North Carolina panel reverses course, allows county's bond request

The North Carolina Local Government Commission reversed course from its July meeting and approved Cabarrus County’s request to sell $186 million of bonds to take out bond anticipation notes.

The commissioners voted seven-to-one in favor Tuesday, with Commission Chair and State Treasurer Dale Folwell the sole “no” vote. In mid-July the county’s request for the $186 million bond and a separate $42 million bond had failed for lack of a motion — no commissioner indicated a willingness to approve them.

At Tuesday’s meeting, the commission staff recommended approval of the $186 million in bonds, as it had at the July meeting.

State Treasurer Dale Folwell told the Cabarrus County Commission chair that he hoped the county would get voter approval for future major borrowings.

State Auditor and LGC Commissioner Jessica Holmes said she was not convinced that the limited obligation bond Cabarrus County was proposing was better than using a general obligation bond, which state law would require the county voters approve.

The $186 million limited obligation bond was not transparent or good government, she said, but she said she would leave it up to Cabarrus County voters to determine the wisdom of the county commission’s decision to use a limited obligation bond, presumably when the commissioners seek reelection.

Folwell said he’d have liked the county government to have sought voter approval before it approved large amounts of debt. The county government would probably have succeeded in getting it and have avoided the risk that interest rates go up from the time BAN was drawn, which was 2022.

After the commission approved the bond, Folwell asked Cabarrus County Commission Chairman Steve Morris if the county planned to seek voter approval for their bonds in the future.

Morris said the commission had not discussed it yet. He said he hasn’t seen much financial benefit to the county of using GO bonds as compared to LO bonds. Cabarrus County currently has triple-A ratings on its GO bonds from all three major rating agencies.

Morris said 54 counties in state used LO bonds for financing school facilities.

LGC Commissioner John Burns said the state provided limited obligation bonds as a “tool in the toolbox” for counties.

“It is the Local Government Commission’s responsibility to ensure fiscal compliance and fiscal capacity of our local governments. It is not our position to be a super county commission, imposing our policy judgements on those of the elected officials of these counties,” Burns said.

“I agree with the auditor that these [county] commissioners, if their voters believe they have not showed sufficient information with them before incurring this type of limited obligation bond, will face those voters,” Burns said.

The Local Government Commission had asked the county for financial information surrounding its separate request for a $42 million bond to acquire a building for a human services center and land for a regional behavioral health center.

Morris said the information was not yet available and would be brought to the LGC in a workshop meeting in two weeks.