Town of Cary
North Carolina

Staff Report

2019 Bond Referendum Preliminary Findings Resolution

Information

Department:FinanceSponsors:
Category:Resolution

Speaker:  Karen Mills, Finance

 

Executive Summary: During the May 9, 2019 Quarterly Meeting, Council directed staff to begin taking the required steps to hold a bond referendum for Transportation and Parks and Recreation on October 8, 2019. The legal process associated with holding a referendum requires separate Council actions over several months, the first of which is to adopt a Preliminary Findings Resolution, which documents Council’s conclusions about using debt and authorizes staff to seek approval of the proposed referendum with the NC Local Government Commission.

 

Recommendation: That council adopt the attached Preliminary Findings Resolution.

Body

Background:  Dating back to the 1980’s, Cary has successfully used voter-approved bonds as one of several financial strategies to help create and maintain the community we enjoy today. The most recent referendum was approved by voters in 2012 for fire, transportation, and parks initiatives. All of the funded projects are either complete or well underway.

 

A group of people sitting at a desk

Description automatically generatedWith this in mind and on May 9 as part of the annual budget discussion, Council and staff explored a number of projects that could qualify and are well-suited for funding with debt financing via general obligation bonds.  There was agreement for a “not to exceed” total of $225 million for Cary’s next referendum: up to $113 million going toward transportation needs and the remaining $112 million for parks and recreation needs, including preserving open space. Council then directed staff to begin the legal process to hold a general obligation bond referendum on October 8, 2019.

 

Discussion:  To help keep Cary great, a referendum is being planned for the October 8, 2019 election. The referendum, which will be comprised of two separate questions, will ask voters whether they approve of the Town’s use of general obligation bond financing to pay for qualifying transportation projects and qualifying parks projects.

 

While the referendum sets maximum limits for borrowing in each of the two categories, the Town is not required to borrow the full authorized amounts.  If the debt financing is approved by voters, then projects would be initiated, designed, constructed and initially financed over as many as 10 years. At the same time, we expect the tax base will grow, existing debt service will decrease, and other revenues and operating expenses will change. For perspective, in today’s dollars based on current assessed value, one penny of property tax yields enough revenue to cover debt service on approximately $30 million of new debt. 

 

This staff report presents the first legal step toward the referendum:  adopting a resolution (Attachment A) documenting Council’s conclusions that debt financing is needed and affordable; directing the Town Clerk and Chief Financial Officer to file an application for approval of the referendum with the Local Government Commission; appointing bond counsel; and authorizing the appropriate officers to do all things necessary to carry out the resolution. The proposed resolution is Attachment A to this staff report.

 

Fiscal Impact: There is no fiscal impact resulting from adopting the resolution.  However, future tax increases will be required for operations, maintenance, and capital projects if we are to keep Cary great as we move from a growing community to a maturing community.  As explained above, the amount and timing of tax increases remains to be determined. 

 

Next Steps:  Following approval of this resolution, staff will place a legal advertisement regarding the Town’s intention to make application for state approval of the referendum to the LGC and will follow through with the application. Staff will bring additional legal steps to move the referendum forward in June by asking Council to introduce the bond orders and set a public hearing. In July, that public hearing will be held and the bond orders considered for adoption. If approved, the bond orders would be publicized in legal notices during July and August. The entire proposed bond referendum calendar is attached (Attachment B).