BC 1998 08 17 - Laserfiche WebLink

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32 Mr. Clifton reviewed the proposal for the County to finance the purchase of property by the Tourism Authority Board for the construction of a civic center/exhibition hall. The County would lend the money to the Tourism Authority at a 5.75 percent interest rate and would be reimbursed through the hotel/motel tax for the purchase of the property and for building a facility at some time in the future. UPON MOTION of Commissioner Niblock, seconded by Commissioner Mills and unanimously carried, the Board approved the financing of approximately $2 million at a 5.75 percent fixed interest rate for the Tourism Authority to purchase land for a public exhibition/civic center. Further, the Board authorized the County Manager and Finance Officer to proceed with finalizing a formal legal agreement with the Tourism Authority. INFORMAL PUBLIC COMMENTS Chairman Casper opened the meeting for Informal Public Comments at 8:20 P.M. There was no one present to address the Board, and Chairman Casper closed that portion of the meeting. Closed Session to Consult with Attorney Regarding Pending Litigation Concerning Philip Morris as Authorized by N. C. General Statute 143- 318.11(a) (3) UPON MOTION of Commissioner Barnhart, seconded by Commissioner Mills and unanimously carried, the Board moved to go into closed session to consult with the Attorney regarding pending litigation concerning Philip Morris as authorized by North Carolina General Statutes 143-318.11(a) (3). The following persons joined the Board in closed session: Mr. Blair Bennett, Deputy County Manager for Administration (Finance Director and Interim Tax Administrator); Mr. Charles Meeker, Attorney; and Mr. Bill Kouri, Tax Audit Manager. UPON MOTION of Commissioner Barnhart, seconded by Commissioner Carpenter and unanimously carried, the Board moved to come out of the closed session. Discussion of Capitalized Interest Chairman Casper asked Mr. Clifton to define capitalized interest and to give a brief overview of the Philip Morris issue. Mr. Clifton presented the following information. There has been a dispute between Cabarrus County and Philip Morris since 1990 over capitalized interest and the valuation of assets for taxation purposes. For the general public and those who may see this later on cable, capitalized interest can best be described as financing costs associated with the period of time during the construction of assets that later are added for value for taxation purposes. Those interest costs can either be the actual interest paid on borrowed funds or, in terms of larger corporations, a financial return those firms may forego by using their internal funds to finance asset acquisition. There have been efforts among both Philip Morris and Cabarrus County to resolve this issue over the years. The issue is currently before the Property Tax Commission and has been disputed over a number of years. The County and Philip Morris have been persistent in attempting to reach an agreement, but the County also had to remain insistent that any agreement adopted would impact all property tax payers in a uniform manner. In North Carolina, our research has found that there is a large variance in what you might call 'proper practice' Some counties do include capitalized interest and some do not. To be honest with you, some of them do not know what it is. There is a great deal of confusion out there. Clearly there is a need for the Legislature to take action to establish uniform and enforceable standards that could be applied throughout the State. Settlement of this issue locally will define County policy in this area until applicable legislation is implemented or applied on a statewide basis. Under terms of an agreement that is yet to be finalized, Philip Morris will pay Cabarrus County an estimated amount in excess of $875,000 to settle capitalized interest issues dating back from the 1990 tax year through 1997. The County will agree to suspend