Bond FAQs

 

2017 BOND REFERENDUM

Frequently Asked Questions

 

Q.           When is the election?

A.            One stop voting begins on October 19 and Election Day is November 7. 

 

Q.           Are these bond referendums only for inside Town residents or anyone in the Harrisburg/Cabarrus County area?

A.            The bond referendums will only be voted on by residents located within the Harrisburg municipal limits. If you vote for Town Council/Mayor, then you will be able to vote on the referendums.

 

Q.           How do I vote?

A.            More information on how to register, where to vote, and one stop voting dates and locations is available here:

 Cabarrus County Board of Elections: 

https://www.cabarruscounty.us/government/departments/elections/Pages/default.aspx, or call 704-920-2860

 

Q.           What is a bond and why are we getting to vote for it?

A.            A bond referendum gives voters the power to decide if the Town should be authorized to borrow funding for capital projects with General Obligation (G.O.) bonds that are backed by a pledge of the full faith and credit (the taxing power), of the Town. G.O. bonds are debt instruments authorized by the public that can be issued by the Town during a 7-year period (which can be extended to 10 years). The Town will pay back the principle and interest over time, similar to a home mortgage, from the general funds of the Town.

Bond financing is often used for capital projects that are above and beyond the scope of the annual operating budget, or are utilized for projects that will benefit citizens for many years in the future.

 

Q.           What are the bonds for that will be included on the November ballot?

A.            There are two bond referendum questions on the ballot.  One is for Transportation Bonds in the amount of $4,000,000; and one for Parks and Recreation Bonds in the amount of $21,000,000. 

 

Q.           Do you have to vote for both bonds, or can you consider each bond separately?

A.            The bond questions for the transportation and Parks and Recreation improvements will appear separately on the ballot.  You may vote for one, both, or neither.  Each referendum question will have a Yes or No answer to select.  A YES vote is FOR support of the bonds and related tax increases to pay for the cost of the bonds.  A NO vote is AGAINST support of the bonds and related tax increase to pay for the cost of the bonds.

 

Q.           Why doesn’t the Town just use cash for these projects rather than financing them with bonds?

A.            The Town of Harrisburg is in good financial health. However, the Town does not have enough cash available to pay for all of these capital projects, while also sustaining the high level of service our citizens deserve and expect. Using bonds to fund these major capital projects will allow citizens to pay for these projects over the useful life of the project/asset. Another benefit of using bond financing instead of cash is the equity factor that will require future Town residents to pay for a portion of the new projects they will benefit from, rather than all of the funding coming from funds raised by current and past residents.

Additionally, if the Town were to save to pay cash for these projects, we estimate it could take 25 years or longer to accrue enough cash to pay for the projects under our current tax arrangement. With inflation and construction costs contributing to higher construction costs in the future, the projects are likely to be significantly less expensive to construct now versus waiting to accrue the cash necessary to fund the projects.

 

Q.           What are the pros and cons of a utilizing a General Obligation Bond?

A.           

 

Q.           By voting YES for these bonds, am I voting for and approving the specific projects that are included in the bond materials?

A.            The bond questions that will be on the ballot describe the intent, or list of projects, expected to be funded by the bond revenue. Detailed information about those projects is not included in the question on the ballot, giving the Town Council the flexibility to choose priority projects they deem appropriate. Despite this flexibility, the Town Council cannot use bond monies for items outside of the scope of the bond questions.

           The bond materials describe a list of priority projects that have been identified for these bond funds to be used for, and the Town anticipates the completion of all, or most all, of the projects listed. Certain factors such as higher than expected construction costs or a change in priority by the Town Council could alter what projects may or may not be completed.

 

Q.           How do I find out more information about the bonds?

A.            The Town’s website, www.harrisburgnc.org,  has a link on the homepage for the bonds which will give a lot of detail of the potential projects that are currently under consideration, as well as information about the bond process in general.  There will be information provided at the next regularly scheduled Council meeting in October, as well as community input/information meetings that will be held on September 28th and October 26th to further educate the public.

 

Q.           What is the Town’s role in educating the public about the bonds?

 

A.            No public funds may be expended for the purpose of advocating for or against a bond referendum. The Town may only provide educational information to citizens about general obligation bonds and the anticipated bond projects to assist voters in making an informed decision.

 

Q.           How much of the vote does a referendum need to pass?

A.            A majority vote, or greater than 50% of the votes must be “Yes” in order for the bond to pass.  Each referendum is considered individually, so in order for both bonds to pass, both would have to have in excess of 50% Yes votes.

 

Q.           What happens if the bonds do not pass in November? Can the Town Council still raise taxes?

A.            If the voters do not approve one or both of the bond issues, it will be up to the Town Council to determine how to proceed on those projects. The Town Council could decide to postpone or eliminate the projects, or they could consider other financing options for moving forward with the projects.

