Orange County NC Website
Browse       Search
!In <br />FINANCING EPHESUS FORDHAM PUBLIC IMPROVEMENTS February 2014 <br />Although the forms of debt the Town is planning to use are familiar; the Town Operations Center <br />and the 140 West Parking Garage were built using installment financing and as recently as 2012 <br />the Town used two- thirds bonds for parks facilities and streets, the repayment plan is somewhat <br />unique to the Town because it relies on a "tax increment." <br />Repayment Plan <br />Debt Management Fund: The portion of debt <br />used for Town Hall and CIP will be repaid through <br />the Debt Management Fund. The Debt Fund was <br />established in 2009 with a dedicated property tax <br />to provide a source of funds to pay off Town debt <br />obligations. <br />"Synthetic Tax Increment Financing (TIF) ": <br />The portion of the debt used for the Ephesus <br />Fordham public improvements will be repaid by the <br />incremental increase in tax revenues resulting from <br />redevelopment. In other words, the <br />redevelopment we are hoping to generate through <br />the Ephesus Fordham Renewal Project will increase <br />property tax receipts from the area. Those tax receipts, over and above the base level of tax <br />receipts that existed prior to the project, will be dedicated to pay off the debt for the public <br />improvements. Although this method of financing economic development projects is fairly <br />common in North Carolina, it is the first time that the Town has used incremental tax receipts as <br />a primary source of debt repayment. <br />Synthetic versus "traditional" TIF: In 2004 the State Legislature approved Tax Increment <br />Financing (aka: Project Development Financing) legislation that enabled local governments to <br />finance economic development projects with a pledge of future additional (incremental) tax <br />revenues from an established TIF district. Because of the cost, complexity and length of the <br />process for approval there have only been two traditional TIFs approved in North Carolina in the <br />last 10 years. Part of the reason for the unpopularity of traditional TIFs in North Carolina is the <br />availability of an easier, faster and less expensive alternative. Many local governments in North <br />Carolina have opted for installment financing that uses a physical asset as collateral and <br />repayment from a tax increment to finance economic development projects. This accomplishes <br />the same thing as the traditional TIF, but is less expensive (lower interest rate) and takes less <br />TOWN OF CHAPEL HILL I BUSINESS MANAGEMENT DEPARTMENT r 2 <br />