Property tax hike shouldn’t pay for bond financing
RALEIGH – The local government commission (LGC) filed a Guilford County request to approve $1.7 billion in school building bonds and did not vote on a controversial project in New Hanover County after a motion by approval didn’t get a second. A funding request for a $177 million Johnston County school bond, pending a referendum in November, has been approved.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by the Department of the State Treasurer (DST), has a legal duty to approve most debt issued by units of the local government and state public authorities. The commission examines whether the amount of monetary units borrowed is adequate and reasonable for the proposed projects and confirms that the government units can reasonably afford to repay the debt. It also monitors the financial well-being of over 1,100 local government units.
There were three major school bond issues on the agenda for Thursday, September 22, along with more than half a billion dollars in demands from Raleigh (Wake County) and Charlotte (Mecklenburg County) for most parks and recreation projects.
Guilford County’s request for approval of a $1.7 billion bond package that was approved by voters in the May primary election has been put on hold. But Wake County’s $883.9 million request and Johnston County’s $177 million request were given the green light by the LGC and will now be put to voters in referenda in the Nov. 8 ballot.
The Guilford County School System plans to build three new schools, tear down and rebuild 19 schools, completely renovate 12 schools, and invest approximately $363 million in safety and technology upgrades. No tax increase is planned. The school system now has 126 schools and more than 300 buildings.
However, LGC members had questions about the county taking on more debt, how it would be repaid, and whether declining school enrollment trends justified the need. A $300 million bond package was approved in 2020. While voters approved the $1.7 billion bond in May, they rejected a referendum to raise sales taxes to pay for it . The county plans to use property taxes instead. School officials said schools in some areas are overcrowded and are deteriorating badly. In filing the case, the commission ordered county officials to respond within 10 days with enrollment numbers.
Wake County will build five new schools and design one more. The major renovation or replacement of seven other schools is under consideration. The costs of these items and improvements at other schools total approximately $664.7 million. The balance of the bond money will go to Wake Technical Community College. It will pay for a new health sciences building and parking adjacent to the main WakeMed hospital; the relocation of Western Wake Campus to the Apex/Holly Springs area; the construction of a Workforce Development Building at the Western Wake Campus; a new Cyber Science Building and parking lot on the RTP campus; and renovations at Southern Wake Campus and throughout the system. A tax increase of 1 cent per $100 of property assessment is planned.
Johnston County school officials do not plan to raise taxes to pay for its $177 million funding. The county wants to build two new schools and two additions, and acquire land, which could mean the closure of about half of the district’s 186 portable classrooms. School officials say the expansion is necessary because the county has the fastest growing population in North Carolina and ninth in the nation.
After lengthy discussions, LGC members denied approval of New Hanover County’s request for $80 million in funding for a public-private partnership to build a mixed-use development known as Project Grace. in downtown Wilmington. The request died after a motion to approve was not seconded. The project, which includes a new library and museum, has come under scrutiny from LGC members due to the nature of the funding agreement under which the county would sell the land to the promoter and then lease it.
In other cases, LGC members approved a request for $275 million in general obligations submitted by Raleigh, Wake County, for a variety of parks and recreation projects. The financing will be reimbursed with a property tax increase of 4 cents per $100 of assessment. New facilities, expansion and upgrade of existing facilities, expansion of parks and greenways are on the list of projects. Renovation of Dix Park buildings for office and operating space is included, as is work on the Chavis Park Aquatic Center and plaza.
A $226 million request from Charlotte (Mecklenburg County) to issue general obligation bonds has been approved. Of this amount, $146.2 million will go towards the construction, reconstruction, expansion, extension and improvement of streets and roads; $29.8 million will be used for neighborhood improvements; and $50 million will be used to build low- and middle-income housing projects.
The LGC approved a request for $97 million in general bonds from Fayetteville, Cumberland County, for public safety, street and sidewalk improvements and the rehabilitation of multi-family and single-family dwellings.
