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HomeMy WebLinkAbout08-11-26 Work Session179 City of Dunn Work Session Tuesday,'Augustll,2026 6:30 p.m.,,Dunn Municipal Building MINUTES , PRESENT: Mayor William P. Elmore Jr., Mayor Pro,Tem April Gaulden, Council Members J. Wesley Sills, Raquel McNeil, Billy N. Tart, Alan Hargis, and Dr. David L. Bradham. Also present: cityManagerJustin Hembree, Assistant City Manager BillyR. Godwin, Finance Director Cary McNallan, Human Resources Director Connie Jernigan, Interim Planning Director Will Deaton, Senior Planner Stephanie Goodrich, Public Works Director Dwayne Williams, Collection & Distribution Manager Billy Cottle, Wastewater Treatment Plant Manager Donrie Dukes, Water Treatment Plan Manager Ian Stroud, Police Chief Lynn Gay, Administrative Support Specialist Christy Sweeney, City Attorney Tilghman Pope and City Clerk Melissa Matti: CALL TO ORDER Mayor William P. Elmore, Jr. called the City Council Work Session to order on Tuesday, August 11, 2026, at 6:30 PM at the Dunn Municipal Building, 401 East Broad Street, Dunn, North Carolina. INVOCATION & PLEDGE OF ALLEGIANCE The invocation and Pledge of Allegiance were led by Mayor Pro Tern April Gaulden. CONSIDERATION & APPROVAL OF THE AGENDA Motion by Council Member Dr. David Bradham, second by Council Member Alan Hargis to approve the agenda as submitted. All in favor. The motion carried unanimously. CONSENTAGENDA Mayor Elmore presented Consent Agenda items, which included three (3) items: • Approval of July 16, 2026 Special Called Meeting Minutes • Approvalof July 28, 2026 Regular Meeting Minutes • Internal Control Policy -ARP/CSLFRFAward Motion by Council Member Billy Tart, second. by Mayor Pro Tem April Gaulden to approve all three (3) Consent Agenda items. All in favor. The -motion carried unanimously.. A copy of the Internal Control Policy -ARP/CSL FRFAward is incorporated into these minutes.as Attachment #1. ITEMS FOR DISCUSSION & CALENDARING FOR AUGUST 25, 2026 Data Center Land Use Regulation Presentation Interim Planning Director William Deaton provided an update on staff's progress in developing potential amendments to the Unified Development Ordinance (UDO)to address data center land use, following a Temporary Moratorium on the Permitting of Data Centers (02026-09) being adopted bythe Council at the May 26, 2026 Regular City Council Meeting. City Manager Justin Hembree noted that the purpose of the session was to gather Council feedback before taking a formal proposal to the Planning Board. Mr. Deaton explained that staff had preliminarily identified several key regulatory components, including a formal definition for data centers, closed -loop water systems, vehicular access standards, noise controls,. separation and setback requirements, Landscaping and screening requirements, aesthetic standards, `perimeter security, water management plans, and air quality considerations. He noted that data centers are not currently listed in the UDO's use table and would, at present, be classified most closely as heavy industrial uses with only basic supplemental standards. The Council discussed two (2) primary pathways for approval. First, data centers could be established as a "permitted use by right in the 1-100 (industrial) district, subject to 180 supplemental standards; if all standards are met and the property is already appropriately zoned, the use could proceed without coming before the Council or Planning Board. Second, data centers could,require a Special Use Permit, necessitating a quasi-judicial hearing before the Council; however, City Attorney Tilghman Pope cautioned that if an applicant meets all established criteria and no substantive opposing evidence is presented, the Councilwould be legally obligated to approve the permit regardless of public opposition. Council Member J. Wesley Sills raised the concern that large data center operators could pursue legal action if a Special Use Permit were denied without proper evidentiary basis. The Council expressed general consensus that the 1-100 district is the appropriate zoning category for data centers, with robust supplemental standards. Key areas of concern included noise levels, with Council Member Billy Tart noting the particularly disruptive nature of high-pitched mechanical hum; water usage and the importance of closed -loop or reclaimed water systems; building aesthetics, with Council Member J. Wesley Sills referencing Texas Governor Abbott's standards requiring that facilities not resemble military bunkers; landscaping and buffering; and the potential impact on municipal infrastructure. City Manager Hembree pointed to Catawba County and the Hickory area as a regional model where data centers —including facilities for Google, Apple, and Microsoft —have been successfully integrated over approximately twenty (20) years using a permitted -use -with - conditions approach, with minimal public pushback. He noted contact with a Catawba County Commissioner who offered to discuss their experience. Loudoun County, Virginia was cited as a cautionary example where insufficient early regulation led to significant problems. Attorney Pope clarified that a use could be structured both with supplemental standards and as a Special Use Permit but reiterated that the Councilwould have limited discretion to deny an application if all criteria were satisfied. Council Member Alan Hargis indicated support for additional standards and the Special Use Permit process, accepting that political accountability accompanies those decisions. The Council directed staff to research Catawba County's regulatory framework and other relevant jurisdictions, compile best practices —particularly on noise