Frequently Asked Questions
Frequently asked questions on:
General Bonds:
Q: Why is the County asking me to consider these bond referenda for open space and Wake Technical Community College?
A: We need to provide funding for Wake Technical Community College to expand and serve its growing population, and to acquire and preserve open space to protect the water quality in our County. Bonds are a way to get the money immediately to finance these projects over a long period of time, and at the lowest cost to the taxpayer. General obligation bonds carry the lowest interest rate, so they will cost less to repay than other types of loans.
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Q: Why would the County want to issue bonds to pay for these programs?
A: Bonds are a commonly used financing tool that allow the County (or other entity) to borrow money and repay it - with interest - over a long period of time, typically 15-20 years. This is similar to someone taking out a mortgage to buy a house. Most people do not have enough money to pay cash for a house or a car, so they borrow money and repay it with interest, while they are using their house or car. In the same way, the County would issue bonds - in effect, borrow the money up front - and then repay that debt over several years. Because the facilities will be used over a number of years, this way of paying for them is a fair and equitable way of sharing the cost with current and future residents as we continue to grow.
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Q: What are bonds?
A: Bonds are "documents" that the County would issue with a promise to repay the entire amount borrowed, plus interest. Generally, these bonds are issued in amounts of $5,000, and appeal to investors because the interest they earn is exempt from federal and state income taxes. We are seeking to issue general obligation bonds, which are backed by the full faith and credit of the County. Interest earnings on the bonds are tax-exempt to the holders of the bonds, which makes the bonds an attractive investment option. We repay the bonds with money from the general fund. Other types of bonds that local governments might use are revenue bonds, which are repaid with money from the fees that citizens pay for services (such as water and sewer services).
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Q: How much interest will the County have to pay?
A: That depends on market conditions at the time the bonds are issued. Wake County has a distinct advantage in issuing bonds because our credit rating is so good. We have the best possible credit rating, known as "triple A" or "AAA," which means that we are considered by investors to be a very good risk (they can count on us paying back the principal and interest). A number of factors make up the credit rating, but essentially it reflects our sound financial health. We realize that taking on more debt will change our cash and debt ratios, but after comparing our potential debt ratio to other counties our size, we believe that issuing the bonds would not affect our credit rating.
The AAA credit rating does make a difference when a County issues general obligation bonds. When we issued $130 million in general obligation bonds on March 30, 2004, they were sold at an average net interest cost of 3.419%, or 99 basis points below the Bond Buyer's Index. This difference represented a savings in interest costs of $8,907,399 for Wake County taxpayers.
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Q: Can I buy the bonds that would be issued after the referendum?
A: That depends. These bonds will be competitively bid, so we don't know who will win the right to sell the bonds. Generally, these are groups of large banks and brokerage houses that join together to sell the bonds. If you are a client of the consortium that wins the bid, you may be able to buy the bonds.
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Q: How can the County pay for these bonds without raising taxes?
A: The County can repay these bonds, if they are approved, with no tax increase. The County is able to do this by taking on more debt to pay for capital projects. In the past, the County has largely used cash - or the pay-as-you-go method - to pay for capital needs. In fact, about half the cost of capital projects was financed using cash, and about half with debt. The financing method we are proposing instead would shift that ratio to about 85% financing with debt, and 15% with cash. By using less cash for capital needs, we can make that money available for other needs. This change is in line with the recommendations of a citizens' advisory committee for schools funding, which suggested paying for capital projects without increasing taxes.
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Q: How will the bonds be listed on the ballot?
A: Voters will consider each referendum separately. This is the wording that will be on the November 2 ballot:
Open Space
Shall the order authorizing up to $26,000,000 of General Obligation Open Space Bonds of Wake County for financing, in part, the acquisition of real property by the County and the improvement of such real property or any other County-owned real property for the conservation of open space, the protection of water quality, wildlife habitats, scenic areas and natural areas suitable for recreational or other public uses in Wake County be approved?
[ ] YES [ ] NO
Wake Technical Community College
Shall the order authorizing up to $40,000,000 of General Obligation Wake Technical Community College Bonds of Wake County for financing, in part, the acquisition construction, installation and equipping of modifications, renovations, additions, improvements and extensions to existing facilities and/or one or more new buildings or other educational facilities for Wake Technical Community College including, without limitation, laboratories, offices and parking lots, and the acquisition of land, easements and rights-of-way therefore in Wake County be approved?
[ ] YES [ ] NO
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Q: How can I ask other questions or make comments about these referenda?
A: You may make comments or ask questions by e-mail at referenda2004@co.wake.nc.us, or by calling the Wake County bond referenda comment line at 664-7989.
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Open Space:
Q: Why do we need an open space preservation program?
A: Last year in Wake County, nearly 10,000 acres of land were converted into subdivisions, shopping centers, and business parks or some use other than open space. That's 27 acres a day, or a little more than one acre every hour. About 63 people move to Wake County every day (more than 23,000 a year). Given the strong local economy and population projections for the future, this pace of development is unlikely to change. This growth and development is crucial to Wake County's economy, but County leaders know it's important to strike a balance by preserving open space at the same time, especially in areas that would help protect the quality of our water supply. Open space needs to be planned for, the same as roads and other essential components of infrastructure. We also know that land costs are likely to continue rising, so it is more cost effective to advance our open space efforts now.
