January 29, 2023

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North Carolina commission approves $2.5 billion of local school bonds

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North Carolina commission approves .5 billion of local school bonds

The North Carolina Local Government Commission approved requests for about $2.5 billion of school bonds for four counties, including a $1.7 billion deal for Guilford County that the commission held over last month.

The commission also approved additional bond and financing requests for other municipalities at its Oct. 4 meeting.

Most bond sales in the state must be approved by the LGC, which is chaired by State Treasurer Dale Folwell, and it examines whether the amount of money that municipalities want to borrow is reasonable for the projects proposed and sees that they can pay it back.

“We are now in a period in which interest rates are higher than they have been in decades, construction costs exceed anything we’ve seen for decades and taxpayers are going to be hit with higher property taxes to pay for this massive bond,” said state Treasurer Dale Folwell.

In September, commissioners postponed a vote on Guilford County’s application for the general obligation bond issuance so that commissioners could get more information about it. 

Two studies done by the county identified the need to build three new schools, demolish and build 19 other school buildings and to fully renovate 12 additional schools while also investing in safety and technology upgrades. 

While no tax hike is expected, the county doesn’t plan to lower its property tax rate to a revenue-neutral level even though a revaluation raised the amount of revenue that will be collected. 

The vote to approve the GO sale was five to one, with one abstention.

Folwell abstained from the vote and expressed concern about the timing of the request and the fact that the county had put off needed capital improvement projects for such a long time would cause higher costs for the projects.

“We are now in a period in which interest rates are higher than they have been in decades, construction costs exceed anything we’ve seen for decades and taxpayers are going to be hit with higher property taxes to pay for this massive bond,” he said. “That disproportionately affects lower-income residents and people on fixed incomes.”

Guilford County has a population of more than 540,000 and is the third most populous in the state.

“With LGC approval the county can now move forward with our capital funding strategy,” County Manager Michael Halford said in a statement after the vote. “We plan to issue the bonds in three installments beginning in 2024 and ending with the last tranche in 2029. This will allow us to monitor the market for the best timing to issue the debt and align repayment with the county’s existing revenue streams.”

The LGC also gave its okay to financing requests for funding that would go toward transportation, water and sewer, parks and recreation, and government buildings.

Durham County received approval to issue $550.2 million of GOs. Proceeds will be used to build and reconstruct school buildings, acquire land for future use and improve facilities at Durham Technical Community College as well as the Museum of Life and Science in Durham.

The LGC approved Union County’s request to sell $167.1 million of GOs to acquire land and to build a Forest Hills High School and East Elementary School as well as to improve buildings at South Piedmont Community College. 

The LCG gave the green light to Watauga County’s plans to build Valle Crucis Elementary School with proceeds from a $32 million limited tax GO bond issue.

Gastonia was given approval to issue $75 million of GOs to control traffic flow and improve safety while the Gastonia Housing Authority received LGC approval on three revenue bonds totaling $76.6 million for multifamily housing projects.