex where the public parking area and courthouse entrance are now to house new courtrooms, and backfill the current courtroom space for existing county personnel and new county staff that may be working elsewhere now, to create more of a county complex, he said.

The county moved to proceed with exploring that option for now, as a design phase could last 9-12 months.

VFW Building renovation: $4.2M

Architect Lindsey Rhoden with McMillan Pazdan Smith Architecture presented the latest plans to county commissioners for the Veterans of Foreign Wars building in Hendersonville, which the county purchased and plans to turn into a community center.

More: VFW building could require up to $4 million in renovations

Plans would add 18 parking spaces for a total 58, she said, upgrading bathrooms to be up to accessibility standards in the Americans with Disabilities Act, with elevator and kitchen outfitted with commercial equipment Commissioner Rebecca McCall said has been needed in the community.

The total cost of $4.2 million includes $3.5 million in construction costs, and the county decided Jan. 19 to move forward with using federal funds from the American Rescue Plan to cover the cost, now that the final rule on what local governments can use the money on has been finalized.

Edneyville Sewer: $20M

With $12.7 million in state funding bringing with it a deadline of Dec. 31, 2023 to have a permit for the project in place, county commissioners voted to move forward with the project to extend sewer service to the new Edneyville Elementary School and surrounding area.

Commissioners voted to begin seeking a needed wastewater discharge permit from the state Department of Environmental Quality that Jones said could take around a year to secure.

"I think we need to be talking to DEQ very quickly," he said.

A cost analysis presented to the county by Will Kerr, with accounting firm Raftelis, showed an estimate that a typical customer using about 4,000 gallons per month would pay $56 per month to the new sewer enterprise fund, a cost that includes building $50,000 per year in reserves.

That's $10 higher than what Henderson County charges out-of-city customers, but lower than other nearby systems, Kerr showed.

Will Buie, with WGLA Engineering, said the county could expect about a 20-30-year lifespan for the wastewater treatment plant, planned to initially handle 150,000 gallons per day.

More: After years of prep, it's decision time for Edneyville sewer project

The plant would be built and planned modularly, to add capacity in 150,000 gallon-per-day increments up to the 450,000 gallons per day an earlier study forecasted the system would serve at full build-out.

Lapsley called the project a rare situation for a utility, as it will include no debt service, with funds available from the state and from allocations with the Edneyville Elementary School construction project the county still has in hand, and the potential for American Rescue Plan funds, as well.

The board voted to move forward with preliminary work for one of 11 the county was considering, and to seek a permit for a wastewater treatment plant with a capacity of up to 450,000 gallons per day.

Derek Lacey covers environment, growth and development for the Asheville Citizen Times. Reach him at DLacey@gannett.com or 828-417-4842 and find him on Twitter @DerekAVL.

This article originally appeared on Hendersonville Times-News: Henderson County's capital reserve fund is healthy and debt declining