The Full Story Of The Cabarrus County ACN Building Purchase

History of the project to facilitate better understanding

Since the current ACN campus began several years ago, the project’s history and path will explain how Cabarrus County (“County”) arrived at its current proposal. For clarity, the Cabarrus County Department of Social Services changed its name from the Cabarrus County Department of Human Services to its current name, Cabarrus County Department of Social Services, since the project began. For this reason, some reports use “Human Services,” while others use “Social Services.” The proposed site will house the Cabarrus County DSS and the regional Behavioral Health Center, which is planned to be operated by Monarch.

With the help of an in-house engineer (then employed), the County evaluated 10 properties to house a new Department of Social Services facility. Some of the properties were identified by the County’s Realtor, and others by County staff who scoured maps for properties that met the search parameters, including minimum acreage, access to public transportation, and a central location in the County. The identified properties were then systematically eliminated due to environmental concerns, odd-shaped parcels that were not feasible, significant demolition costs for existing buildings, and driveway access issues. After analyzing the ten properties, the list was narrowed to one near the current ACN campus. This property met many of the parameters above but presented topographical challenges, potential stormwater issues, and a road that the city had not assumed responsibility for. Architects provided cost estimates for that site based on several conceptual building designs. Those estimates ranged from $85 million for a building that was less than functional from the conceptual layout to $140 million for a more functional layout. Still, they required a parking deck and some substantial retaining walls to meet parking needs. These factors led to the ACN campus, which the County had examined previously.

In June 2023, the County negotiated a price of $42 million based on Realtors’ suggested comparable properties. At that time, the County was undergoing a revaluation, with early reports indicating that, on average, properties were increasing in value by approximately 40%. After a purchase agreement was signed, the County began its due diligence period. This process included a facility conditions analysis and feasibility study to ensure that the Social Services functions could be adequately housed. The facility conditions study recommended about $18 million in deferred maintenance, with a 10-year plan to address it. The feasibility plan suggested about $2 million in renovations, primarily driven by the need for a front counter for reception and minor renovations to address Child Welfare needs. These renovations account for the 20 million dollar estimate for renovations and repairs. The ACN facility is usable and in better condition than the County’s current DSS facility.

Why are there two appraisals? What’s the difference?

The County had no plans to obtain an appraisal initially due to the exemption from appraisal standards for governmental agencies. This exemption stems from the compulsion to purchase that accompanies the public good/need. In this case, the County was compelled by the property’s location, size, and the availability of vacant property on the campus to house the Behavioral Health Facility. Further, the model placing the Behavioral Health Facility on the same campus as the County’s Human Services operations provides a continuum of services and affords easy public access. The need to conduct an appraisal arose from information County staff received that the LGC would require it. The County engaged Integra Realty Resources to provide the appraisal.

The market value appraisal returned lower than anticipated at $23,830,000 (including the vacant land). The issue was discussed with the appraiser and Realtors. Staff inquired about the reasons for the low appraisal and about the County’s options, which are typically undertaken when projects encounter complex issues. During the review, staff determined that the appraisal was similar to the value placed on the property by the Cabarrus County Tax Appraiser, as the property was evaluated using a market/income-producing approach. The replacement value appraisal is, in fact, an appraisal, not an assessment. This type of appraisal assesses the property’s cost to replace the same building and its improvements, such as parking lots and stormwater infrastructure, under current building codes. This appraisal stated that it would cost $54,140,000, excluding the value of the vacant property on the campus, which was valued at an additional $2,410,000 in the market-value appraisal.

The staff approached ACN again to request a price reduction based on the appraisal issue. They declined to reduce the price because they have a lucrative lease agreement that is valuable to the owner. After carefully considering the following factors, the decision was made to proceed with the purchase of the ACN campus.

Costs and Accessibility

The projected cost of a newly constructed facility is $85-$140 million. These estimates were completed on the only feasible lot identified. However, they still faced challenges, including topography, stormwater issues, and an unmaintained street. The estimated range was based on conceptual designs that fit the property and accommodate the required square footage and parking spaces. The least expensive version of the conceptual plans was unlikely to be a truly feasible design, as it was a long, narrow building that could accommodate the required parking spaces with surface parking, reducing the need for a parking deck.