decibel thresholds (60 dB was noted as a reference standard used in Edgecombe County) and return with a more refined draft for Council review prior to transmittal to the Planning Board. The moratorium is understood to have approximately two (2) to three (3) months remaining of its six-month (6) term. Staff indicated it may be possible to return to Council with a proposal as early as the September meeting. Staff was directed to research Catawba County's data center regulatory model, compile best practices on noise, water, aesthetics, and buffering standards, and present a refined draft ordinance to the Council before advancingto the Planning Board. Ordinance TextAmendment (OA-26-01) Tabled 7128126 Senior Planner Stephanie Goodrich presented a series of recommended technical and procedural amendments to the UDO that had been tabled from the July 28, 2026 Regular City Council meeting. The changes were presented for Council discussion and feedback prior to formal action at the August 25, 2026 Regular City Council meeting. The proposed changes included the following: a clarification of the review authority table by consolidating Public Meeting notice requirements into the ordinance text and removing redundant footnotes; a process change designating the Zoning Administrator as the final review authority for major subdivisions' final plats and final plats generally, streamlining approval by approximately one (1) month and eliminating delays caused by Planning Board quorum failures; a consistency correction in Article III replacing interchangeable use of "compliance" and "completion"; a use table correction removing a duplicative listing of 181 research and development services from the institutional and assembly category while retaining it under industrial uses; and a correction to Article 5, Section 5.07 addressing garage and parking placement standards for single-family attached and two-family dwellings. Regarding the garage and parking placement provision, Ms. Goodrich explained that North Carolina General Statute 160D-605 already prohibits local governments from regulatingthe Location of garages on buildings, and that the General Assembly recently passed legislation —effective January 2027—prohibiting local governments from requiring a minimum number of parking spaces for any use except those in designated historic districts. City Manager Hembree emphasized the significance of this change, noting that a municipalitycouldtheoreticallybe unableto require any parking spaces from a commercial developer. Ms. Goodrich recommended removing the affected dwelling provisions now, leaving a placeholder for future legislative developments, while leaving the remainder of parking regulations untouched untilthe new law takes. effect. Additional proposed amendments included a correction of a likely typographical error in the home occupation standards (substituting "principal structure" for "accessory structure" in the gross area calculation); the addition of a definition for "correctional, probational, or parole facility" to align with existing use table entries, with such uses permitted only in the I- 100 district; adoption of a statement of consistency and reasonableness template as required for proposed ordinance amendments; and a procedural note that staff will no longer provide pre -written motion language for quasi-judicial or legislative land use decisions, as recent appellate decisions require the Council itself to articulate the rationale for approval or denial. Council Member Alan Hargis expressed reservations about the proposal to remove final plat approval from the Council's purview, questioning what accountability mechanism would exist if standards were not met. Attorney Pope and City Manager Hembree clarified that this proposal pertains only to final plat approval —not preliminary subdivision approval —and that by the time a final plat reaches approval, the Technical Review Committee (including Planning staff, the Fire Marshal, Utilities, and Public Works) has already confirmed compliance with all previously approved preliminary plat conditions. The Council would retain authority in any instance involving a bond or a request for an exception to the established criteria. Council Member J. Wesley Sills confirmed his comfort with the change in that context. No formal action was taken. The item was calendared for a vote at the August 25, 2026 Regular meeting. Consideration of Various BudgetAmendments City Manager Hembree provided an overview of the proposed Budget Amendments, framing them as the concluding step of the FY 2026-27 budget process. Finance Director Cary McNallan presented the specific components for Council consideration. The package consisted of four (4) components: (A) a Salary and Wage Adjustment Resolution providing a 2% market adjustment and 3% cost -of -living adjustment, mirroring Harnett County's adopted pay plan; (B) a Position Classification Resolution including a 0- 1.5% merit option available to eligible employees beginning January 1, 2027, along with the annualwage and position chart; (C) a Capital Project Ordinance authorizingthe purchase of equipment; and (D) an FY27 Budget Amendment appropriating funds to support the pay adjustments, equipment, and other departmental requests.. Financial Impact & Community Benefit: The Capital Project Ordinance authorized the purchase of $855,000 in equipment, of which $636,000 (Police vehicles and a leaf truck) would be financed through a loan and $219,000 paid in cash. A reimbursement resolution was included to allow equipment to be purchased prior to securing financing if necessary. 