Minutes 11-11-2014 - Laserfiche WebLink

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Ken Pennoyer said the Town originally looked at a tax increment financing (TIF); however the structure of the law in N.C. makes this too expensive and somewhat less efficient. He said the local government commission staff dissuaded the town from using this and instead encouraged them to use an installment purchase model. He said there was also an opportunity to combine projects. He said the problem with the improvements for the Ephesus Fordham area is that they are roadway and storm water projects, which offer no asset to use as collateral. He said in order to make this work it had to be combined with a project that has collateral. He said the needed update of the Town Hall provided an opportunity to combine projects and use the Town Hall as a security for the $10 million. Ken Pennoyer said by using the synthetic tax increment financing, the idea is that the majority of the funds to repay the debt would come from the increase in the value of the development that happens in the tax increment area. He said the Ephesus Fordham project would create increased property tax values and tax revenue that would help pay for the debt for the project. Ken Pennoyer reviewed the expected development graph and said the development is planned to have 3 separate phases, and the cash flow has been projected out 20 years in order to match the debt service. He said the expectation is that the actual development will be completely built out within 15 years. He said the goal was for the cumulative debt service to be paid for by the cumulative property tax increment achieved by the town extending services to the new development. He said the "Cost Benefit" graph shows where these cost and tax increment lines cross. He said in formal tax increment financing, the process would be to come to the County Commissioners to have the tax increment approved in a vote. He said the County would then have the opportunity to decide whether or not to participate. Ken Pennoyer said the projection based on the current tax rate is that the total property tax generated after a 15 year period would be approximately $2.3 million, and the school impact fees would be $1.9 million (based on the estimate of 1,495 new family housing units). He reviewed the slide regarding proposed County participation, and he said based on the anticipated debt service of$80,000 per year, the maximum the County would pay is $400,000. He said if the increment ends up being $100,000 in the early years, the maximum request of the County would be 50 percent of that, or $50,000. Ken Pennoyer said the Town has been working with this for years and has a comfort level that allows them to make the leap. He said it is different from the County's perspective; so in order to help the County make a decision without committing to it for 20 years, the town will provide annual reporting as outlined on the slide. He said the decision to allocate money could be an annual budgetary decision based on whether the project is meeting expectations. He said this is a departure from the original presentation. Ken Pennoyer reviewed the slide regarding Projected County Tax Increment, and he said the green bar represents the maximum amount of debt service the County would have to pay in the given year. He said the cumulative net tax increment, after taking this amount off, would be $25 million. He said the green line in the next slide shows how the County contribution impacts the 20 Year Cost Benefit Comparison. Ken Pennoyer said, in looking back at the last presentation, he noticed that the numbers