County leaders malign proposal

While there was no official stance of disapproval taken Tuesday by the Orange County Board of Commissioners on Amendment One, commissioners expressed concern and discontent with the issue.

The amendment, which is being referred to as self-financing bonds, will be on the North Carolina ballot Nov. 2. If passed, the amendment would allow local governments to use bonds to fund infrastructure to encourage private development without voter approval.

Commissioner Moses Carey Jr. said that although he can understand why smaller counties would want to use the bonds to encourage economic development, he does not see the need for them in Orange County.

"In this county, we will probably never use it because we have other options," Carey said.

Commissioner Stephen H. Halkiotis said he was worried that the amendment's language and the advertising campaign that endorses it paints an unrealistic picture of what the bonds would provide.

He said television commercials make it look like the bonds would help build new schools. In reality, he said, the bonds would fund infrastructure such as water and sewer lines.

The issue of self-financing bonds has been defeated at the polls twice, both in 1982 and 1993, under the name "tax increment financing." The bonds have been renamed "self-financing" for this election year.

"I voted no, and I'll encourage everyone else to vote no," Halkiotis said.

In theory, the bonds would provide funding for infrastructure such as sewer, water and telecommunication lines that are needed in order to begin building on a piece of land. The bonds would be paid off with the increase in property tax revenue that the development would create.

The question of whether the bonds will increase taxes has been strongly contested by officials on both sides of the issue.

In a report to the commissioners from Assistant County Manager Rod Visser, both sides were explained. He said supporters say the bonds would provide a valuable tool to local governments. He said critics think the bonds are risky and provide no guarantee of increased revenue.

"To say there's no tax increase isn't exactly right," said Commissioner Alice Gordon. If used, money typically sent to the general tax base would be used to pay off the bonds, she said.

North Carolina and Arizona are the only states that do not currently legislate these bonds. Supporters of the amendment have expressed concern that North Carolina is being limited in economic development by not allowing them.

"The reality is, if North Carolina doesn't allow local government to utilize this type of tool, then private economic folk who want to relocate will pick other places to do it," said Paul Meyer, assistant general counsel for the North Carolina Association of County Commissioners.

"The additional demand created by a business located downtown will not result in increased taxes," Meyer said. "It will actually result in a more diversified and broader tax base."

But Perri Morgan, state director of the National Federation of Independent Business, said the bonds are unfair government hand-outs that encourage big business at the expense of small business.

"Our members don't ever want to feel that their tax dollars are being used to subsidize their competition," Morgan said.

More information on Amendment One can be obtained at http://www.ncjustice.org/btc.

Contact the City Editor at citydesk@unc.edu.