A significant change to a 13-year-old policy was approved by the N.C. Capital Facilities Finance Agency (NCCFFA) this week. State Treasurer Brad Briner chairs the seven-member board, which facilitates tax-exempt financing to nonprofit institutions providing elementary and secondary education, private higher education institutions, and various other public-interest, special-purpose projects.
Over the past decade, a NCCFFA policy limited the length of bond maturities to terms lower than those allowed by law. Maturity is the date when the principal must be paid back to the bondholder. In that 10-year period, more than twice as many qualified borrowers sought services outside of North Carolina than through NCCFFA.
On Tuesday, March 4, the agency adopted revised guidelines for the final maturities of agency-issued conduit bonds. The existing guidelines called for final bond maturities of 20 years for revenue-producing projects, 25 years under certain defined circumstances, or more than 25 years under extraordinary circumstances. The new guidelines allow for final bond maturities of up to 40 years, in accordance with the maximum final maturity allowed by statute and based on agency staff’s recommendation.
Treasurer Briner said some North Carolina entities have been issuing debt in Wisconsin and obtaining longer amortization schedules; this policy change seeks to address the financing needs of those entities.
“I think it is a good thing for the state of North Carolina and this particular agency to oversee issuers within our borders in a much more detailed way than we can if they issue outside of our borders,” Treasurer Briner said. “North Carolina has an unparalleled reputation for financial oversight through entities like the North Carolina Capital Facilities Finance Agency and the Local Government Commission, both staffed by the Department of State Treasurer. We hope that this policy change provides opportunities for eligible borrowers to take advantage of the strong reputation and customer service experience the agency provides.”
Following that decision, the Local Government Commission (LGC) approved an application from Raleigh for $75 million in limited obligation bonds at its meeting on Tuesday. Bond proceeds will pay for public-serving elements of a new Omni Hotel — enabling more and larger downtown conventions, cultural and arts events to boost tourism and economic development.
Limited obligation bonds are a type of municipal bond generally secured by a limited source of revenue, and do not require voter approval. The Raleigh bonds will be paid with room occupancy and prepared food and beverage tax revenues. The $75 million in bonds will not be issued until the hotel developer secures its private financing.
Total cost of the project is estimated at $330 million. The convention center project is recognized by both Wake County and the capital city as an essential need to support Raleigh Convention Center expansion plans. The Omni Hotel’s 55,000 square feet of meeting space and 550 guest rooms will accommodate more event visitors. The hotel will be built on city land on Fayetteville Street, across from the convention center and the Martin Marietta Center for the Performing Arts. The site will be leased to the hotel for 99 years at $75,000 per year, with an opening projected in 2027.
State Treasurer Briner chairs the LGC. The commission is staffed by the Department of State Treasurer (DST) and 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.
Asheville (Buncombe County) also was on the agenda, and its request was approved for $80 million in general obligation bonds for housing, transportation, parks and recreation, and public safety projects. The work is expected to increase property taxes 2.58 cents per $100 of valuation. Voters passed four election referenda to issue the bonds in November 2024.
The bond proceeds will be used to acquire, build, renovate, develop and equip low- and moderate-income housing projects ($20 million); and for paving, resurfacing, grading or improving streets, roads, intersections, pedestrian and bicycle paths, sidewalks, curbs, gutters, drains, bridges, overpasses, underpasses and grade crossings ($20 million).
The bonds also will be used to build, reconstruct and improve parks and recreation amenities including aquatic facilities, community centers, courts, fields, landscaping, lighting and multipurpose trails ($20 million), and for firefighting and prevention facilities and law enforcement facilities ($20 million).
The Gastonia Housing Authority (Gaston County) was given a thumbs-up from the LGC for $35 million in conduit revenue bonds that will be loaned to The Lofts at Hudson, LLC. Proceeds will be used to finance a portion of the cost to acquire, build and equip a 252-unit low- and moderate-income, multifamily rental housing development on Hudson Boulevard to be known as The Lofts at Hudson.
