With government debt and uncertainty about the economy serving as hot-button topics for this year’s local and national elections, the fate of the $203.6 million Charlotte bonds package on the Nov. 2 ballot seems uncertain — at the same time that advocates say it’s crucial for the package to pass.
Voters will get to decide whether to support three bond packages: $156.6 million for roads and transportation projects, $32 million for neighborhood improvements and $15 million for affordable housing.
Charlotte Mayor Anthony Foxx supports the bonds package. He said the troubled economy has led to lower construction costs and interest rates, which means the city could do more with the package if it’s passed now. Plus, because of the debt-service fund the city has established, taxes won’t need to be increased to pay the bonds off, he said.
“We have kicked the tires extensively as to our ability to pay,” Foxx said at an Oct. 12 luncheon of the SouthPark chapter of the Charlotte Chamber of Commerce. “I’m convinced that not only is it a good thing for us to do, it’s the right thing to do now.”
But with the recession, competency of government has become a hot topic, and some are not happy about the prospect of city government taking on more debt.
“Incurring more debt and extending yourself, even though you’ve been responsible and you’ve stocked away money for it over the last few years, isn’t always a no-brainer and the right thing to do,” said Tariq Bokhari, founder of the group Strengthen Charlotte, whose aim is to educate voters about campaign issues and candidates. “While times are great and money’s flowing, you don’t have that debate a lot. But now is the time that we should really question every dollar we spend.”
$136.6 million of the transportation bonds will pay for improvements and repairs to Charlotte roads, including North Tryon Street and Beatties Ford and Idlewild roads as well as intersections, such as Ballantyne Commons and Elm Lane. $15 million will go toward sidewalk construction and repairs, and $5 million toward streetscapes and other infrastructure improvements for projects in certain areas, such as University City and the Independence Boulevard corridor.
The $32 million neighborhood-improvement package will help spruce up some of Charlotte’s older neighborhoods — such as Shamrock Gardens, Tryon Hills and Eastwood — with repairs to sidewalks, curbs and gutters.
The $15 million from the affordable-housing bonds will go into the Charlotte Housing Trust Fund to develop housing for low- and moderate-income families.
All city bonds packages proposed in the past 20 years have passed, said Bill Parks, budget analyst for the city. The last one, passed in 2008 and totaling $227.2 million, had support from more than 70 percent of voters. The city’s bond rating is AAA, the highest rating, which means the city gets lower interest rates, making the debt less expensive to taxpayers.
The timing of the bond issue is important: It will be the last time the city has money for bonds in the foreseeable future. In 2006, the Charlotte City Council approved a property tax increase — from 42 cents per $100 of property value to 45.86 cents — of which a portion was dedicated to a debt-service fund to finance additional bonds, Parks said. The debt the city takes on from bonds is paid off out of the fund.
The revenue from the tax increase allowed the city to do three consecutive bond referendums: one in 2006, one in 2008 and one in 2010. But the city does not have a plan or the funding for a bond program in 2012, the year when bonds would, traditionally, come back up for a vote, Parks said.
The projects are no-frills, basic capital project responsibilities of city government, said Cyndee Patterson, co-chairwoman of the Yes for Bonds Committee, which is backing the bond projects.
City Councilwoman Nancy Carter called the bond funding “most crucial right now.”
“They’ll help fund necessary functions for the city, create jobs and help create this positive blanket over our area, because we’re saying that the city cares to invest and complete these projects,” she said.
But in Bokhari’s case, that the government would be taking on more debt for things it should be doing anyway is not a comfort.
Strengthen Charlotte came out against the bonds Thursday, with members saying the projects included in the bonds package should be funded using available funds instead of taking on debt.
“When we spend money on a streetcar that we don’t have the money figured out for operating costs, and then we’re incurring debt for other things government should be paying for, to me, it feels like going on vacation with your checking account money and using your credit card to pay your bills,” Bokhari said.
Bokhari said he was worried about the model that the city was setting up when it came to prioritizing projects and funding.
“If we continue saving all of our big priorities and needs into big, massive pieces that we have to have a huge silver bullet to solve, and along the way continue to spend on things that are not priorities, then taxes are going to go up,” he said.
In addition to concerns like Bokhari’s, Patterson said some voters might be confused about the distinction between county and city government. The county has no more debt capacity, Patterson said, in part because the county has more mandated services to fund, including the school system. But the city has more flexibility in its budget.
The Yes for Bonds campaign plans to educate the public about the difference between the city and county governments and the debt capacity that both have.
“They’re both facing issues, but the city’s in a much better place,” Patterson said. “Once you realize that, and that the city has this debt capacity, it’s hard to understand why somebody wouldn’t want to do it.”
Some voters are confused as to how the bond package will affect them, said Matthew Ridenhour, an organizer with the Charlotte Tea Party. Ridenhour said some people he’s spoken to in the local tea party movement and members of the general public seem to think that the bonds package will result in a higher tax rate.
“I’m a little surprised that there hasn’t been a better sales pitch about why bonds are good and why they won’t raise taxes,” he said.
The part of the bond package that appears to be in the most jeopardy is the $15 million package for affordable-housing projects. Although even bond critics, such as Bokhari, acknowledge the need for neighborhood infrastructure projects and road repairs, the affordable-housing bonds are raising the question of whether the government is trying to take on a role it shouldn’t play.
“I certainly believe that affordable housing is important,” Bokhari said. “But at the same time, allowing government to play banker and decision-maker in that kind of role, rather than a role of coordination and showing the market the need that exists in creative ways and letting the market truly figure out solutions to the needs, that’s a big topic for debate.”
Ridenhour is on the same page. He supports the neighborhood infrastructure and transportation projects but is leaning toward a “no” vote for the affordable-housing bonds.
“At that point, the city’s getting into the development role, and that’s when I start to shy away,” Ridenhour said. “When any kind of government gets too involved in the private market, I get concerned.”
Patterson said she’s heard the concerns when it comes to the affordable-housing bonds. But she argues that it’s important to have affordable housing within the city limits.
“We’re talking about housing for seniors, housing that includes veterans that have come home and are still getting job training, for people that work in the hospitality sector, which is a huge sector for Charlotte,” Patterson said. “What you’re dealing with here, in large part, is folks that are working, they have jobs, and they’re trying to take care of their families. And we are significantly underhoused in that income range.”
Foxx echoed Patterson’s sentiments in his State of the City speech to the chamber Oct. 12.
“We’re demonstrating not only the compassion, but the understanding that part of being a community is helping other people,” he said.
Caitlin Coakley can be reached at [email protected].