Agenda - 06-03-1991 - Laserfiche WebLink

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d involved if development rights are acquired in the southwestern portion of the county. Tables 5 and 6 play out the same scenarios but assume a beginning development rights cost of $1,500 per acre, the national average and representative of values which might be found in the northern portion of the county. Regardless of the scenario, though, the central point to make of even a "modest" program is that substantial expenditures will be made, particularly if the program extends over a long period of time. Bond Program: When North Carolina local governments pay for programs and projects through bond financing today, the term of the bond is generally 20 years. The interest rate may vary with the jurisdiction's bond rating, but for Orange County, it is six and one -half percent with a one percent administrative fee. To show how a bond program for financing the purchase of development rights might work, it is best to use the examples provided in Tables 3 and 4 for comparative purposes. Table 3 indicated that a 20 -year pay -as- you -go program would cost $9,614,210, assuming a one cent tax increase, a three percent appreciation rate, and a development rights cost of $2,400 per acre. If the development rights on the entire 2,982 acres had been purchased in the first year at a per acre cost of $2,400, the total cost would have been $7,156,800 or $2,457,410 less. Using the example provided in Table 4, the savings would have amounted to $7,511,371. To finance the $7,156,800 cost of development rights in the first year, it would be necessary to seek the approval of a bond issue. If it passed, the annual debt service payments and long -term cost to the County would be as shown on Table 7. From the comparisons at the bottom of Table 7, it is apparent that a pay -as- you -go program at three percent appreciation would save money in the long term. The real disadvantage to any pay -as- you -go program is that land is being developed during the period, and valuable farmland will be lost. If property values were appreciating at an annual rate of seven percent during the period, bond financing would be more advantageous, both in terms of long -term program costs and cost to the taxpayer. The total cost for the bond program would be $14,040,524, including principal and interest payments. The total amount received and expended through a one cent tax increase would be $14,668,171 or $627,647 more. As shown in Table 8, the initial two cent tax rate needed to meet the annual debt service payment could be decreased, since the total property value would be appreciating. By the end of the 20 -year period, the tax rate would be equivalent to one -half cent. The long -term cost to the owner of a $100,000 home would be $392 under bond financing and $410 under pay -as- you -go. Page - 9