Get ready, the $74 million bond package WILL BE on the November ballot.
We spoke to the assistant bond counsel at the State Treasurer's office who reviews these bond applications and they confirmed that next Tuesday, October 4th, the committee that reviews bond applications will be reviewing Asheville's applications along with 3 others across the state. The bond counsel also confirmed that they would be approving the application. So, next step: November Voting.
We also learned the following which have not been reported by the City or local media. Details which you as taxpayers may want to know:
How Long Will We Be Paying?
Now this is a tricky question which the City has not clarified and our local media can't seem to either but we made a simple call to the LGC (NC State Treasurer's Office) who confirmed these details - it's public and all you have to do is ask. (NOTE: we also confirmed that they have received very few calls about this).
17 Years to Issue
The City has 17 years to issue these bonds. Really? Yes, according to statutory rules, they have 10 years to issue but can file for a 7 year extension which means 17 years.
20 Year Maturity
These bonds are long term meaning, they have a 20 year maturity during which the City must pay at least $1 million in principal each year, plus interest but we will have to pay more cause you can't pay off $110 million by only paying $1 million a year for 20 years.
$110 Million in Total = Debt Plus Interest
The interest the City pays on these bonds will be a little less than 3% and the total amount of interest will be around $36 million. Total debt will be $110 Million. If the bonds were issued all at once, the City would have to essentially pay $5.5 million per year.
Keep in mind, the City already has existing debt of $83 million. So, our new total debt would be almost $200 million.
City must issue bonds for sale before they receive the funds - as early as January 2017
Just because Voters approve the bonds (if they do and we hope you won't) in November, the City will then have to certify the vote plus a bunch of other paperwork. According to the representative at the LGC, the earliest they could sell these to investors would probably be early January 2017. They are sold by electronic bid process in which banking institutions and investors submit their bids and purchase our bonds online. This usually happens on a Tuesday around 11am.
Bonds can be sold in part or in whole
The City can also just issue a portion of each bond package. For example, $10 million from transportation, $10 million from affordable housing and $5 million from parks & rec.
Future Generations of Debt - 15 years later...
The City does not have to issue all the bonds for sale at once. It has 10 years plus 7 year extension to sell these bonds. Therefore, some of this debt could be issued in 17 years and with a 20 year maturity, we would be paying on these until 2054. Is that likely? Hard to tell what this Council will do. Though they've been specific about where they "plan" on putting the money, they have been vague as to when they plan on issuing these bonds. All next year? Scattered for the next 10? Let's see if they tell.
No Vote Required
In North Carolina, municipalities do not have to get voter approval to issue general obligation bonds. In fact, this year the City of Asheville issued $42 Million in bonds as part of it's massive Capital Improvement Plan begun in 2012 (the advent of New Belgium). So, why didn't the City just issue these bonds without voter approval? Probably because they would be voted out if they did. Instead, they put it on you.