If voters reject any of the bonds, the Town Council will still have the ability to raise taxes to raise the funds necessary to complete the projects. A vote on the bonds, is not a vote on the property tax rate.

 

 

Q.           How were the potential projects associated with the bonds determined and was community input involved?

A.            There were many areas of input that went into these potential projects that are being shown associated with the bonds.  The Harrisburg Park Master Plan, Parks and Recreation Master Plan, 2015 Bicycle, Pedestrian and Greenway Plan, 2017 Community Survey, and staff recommendations were the significant sources of input used to generate the bond projects. Each of the plans noted included community input during their preparation.  The projects proposed were the highest-ranking capital projects identified from those sources. The Town Council approved the project list during the development of its 2018 budget.

 

Q.           When will these projects begin?  What is the process?

A.            If the bonds are approved in November, the bond projects would not necessarily begin immediately. The Town Council would need to first approve a project, in principal, before Town staff would begin the planning stages of the project.  Council would then consider the budget and timing of the projects, among other factors, before agreeing to move forward.  Once the projects have been approved and designed, the Town Council would need to vote to issue the debt, and raise the property tax accordingly. This would typically fall in line with a new budget year for the Town.

 

Q.           How long does Council have to approve a project for it to be included in these bonds?

A.            There is a seven (7) year limit from the date the bonds are approved by voters, to issue the bonds for specific projects.  This may be extended, in some special cases, another three (3) years, for a total of ten (10) years.  If the time period passes and the bonds have not been issued, a new bond referendum would have to be held, and the process started all over again.

 

Q.           If the bond referendum passes, when do the taxes for the bonds get increased?

A.            Council has the option of modifying the tax rates at any time they deem necessary.  At a minimum, the taxes would need to be increased in the year prior to issuing the bond, to ensure funding is in place once the debt service payments begin on the bonds. Typically, the tax rates are increased at the start of a new budget year. The Town’s budget year runs from July 1st to June 30th.

 

Q.           Do taxes get increased for all of the bond projects at once, or when the projects are queued up?

A.            The tax rate increases can be tied directly to the project, by year, or by bond issue.  Town Council makes the determination of when these increases will take place based on cash flow needs of the projects.

 

Q.           How long will the tax increases be in place for these bonds?

A.            The tax increases are typically tied into the life of the bond repayment schedules.  Thus, at a typical 20-year repayment term, the tax increase for the bonds may be in place for that period of time.  However, various factors, such as increases to the assessed property valuation and/or changes to provided services, can shorten that period or reduce the amount of tax increase needed to fund these debt service payments.

 

Q.           How long will the tax increases be in place for these bonds?

A.            The tax increases are typically tied into the life of the bond repayment schedules.  Thus, at a typical 20-year repayment term, the tax increase for the bonds may be in place for that period of time.  However, various factors, such as increases to the assessed property valuation and/or changes to provided services, can shorten that period or reduce the amount of tax increase needed to fund these debt service payments.

 

Q.           For both bonds, the current total tax rate increase is anticipated to be eight (8) cents per $100 of valuation.  Will the actual tax rate increase be higher or lower?

A.            The eight (8) cents represents the maximum anticipated tax increase relating to the bond issue.  The tax rate increase is dependent on various factors, but is based primarily on the assessed value of property to be taxed at the time of the increase, and the interest rate at which the debt is issued.  The tax increase necessary to achieve bond repayment could be less than eight (8) cents, provided the tax base of the Town continues to grow.

 

Q.           Does the eight (8) cent tax increase mean that there will be no other tax increases during the repayment period of the bonds, currently estimated at 20 years?

A.            Whatever the tax rate increase becomes for the bonds are only related to the bonds and their related projects and debt service payments. There is always the potential that Town Council may increase the tax rate to cover other operational or capital needs of the Town, outside of these bond projects. For example, if additional funding is necessary to expand public safety services, or to purchase new public safety equipment, the Town Council may increase the tax rate to meet the other day-today or capital needs of the Town. The Town has not raised its general services tax since 2012 (currently at $0.1585 per $100 valuation).

 

Q.           How much does the potential maximum tax rate increase of eight (8) cents for the bonds mean on my tax bill?

A.            The Transportation Bonds would require a maximum tax rate increase of $0.0125 per $100 of value, or $31.25 for a $250,000 home. The Parks and Recreation Bonds would require a maximum tax rate increase of $0.0675 per $100 of value, or $168.75 for a $250,000 home. 

The total maximum tax increase, if both bonds pass, would be $200 per year for a $250,000 home, over the life of the bonds (20 years).  Also note that the tax increase impacts ALL property, real and personal.  Thus, any tax increase related to the bonds would also be applied to personal property such as vehicles, boats, RVs, etc.  

The same formula to determine the tax impacts of a home would be used to determine the tax implications for personal property:  tax value of property divided by $100 multiplied by the tax rate increases noted above.

See below for some other examples of the tax impacts of each bond for varying home values.