KANNAPOLIS — The Kannapolis City Council voted to pursue a $40 million general obligation bond process to support parks and recreation capital projects in the city.
On Monday, May 11, the City Council heard a presentation from city staff and Davenport Financial about the process of a general obligation, GO, bond. After brief discussion and questions, the council unanimously approved a notice of intention to apply for the bond.
A GO bond has to be approved by the voter base in a referendum, as it relies on the taxing power of a municipality as collateral. This would be the first GO bond that Kannapolis has pursued as a municipality, historically using limited obligation bonds that rely on city property as collateral instead.
This $40 million bond would support various park projects that have been put on hold or on the horizon for the city. This includes Eastside Park, which has brought multiple people to public comment for the past couple months to express concern about its delay and potential forfeiting of a $500,000 grant. With this bond, the city could apply for an extension on the grant to still utilize the funds for the park project.
Beyond Eastside Park, Director of Parks and Recreation Gary Mills shared the projects that the bond may help fund. These include a $16 million Westside Park, the Irish Buffalo Creek Greenway expansions, Rocky River Greenway and Gem Theatre renovations. The proposed projects also noted a potential project off Glenn Avenue that has yet to be determined.
The projects are expected to total roughly $37.5 million, and the bond builds in a $2.5 million contingency for cost changes.
“There are multiple projects in our master plan, but we felt that these were more of a priority. They also stretch all the way across the city, so there are multiple projects on the west side, projects in the middle and, of course, projects on the east side. So, a little bit of everything for everyone,” Miller said.
The next steps for the bond are publishing public notice in media outlets and receiving approval from the Local Government Commission. The City Council will hear a bond order by June 8, which then sets the public hearing about the bond. By June 22, the City Council would hold the public hearing and vote on setting the bond referendum for the November general election.
The referendum wording has to be decided by June, stating the purpose of the bond, the expected principal plus interest and the estimated property tax liability increase. Beyond the principal, these numbers are estimates, and according to Mitch Brigulio from Davenport Financial, the estimated property tax increase is not binding or immediate.
The estimated interest for the bond if issued immediately is roughly $22.4 million with a maximum property tax impact of 4.6 cents. The interest would change based on the issuance schedule.
Brigulio emphasized that it is good practice to issue the bonds quickly, but based on the multi-project plan, the bond would likely be issued in chunks based on when the capital is needed.
“This is establishing on the high end what the maximum amount to be expected in terms of interest, the maximum property tax liability could be. It doesn’t necessarily say what the tax rate or tax bill will be. It’s the tax liability,” Brigulio said.
If voted for by residents and then approved by the LGC, Kannapolis will have seven years to use the $40 million, with the option to apply for a three year extension. The issue will be discussed again in June with finalized language of the referendum.
