BC 2009 05 04 Work Session - Laserfiche WebLink

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May 4, 2009 (Work Session) Page 1360 Ms. Dubois pointed out if the Board chooses the Capitalized Interest option, another public hearing will be required May 18, 2009 to add capital interest as an option as a financing mechanism. Ms. Dubois also reviewed the comparison between the two options. She answered questions from the Board regarding how the financials were derived and how economic factors were taken into consideration when calculating these figures. In response to questions from Vice Chairman Mynatt, Mr. Day explained the timing of the school debt payments in both scenarios is around the increased revenue that would be produced by revaluation. He stated the alternative to that is to raise taxes without a revaluation, yielding the same result. Brent Weisner, Tax Administrator, explained to the Board that the County's revaluation increases are due to land values increasing rapidly in this part of the Nation. He stated the following: estimates used in these options were a projection of a 10.5 percent increase due to a revaluation in 2013; so far, the sales numbers from 2009 show a decline of 5-6 percent in market value of residential properties; historically, the County has an average of 6 percent growth over the last 10 years; etc. A lengthy discussion ensued between the Commissioners and staff concerning sales tax; future capital improvement projects; etc. Vice Chairman Mynatt expressed concern over increasing property taxes in the near future, noting the lack of income to offset the increase in taxes. She stated the need to consider the private citizens and business owners and what they're being asked to give. Chairman White stated the importance to hear from the schools to get a better understanding of their situation and needs. Commissioner Poole stated that schools are extremely overcrowding and delaying the construction of any capital projects would be detrimental. Commissioner Carruth stated the need to evaluate the budget and consider making strategic reductions or cuts, either temporarily or long term. He also expressed the need to engage the public in this process. Chairman White reported: approximately $187 million dollars has been provided to North Carolina; interest free loans are available to qualified counties for school construction, based on size, need, free lunch, and similar qualifications; several counties have already received disbursements from these funds, leaving approximately $100 million to be allocated over the next two years; and decisions made by the Board should not be based on the County receiving any of those funds. Mr. Day clarified that in order to use the capitalized interest mechanism, a public hearing must be held on May 18. Ms. Dubois informed the Board that at their April regular meeting, the Board approved a resolution approving installment contract financing for various public school projects in an aggregate principle amount of up to $100,000,000.00. That plan, which uses interest only to pay the debt for the first two years, is scheduled to be evaluated by the Local Government Commission (LGC) at their meeting on May 5, 2009. She said if the Board does not plan to use the interest only scenario, it is recommended that the Board ask the LGC to pull that item from their agenda. Mr. Day explained: (1) the interest only option is not configured into the budget and will require a significant tax increase; and (2) that due to the degree of uncertainty on which direction the Board will go, he recommended the Board ask the LGC to pull this item from their agenda for now. A discussion ensued and the following issues were addressed: the need for public input and procedural concerns. Ms. Dubois reiterated that in order for the Board to use the capitalized interest financing mechanism, a public hearing must be held and a resolution adopted on May 18 to be considered by the LGC at its June 2 meeting. UPON MOTION of Commissioner Poole, seconded by Commissioner Carruth, and unanimously carried, the Board voted to schedule a public hearing for May 1B, 2009 at 6:30 p.m. regarding an option to utilize capitalized interest to fund various school construction projects.