How Asheville's Bond Referendum really impacts taxpayers
If voters approve the City's $74 million bond referendum....
- There will be a 538% increase in Per Capita Debt since June 30, 2015
- Asheville will have the 5th highest Per Capita Debt of all cities in North Carolina with populations over 25,000
- Asheville Per Capita Debt will only be $103 less than Charlotte, which is in 4th place and $400 less than Raleigh which is #1 in Per Capita Debt.
None of the above information has been reported by our local media. In fact, they write ad nauseum about where the money will go when really there is no guarantee or requirement by the City to stick to its stated plans as to which projects the money will be allocated. We did write that very little of it appears to be planned for South Asheville taxpayers who contribute a huge portion in taxes to City coffers. But who knows, maybe they'll change their mind. Click here to read: Does anyone really know where the bond money will go?
City works the numbers
On August 2, 2016, the City of Asheville Blog published an article about upcoming public hearings on the $74 million bond referendum. That is required by law. Also, by law, it is not supposed to spend public funds promoting the bonds (which is why the Chamber is doing it for them). It should be information only.
In the City's blog, they state the following (last paragraph, :Managing Debt")
“There are many other North Carolina cities
with per capita debt higher than $1748, some significantly higher.”
In other words... don't worry about it. We're not the only ones with skyrocketing debt per person.
Really? We did some checking. To most people, "many" means countless, scores of or a lot of... To the City of Asheville, "many" means 4 more.
PS> If you want to find the original blog by the City mentioning the total Per Capita Debt incurred by these bonds, you will have to click here because the City has buried that blog post under the tag "Newsletter".
5th Highest RankingPer Capita Debt according toNC Dept of State Treasurer Debt Analysis Report
According to the NC Dept of State Treasurer's Debt Analysis Report for the period ending June 30, 2015 and revised January 11, 2016, it shows very clearly that Asheville will have the 5th highest level of Per Capita Debt of all NC cities over 25,000 in population if these bonds pass.
Further analysis shows that we will only be $100 less than Charlotte which is in 4th place and only $400 less than Raleigh which is in 1st place.
The City's own blog reports that Asheville's Per Capita Debt was $274 as of June 30, 2015. In one year (June 2016), that had increased to $947. If these bonds pass, the City reports our new Per Capita Debt for 2017 to be $1,748 per person. That's a massive increase of 538% in less than two years.
In addition, we will have another #1 ranking (not so great) of being the highest Per Capital Debt of all cities of our size (50,000 to 99,999). The current high is $1,188 for our population size according to the same Debt Analysis Report by the NC State Treasurer.
Why does Per Capita Debt matter to taxpayers?
Our Per Capita Debt (the amount per taxpayer of City debt) increases as the City issues bonds to finance its capital projects, equipment etc. In this case, the City is asking voters to authorize three General Obligation Bonds which must be paid back either through:
>Revenue generated from projects OR
Property Tax Increase
Because these bonds are NOT being used on projects that are revenue generating, they must be paid through Taxation which means an increase in Property Taxes. The City has said that property taxes would have to go up by 4.15 cents to cover these bonds and then in the same mouthful says this is nothing. Our analysis shows, it will go up much more than that. We'll be writing about that in our next article.
Property taxes will go up dramatically and these taxes will simply be passed down to renters or will continue to push out retirees that can't afford dramatic changes to fixed incomes. It will also continue creating Asheville as an elitist town where only the wealthy can afford to be here. Seems hypocritical when our leaders talk about caring for millennials and affordable housing. More on this in our next article.
Higher Cost of Living
Asheville already ranks as one of the most expensive places to live in North Carolina. Our cost of living index is higher than the national average and higher than many of the cities in North Carolina. (Although the Chamber reports that we are below the national average). (It depends on the source and it appears the Chamber's source is the only one stating that we're not above the national average.) What does that mean? Not only housing is expensive but Healthcare, Utilities and even Groceries cost more here than the national average. With an increase in property taxes and rents, that cost of living goes up even further.
Rents will increase
Approximately 40% of homes are occupied by renters (42.7%) (Source: US Census). Of those renters, 36.5% of their rent makes up at least 35% of their household income. A single person making $2166 per month (the average per capita income), spends at least 800 on rent. Some will tell you that those figures are even higher today as these figures from the US Census are as of 2014. The increase in property taxes will mean an increase in rents in an area already struggling with "affordable" housing.
The $1748 per capita debt reported by the City is also based on several bad assumptions:
- It assumes no other property tax increase for other debt in the next 10 years.
- It also assumes no other increase in Buncombe County taxes (remember, we are due for a revaluation on all Buncombe County properties in 2018)
- It assumes no Asheville City Local City tax increase
- This also assumes no other City debt is added to this debt.
Why are these bad assumptions?
Property taxes will have to go up
The last property tax increase was in last years budget (2015-2016) of 1.5 cents to raise 1.5 Million. The City promised no increase in property taxes in this year's budget but then recommended this $74 million bond referendum one week after the budget passed. Hmmm... Now we need to raise $110 Million... you can't do that with just a 4 cent increase.
We are due for a revaluation of Buncombe County property which means all property values will likely go up. Property owners will get new bills starting in 2018, not that far off.
Water System is still up in the air
If the City loses the water system, there will be a negative impact to the City's revenue. Where will these funds come from then?
City Leaders Hypocrisy
While these bonds sound like a good thing, are they really? For all the talk by our leaders of needing good paying jobs and affordable housing, their actions are hypocritical. Ever heard the saying, "Actions speak louder than words."?
The City has indebted it's taxpayers for greenways, $20 million of taxpayer funds to fix 2.2 miles of road for New Belgium trucks in the River Arts District and bike lanes for the 1% that it has run out of funds to maintain its streets, sidewalks, public transportation, and parks. And, while the City and the Chamber talk endlessly about affordable housing, half of the $32 million of the bond dedicated to affordable housing is earmarked for PRIVATE DEVELOPERS and the other half to the City to buy up land. These bonds are hypocrisy in action.