Officials present primer for self-financing bonds
Thursday, September 28th, 2006
By Chris Fitzsimon
By Justin Vick jvick@independenttribune.com
The City of Kannapolis hosted an information session Wednesday justifying the use of self-financing bonds that will prepare the local infrastructure for growth spawned by the $1.5 billion-dollar North Carolina Research Campus.
“Because this is so new in North Carolina and because it’s so important and ties with the research campus, we anticipate questions, concerns and thoughts,” said city spokeswoman Karen Whichard.
After all, North Carolina was the 49th state in the U.S. to pass legislation allowing municipalities to issue the self-financing bonds to fund public improvements.
“Before this form of financing was passed a couple of years ago, the only way we could have done this project was to pledge to pay off the debt with everyone’s taxes,” said Kannapolis City Manager Mike Legg.
The mechanism didn’t exist to leverage those dollars and having legal safeguards in place to ensure the project would be financed, Legg said.
Self-financing bonds are issued and repaid by the property taxes generated by new private development within a designated bond district. Kannapolis designed a district encompassing areas that expected to receive the most investment.
If the bonds were to fail, Legg said developer Castle & Cooke would pay off the debt. A bank letter of credit would ensure a bank take care of the debt the developer can’t pay off.
Kannapolis officials said bonds rarely fail. (more…)
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