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Consider a November 2024 Bond Referendum Preliminary “Findings” Resolution.
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Staff: |
Department: |
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Amy Oland, Director |
Business Management |
Overview: The Town is pursuing a referendum for general obligation bonds for affordable housing, public facilities, streets & sidewalks, parks and recreation facilities, and open space/greenways for the November 2024 ballot.
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Recommendation(s): |
That the Council adopt the preliminary resolution stating Chapel Hill’s intent to proceed with a referendum for general obligation bonds in November 2024.
Key Issues:
Explanation of Referendum Process
• In the State of North Carolina, public approval is required for the issuance of most municipal general obligation (GO) bonds. Public approval is gained through a public vote or referendum. Referendum questions for municipal GO debt must be broken out into bond orders that authorize issuance of bonds for a particular purpose. The amount of a bond order is the maximum amount that can be borrowed.
• In collaboration with the Town’s financial advisors, Town staff determined that the amount of available debt capacity over the next 5 years, without the need for a property tax increase, after the June 2024 installment financing, is $44 million.
• To determine the make-up of the bond orders and amounts proposed for the referendum, we asked departments to provide their top three capital project requests that supported Everywhere to Everywhere, the Affordable Housing Plan, and other Town master plans, Council goals, and community interests.
• After several planning sessions with Council, we propose the following bond orders and amounts:
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BOND ORDER |
AMOUNT |
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Affordable Housing |
$ 15.0 million |
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Public Facilities |
15.0 million |
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Streets & Sidewalks |
7.5 million |
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Parks & Recreation Facilities |
4.5 million |
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Open Space/Greenways |
2.0 million |
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$ 44.0 million |
Explanation of Timeline
• The preliminary resolution, among other things, establishes the Council’s intent to proceed with a referendum in November 2024 to authorize the issuance of general obligation bonds for the uses and amounts shown above. The resolution also authorizes Town staff to proceed with the steps necessary to authorize the referendum. The preliminary resolution is a required step in the process of authorizing a general obligation bond referendum.
• After approval of the preliminary resolution, the actions needed to hold a general obligation bond referendum on November 5, 2024, include the following:
o Publish notice of intent to file application with the Local Government Commission (LGC) (5/15/24 council meeting)
o Make Legislative Committee filing
o File LGC application
o Council introduces bond orders and schedules public hearing (6/5/24 council meeting)
o Publish notice of public hearing
o Council holds public hearing; adopts bond orders and sets ballot questions and referendum date (6/17/24 council meeting)
o Publish bond orders and notice of referendum (twice)
o Bond referendum (11/5/24 election)
Fiscal Impact/Resources:
• The Town’s Debt Management Fund will be the source of repayment for the proposed general obligation bonds. The amount of available debt capacity was calculated to be $44 million over the next five or six years. The Town will not require a property tax increase to carry out the projects tied to the bond referendum.
• It is most likely that the bonds will be issued in three installments separated by two to three years each, as various projects move through the planning and design phases at different times and as our capacity to pay back the debt builds up over that time frame.
Where is this item in its process?
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Attachments: |
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• Resolution to Proceed with 2024 Referendum |
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• Sample ballot question |
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• Draft Staff Presentation |
A RESOLUTION STATING INTENT TO PROCEED WITH A 2024 REFERENDUM ON CHAPEL HILL GENERAL OBLIGATION BONDS (2024-05-15/R-8)
Introduction -
The Town of Chapel Hill’s long-range capital improvement plan contemplates funding for a wide variety of projects and calls for funding those projects using the multiple tools available to the Town. The Council has considered its priorities among identified projects and its alternative means of financing the costs. The Council has made a preliminary determination to finance at least some of the costs of the project through the issuance of general obligation bonds.
The issuance of these bonds is subject to the approval of the Town’s voters at a bond referendum. This resolution is the Council’s first formal step toward placing these bonds before the voters.
BE IT THEREFORE RESOLVED by the Town Council of the Town of Chapel Hill, North Carolina, that the Council makes an initial determination to proceed with a referendum on November 5, 2024 for Town general obligation bonds in the maximum amounts and for the purposes set forth below:
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Purpose |
Amount ($) |
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Affordable housing |
15,000,000 |
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Public facilities |
15,000,000 |
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Streets and sidewalks |
7,500,000 |
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Parks and recreation facilities |
4,500,000 |
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Open space/greenways |
2,000,000 |
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BE IT FURTHER RESOLVED that Council makes the following findings of fact in support of its determination:
(1) The proposed capital projects are necessary and expedient for the Town.
(2) The amount of bonds proposed is adequate and not excessive for the proposed purpose. The precise amount of bonds issued, and the projects eventually funded with bond proceeds, will depend on final project plans and costs and the evolving needs within the Town.
(3) The Town’s debt management and budgetary and fiscal management policies have been carried out consistently in accordance with the law.
(4) The Council estimates that no actual increase in the Town’s property tax rate will be necessary to provide for principal and interest payments on the bonds. The Council expects that existing revenue sources and growth in the Town’s tax base will be sufficient to generate funds for debt payments, as the debt payments are phased in over the next several years. The Town will work to minimize the tax rate impact, in a manner consistent with moving ahead on the projects and addressing other Town needs.
BE IT FURTHER RESOLVED, as follows:
(a) The Council directs the Town Manager and the Finance Officer to proceed with the authorization of the referendum, including proceeding with an application to the North Carolina Local Government Commission for its approval of the proposed bonds. The Council appoints the Finance Officer as the Town’s authorized representative with respect to the LGC application process.
(b) The Council directs the Town Clerk to publish a notice of the Council’s intent to apply to the LGC for approval of the bonds. This notice must be in the form prescribed by statute and consistent with this resolution.
(d) The Council authorizes all Town representatives to take all further action as they may consider desirable for accomplishing the purposes and intentions of this resolution. The Council ratifies all prior actions of Town representatives in this regard. This resolution takes effect immediately.
This the 15th day of May, 2024.
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The Agenda will reflect the text below and/or the motion text will be used during the meeting. |
presenter
PRESENTER: Amy Oland, Business Management Director
RECOMMENDATION: That the Council adopt the preliminary resolution stating Chapel Hill’s intent to proceed with a referendum for general obligation bonds in November 2024.