182 The FY27 Budget Amendment also directed $175,000 toward Codrington Park improvements, a $20,000 contribution to the Stewart Theater Project, and additional appropriations for Police and Public Work's needs, as well as Water and Sewer requests. Approximately $560,000 was set aside in the General Fund to begin replenishing the City's Reserves and improve its Fund Balance position. Funding derives from the current fiscal year's General Fund, with the loan covering the bulk of Capital Equipment costs. The pay plan adjustments are recurring annual expenditures, while Capital items are one-time expenditures. The rationale for acting nowwas the board's prior commitment during budget adoption to return and address employee compensation and equipment needs. The direct benefit to residents includes improved public safety capacity (new Police vehicles), enhanced park and cultural amenities, and a workforce incentivized to deliver Municipal services effectively. No specific performance metrics were cited, though the merit component carries an implicit accountability mechanism through the employee evaluation process. Mayor ProTem April Gaulden expressed appreciation to staff for prioritizing employee needs and necessary equipment within available resources. Motion by Mayor Pro Tern April Gaulden and seconded by Council Member J. Wesley Sills to approve the three (3) attached Resolutions, the attached Equipment Capital Project Ordinance, and the attached FY27 Budget Amendment. All in favor. The motion carried unanimously. Copies of the 3 Resolutions (R2026-21 - R2026-24), Equipment Capital Project Ordinance, and the FY27 Budget Amendment are incorporated into these minutes as Attachment #2. Credit Card Fees Discussion Finance Director Cary McNallan presented a report on the City's credit card and banking processing fees, which have grown substantially in recent years, and sought Council direction on how to proceed. Mr. MCNallan reported that total credit card, banking, and processing fees paid by the City in FY 2026 amounted to $106,000, a nearly 50% increase over FY 2024's $72,000. The Finance Department accounted for $90,000 of that total, primarily through utility bill payments, with Planning and Inspections representing the next largest share at $13,000. The increase was attributed in part to rising utility rates —since fees are percentage -based, a higher bill generates a higher processing fee even at the same rate. The City engaged a vendor approximately one (1) year ago to analyze and optimize rates, yielding modest savings, but the overall trend continues upward. Mr. MCNallan outlined two (2) primary options: the City could continue absorbing all processing fees as a cost of doing business, or it could pass the fee directly to customers using credit cards, with the processing company retaining its fee off the top so the Citywould still receive the full billed amount. He noted that any fee passed to customers must not exceed actual processing costs, per applicable law, and that the Citywould need to provide customers with approximately two (2) months' notice before implementing such a change, requiring a lead time of two (2) to three (3) months forvendor coordination. He estimated the earliest feasible implementation date would be January 1, 2027, though he suggested July 1, 2027 (the start of the next fiscal year) as a more practical target. Financial Impact & Community Benefit: The ongoing cost of $106,000 annually in processing fees is recurring and draws from the General Fund. The rationale for addressing the issue now is the rapid escalation of costs and the upcoming utility rate increases, which will further inflate fee totals. Passing the fee to credit card users would effectively recover this recurring expense, though it would impose a modest incremental cost on customers choosing to pay by credit card. The City would retain full billed revenue. Customers could avoid any fee by using ACH/auto-d raft, cash, or check. Mr. McNallan noted the City recently implemented a reduced deposit incentive ($40 instead of $60) for new accounts enrolling in ACH at setup. The tradeoff involves potential public perception, particularly given 183 concurrent utility rate increases —and a possible shift toward more cash and check payments, which carry their own administrative burdens. Council Member Billy Tart noted that the $106,000 annual figure is roughly equivalent to a one -cent tax increase, makingfee recovery highly meaningful. Council Member Raquel McNeil expressed concern for residents already facing rate increases and argued against passing costs to customers. No formal metrics were established. Finance Director McNallan was directed to conduct further investigation into implementation logistics and return to Council at a future work session with a formal recommendation. REPORTS & UPDATES City Manager's Report City Manager Hembree presented an update on the East Broad Street paving project, specifically the segment in front of Kim"s Barbecue, which has been identified as one of the most deteriorated stretches of roadway in the city and most frequently requested to be paved. City Manager Hembree advised the Council that we had received a quote of approximately $300,000 to mill and resurface the segment from Ellis Avenue to Ashe Avenue, includingthe addition of a loading lane to prevent trucks from blocking the travel lane in front of the adjacent shopping center. However, upon closer inspection, staff identified significant concerns with the underlying stormwater infrastructure: catch basins in the area were found to lack bottoms (since remedied with concrete by Public Works), were spaced too far apart, were potentially undersized for post -paving drainage loads, and featured aging brick -wall construction without