Greensboro (Guilford County) got a green light from the commission to issue $23 million in limited obligation bonds. Proceeds will be used to demolish the city’s Bellemeade Parking Deck, to build and equip a new fire station, acquire and install radio communications equipment for several departments and acquire property for future governmental purposes.
LGC members voted in favor of two applications totaling $29 million from Sanford (Lee County) for infrastructure projects including work related to water and sewer utility mergers with the Chatham County towns of Pittsboro and Siler City. Rate increases of 6% to cover the costs were implemented for 2025, and 4% rate increases are projected after that through 2030.
Revenue bonds totaling $19 million will help to pay for extensions, additions, capital improvements and replacements. Those include building a pressurized sewer pipe and lift station to connect the Pittsboro service area to Sanford’s wastewater treatment plant, and to acquire a reservoir and a network of smart meters related to the merger of Siler City’s utility systems. The Siler City transfer of 3,824 water accounts and the same number of sewer accounts is scheduled for July 1, when the Siler City system is merged with Sanford’s system.
The second Sanford application was for a $10.05 million State Revolving Fund loan increase on a project to convert the Pittsboro Wastewater Treatment Plant and install a new pump station and pressurized sewer line. The work is necessary to transmit Pittsboro’s wastewater to the Sanford Big Buffalo Creek Wastewater Treatment Plant, then on to Sanford’s Big Buffalo Creek Wastewater Treatment Plant.
In a related request, Fuquay-Varina (Wake County) received the LGC’s blessing to obtain a $5.5 million State Revolving Fund loan to increase capacity at the Sanford regional water treatment plant by 18 million gallons daily. Six million gallons of the expansion costs will be borne by Fuquay-Varina, with rate increases of 15% in the coming three fiscal years, and 5% in 2029. Holly Springs (Wake County) will shoulder the costs for 4 million gallons of the expansion, and plans to pay for that with a $2 million State Revolving Fund loan that the LGC authorized. Holly Springs will raise water and sewer rates 15% in the next two years, and 9.5% in 2027, 2028 and 2029. Those Wake County towns are in a cooperative agreement with Sanford, which will bear costs for the other 8 million gallons of expanded capacity.
Greenville (Pitt County) secured the go-ahead from LGC members for $11 million in limited obligation bonds, proceeds of which will help to pay for various capital improvements. Those include construction of street, road and sidewalk improvements to improve traffic flow, and the replacement of failing stormwater pipes and related facilities at the city’s Public Works Department building. No tax increase is anticipated.
LGC members passed a $6.8 million installment purchase requested by Alleghany County to help pay for a new Alleghany County High School in Sparta. The current 60-year-old school is not compliant with federal Americans with Disabilities Act requirements, and incurred damage from a 5.1 magnitude earthquake in August 2020. The installment purchase allows the county to pay back the financing over time instead of paying up front. The county is putting up $1.5 million in general fund appropriations and is receiving $59 million in Needs Based School Construction Grant Funds from the NC Education Lottery.
Goldsboro (Wayne County) received a nod to enter into a $6.7 million installment purchase to buy and equip multiple police vehicles to replace old models, and to buy equipment to upfit other aging vehicles.
Additional requests approved by the LGC were:
- Wake County, $49.5 million general obligation bond refunding at a lower interest rate to reap $1.3 million in savings.
- Beaufort County Water District 1, $1.95 million State Revolving Fund loan increase, on a project to install a new supply well and add treatment filters to the Southside Water Treatment Plant to meet water demand and potential water supply shortages.
- Garner (Wake County), $1.9 million in general obligation bonds, to improve Jones Sausage Road, Main and Pearl streets, and sidewalks along Bryan Road, and for four athletic fields, a playground, shelter with restrooms and covered seating.
- Reidsville (Rockingham County), $60,000 repayable loan from the N.C. Department of Environmental Quality to perform a federally required inspection and inventory of water lines.
Next month’s LGC meeting marks the last one for Deputy Treasurer Debbie Tomasko, State and Local Government Finance Division director who serves as the LGC board secretary. She announced her pending retirement in April during the meeting. She has been in her position since December 2023. Prior to that she was director of policy, technology and operations, starting in April 2018.