Burlington’s city council has resolved to issue the first batch of general obligation bonds that the city’s voters approved in last year’s general election.
During a regularly-scheduled meeting on Tuesday, the council cleared the way for the sale of $33.5 million in bonds – or just under half of the $68.5 million that had appeared as two, separate bond packages on November’s ballot.
The local electorate ultimately signed off on both of these packages – with more than 57 percent supporting the smaller of the two, which proposes to raise $21.5 million for street and sidewalk improvements. Meanwhile, a bare majority favored the larger package, which entails $47 million for several recreation-related endeavors.
The bonds that received the council’s imprimatur Tuesday are a mix-and-match of these two voter-authorized packages.
According to city manager Craig Honeycutt, this $33.5 million bond issue includes $11 million for a proposed expansion of the Paramount Theater, $8 million to build a new superstructure for the Maynard Aquatic Center, $15 million to repair and resurface various city streets, and $1.5 million for sidewalk improvements.
Honeycutt told the council that the city is currently soliciting bids for each of these projects. The bonds needed to bankroll this work are slated to go to market on April 29.
Omitted from this forthcoming bond issue is $5 million for streetscaping in Burlington’s downtown business district and $30 million for a “sportsplex” in the western part of the city. The streetscaping project, which is an outgrowth of some state-funded utility upgrades, is currently in its formative stages, while the city has yet to identify either a layout or a location for the proposed sportsplex. In each case, the city’s administrators plan to issue the bonds for these projects once they have some concrete proposals in hand.
In the run-up to November’s election, city officials had acknowledged the debt payments for both of these bond packages could cost the equivalent of 5.7 cents on Burlington’s property tax rate. This figure was portrayed at the time as a worst-case scenario since it assumed an interest rate much higher than anything the city would be likely to get when the bonds go to market. In any event, this estimate served as the basis for the mandated disclosures about tax impact that voters saw when they went to the polls in November.
Burlington’s CFO Peggy Reece didn’t say anything about the additional tax revenue needed to bankroll the inaugural bond issue when she presented the details to the city council on Tuesday. Based on the city’s pre-referendum projection of a 5.7-cent increase to cover the full $68.5 million, the debt payments on this month’s $33.5 million sale would be tantamount to nearly 2.8 cents on the tax rate, which currently stands at 48.36 cents for every $100 of property value.
Meanwhile, a memo in the council’s agenda packet declared that the financial repercussions of these bonds would “be determined at a future date once the bonds are issued and the interest rate obtained.”
Honeycutt has assured The Alamance News that the city’s administrators are trying to zero in on the actual financial implications of this month’s bond issue in preparation for Burlington’s next annual budget. The city manager went on to concede that the first payment on this issue will come due in the upcoming financial cycle. He added, however, that there are several factors that make the pre-referendum estimate a poor gauge of this bond issue’s impact on the city’s next budget.
“Number one, we won’t know the actual interest rate until the bonds go on sale,” he explained in an interview Tuesday, “and number two, we aren’t selling all of the bonds at the moment.”
Honeycutt added that any potential tax increase may be further reduced if the city can take some old debt off the books in the next fiscal year.