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Q: What is open space?
A: Open space is a protected system of natural and cultural resources provided and maintained to benefit residents, businesses and visitors. The Wake County Open Space Program is designed to preserve lands such as forests, meadows, fields, wetlands, floodplains, stream corridors and other areas that are to remain relatively undisturbed. The top priority of this program is to protect and improve water quality by safeguarding lakes, rivers and streams.
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Q: What is the County's plan to preserve open space?
A: In 1997, the Board of Commissioners appointed a task force to study the issue of open space preservation. The task force presented its findings to the Board in summer of 1998, and an Open Space Advisory Committee was formed. The County then began working on a countywide Consolidated Open Space Plan, which is now finished. This plan means that for the first time, citizens have worked together on a "greenprint for the future," which knits together the County's open space plan with those of all 12 Wake County municipalities. This unique plan provides for open space protection on a large scale from a countywide perspective, and also in ways that are close to home by outlining plans for greenway linkages and neighborhood parks.
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Q: Why do we need this if we already have parks and greenways and regulations in place, such as zoning regulations or those regarding floodplains?
A: It is true that zoning regulations can be one tool to help protect water quality by restricting development too close to the water supply. Also, we currently have many areas that preserve open space and offer recreational uses, such as Umstead State Park, Blue Jay Point and the County's other parks, and many city and town parks around the county. However, given that the top priority of this program is to protect and improve water quality in Wake County, we need to take a multipronged approach to preserving open space. We need to consider stricter zoning regulations, and we need to act as a partner in acquiring land now to preserve these areas for the future. Besides the environmental benefits, preserving open space also provides important recreational benefits through parks and greenways, protects wildlife and plant species, and preserves important cultural and historic resources. We have many unique areas that make Wake County special, and it is important to maintain our unique character.
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Q: Why can't someone else do this, like a private or nonprofit organization?
A: There are other organizations interested in protecting the environment and open space, and all play vital roles. However, few environmental organizations actually acquire land for preservation purposes. Because local government plays a vital role in protecting the environment and planning for the future, we must be a partner in this effort. No single group or organization can tackle this issue alone, and we get more for our money if we work together. We will acquire the land ourselves or will rely heavily on partnerships with municipalities and nonprofit organizations for open space preservation.
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Q: What have you done with this program so far?
A: Wake County has used general budget funds and proceeds from a $15-million voter-approved bond referendum in 2000 to foster partnerships with municipalities, state agencies and nonprofits to preserve land as open space. So far, 1,800 acres worth $23.1 million have been acquired; of this amount, $11.7 million has been County funding. Some partners have included Apex, Cary, Raleigh, Wake Forest and Wendell, along with the N.C. Division of Forest Resources.
Some Open Space Preservation Program accomplishments to date include:
- Partnership with the City of Raleigh to preserve 160 acres in the Swift Creek corridor, between Lake Benson and Lake Wheeler. This area is important to water supply and quality.
- Purchase of 116 acres with the Town of Cary on White Oak Church Road; this is in the important Jordan Lake Watershed.
- The pastoral 117-acre Joyner Farm, purchased with the Town of Wake Forest.
- Future site of a municipal park with connections to the American Tobacco Trail, purchased with the Town of Apex (Holleman tract).
- The 45-acre Clark Property, which will provide for watershed protection and future recreational amenities for town residents for generations to come, purchased with the Town of Wendell.
- A 252-acre parcel, in partnership with the State of North Carolina, to expand Clemmons Educational State Forest into Wake County. This area will protect water quality, provide recreational opportunities and be used as a research area by North Carolina State University.
- Protection of the Marks Creek area, a watershed that straddles the Wake and Johnston County lines. This effort has been spearheaded by the Trust for Public Lands and the Triangle Land Conservancy. Wake County has provided 50% of the funding for 357 acres of open space.
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Q: If you create certain open spaces or greenways, how does that affect property values? Will it affect homeowners' privacy?
A: Homes that are built along greenways or amenities such as parks or golf courses tend to be more attractive to buyers, so the property value increases with the open space nearby. The sales prices of lots and building units in these types of areas have consistently higher sales prices nationwide. Here in the Triangle area, comparative sales have been researched and show that the lots not only have higher value but also sell more quickly (source: National Park Service Research Reports). The privacy decision is one that only an individual can make, as some people love living near greenways and some people prefer not to. Greenways offer the advantage of being a "managed use," meaning they are managed and maintained. We also make every effort to provide buffers, whether natural vegetation (shrubs and other plantings) or actual fencing, as appropriate for safety and privacy. For instance, the American Tobacco Trail plans call for fencing in certain areas to create a buffer between the trail and people's yards.
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Q: How do you decide which land to acquire?
A: The County has identified the watersheds geographically in our area. The watersheds have been further classified in terms of identifying those that are the most critical to the protection of our water supply. We use criteria to evaluate each acquisition, such as location, water quality protection potential, linkage to other parcels, accessibility, aesthetic quality, threat of loss to development, size, rarity and use potential. Other criteria include cost, management potential, potential for partnerships, and parcel configuration.
