The North Carolina Local Government Commission recently denied Cabarrus County’s requests for bonds totaling $228 million, despite the staff recommending approval. This decision came after some members of the board expressed concerns that the bonds should be subject to a voter referendum before moving forward. Additionally, some commission members objected to the county’s use of bond anticipation notes and suggested that the county should only take on debt for projects once the final costs are determined.
Cabarrus County sought $186 million in 20-year limited obligation bonds to replace variable rate 2022B bond anticipation notes, as well as $42 million for the acquisition of a building for a human services center and land for a regional behavioral health center. The county’s limited obligation bonds are highly rated, with Moody’s Ratings giving them an Aa1 rating and S&P Global Ratings and Fitch Ratings both rating them AA-plus. The 2022B BAN funded a courthouse expansion and renovation, along with other county projects.
During the commission meeting, Jennifer Wimmer, LGC deputy secretary, expressed the staff’s concerns over the county’s use of BANs before final project costs were available. Commission Chairman Dale Folwell, the North Carolina state treasurer, voiced his apprehension about the county taking on additional costs by using BANs, especially given the rise in interest rates and construction costs since 2022. Folwell suggested that the bonds should be presented as general obligation bonds to allow voters to have a say in the matter.
County Manager Mike Downs defended the county’s approach, highlighting the efficiency of using BANs instead of issuing bonds multiple times a year. He argued that other major issuers in the state also utilize this financing method, although Folwell disputed this claim. As discussions continued, it became clear that there was a lack of awareness among some commission members, like Jessica Holmes, regarding the use of limited obligation bonds for the county’s planned projects.
In response to the commission’s decision, the county stated that they are working with the LGC to determine when these matters will be reconsidered. It remains to be seen whether the county will need to use general fund money within five years to repay the BANs if the $186 million bond is not approved. Despite the setback, the county is determined to address the concerns raised by the commission and seek guidance on the best way to move forward with its financing needs.
In a separate decision, the LGC approved $226 million in revenue bonds for three municipalities in the Research Triangle Region. This approval demonstrates the commission’s willingness to support certain funding proposals, while also showcasing the scrutiny applied to other requests, such as Cabarrus County’s.