The recent rejection by the North Carolina Local Government Commission of Cabarrus County’s request for bonds totaling $228 million has raised several concerns and highlighted the challenges faced by the county in securing financial approvals. Despite the panel’s staff recommending approval, some members on the board expressed reservations about the proposed bonds and suggested that they should undergo a voter referendum before receiving commission approval.
One of the major points of contention was the county’s use of bond anticipation notes (BANs) and limited obligation bonds. Some commission members objected to the county’s reliance on BANs, advocating instead for debt to be taken out for projects only once final costs are determined. The county had requested $186 million in 20-year limited obligation bonds to replace variable rate 2022B BANs, as well as an additional $42 million for the acquisition of a new building for a human services center and land for a regional behavioral health center.
Cabarrus County’s limited obligation bonds currently hold favorable ratings of Aa1 by Moody’s Ratings and AA-plus by S&P Global Ratings and Fitch Ratings. However, concerns were raised about the potential financial impact of the county’s reliance on BANs, particularly in light of increasing interest rates and construction costs since 2022. Commission Chairman Dale Folwell expressed apprehension about the county incurring additional costs and advocated for the bonds to be presented as general obligation bonds to allow voters to make an informed decision.
County Manager Mike Downs defended the county’s approach, stating that using BANs was an efficient method that allowed for timely project financing without the need to issue bonds multiple times throughout the year. He argued that the use of BANs was a common practice among major issuers in the state, contradicting claims made by Folwell. However, concerns were raised about the lack of familiarity with limited obligation bonds among commission members, with some questioning the suitability of this financing method for Cabarrus County’s projects.
Despite the rejection of the bond requests, Cabarrus County officials have expressed their commitment to working with the Local Government Commission to address the concerns raised. It remains unclear when the county’s bond requests will be revisited, as the commission seeks to provide guidance and direction to the county on their financing approach. In the meantime, the county continues to explore alternative funding options to support its ongoing projects and initiatives.
The challenges faced by Cabarrus County in securing bond approvals highlight the complexities and considerations involved in municipal financing. It is essential for local governments to carefully evaluate their funding strategies and engage in dialogue with regulatory bodies to ensure financial stability and transparency in their operations. By addressing the concerns raised and seeking collaborative solutions, Cabarrus County can navigate the complexities of securing bond approvals and continue to support its economic development and community welfare initiatives.