(Raleigh, N.C.) – The Local Government Commission (LGC) has approved a $2 million installment purchase to pay for ballfield lighting and public safety vehicles for the town of Cornelius (Mecklenburg County).
An installment purchase allows for payments to be made over time instead of paying all project costs up front. The Cornelius item was among several requests on the agenda for the LGC meeting on Tuesday, Jan. 10.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by the Department of State Treasurer, has a statutory duty to approve most debt issued by units of local government and public authorities in the state. The commission examines whether the amount of money that units borrow is adequate and reasonable for proposed projects and confirms the governmental units can reasonably afford to repay the debt. It also monitors the financial well-being of more than 1,100 local government units.
The Cornelius request was divided into three components: Replacing lighting with a more efficient LED system on three multi-purpose ball fields at Bailey Road Park, $725,555; a fire truck, $795,924; and police vehicles, $500,000. The town, whose population has grown from about 14,000 in 2000 to slightly more than 31,500 in 2020, has construction bids in hand. Debt service is expected to be paid from the General Fund, and no tax increase is anticipated.
The city of Asheville (Buncombe County) received LGC approval to issue $26 million in general obligation bonds. The proceeds will pay off short-term bonds for parks and recreation and transportation projects. The original bonds were issued under the city’s draw-bond program, which was nearing its ceiling for borrowing.
A draw bond allows for the issuer to use proceeds from the bond sale over time while paying interest only on portions of the principal that are drawn down.
LGC members approved a request from the town of Chapel Hill (Orange County) for a “two-thirds general obligation bond” for $1.98 million. Unlike other general obligation bonds, a two-thirds bond does not require voter approval. The proceeds will pay the bulk of purchase costs for public safety radios and related equipment, with the rest being paid from available revenues.
This type of financing gets its name from provisions in the North Carolina law that allow some government units to issue bonds equivalent to up to two-thirds of the amount of reduction in general obligation debt the preceding year.