Economic Development or Economic Burden?

On the corner of South Elm Street and Lee Street on the south side of downtown Greensboro lies a seven-acre empty lot. The lot is a former brownfield that has been untouched for years even as other areas of downtown have developed, but city planners and development groups are hoping to change that.

And they are enlisting seven local colleges and universities to help them.

Past projects considered for the lot were a downtown baseball stadium, a mixed-use development that would move the headquarters of the Guilford County Schools administration building, and a luxury hotel. But none of these materialized—the stadium was built on a different downtown site, while the other two plans fell through.

“Private investment has not occurred lately [in the area],” Edward Kitchen told the Pope Center in an interview. Kitchen is a former Greensboro city manager who is now the vice president and chief operating officer of the Joseph M. Bryan Foundation and a board member and spokesman for Opportunity Greensboro.

That organization, an offshoot of city beautification non-profit Action Greensboro, was formed in 2009 as a partnership between higher education and business. It announced plans in 2012 to build a downtown university campus, recently branded Union Square Campus. It chose the Elm and Lee lot in part because its seven acres give the project plenty of room for expansion.

Even though private interest in the South Elm area has not been forthcoming, Kitchen believes that his group’s big project will spur economic activity there by decreasing startup costs for potential tenants.

The campus is intended, ultimately, as a shared space for all seven postsecondary institutions in Greensboro: the University of North Carolina at Greensboro, North Carolina Agricultural and Technical University, Greensboro College, Bennett College for Women, Elon University School of Law, Guilford College, and Guilford Technical Community College.

In announcing the plan for the South Elm and Lee site, South Elm Redevelopment Group managing partner Bob Chapman described a complex including a hotel, residential units, two parking garages, retail space, and a nursing and healthcare space.

Mayor Nancy Vaughan told FOX8 news that she thought the campus would help give the Gate City more of the “college town” feel.

It will start with the nursing and health education and training facility, a building of approximately 103,000 square feet costing $37 to 40 million. UNC Greensboro, N.C. A&T, Guilford Tech, and local healthcare provider Cone Health will share this space, the latter for professional education and training for its employees. Guilford Tech will also use the space for its radiography program.

According to Kitchen, joint use of the building reflects the fact that the three schools have growing nursing programs, there is high and growing demand for nurses, and sharing space will save money.

“It’s a very efficient model to meet the workforce needs and the fact that Capitol money is very scarce,” he said.

While that may be true, it looks as though the project could rely heavily on additional taxpayer funds. Three out of the four tenants responsible for the debt are public entities—UNCG, N.C. A&T, and Guilford Technical Community College.

UNCG will use the new building for its doctor of nursing practice (DNP) program, which starts in the fall of 2015. Because the building is not scheduled for completion until the summer of 2016, the first cohort of DNP students will take classes at the main campus.

N.C. A&T will also use the space for its nursing program, but that program is hanging by a thread. As we reported last month, the UNC Board of Governors suspended the program effective next year, and created a panel to consider eliminating the program after it failed to meet minimum standards two years in a row—twice. It actually failed for the first time almost a decade ago, but the board continually gave A&T a free pass until now.

N.C. A&T could not be reached for comment before publication, and the Board of Governors did not bring up the issue at the monthly meeting last week. However, the panel’s deadline to convene to review elimination of the program was mid-June. Considering these circumstances, there is reason for concern about the school’s contributing resources to a new nursing facility.

This concern is even more pronounced when the long-term nature of the project’s funding structure is considered.

“My guess is it’s going to be 20-to 25-year debt, maybe 30,” Kitchen told the Pope Center.

While Kitchen is optimistic about the campus’s financing, it is so far unclear where some of the expected money will come from, or whether it will come at all.

Out of the approximately $40 million price tag, the goal is to get $10 to $15 million from state government and private donors, $4 million from the city, and the rest from lease payments over time.

So far, four non-profits have offered $6.5 million. Three of these non-profits specialize in giving grants to public works in Greensboro. One of them—by far the largest donor—is Kitchen’s employer, the Joseph M. Bryan Foundation.

The planners are asking for $2 million from the state government, a number that Kitchen said reflected doubt that Raleigh would offer any more than that. The Senate’s budget granted the request but the House’s budget did not. Lawmakers will continue to debate the budgets in the coming days.

Greensboro will donate about $4 million, mostly in land and parking space. The Greensboro News & Record reported that the city had previously planned to sell the land for $450,000 per acre to repay a loan it had taken on the land.

Most of the project’s cost is to be recouped by lease payments from the three colleges and Cone Health. This could be a daunting prospect in at least one respect if it turns out N.C. A&T no longer even has a nursing program when the building opens. However, the UNC Board of Governors has approved 10-year leases for its two participating member institutions.

Also, while the planners cite statistics showing strong demand for nurses by 2020—they are by no means alone in citing this trend in calling for state action—if it takes 20 to 30 years to pay off the debt, who knows if the stated justification for the nursing complex will still apply? The funding model assumes, or hopes, for static or growing demand for nurses until at least 2036.

“I can’t imagine any circumstances in which you won’t continue to need more and better-trained nurses,” Kitchen said.

Sam Hieb, a Greensboro journalist who contributes to Carolina Journal and blogs at Piedmont Publius, expressed pessimism about Union Square Campus in an interview with the Pope Center. “I don’t see a scenario where there are not funding holes that the taxpayer is going to have to fill,” he said.

Taxpayers should be skeptical of assurances that any public-private partnership will pay for itself, especially when the private sector has shown no interest in the undertaking. They should also wonder whether, even if room is running thin for nursing students on campus, whether these schools have explored every possible way to economize on existing space before calling for more government spending.