GO bonds are the least costly financing option available to the Town for these projects. Given the Town’s excellent credit rating and financial management, Cary can borrow money at low interest rates and issuance costs, thus saving Cary taxpayers millions of dollars over the repayment period. The Town will have up to 10 years to issue the bonds and 20 years to pay back the bonds after the funds are borrowed.

The Town of Cary is in excellent financial health. However, the Town does not have enough cash available to pay for these important projects while still sustaining the high level of service our citizens expect, and maintaining fund-balance levels that are required by law and directed by the Town Council.  In addition, financing these projects over 20 years allows future citizens who will also benefit from the projects to contribute towards paying for them.

No. The annual debt payment for the bonds decreases over time.

The Town issued general obligation bonds on July 16, 2019 and received a very favorable average interest rate of 2.18% for 20 years.  The other type of financing that the Town would consider for the transportation and parks projects – Limited Obligation bonds (asset-backed debt) – would have a higher interest rate of 2.38%.

Yes. Currently, debt service is running about 10% of annual operating expenses, so there is enough debt capacity remaining for these bonds.

Cary’s current general fund debt service is approximately $17.2 million a year.

Over the 7-to-10-year period that the Town will issue the bonds, we expect the tax base will grow so that our current tax rate generates more revenue, existing debt payments will decrease, and other revenues and operating expenses will change. Because of all of these changes, the amount and timing of tax increases remains to be determined, however we are confident that future tax increases will be required to support operations, maintenance and capital projects to manage Cary’s transition from a growing community to a maturing community.

For Fiscal Year 2020 (effective July 1, 2019), adopted property tax rates for Cary and surrounding municipalities are as follows:

Cary – 0.35

Morrisville – 0.39

Raleigh – 0.4382

Fuquay-Varina – 0.4325

Apex – 0.415

Knightdale – 0.43

Holly Springs – 0.4825

Rolesville – 0.48

Wake Forest – 0.52

Garner – 0.56

Wendell – 0.49

Zebulon – .592

For additional comparison, Chapel Hill’s tax rate is 0.544 and the City of Durham’s is 0.5317.

Maybe. Council sets the tax rate each year and it can go up, down, or stay the same regardless of whether or not voters approve the bonds.

The 2012 referendum authorized the Town to use GO financing for transportation, parks, and fire projects. The Town has issued all of the bonds totaling $80 million that were authorized in 2012. All of the funded projects are either complete or well underway.

If the bond referendum does not pass in October, the projects will likely not move ahead within the next five to ten years.

No. The bond vote is a vote on whether the Town may specifically use general obligation bond financing; it is not a vote on the property tax rate. The Council may raise or lower the property tax rate each year depending on the amount of revenues the Council believes is necessary to meet the operational needs of the local government.

Town officials expect that bond raters will view Cary’s debt levels as moderate and manageable given the Town’s financial position and Cary’s continued, proactive attention to planning for and managing growth and community needs. In June 2019, Cary was rated AAA by Fitch Ratings, Moody’s Investor Service and Standard and Poors. Moody’s noted “The outlook further reflects the expectation of continued sound financial operations.”

Immediately. While the Town of Cary is in excellent financial health, the Town does not have enough money in its savings account to be able to pay for these extra projects. The Town does have enough funds to start construction on some of the projects that are already under design, and will then have the authority through a reimbursement resolution to be reimbursed from the bond proceeds once they are issued.

While it’s not possible for us to predict what interest rates will be, we can say that if we were to sell general obligation bonds this fall, we would expect the average interest rate to be more than 2 percent but less than 3 percent based on the rate of 2.18% that the Town received from a bond sale on July 16.  Had the bonds been sold last September, the rate would have been 3.25%, so changing market conditions do impact the rate the Town receives when selling bonds.