2003
Bond Referendum Frequently Asked Questions
The Town has received the questions below during public input sessions, speakers’ bureau presentations, telephone calls and e-mails.
- How
much will the Town borrow in bonds?
If citizens vote in favor of the two bond issues on the April 8th ballot, the Town will have the authority to borrow up to $160 million in general obligation bonds over seven years--$130 million for street improvements and $30 million for recreational facilities. Just how much of this $160 million in bond authority is used and when will be up to the Town Council each year during the budget process. - Why
general obligation (G.O.) bonds?
G.O. bonds are the cheapest, fastest financing option available to the Town for the types of street and recreation projects being proposed for funding. Because this type of bond pledges the Town’s taxing authority as a commitment to repay the bonds if needed, financial markets require lower interest rates than other types of municipal borrowings. - How
will the Town pay back the bonds?
G.O. bonds can be paid back using revenues from many sources available to the Town including fees and taxes. Since the bond projects would likely be spread out over many years, the Town will have plenty of time to choose the best way to repay the debt. - Can
we afford these projects?
Yes. Cary has a reasonable amount of debt at this time, reasonable utility rates, and the second lowest tax rate in Wake County. In fact, Cary hasn’t raised taxes in over ten years, even after bond referendums in 1988, 1994, and 1999. Wall Street financial markets have given Cary a AAA credit rating, the best possible rating in the world. - How
will the Streets & Recreation Bonds affect the tax rate?
The Town may not have to raise taxes if there are other revenue sources available to pay the bond debt. If other funds are not available, the Town estimates that the property tax rate would increase 7¢ over seven years. Just if and when tax increases would go into effect would depend on how quickly the Town moves forward on the proposed projects and, therefore, takes on the G.O. debt. - What
happens if the bonds don’t pass in April?
If the bond authorization is not approved, the street improvements and proposed recreations facilities will be postponed or cancelled. Projects that are postponed will cost more to citizens since interest rates for other types of borrowing are higher and construction costs climb over time. - What
is the Town’s current debt service?
Our current debt service is approximately $10 million a year. It is important to note that government bond debt service is very conservatively structured. Rather than like a home mortgage where your debt payments are level amounts, so that although your interest is greater in the beginning than the principal and then changes later but your payments remain the same, governments typically have level principal repayment so that debt service shrinks over time, which provides future capacity for debt service. - How
much money is left from the 1999 Bond Referendum?
None. The $139 million in bonds from the 1999 Bond Referendum have been appropriated to accomplish the following:
>Expanding our water treatment plant and adding three water storage tanks.
> Adding 14 miles of roadway lanes to many Cary streets including Walnut Street, Maynard Road, Louis Stevens Drive, and Dillard Drive.
>Adding 20 miles of sidewalks throughout town.
> Adding three miles of to our greenway system.
> And building seven parks, a senior center, a tennis center, the Amphitheater at Regency Park, and a community center
And that’s only what has been completed. There’s a lot more under design and under construction. - Given
the soft economy, is now the right time to vote on bonds?
Yes. No one disagrees that the economy is more sluggish than anyone would like. But the state of the economy doesn’t change the Town’s obligation to continue making steady progress on important quality of life issues for Cary citizens over the next seven years, which is the life of the bonds.
- Has
the Town considered what kind of revenue could be generated from a
performing arts center or an aquatic center and how that may offset
the costs?
Yes. The Town has looked at this extensively. Staff has looked at generating revenue versus operating costs. It is unlikely that these facilities would generate enough revenue to cover both the capital and operating costs.