Wednesday, April 25, 2012

Performing Arts Center Task Force Economic Feasibility and Impact Committee, Tuesday, April 03, 2012

"Richard L. Lusk, Finance Director,
Financial and Administrative Services Department, City of Greensboro
...was asked...about public funding options for a Greensboro Performing Arts Center.

...the City has about $500M in outstanding bonds each year
with approximately $250M for water and sewer bonds (paid for from
water fees); the remaining $250M General Obligation Bonds are approved by purpose.

...Rick and EFIC briefly discussed other funding mechanisms for a performing arts center.

These included Certificates of Participation (COP).

A COP can be issued by the City Council
and is paid from Hotel/Motel and other non-property based tax revenues.

The difference between [Government Obligation Bonds] and COP
is the approval process and funding mechanism:
the Council votes on the issuance of COPs,
they are not included on the ballot as a referendum
and the Council pledges nonproperty tax revenues to support the debt.

...If a PAC is placed on the ballot as a referendum,
it must include language around a tax increase to fund repayment of bond...

...If a PAC were approved at a $20M bond,
the debt payment would equate to $2M per year for 20 years
or about 1 cent of the current tax rate to support the retirement of the bond
used to support construction of the facility."

1 comment:

W.E. Heasley said...

Apparently a municipality heavily in debt with a high tax rate is attractive to private sector businesses. Who would have figured!

“[M]y life as an economist has been the source of much pleasure and satisfaction. It’s a fascinating discipline. What makes it most fascinating is that its fundamental principles are so simple that they can be written on one page, that anybody can understand them, and yet that very few do.” - Milton Friedman’s 1985 lecture “My Evolution as an Economist,” in Lives of the Laureates, William Breit & Roger W. Spencer, eds. (3rd ed., 1995) page 93.