The total cost of purchasing an ACN campus with the necessary renovations is significantly lower than that of new construction. With available property, the regional, state-supported Behavioral Health Center could be built in an area with the necessary support services and infrastructure nearby, saving money and resources in long-term operational costs.
The averaged appraisals totaled $38,985,000, which was closer to the asking price.
The owners had a lucrative lease that was of value to them.
The increasing costs of rent and maintenance at the existing DSS facility, a former Kmart building, are the County’s responsibility.
The ACN site is located centrally, away from the current DSS facility, to facilitate user accessibility.

While there were reasons for both appraisals, the need to submit one stemmed solely from LGC requirements. Most importantly, the purchase of the ACN by another commercial real estate buyer is not comparable to a purchase by the County for use as a Human Services Facility. North Carolina has a federally mandated, state-supervised, County-administered social services system. The Uniform Appraisal Code assumes that governments are not considered in terms of use and value because they are not profit-driven agencies. Often, governments are compelled buyers because they address a public need or good. Below is a section of the uniform appraisal guidelines that addresses this.

Article 13.
Standards for Appraisal and Assessment.
§ 105 283. Uniform appraisal standards.
All property, real and personal, shall, as far as practicable, be appraised or valued at its true value in money. When used in this Subchapter, the words “true value” shall be interpreted as meaning market value, that is, the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller; neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used. For the purposes of this section, the acquisition of an interest in land by an entity having the power of eminent domain with respect to the interest acquired shall not be considered competent evidence of the true value in money of comparable land. (1939, c. 310, s. 500; 1953, c. 970, s. 5; 1955, c. 1100, s. 2; 1959, c. 682; 1967, c. 892, s. 7; 1969, c. 945, s. 1; 1971, c. 806, s. 1; 1973, c. 695, s. 11; 1977, 2nd Sess., c. 1297.)

A canceled meeting and the information provided

County staff responded to some comments provided to the LGC Board by LGC staff. The ACN campus purchase was included as part of the “complete application” at the LGC meeting in July. There was a lot of confusion regarding the application at that meeting. Therefore, no motions were made. LGC staff directed County staff to separate the funding packages into three requests, and the County complied, paying separate fees for each application. The ACN campus was moved from the July funding application, which LGC staff considered complete, to the September application to include the Behavioral Health Center and ACN renovations. The County had approved GMPs for the Behavioral Health Center and valid renovation estimates for ACN. The renovations were laid out over 10 years. County staff projected a 20 million renovation/deferred maintenance package based on engineering estimates. The renovations can be easily scaled to fit the budget, since the building is in good condition today.

When the September funding application was made as directed by the LGC staff, County staff clearly stated in the email that they would let them know if any additional information was needed.

An email chain on August 19 asks for documentation on the 2020 draw program that was provided to LGC staff on the afternoon of July 9. A meeting was scheduled for August 16 to discuss their September funding application.
On August 15, the LGC canceled the meeting with a one-sentence email. Despite emails expressing staff concerns about delays in their applications, the LGC made no effort to reschedule.
Then-Commissioner Steve Morris emailed several LGC staff members, stating they were disappointed about the cancellation and were prepared to meet on short notice to provide additional information.
Ms. Tomasko responded to the email on August 21, stating that the application was still under review.
On August 27, Mike Downs sent another email to LGC staff stating that it was understood that there may still be questions about the application, and they were prepared to discuss and /or provide additional information.
On August 28, the LGC staff provided a list of questions and items to be provided.
On August 29, Mike Downs sent an email responding to the questions and attaching information as requested. The first attachment to this email was the market- and income-based appraisal. Mr. Downs also asked for clarification on the email request. Kelly Sifford sends a second email with attachments per LGC staff request.
August 29, Ms. Tomasko provided clarification on the email request.
On September 3, Ms. Tomasko confirmed receipt of the email with additional required attachments from Kelly Sifford.
On September 5, an email was sent to Mike Downs informing Cabarrus County that the ACN campus and associated projects funding application would not be included on the September 10th agenda, stating that LGC staff could not find that the amount was adequate and not excessive.
County staff made multiple efforts verbally and in writing to offer to meet and/or provide information as requested. The requests came late and involved hundreds of pages of documentation. County staff made every effort to address any concerns.

After considering numerous sites and other factors, the County decided to purchase the ACN campus for the reasons outlined above. This decision was not taken lightly by the Board of County Commissioners at that time. It was the culmination of several years of research and work, and the result of years of consideration. This is evidenced by the fact that the process began before the current Board and was voted on by a majority of the Board in May 2024. This site was determined to be the best option for the optimal operation of the two facilities planned for the site.