2017 Parks Bond
What is a General Obligation (GO) bond?
Bonds are a method used by towns and cities to finance major capital projects. They work similarly to your home mortgage, through which you finance a large purchase over time. Because of the longer payback period (typically 20 years), the financial impact is not applied only to current residents, but also to citizens who move to Apex after the projects are complete and will also be potential users of the facilities.
What are the benefits of paying for projects with bonds?
Because the Town of Apex has a very favorable bond credit rating, we can finance the repayment at a low interest rate. Bonds also enable the Town to complete major projects now rather than wait until there is enough cash accumulated to pay for the project. Construction costs are currently increasing at a rate that exceeds the costs of borrowing, particularly in this area of the State. Building today can result in a significant costs savings and place the project in use much sooner. Interest payments on the bonds are exempt from Federal income tax and also State income tax for North Carolina residents, which lowers the costs of borrowing. Finally, bonds are sold competitively, resulting in the lowest possible financing cost at the date of the sale.
What is the impact on my property taxes?
An increase in property tax rate will be necessary to repay the bond debt. We anticipate incremental increases spread out over the period of about 4 years, beginning with an additional 1.5 cents in 2019, and another 1.5 cents in 2021 and 2022. For the median home value in Apex of $273,400, this would result in about $123 more per year in property taxes if the full 4.5 cent increase was applied.
Why do residents vote on bonds?
GO Bonds are secured by a pledge of taxing power as voted by the citizens. Therefore, Apex residents will choose whether or not to authorize the 2017 Parks Bond during this November’s general election.
What other types of financing can been used to pay for Parks, Recreation and Cultural Resources projects?
Grants, donations, subdivision fees and general revenues of the Town have been used to pay for smaller projects in the past. The Town will continue to aggressively pursue grants and other initiatives that would help to reduce the amount of bond funds to be sold.
Over the years the Town has been very successful in securing grants from the Federal Land and Water Conservation Fund, the N.C. Parks and Recreation Trust Fund, the Wake County Open Space and Recreation Grant Fund, the United States Tennis Association, and the North Carolina Recreational Trails Grant program.
What happens if the economy goes bad?
The referendum only provides the authorization for the Town to issue up to a certain amount of bonds. However, the Town is not required to issue any debt. The Town Council must still approve each bond sale. They may elect to delay, reduce the amount sold or not sell bonds at all depending on the financial climate at the time.