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10/20/2004 |
Economic Development |
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County’s Registered Voters Have Opportunity To Be Economic Developers |
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County’s Registered Voters Have Opportunity To Be Economic Developers For A Day
(Cleveland County, NC) – Cleveland County’s approximately 53,000 registered voters will have an opportunity at the polls November 2 to play a positive, personal role in an effort to make our county more competitive in the rough-and-tumble economic development arena.
No heavy lifting is required. All voters have to do Nov. 2 is vote “Yes” on Amendment One. Passage of Amendment One would add a major new tool in Cleveland County’s already broad and intensive efforts to accelerate our economic recovery. That ought to be an encouraging prospect in a county which has experienced double-digit unemployment and the loss of more than 3,500 jobs since 2001.
A positive statewide Amendment One vote would authorize amending the North Carolina Constitution to permit counties and municipalities to issue self-financing bonds to fund public improvements and spur private investment in special development districts.
For example, a city might designate a dilapidated block as a special development district. The block’s current tax value might be $100,000. Once the improvements were made, the value might have risen to $500.000, a net increase of $400,000. Taxes paid on the $400,000 net increase would be used to repay the bonds. Taxes paid on the original $100,000 would still go to the city’s general fund.
Once the bonds were retired, taxes paid on the full $500,000 tax value of the redeveloped block would go to the city coffers. Such bonds have been used quite successfully for over 40 years in 48 other states, including neighboring South Carolina, resulting in billions of dollars worth of public improvements and private investment. The hundreds of self-financing bond projects in those 48 other states have neither required property tax increases nor required cities or counties to pledge their taxing authority.
Self-financing bonds are not sold just like general obligation bonds.
With general obligation bonds, a county or municipality pledges to the bond holders that it will use the community’s full faith and credit to repay the bonds. With self-financing bonds, cities and counties do not pledge to the bondholders their full faith and credit. The difference is important because the North Carolina constitution requires a referendum on bonds only when the community is pledging its full faith and credit to the bondholders.
Also, general obligation bonds allow the bondholders to force the community to raise taxes to pay off the bonds. Self-financing bonds prohibit bondholders from forcing the community to raise taxes to pay off the bonds. Furthermore, a survey of self-financing bond issuances over the past 50 years reveals a successful retirement rate of more than 98 percent. Property tax dollars were not used to retire the less than two percent of the problem issuances.
Sales taxes were used in those two percent of cases. Amendment One prohibits the use of sales taxes for such purposes. Other taxpayer-protection elements of the self-financing bond procedures embodied in Amendment One are equally stringent. North Carolina cities and counties could, after discussion with landowners, specify certain areas to be development districts. Those districts, however, would not become official until development plans were thoroughly reviewed and approved by the North Carolina Local Government Commission.
The Local Government Commission is an independent, non-partisan body. A key assurance against flawed projects slipping through is that in over 50 years, no local bond approved by the Local Government Commission has defaulted.
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