John Locke Update / Research Brief

Rocky Mount’s Ill-Advised Community Facility Breaks Ground

posted on in City & County Government, Local Government
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In 2012, Rocky Mount started discussing plans for a downtown event center.  The plans were controversial, with supporters adamant that the project would bring much-needed economic revitalization to the area, and opponents worried that it would cost money that the city didn’t have without bringing any lasting benefit.

Over time, the plans evolved.  An “event center” became a “downtown community facility.”  The focus shifted to amateur sports tournaments, but with a variety of other events also thrown in for good measure, including an indoor ropes course, classrooms and corporate event space, concerts, and reunions.  There was even discussion of a health clinic at one corner of the facility.  No one’s sure yet whether that will ultimately be included or not.

Last year, the John Locke Foundation weighed in, raising questions about what exactly the facility was intended to be, how much it would cost, and whether it represented a good use of taxpayers’ money.  We were skeptical.  With a price tag of more than $40 million funded through special obligation bonds (which don’t require the approval of voters through a referendum), revenue forecasts that seemed to us to be questionable, and an imminent property revaluation in Rocky Mount that could affect tax rates, the community facility seemed to us like a pretty big gamble.  We urged caution, and suggested it made sense to wait at least until the revaluation was completed.

The City Council went ahead anyway, with the somewhat reluctant approval of the Local Government Commission, and this week they broke ground on the new project.  So it seems a good time to look back at what’s happened over the last few months and where the project stands now.

The long-anticipated property revaluation results were finally released in February, and all that could really be said about them was that they could have been a lot worse.  In Nash County, property values dropped 1.21 percent overall.  In Rocky Mount, which is partially in Nash County and partially in Edgecombe, the decreases were more significant at 6.12 percent.

This will mean one of two things.  Either local government budgets will have to be cut, or property tax rates will have to be adjusted up to keep tax revenue steady.  Neither one is ideal for a community undertaking significant additional debt to build a new community facility.  Over the coming months, balancing these financial obligations will be a significant challenge for Rocky Mount.

The city manager, Charles Penny, has long been one of the downtown community facility’s strongest supporters.  According to the Rocky Mount Telegram, at the groundbreaking earlier this week, he confidently said, “We’ve taken a losing proposition and made it into a moneymaker with cash flow by the fourth year.”  That’s based on projections from a report on the event center prepared for the city council by a firm that manages sports centers across the country.  Those estimates were optimistic, but many, including myself, wonder if they’re realistic.

At the Locke Foundation, we’ll continue to monitor this project.  Will construction stay on budget?  What will happen to property taxes rates?  And most importantly, will the event center actually attract the sorts of sports tournaments and other events that the city hopes?  Or will they have to offer deep discounts at the taxpayers’ expense to do so?  There are predictions that construction will create local jobs, but how many will be sustained after the facility is complete?  And what about other businesses that the city expects to attract?  Will hotels, restaurants, and shops follow the event center?  Or will local governments need to give various (taxpayer-funded) incentives to get those off the ground, essentially throwing good money after bad?

These are the questions we, and many in Rocky Mount will continue to ask over the coming months and years.  The answers could mean the difference between an economic boon to the city, and an albatross around the necks of taxpayers.

Julie Tisdale is City and County Policy Analyst at the John Locke Foundation. Before coming to the Locke Foundation, she worked at the Centre for Civil Society in New Delhi, India, where she wrote about various economic and public policy… ...

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