July 2004 Executive Voices


Amendment One
Self-financing bonds will give us another tool to create jobs

By Mac Williams

The candidates vying for your vote this November may discuss many important issues. But the predominant issue, certainly in North Carolina, will be about jobs. Every region across our state has been affected by permanent job losses. Many of these from closings of what were trophy industrial plants won by North Carolina and its communities – once distinguished as innovative competitors in economic development.

In response to these job losses, progress is being made to help North Carolina regain a competitive position in this global economy. The progress may often seem too slow in coming but things are happening because the times demand action.

Examples of recent actions include the Job Development Investment Grant program (JDIG), enacted last year, which is proving an effective incentive. Funding for education and biotech programs are preparing us for attracting future growth industries. The legislature recently approved a $20 million infusion into the One NC Fund for deal-closing incentive money. The Joint Select Committee on Economic Growth and Development has been working diligently this past year on a menu of recommendations promising to further enhance the economic development toolbox. Local officials are also doing what they can to be as responsive as possible when opportunity knocks on their community door.

One opportunity being presented to North Carolina this November is self-financing bonds. A referendum titled Amendment One will be on the ballot and, if passed, would provide local governments this effective economic development tool – now available in 48 other states and in use for more than 40 years.

North Carolina is the only state east of the Mississippi River without this tool - hardly a distinction for a state otherwise known for its innovation in economic development. You can change that by voting yes for Amendment One and for jobs.

Amendment One already enjoys broad support starting with the General Assembly, which passed legislation last year creating the tool and authorizing the referendum. General Assembly support was bipartisan and overwhelming.

Businesses, government, chambers of commerce and economic development groups across North Carolina, including the N.C. Economic Developers Association, are on board. Under the leadership of NCCBI, a broad-based coalition has been formed — North Carolinians for Jobs and Progress — to advocate for successful passage of Amendment One. Reflecting bipartisan support for the issue, former Governors Hunt, Martin, and Holshouser are serving as Honorary Co-Chairs and are actively campaigning in support of self-financing bonds.

Self-financing bonds allow local units of government to finance public improvements including water, sewer, and storm-water facilities, streets, parking facilities, and other amenities to leverage private sector investment, in targeted areas, for a variety of economic and community development purposes. Downtown and waterfront revitalization, affordable housing, Brownfield redevelopment, and industrial parks are typical.

The local unit issues bonds for public infrastructure that, when combined with an associated private project, results in an incremental increase in the property values of the project area. The revenue from the incremental increase, generated by the project within the development district, is dedicated to retiring the bonds that leveraged it. Thus, the bonds are self-financing.

Importantly, no new or special tax is placed on either the new development or on any other taxpayer inside or outside the designated project area. Additionally, unlike general obligation bonds, self-financing bonds do not require the local unit to pledge its taxing authority to secure the bonds. The risk is on the bondholder — not the taxpayer.

Because self-financing bonds are targeted and project specific, this tool is uniquely adaptable to particular circumstances and opportunities and applicable in both urban and rural settings. It is a tool ideal for responding to your unique local business climate. With these bonds, local governments opting to use this tool can respond, in less time and with more resources, to sound private development opportunities.

Self-financing bonds may not be the solution to more jobs, but, used in tandem with other tools already in place and/or proposed, it is certainly one more solution — and, one that is responsible, measured, widely accepted, and well practiced.

All of our 100 counties have been hit in recent years with a perfect storm of challenges, including state and local fiscal crises, coupled with a fundamental and permanent transition of their economies fueled by technology and global competition.

From my perspective – as someone working in both local government and economic development - not only is supporting Amendment One the right thing to do, now is the right time to do it.

The November 2004 ballot will be a “jobs” ballot. On behalf of your local economic development professional, I urge you to support not only the candidates you think understand these challenges and who can lead us through this period of transition, but also, this particular tool that can help foster more local job creating opportunities.

For more information on Amendment One go to www.amendmentone.org.

Mac Williams of Asheville is economic development director for the city and is this year’s president of the N.C. Economic Developers Association (NCEDA).

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