AG 1993 10 04 - Laserfiche WebLink

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MAJOR POINTS ON EDF The economic climate across the country is becoming more and more competitive. States like South Carolina, Kentucky and Alabama offer significant financial incentives and tax breaks to lure businesses. North Carolina has not, and never will, be in the business of tax abatement. But North Carolina must find reasonable and prudent ways to remain competitive. With this in mind, the 1993 NC General Assembly passed a bill authorizing Economic Development Financing, and a constitutional amendment to put it into effect. EDF is a new tool for communities to use to recruit new industry or expand existing industry and create new jobs. It's a new way to finance the public infrastructure that companies need. For example, it a large manufacturer is considering locating in a North Carolina county, but needs water and sewer, EDF will allow the local government to sell bonds and use the bond proceeds to build the water and sewer lines. The bondholders are then paid back with the additional property tax revenue that comes from the factory built on that site. Some 40 other states have this economic development tool -- North Carolina needs it in order to stay competitive. Individual counties need it in order to be more competitive. EDF is a safe, pay-your-way approach: Typically used for public infrastructure -- things that will benefit more than the company alone in many cases. Not tax abatement. Company still pays taxes, but additional property taxes generated by the company's investment are diverted by local governments to pay bonds. All other taxes continue to be paid. o Full faith and credit is not pledged unless approved by a vote of the people. o Local Government Commission must approve financing plan and bond issue. o Any EDF financing plan must be subject to public hearing. Nothing done behind voters' backs. Citizens vote in statewide election; public hearings will be held on each project. All counties can benefit -- including poor/rural counties. EDF gives these counties a new option. EDF bonds can be issued relatively quickly. A bond referendum can take a year or more, which is usually longer than a company can afford to wait when selecting a site. Once the bonds are paid off, the increased tax revenues are available to pay for improved services. Paid for by the NCACC 1993 State Referenda Committee g:~shared~ed~q&aedf