Agenda - 10-19-2004-7b - Laserfiche WebLink

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Projects Can Be Funded Under Existing Financing Options -Despite the current unavailability of PDF in North Carolina, localities have other readily available financing options. Local governments currently issue debt to pay for the types of projects this legislation would fund, such as general obligation bonds or industrial development bonds.. In addition, the state's extremely (some would say exceedingly) generous economic development package includes varying incentives, grants, tax credits, and funds that encourage local development. The state has also moved toward authorizing certificates of participation (COPS), which can also be issued without voter approval. COPS, as well as lease-purchase arrangements are also already available to local governments and do not require voter approval, Urban Sprawl May be Exacerbated - "Urban sprawl" results when large amounts of undeveloped land outside a city's boundaries is developed for residential or commercial purposes, resulting in the destruction of natural habitats, the reduction of vital wetlands, strained water supplies, and worsened traffic. Because PDF projects may be funded by a city or multiple cities, by a county or multiple counties, and can therefore be used anywhere in the state, it is certainly possible (perhaps likely) that the use of this financing scheme will increase urban sprawl. Annual Report Information is Minimal -The required annual report must include only four pieces of information: 1) the base tax valuation of the property in the district, 2) the current valuation, 3) how much debt remains, and 4) the anticipated date the bond will be paid off.. As a result, no meaningful analysis can be conducted to determine if the project was successful in meeting the initial goals set forth in the development financing plan. For example, the number of jobs anticipated versus actual jobs created will not be in the annual report. An analysis of whether the city was successful in ameliorating the negative impacts attributable to the project will not be found either_ Moreover, in addition to the weak reporting requirements, the reports are not required to be released to the public. No Clowbock Provision -The term "clawbacl<" describes the ability of a municipality to seek reimbursement from a private company that receives some form of government subsidy but fails to meet specific and agreed upon contractual obligations. For example, a city agrees to renovate an existing warehouse bought by XYZ company on the condition that the company be in business and hire 50 people by 2006, but XYZ decides to move to Virginia instead after the renovation is complete Instead of benefiting from the increased property value due to the renovation, XYZ should be required to repay the funds spent by the city. The PDF amendment includes no such requirement. Belief that Taxes Will Not Increase May be Overstated -When an undeveloped piece of land is developed or when a downtown district receives a facelift, inevitably, local governments will incur greater responsibility and thus, their costs of providing the same level of service to the district will rise. Usually, the taxes generated in redeveloped or newly developed areas are used to pay for the normal operating expenses incurred by a district Since the property tax revenues are devoted to paying down the project's financing bond, the issuing district must raise these revenues elsewhere. For example, a city may need additlonal fire or police protection for the area, wastewater treatment facilities may need to be expanded, or roads that lead to the PDF district may need to BTC nEPORT$ ~ NC BUDGET $t TA% CENTER