LELAND — A town hall expansion at the center of ire from a local community, also upset about a 17% property tax increase this year, got the greenlight from the Local Government Commission Tuesday.
READ MORE: Leland passes 17% property tax increase, town hall expansion comes in $7M less
But it wasn’t without hesitation from the nine-member board including state treasurer, Dale Folwell. The LGC oversees fiscal management of state municipalities and governments. On its Tuesday agenda was approval of $13.5 million in limited obligation bonds to pay for the expansion of Leland Town Hall.
It includes a two-story, 22,000-square-foot addition, with more offices, flex space, mechanical system upgrades, storage and parking.
Town council voted unanimously in mid-May to submit its application to the LGC; the vote happened in the same meeting the council approved its $50-million budget, which included $2.7 million debt payment to put toward the expansion.
The project was expected to cost taxpayers $20 million but bids came in less. Out of five applicants, Clancy & Theys Construction secured the contract for $11 million.
Town Manager David Hollis and financial director Carly Hagg presented to the LGC Tuesday. The treasurer said the amount of comments — more than 100 — that funneled through to the state commission regarding the expansion were record-breaking.
“Obviously, there’s a lot of community concern,” secretary Elaine Marshall said.
Residents have spoken out at rallies and town council meetings this year, drawing hundreds of Lelanders to both. They’ve taken issue with their town government, many asking for a recall of council members, after the town proposed a 70% tax increase in the winter before bringing it down to 17%. The tax rate was approved at 27 cents per $100 property valuation, up from 23 cents last year.
Rhonda Florian, founder of Better Government 4 Leland which hosted the rallies, has repeatedly called town hall “Taj Mahal” — a place “not good enough” for staff, which the group also believes should be cut back.
“But they are not hearing what the taxpayers are saying to them,” Floran said at an April rally.
Joseph Livoti accused the town of spending “recklessly” in his letter to the LGC:
‘You already have huge growth in new residents each year and being greedy and wanting even more money makes our town leaders appear as if they are playing Monopoly with land buy-ups and expansions all on the taxpayers’ wallets. ENOUGH!!!!”
The town leaders have pushed back against the narrative saying this project has been a part of the town’s long-term needs, as it anticipated it would run out of space. The current complex was built in 2015 for $10 million, intended to last the government entity roughly a decade. In the last 10 years, the town has more-than doubled its population from 12,000 to almost 33,000, including town staff increasing from 65 to 205.
Town hall originally had 56 designated offices, but today cubicles overflow in other areas for makeshift offices.
“We have absorbed a lot of flex space, taking break rooms and copy rooms to accommodate staff,” Hollis told the LGC Tuesday.
As well, the police department utilizes some of its operations in conference rooms, and the emergency management department would take up council chambers in the event it’s deployed.
The town manager explained, while upward of 150 residents packed council chambers during the budget meeting almost two months ago, most left by the time the town hall expansion project came up for public hearing. Leland resident Kathy Short stated earlier that night in the meeting: “We don’t need a 20-million-dollar town hall expansion.”
However, the staff revealed later in the meeting after the budget passed, it would be millions less due to bids coming in under what they anticipated. Hollis informed the LGC only around three people or so were left in the audience by that time to hear the expense had dropped.
“So the majority of complaints that came to the LGC were when they thought the price was $20 million,” he explained.
“Even though they could have stayed 5 more minutes and maybe gotten more information,” Folwell responded later in the meeting. “I think it’s important when we have this amount of input from a community.”
Earlier this month, Leland received an Aa1 initial user rating and an Aa2 rating for its limited obligation bonds last week, the first time it ever sought a bond rating.
“These ratings signify that the bonds are of high quality with very low credit risk,” according to the town’s release. “The estimated $12.66 million from these bonds will be used to finance the Town Hall Expansion and Renovation project.”
The financing of the bonds will be at 3.5% — not to exceed 4% — interest. The town hall expansion will add $13 million to its already $18 million in debt.
