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INNOVATION AND CREATIVITY Not only is the scope and size of the campus im- mense, but the challenging construction schedule cre- ated a series of unique issues for the city of Kannapolis. First and foremost, the 6.8- million - square -foot Pillow - tex complex had to be demolished and the site prepared to make way for the campus. The industrial buildings, tightly packed together, included several facilities nearly 100 years old. D.H. Griffin Company, based out of Greensboro, NC, com- pleted the demolition work in a year, working around the clock. Owner David Griffin commented that demol- ishing the former Cannon Mills property closely rivaled their largest demolition project just four years earlier – the clean -up of the World Trade Center Towers in New York City. Demolition costs for the mill complex ap- proached $60 million, all paid for by Murdock. In addition to bringing down buildings, the demoli- tion included draining a small industrial reservoir on the site. The lake, which would become the site for the Core Lab, also was an integral part of the fire suppression sys- tem for downtown Kannapolis. Specialty pumps were ordered to fill the gap while that portion of the city's wa- ter system was off -line. City departments worked hand in hand with the campus developer, establishing weekly meetings to discuss infrastructure challenges. This col- laborative interaction between the city and the devel- oper continues as the campus develops. Other issues with infrastructure required innova- tive solutions. Water lines crisscrossed the site, often running under buildings. Luckily, there was a redun- dancy system created by the original builders that allowed the city to put some lines out of service and switch to lines that hadn't been used in decades as a short term solution. tions for financing, including a smaller package of proj- ects, private placement directly with banks. (rather than open bond market), and pursuing an investment grade bond rating for the TIF. None of these options would result in reasonable interest rates or minimum bond proceed amounts needed to finance the first phase of the projects. In November 2010, the Kannapolis City Council and the Cabarrus County Board of Commissioners ap- proved the pursuit of a different type of bond financing plan: the use of Limited Obligation Bonds (LOBs) and Build America Bonds (BABs). Unlike the TIF bonds, LOBs and BABs together would be backed by the city in the event of a default. However, it was concluded that the risk of any sort of default would be minimal. This was due to the fact that there is already a revenue stream to pay for a smaller set of bonds from the property tax being generated by existing buildings on the campus. Aerial view of the North Carolina Research Campus, featuring the David H. Murdoch Core Laboratory building on the far left, the North Carolina State Human Health Institute front center; and the University of North Carolina Chapel Hill Nutrition Research brstitute located on the right. INNOVATIVE PARTNERSHIP VIA A NEW FINANCING MECHANISM For Kannapolis, one of the goals of the NCRC is to stimulate additional development and investment throughout the city. To- foster- this-development,-the- city initially partnered with Cabarrus County on a $168.4 million tax increment financing (TIF) package to sup- port the NCRC. Due to many reasons, including the downturn in the economy, the TIF bonds were never issued. In 2009, the city began looking at other op- Not only is the scope and size of the campus immense, but the challenging construction schedule created a series of unique issues for the city of Kannapolis. First and foremost, the 6.8- million- square -foot Pillowtex complex had to be demolished and the site prepared to make way for the campus. 1 This transaction is complicated, and after five years of w orking t hro ugh multip options, the city had done its diligence to maximize benefits to taxpay- ers and minimize risk. The debt service for the bonds will be paid for by the incremental (increased) tax rev- enue generated almost exclusively by the NCRC de- velopment, with half of those payments coming from Cabarrus County. All of the revenues necessary to pay for the bonds are already being generated. Further re- ducing the risk, about half of the tax revenues are se- cured through building leases paid by the state of North Carolina for the current state university presence on the campus. With approximately $30 million of the $35 million bond proceeds available to fund projects, the money is being utilized for these activities: • Cabarrus Health Alliance building — $13.5M • Stormwater line and pedestrian tunnel to Village Park — $1.35M Attachment number 1 Economic Develi gment Journal / Spring 2011 / Volume 10 / Number 2 a e 601 41 1