Street and Sidewalk Bonds Parks and Recreational Bonds Redevelopment Bonds Public Safety and Services Facilities Bonds
Frequently Asked Questions Tax Rate Information Sample Ballot and Voter Information Bond Pamphlet


Frequently Asked Questions


What is a bond referendum?
For what purpose will the bond funds be used?
How much will the Town issue in bonds?
Why doesn’t the Town just use cash instead of debt to pay for these projects?
Can I vote for some bond issues but not others?
Why is the Town having the referendum in March?
What is the value of one penny on the tax rate?
What is the total tax rate implication for each bond referendum question?
What were the estimated tax increases associated with bond referendums held by neighboring municipalities in November 2012?
How will the Town pay back the bonds?
What is the customer cost for municipal services of other cities and towns in the region?
What are the property tax rate implications of these bonds?
If required, when would the tax increase for these projects go into effect?
If these bonds are approved, will the Town be able to stay under the Council’s 15% debt ceiling?
What happens if the bonds don’t pass in March?
If voters don’t approve the bonds, does this mean that the Town Council will be prevented from raising property tax rates in the future?
What is the Town’s current debt service?
Given the condition of the economy, is now the right time to vote on these particular bond initiatives?
What projects has the Town issued debt for?
If these bonds are approved by the voters, how will the additional debt be viewed by bond raters in light of Garner’s existing debt?
If the bond referendum is approved, how quickly could the projects begin?

What is a bond referendum?

A bond referendum gives voters the power to decide if the Town should be authorized to raise funds through the sale of bonds. A general obligation (G.O.) bond is long-term borrowing in which a Town pledges its full faith and credit (taxing power) to repay the debt over a specified term. G.O. bonds are the least costly financing option available to the Town for these projects.

Given the Town’s excellent credit rating and sound financial management, Garner can borrow money at low interest rates and issuance costs, thus saving Garner taxpayers hundreds of thousands of dollars over the repayment period. The Town will have seven years (can be extended to 10) to issue/sell the bonds and 20 years to pay back the bonds after the funds are borrowed.

For what purpose will the bond funds be used?

Under North Carolina law, a local government holding a referendum for the purpose of issuing general obligation (G.O.) bonds must specify general categories of capital projects for which bond proceeds may be used. Within these categories, a local government may identify specific projects that are intended to be funded by the bond proceeds – the “bond package.” However, due to the lengthy process involved with identifying, designing, and implementing projects, as well as the lack of detailed cost and other project information available at the time of the bond referendum, the specific projects identified in the bond package may change over time. The question that the actual bond referendum therefore asks of voters is whether they authorize local government to use the G.O. bonds as a financing tool for the general category of projects up to the amount specified in the question.

How much will the Town issue in bonds?

If citizens vote in favor of the four bond financing questions on the March 12th ballot, the Town will have the authority to issue up to $35.716 million in general obligation (G.O.) bonds over seven years. If the projects cannot be completed in seven years due to circumstances, the Town may ask for a three-year extension from the North Carolina Local Government Commission.

Why doesn’t the Town just use cash instead of debt to pay for these projects?

The Town of Garner is in excellent financial health. However, the Town does not have enough cash available to pay for all of these important capital projects while still sustaining the high level of service our citizens expect, and while maintaining fund-balance levels that are required by law and directed by the Town Council.

Another consideration for using multi-year financing instead of cash is the equity factor: Future citizens of Garner pay for a portion of the new projects that they will benefit from.

Can I vote for some bond issues but not others?

Yes. There will be four bond questions: one for Public Safety and Services Facilities Bonds, one for Parks and Recreational Bonds, one for Street and Sidewalk Improvement Bonds, and one for Redevelopment Bonds. You can familiarize yourself with the questions that will appear on the ballot by viewing a sample ballot here.

Why is the Town having the referendum in March?

Even though the projects outlined in the bond package have been discussed for several years, the Town Council did not decide to move forward with a referendum until recently, and information needed for the bond referendum was not available by the statutory deadline for a November election. Instead of rushing the process, the Town wanted to ensure that all necessary materials were complete and available for full review by the Council and citizens.

What is the value of one penny on the tax rate?

One penny on the tax rate is worth about $292,500 in revenue annually for the Town.

What is the total tax rate implication for each bond referendum question?

Per $100 of assessed value:

Street and Sidewalk Improvement Bonds - $14,566,000 = 1.12 cents
Parks and Recreational Bonds - $7,150,000 = 0.55 cents
Redevelopment Bonds - $2,000,000 = 0.15 cents
Public Safety and Services Facilities Bonds - $12,000,000 = 0.93 cents

What were the estimated tax increases associated with bond referendums held by neighboring municipalities in November 2012?

Town of Cary – 4 cents
Town of Morrisville – 4 cents
Town of Knightdale – 2 cents

How will the Town pay back the bonds?