Though financially the town passed muster, Marshall still took issue with how the project will escalate Leland’s debt per capita — from $632 to $1,104.
“That’s oppressive,” she said.
Marshall also questioned whether Hollis thought it would have passed if put forth as a referendum to voters, to which he said “maybe.”
Some commenters, such as Julie Dahm-Lafakis. welcomed the opportunity but said the town wouldn’t take the measure before the residents for a reason.
“The Town Council of Leland maintains a policy of not submitting major issues to the voters for their approval, maintaining they ‘…have all the power and authority we need…’ to indebt the Town and its taxpayers,’’ she wrote. “You exist as a formidable bulwark against the reckless application of power and authority.”
However, she also was impressed the construction bids came in lower. This is a modern-day anomaly, as in recent years the LGC is mostly seeing plans presented with significant inflationary increases on construction supplies and materials.
“That’s news to us,” she said.
Hagg said it also surprised staff, which also resulted in them lowering the timeline in which the debt will be paid back.
“We were thrilled,” she said. “So that’s why you’ll see a six year payment. We don’t like to hold debt.”
Despite the savings, Philbeck pointed to one comment from residents noting the tax increase this year is actually piggy-backing on one made last year. Though after revaluations in 2023, Leland brought its tax rate down from 25 cents to 23 cents per $100.
Mary Podolak wrote into the LGC that the town still wasn’t revenue neutral last year, which would have brought the rate to $18 cents instead of 23.
Philbeck called last fiscal year “a whopping tax increase,” too.
“If that’s how you perceive it, yes,” Hollis said.
Haggis said it was difficult to maintain a 2023-2024 revenue neutral budget due to inflation.
Hollis also countered the town’s tax rate still is significantly lower than most nearby jurisdictions and needed to increase to sustain its growth. He added the increase this year’s budget increase is not driven by the town hall expansion, but by roadway improvements and police and fire needs.
The town hall debt payments have been included in previous year’s budgets — as the town was hoping the process would start earlier. This is only the first year it’s been put forth for LOB approval.
“To our own fault, we have kept our tax rate low — and it’s still relatively low,” Hollis said of the $27 cents per $100 for this fiscal year. “We have been very efficient with our operations and everything, and people have become accustomed to that. So any change or any increase is dramatic to them.”
He used Wilmington — with roughly a 71,000 population — as an example. Wilmington City Council voted to increase the tax rate by 7% — or 2.75 cents last month.
Philbeck understood Leland’s quandary but also sided with residents.
“For a town of 28,000, a 27-cent tax increase sounds ridiculously low to me,” he said. “On the other hand, I can see why you’re getting all these comments from citizens because it’s gone up rapidly.”
Commissioner Paul Butler noted he has driven through the Brunswick County town many times, calling its growth “massive.” He also praised its council’s leadership.
“The overflow from Wilmington has got to go into Brunswick County,” he said. “The best casual way to say why we should support this is, Leland has a Chick-fil-A and they usually don’t go wrong. … I have found the town government in Leland most cooperative in dealings I have had with them through the years.”
A motion was made to approve the $13.5 million LOB request, seconded by commissioner Nancy Hoffmann.
Philbeck chimed in once more to add he normally sides with a council or board who represents a municipality, as they’re the ones who know what’s best for their city.
“I will vote for it,” he said. “I do think it’s better when things go up a little more slowly.”
It was echoed by state auditor Jessica Holmes, as well as state secretary Elaine Marshall, who responded with a “reluctant aye” upon roll call. The rest voted yay as well, except for Folwell.
“I’m voting no and I think that’s healthy,” he said, specifically addressing constituents who take time to be clear with government officials where they stand.
It passed in a 7-1 vote.
Leland will begin construction on its town hall expansion in August, with completion slated by summer of 2026. The contract stipulates if the contractor doesn’t complete it within 720 days from the start date, it will incur liquidated damage penalties of $250 a day for 31 to 90 days late or $500 a day for more than 90 days late.
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