Matthews (Mecklenburg County) has been given the green light to issue $35 million in general bonds. Of this amount, $21 million will be spent on transportation projects to widen, extend, pave, level and resurface existing streets and acquire land to build additional streets. The remaining $14 million will be used to acquire, build, renovate and expand existing parks and recreational facilities. This includes a 93-acre park, a playground for all abilities, and a multi-use trail around the city’s downtown.
North Carolina’s affordable housing stock is not keeping pace with population growth, a momentum accentuated by home price inflation, rising interest rates on borrowing, and corporate investors becoming more active on the single-family housing market. As a result, many municipal housing authorities are stepping in to create more public sector housing. In the fiscal year that ended June 30, the LGC approved more than $418.5 million in funding to build or renovate 2,993 apartments.
This trend continues and the LGC on Thursday approved a series of funding requests from:
Housing Authority of the City of Durham (Durham County), $22.5 million, to lend to 300 East Main LLC to acquire, construct and equip a 110-unit multi-family rental housing development.
Greensboro Housing Authority (Guilford County), $17 million, for a loan to Townsend Trace to acquire, construct and equip a 180-unit rental building; and $17 million to lend to Arlington Trace to acquire, build and equip a 180-unit multi-family residential rental complex.
Inlivian (Mecklenburg County), $12.3 million loan to Ballantyne Seniors to build an 82-unit multifamily seniors’ facility; and a $23.1 million loan to WCO Kingspark to acquire, build and equip Kingspark Commons, a 176-unit multi-family facility.
Raleigh Housing Authority (Wake County), $12 million, to lend to BRAD Thrive at Renaissance to acquire, build and equip Thrive at South End, a 90-unit multifamily project.
Wake County Housing Authority, $32.5 million loan to Broadstone Walk to acquire, construct and equip a 164-unit multi-family residential rental complex.
The LGC approved a request from Charlotte for $125 million in Advance Obligations (ANB) to repair, replace and upgrade stormwater facilities to properly serve users and remain in full compliance with state and federal requirements. A BAN is a short-term interest-bearing security issued to make payments before a larger bond issue in the future.
Graham (Alamance County) received approval for nearly $81.5 million in revolving loan funds to replace outdated sewer infrastructure and for a new maintenance building to increase capacity to meet growth demands over the next 20 years.
Wake Forest (Wake County), whose population has grown 58% in the last 10 years, has received approval for $75 million in general bonds to build, expand, rebuild and widen streets and sidewalks. The city will use some of the money for parks and recreation facilities, greenway improvements and a parking deck as part of a public-private partnership for a mixed-use commercial/residential site. A property tax increase of 3 cents per $100 of assessment is planned.
The LGC approved an $18.8 million request from Hendersonville to upgrade fire and emergency services facilities, acquire new firefighting vehicles and equipment, and for recreation facilities.
Randolph County will build an agricultural, food and family education center, as well as an agricultural events center and an office building with LGC-approved funding of $4 million. The installment purchase agreement allows payments to be made over time rather than all in advance.
Spring Lake (Cumberland County) got the go-ahead from LGC members for a $1 million installment contract to build a fire hall. City officials initially closed the loan without the required LGC approval.
Two other applications have been filed. Kings Mountain (Cleveland and Gaston counties) is seeking $6.9 million in financing for the construction of a new electrical substation and transmission lines, as well as gas lines natural. Commission members wanted more information on the use of electricity fund revenues transferred to the general fund. Sunset Beach sought approval for $1.5 million to purchase 4.28 acres of land on Sunset Beach Island, but commission members wanted additional information.
Contrary to tradition, the LGC meeting was held at the Eastern 4-H Center in Colombia. Treasurer Folwell chose Tyrrell County as the first location for an initiative to take the business of Raleigh State away from the people of North Carolina and introduce LGC members to the challenges facing rural communities who appear before the committee. The November 1 LGC meeting will be held in Cullowee.