In January 2013, Council took action to include a Revenue Savings Program as part of the Town’s Fiscal Guidelines that were adopted in 2010. The Revenue Savings Program dedicates a portion of revenue growth to support capital improvements, such as the projects outlined in the bond. Under the plan, the percentage of growth in annuals revenues dedicated to the savings plan will vary dependent on the projected growth. This program holds the line on operating expenditures by dedicating a portion of funding to a reserve account. Based on the initial analysis, this plan will help keep a possible tax rate increase due to the bond packages lower than originally projected. The Town’s financial advisors calculate that without the implementation of the program, a tax increase could have been up to 4.9 cents. In conjunction with this program there may also be a property tax rate increase up to 2 ¾ cents in 2015 in order to repay the debt.

What is the customer cost for municipal services of other cities and towns in the region?

Each year, the City of Raleigh releases a Customer Cost Chart that compares our regional municipalities’ property tax and additional fees for services. The property tax information was calculated based on a median home price of $188,755. Annual water/sewer rates were calculated based on 4,500 gallons or 6CCF per month.

Comparatively, Garner residents overall pay less for services than some surrounding communities even though our property tax rate is higher than some of these communities.
customer costs

What are the property tax rate implications of these bonds?

Assuming that voters approve all four bond initiatives, for each $100,000 of home value, the annual tax impact would be $27.50 for the 2 ¾ cent tax increase. This means that if your home is valued at $250,000 for tax purposes, your related tax bill would increase by $68.75 per year for the possible increase no sooner than July 2015.

Personal property, including vehicles, is also impacted by the tax rate increase. Using an average personal property vehicle tax bill of $10,000, the annual increase for 2 ¾ cents would be $2.75.

If required, when would the tax increase for these projects go into effect?

Taxes for homes, real property, public service and personal property, excluding registered motor vehicles, would see any impact of the potential tax rate increase no sooner than on the tax bill received in September 2015 that would be due by January 2016.

If these bonds are approved, will the Town be able to stay under the Council’s 15% debt ceiling?

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

What happens if the bonds don’t pass in March?

The Town is working with limited revenue growth and after the current debt payments are met and operational expenses are calculated there are little remaining funds left for capital improvements. If the bonds do not pass the projects will have to compete with the already limited funding. Some projects will likely be postponed or eliminated.

If voters don’t approve the bonds, does this mean that the Town Council will be prevented from raising property tax rates in the future?

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

What is the Town’s current debt service?

In 2013, Garner’s current general fund debt service is approximately $1.4 million per year. The overall annual Town total budget is approximately $23.7 million.

Given the condition of the economy, is now the right time to vote on these particular bond initiatives?

Yes. Community improvements like those outlined in the bond proposal can take years to fully implement, so the bond referendum is the next step in long-range planning. No one disagrees that the economy is more sluggish than anyone would like. But the state of the economy doesn’t change the Town’s obligation to continue making steady progress on important quality-of-life issues for Garner citizens using the most cost-effective options available over the next seven years, which is the life of the authorization for these bonds. Current interest rates for borrowing are at historical lows, which would save taxpayers thousands of dollars in interest payments. Construction costs are also projected to be lower than the boom years. With all of these factors considered, the Town Council felt now was the time to seek approval from voters in planning for these community improvements.

What projects has the Town issued debt for?

Bank of America - June 23, 2006
Centennial Park878,800
Auditorium Renovation and Expansion2,510,000
Senior Center Expansion1,200,000
Water and Sewer Capacity2,489,000
Police Annex - Main Street165,000
Total 7,242,800
Branch Banking and Trust - June 28, 2011
Water and Sewer Capacity3,106,528
Improvements to Public Works293,472
Total 3,400,000
General Obligation Bonds - October 5, 2011
White Deer Park3,200,000
Timber Drive Extension2,500,000
Vandora Springs Roundabout350,000
Total 6,050,000


If these bonds are approved by the voters, how will the additional debt be viewed by bond raters in light of Garner’s existing debt?

Town officials expect that bond raters will view Garner's debt levels as moderate and manageable given the Town's financial position and Garner’s continued, proactive attention to planning for and managing growth and community needs. The Town is working with a financial advisor to ensure that the debt capacity is available and that the Town has the ability to repay the debt. The Town adopted Fiscal Policy Guidelines on December 6, 2010. As part of the document, important ratios are established. This includes debt to assessed property value and debt service to expenditures. Both help establish fiscal responsibility.

If the bond referendum is approved, how quickly could the projects begin?

Immediately. While the Town of Garner 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 preliminary plan designs and contracts, and will then have the authority through a reimbursement resolution to be reimbursed from the bond proceeds once they are issued. It is anticipated that the police station project will be the first one underway.