The Local Government Commission (LGC) has approved more than $100 million in financing requests from local governments around the state for school construction and other facilities, to renovate town halls and to purchase property for public use, and nearly $270 million for water and sewer infrastructure work.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by the Department of State Treasurer (DST), voted on those and other items on the agenda for its meeting on Tuesday, May 2.
The commission 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 Local Government Commission is unlike any similar agency in other states, and continues to serve North Carolina well when it comes to partnering with local government units to review and help obtain interest-free financing,” Treasurer Folwell said. “It is especially rewarding to know our hard work assists local governments in providing resources and facilities used by those who teach, protect and otherwise serve the public, and the citizen taxpayers who benefit from those capital assets.”
Washington County received approval for a $20.5 million installment purchase of a consolidated pre-K through12 campus in Plymouth, with construction beginning as early as this month. The complex is expected to open in 2024. The financing mechanism allows the county to make partial payments over time. The county plans a tax increase of 4 cents per $100 of property valuation to offset costs. Pine Elementary School will be razed to make room for the new school.
“This state-of-the-art campus will serve 1,000 students from across the county. This is a low-wealth county, and families deserve to send their children to a school offering the best educational opportunities regardless of their zip code,” Treasurer Folwell said. “This vote by LGC members helps to make that goal a reality.”
Forsyth County plans to perform K-12, community college, parks and recreation projects now that it has received approval to issue $29.2 million in “two-thirds bonds.” That type of bond does not require voter approval like a normal general obligation bond. Instead, it allows a local government to issue new debt equal to two-thirds of the amount of general obligation debt that was reduced in the previous year.
The money will allow for capital improvement projects at K-12 schools such as roofing, parking lots, HVAC and boiler upgrades. Community college projects include roof replacement, wall and storm drain repairs, IT and equipment upgrades. Parks and recreation projects will include maintenance for trails, basketball courts and other parks facilities.
LGC members signed off on a request by Lee County for $7.7 million in limited obligation bonds. These bonds are issued when general fund revenues pay debt service. The money will be used to refinance an existing financing agreement to purchase 22 acres of land and existing facilities to be used by Central Carolina Community College. It also will pay for a new truck driver training facility.
Also receiving approval were:
- Wayne County, $40 million, to build and equip a combined Department of Social Services and Health Department building.
- Hendersonville (Henderson County), $6.4 million, to renovate and improve City Hall and the City Operations Center, and to perform streetscape enhancements.
- Knightdale (Wake County), $3.7 million, to build a 10,000-square-foot fire station, scheduled to open in August, and purchase two pumper trucks.
- Beech Mountain (Avery and Watauga counties), $550,000, to renovate Town Hall and Visitor Center buildings, and connect them with an addition.
LGC members also approved requests for a variety of water and sewer infrastructure financing. They were:
- The city of Raleigh (Wake County), $215 million in bond anticipation notes to perform multiple water and sewer capital improvement projects. The financing is a short-term security that generates interest to help pay for upcoming projects, and is paid off later with a larger, future bond.
- Henderson (Vance County), $15.3 million, to expand and update the Kerr Lake Regional Water System.
- Eden (Rockingham County), $14.6 million, for replacing lines, manholes and other improvements.
- La Grange (Lenoir County), $13.5 million, to install lines, replace equipment, add two wells and enhance water distribution, among other improvements.
- Hendersonville (Henderson County), $8.4 million, to replace water and sewer mains and pump stations, replace water meters and other work.
- Murphy (Cherokee County), $900,000, to replace 100-year-old water lines.
- Moore County, $756,000, to extend sewer lines.
During the meeting, city of Wilmington staff and elected officials presented plans for a $68 million purchase of the Thermo Fisher Building in the downtown area. They said the building and 12.5-acre property has an assessed value of $91.4 million, with another analysis putting it at $111.3 million. The building would provide consolidated office space for city employees and much needed parking. No tax increase is expected.
In another matter, Deputy Treasurer Sharon Edmundson, who serves as LGC secretary and director of DST’s State and Local Government Finance Division, provided commission members with an update on Elizabeth City (Pasquotank County).
She said the 2022 audit is still missing, and the 2021 audit was just submitted recently. The audited statements show a fund balance available in the general fund of just 13.5%. That is low for a city with similar general fund expenditures, and is only enough savings to pay for just over one month of expenditures.
The 2021 audit included 13 material weaknesses in internal controls and financial processes, including not accounting for its capital assets or capital projects correctly and overbilling to the Coast Guard of more than a half-million dollars for water and sewer fees that the city failed to report as payable. Management didn’t review compensated vacation absences, so some retired employees were still accruing vacation time and some current employees were incorrectly excluded from the compensation figures. Beginning fund balances for 2021 didn’t match 2020 ending balances in some accounts. The city didn’t bid certain procurements in compliance with statutes and its own policies. City Council was not receiving regular financial reports, and no approved minutes were found for many meetings.
While LGC members discussed the issues and what steps to take to help city officials get on track, no action was taken.
Treasurer Folwell said there is a lot of tension among LGC members, and between Elizabeth City officials and LGC members.
“We have to irrigate this until we can get to what’s in the best interest of the citizens and taxpayers,” he said.