mortar in some locations. The pipe size serving the area may also be inadequate once impervious new pavement replaces the current highly porous surface. Public Works Director Dwayne Williams confirmed these observations, noting that a contractorwho had inspected the site concurred that catch basin spacing and pipe capacity were likely insufficient. He also noted that the existing pavement is so degraded that it currently functions as a de facto drainage medium —water seeps through it rather than running off —a condition that will be eliminated by new pavement. Assistant Manager Billy Ray Godwin presented the Council with two (2) options: proceed with immediate mill and resurfacing at the $300,000 price point, accepting the risk of post - paving flooding issues; or commission a Stormwater and Streetscape Engineering Study at an estimated cost of approximately $50,000, which would produce three (3) design alternatives (low, medium, and Cadillac versions) addressing drainage, curb and gutter, potential sidewalk improvements, designated ingress and egress points for commercial properties, and an opinion of probable cost for the full improvement. The study would take approximately four (4) months to complete, followed by additional time for design, bidding, and construction. Financial Impact & Community Benefit: The immediate paving option would cost approximately $300,000 from existing paving contract tonnage with Highlands (the contractor currently under contract). The engineering study would cost approximately $50,000, also from existing funds. The Council acknowledged that delaying could result in cost escalation —the Pearsall Street project was cited as a precedent for how infrastructure complexity can dramatically increase costs —but that proceeding without a study could result in wasted expenditure if new pavement must later be torn up to address flooding. Council Member Alan Hargis raised the possibility of grant funding for the Kim's section, noting that the City secured external funding for the Pearsall Street project. If the study alternative were chosen, the remaining paving tonnage would be redirected to other high - need segments of East Broad Street, including stretches from Wayne to the Hibachi Grill and from General Lee to Ellis Avenue, providing meaningful pavement improvements to other areas while the study is completed. The concrete benefitto residents and businesses would be improved road surface quality citywide, reduced vehicle damage, and —ultimately —a 184 properly engineered drainage solution that protects adjacent businesses such as Kim's Barbecue, which has experienced past flooding events. Mayor Elmore cautioned strongly against a "Band Aid" approach, noting the City had already spent significant capital correcting deferred infrastructure decisions made over prior decades. Council Member Dr. David Bradham acknowledged the dilemma, expressing concern that a study could extend the timeline considerably and that costs would likely rise in the interim. Council MemberJ. Wesley Sills suggested that private property owners whose businesses benefit from the improved corridor, particularly the owner of the adjacent shopping center, should have "skin in the game" and encouraged exploring a public -private partnership for the loading and access improvements. Mayor Pro Tem April Gaulden urged staff to communicate directly with affected business owners to explain why their block is being deferred. The consensus of the Council was to proceed with the engineering study for the Kim's section, redirect available pavingtonnage to pave the segments on either end of the affected block, and communicate transparently with the public and business owners about the rationale for the phased approach. Staff was directed to commission the Stormwater and Streetscape Engineering Study for the Kim's Barbecue segment of East Broad Street, proceed with paving adjacent segments using existing contract tonnage, engage affected business owners, and pursue applicable grant funding forthe comprehensive improvement. ANNOUNCEMENTS Mayor Elmore announced the following upcoming events: • The next Regular Meeting is scheduled for Tuesday, August 25, 2026. • The State of the City Business Impact Luncheon will be held on August 27, 2026, from 11:30 AM to 1:00 PM at the Dunn Community Building. All Council members were encouraged to attend. • The next Work Session is scheduled for September 8, 2026, at the Dunn Municipal Building. CLOSED SESSION Motion by Council Member J. Wesley Sills, second by Mayor Pro Tern April Gaulden to enter closed session pursuant to N.C.G.S. § 143-318.11(a)(3) to consult with the City Attorney and N.C.G.S. § 143-318.1 1(a)(5)to instruct City staff on the position to be taken in negotiatingthe price of real property. All in favor. The motion carried unanimously. Attorney Tilghman Pope noted that the Council would return to open session following the closed session to take action on one (1) item before adjournment. Members of the public were dismissed prior to the Closed Session at 8:45 p.m. At 9:12 PM, Council ended Closed Session and went back into Open Session. Motion by Council Member J. Wesley Sills, second by Mayor Pro Tern April Gauldin to approve the Settlement Agreement and Releases in the Winged Warrior vs City of Dunn Litigation. All in favor. Motion carried unanimously. Copies of the Settlement Agreement and Releases in the Winged Warrior vs City of Dunn Litigation are incorporated into these minutes as Attachment#3. ADJOURNMENT A Motion was properly made and seconded to adjourn the meeting. Motion carried unanimously. 185 William P. Elmore, Jr 0 .���QORATF•. '_ elissa R. Matti $ SEAA- :.Ra City Clerky:'