SOUTHPORT — The numbers are in and Southport leaders have still not been persuaded to move forward on incorporating Project Indigo into the city.
The development could generate a $1.4 million net benefit to the city’s general fund according to a financial analysis and development impact analysis presented last week. On July 18, the Southport board of aldermen and planning board held a joint session to discuss the findings in the analysis put together by national real estate consulting firm Development Planning & Finance Group and civil engineering company WithersRavenel.
READ MORE: Can Southport roads support Project Indigo traffic? Locals say no
According to the firms’ calculations, Project Indigo would create a tax base totaling $584.6 million, an increase to Southport’s tax base by $18.3 million. Property taxes would account for the bulk of revenue at the current rate of 39.56 cents per $100 valuation. If kept constant, it would generate $2.3 million in total property taxes annually.
With sales tax and other minor sources, the total revenue added to the general fund would be $3.2 million. Offset with expenses, the net calculation reaches the reported $1.4 million upon completion.
However, those estimations are contingent upon gaining annexation into city limits and a rezoning approval from the current residential agriculture district to a planned unit development. Some town officials are concerned with granting those requests due to the size of the development, which could double the quaint seaside town’s population, currently 3,700.
“It will be very hard to put that amount of houses there,” planning board member Gustavo Mibelli said during the meeting. “The advantages for the incorporation for the Indigo project at this size completely disappear. I think this is, in my mind, the heart of the matter. It’s not 1.4 million. It’s the big picture.”
Eddie Staley, chief client experience and innovation officer at WithersRavenel, noted at the meeting the studies could only provide a financial impact perspective, not whether the development would be “in harmony with the community.”
“We’re predicting the future, and that’s not something that’s easy to do. We have to make assumptions,” Staley said.
During his presentation, Staley presented a model showing a revenue surplus of $15.5 million over 10 years if city expenses — including additional staffing and services — met expectations. For comparison, he provided another model that calculated surplus if expenses exceed projections by 70% — basically a margin of error. Calculations still showed a surplus revenue of $4.89 million.
“We’re never seeing where the expenditures will be exceeding the revenues from the tax base,” Staley said. “That gives you a lot of room for the unknown things to happen.”
Still, board members expressed discomfort with those assumptions and wanted to see beyond a 10-year timeframe. The meeting’s presenters described the model’s revenue as plateauing around the 10-year mark, two years after Project Indigo would be complete, but leaders and some public commenters worry the trajectory would take a downward trend.
An alternative scenario was presented if the city were to deny the developer’s annexation request. If so, they would be required to work under the residential agriculture zoning, which allows 550 homes, a third of the developer’s proposed 1,500.
Under that situation, the city would not obtain any property tax revenue. Since it resides in the Southport Fire District, the development would generate revenue of $219,000, but require a subsidy of $240,000 from the city for fire and EMS services.
DPFG principal Lucy Gallo described this scenario as a “less attractive option” for the city due to the limited revenue it would receive from the almost 400-acre property.
If it joins the Southport corporate limits, the development’s operating needs include three new firefighters, three advanced EMTs, six new police officers, two new city staff accountants, and one new city administrative assistant. Around $200,000 would be needed to maintain the development’s streets. Total city expenditures are expected to be $1.8 million.
Ultimately, WithersRavenel rated the development as “low financial risk” and “financially sustainable,” but leaders were skeptical considering the plan’s unknowns.
More analysis would be needed on the impacts of the water and sewer infrastructure, which Southport Development Services Director Thomas Lloyd said would most likely require an increase in capacity, which could incur added costs. It is unclear whether that will be a city responsibility, though, as city members work toward transferring infrastructure responsibility to Brunswick County.
The development’s electrical system was not analyzed by WithersRavenel, constituting another unknown for board members and the public.
“It’s an awful lot to take in,” planning board chair Sue Hodgin said.
The city plans to host a town hall to answer questions from the public about Project Indigo before the next board of aldermen meeting on Aug. 11.
Catch up on PCD reporting on Southport Indigo:
Committee voices concern over Project Indigo’s open space plan
Project Indigo’ proposes 1,500 homes in Southport
Reach journalist Brenna Flanagan at brenna@localdailymedia.com
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