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Q: Doesn't this actually cost us by taking this land off the tax rolls? Should we let the land be developed so more taxes are paid?
A: Some of the land can be acquired in fee simple, but in many cases we use other methods of protection. Some examples are conservation easements that prevent any disturbance of the open space; purchase of development rights, which would prevent any type of commercial or residential construction; and easements that allow public access but also allow the property owner certain privileges. It is true that land owned by local government is not taxable, but there are some offsetting benefits to open space that provide a good return on our investment. For instance, open space and additional recreational and leisure opportunities make the area more attractive to businesses and industries, and also to families seeking a high quality of life. We don't have to provide services to these areas, which saves money. Also, if we do a good job of protecting our drinking water supply, it requires less treatment, which saves money in the long run.
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Wake Technical Community College
The following information is provided by Wake Technical Community College:
Q: If the $40-million bond referendum for Wake Tech is approved, how would the funds be used?
A: Wake Tech would use most of the funds ($32 million) to build Phase II of the college's new 401 North Campus. About $3.5 million would be used to develop the Wake Tech Public Safety Center, a training facility for police, firefighters and rescue personnel. Remaining funds would provide repairs and renovations for older campus buildings - roofing, replacement and repairs for HVAC systems, upgrading of electrical systems to accommodate technical needs and other priority maintenance projects.
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Q: What would happen at the 401 North Campus as a result of the bond money?
A: Using funds from a 2000 state bond referendum for universities and colleges, Wake Tech has already begun construction of Phase I of the new campus. This includes site development (electricity, water, sewer, roads, natural gas, telecommunications), two instructional buildings and a maintenance building. At Wake County's current rate of growth, Phase I will operate at its capacity within a year.
The college cannot begin Phase II without funding, which the County bond money would provide. Phase II would begin in 2005, and would add two instructional buildings (for a total of four instructional buildings on the new campus), doubling the capacity for classrooms and laboratories. The campus could serve twice as many students (both curriculum and continuing education).
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Q: What programs will be offered at the 401 North Campus?
A: Initially, Wake Tech will offer courses that do not require specialized equipment - for example, college transfer courses (English, mathematics, history, psychology), business administration, real estate, accounting and general computer courses. The college also will offer continuing education courses in the arts, personal finance, languages and other areas of personal and professional development.
As the 401 North Campus develops, Wake Tech will continually add new programs, such as nanotechnologies or bioinformatics. In most cases, programs that require specialized equipment and dedicated laboratories will be offered at only one campus.
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Q: What's the timetable for this?
A: Wake Tech broke ground for Phase I of the 401 North Campus on July 13, 2004, and expects to open the three buildings of Phase I by August 2007, serving more than 3,000 students within the first year. Ideally, design and development of Phase II can begin in 2005, so the two new buildings will be available within two years of the campus's opening. Other projects that need bond support, including the Public Safety Center and the college's repair and renovation projects, will begin as soon as possible.
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Q: Why does the college need to grow?
A: Because Wake Tech is located in one of North Carolina's fastest-growing areas, its enrollment is increasing rapidly. The college needs enough classrooms to serve its students, and many of these classrooms must be designed to provide the best learning environment for high-tech curricula.
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Q: Has Wake Tech received bond money in the past?
A: Yes. In fact, all Wake Tech construction projects in the past ten years have been funded through bond referenda. The last county bond referendum for Wake Tech was held in June 1993. Wake County voters approved this bond referendum, which provided $32 million for the college. Wake Tech used these funds for many projects:
- Health Sciences Building (Health Sciences Campus), which provides classrooms and labs for surgical technology, dental hygiene, emergency medical science, therapeutic massage and other HS curricula.
- Engineering Technology Building (Main Campus), which provides classrooms and labs for civil engineering technology, environmental sciences, industrial pharmaceutical technology, architectural technology, computer engineering technology, telecommunications and other ET curricula.
- Transportation Technologies Building (Main Campus), which provides instructional bays for automotive and heavy equipment technologies, as well as laboratories for Wake Tech's National Training Center for Alternative Fuel Vehicles.
- Bookstore/Print Shop facility (Main Campus).
- Additions and renovations that join LeMay and Pucher halls on Main Campus.
- Renovations to Holding Hall (Main Campus).
- Americans with Disabilities Act accessibility renovations.
Wake Tech also received nearly $11 million in funding from a state bond referendum during the early 1990s, which supported these projects:
- Student Services Building (Main Campus)
- 401 North Campus land purchase
In 2000, voters in North Carolina approved the statewide Higher Education Improvement Bonds referendum. Wake Tech is receiving $33 million, over a six-year period, from the sale of these bonds. About $24 million of this funding supports Phase I construction at the new 401 North Campus. The remaining funds will provide roofing for two Main Campus buildings, repaving of campus roadways, renovation of the Health Sciences Campus auditorium (which is more than 30 years old), renovation of the former Engineering Technology Building and other repairs. Without funding from bond referenda, Wake Tech couldn't afford to begin any of these major projects.
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