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