Stormwater Infrastructure Capital Finance

Transcription

1 Stormwater Infrastructure Capital Finance Jeff Hughes Environmental Finance Center UNC School of Government (919)

2 Objectives Increased understanding of stormwater capital funding sources and financing strategies.

3 How the Payments are Made Save in advance and pay Pay as you go (current receipts) Pay afterwards (someone loans you money) Grants

4 All NC State Funding Programs from (Draft - Not for Citation) Dollars (Millions) North Carolina Capacity Building Grants Program North Carolina Clean Water Management Trust Fund North Carolina Revolving Loan and Grant Program: High Unit Cost Fund; Drinking Water North Carolina Revolving Loan and Grant Program: High Unit Cost Grants; Clean Water North Carolina Supplemental Grants Program North Carolina Unsewered Communities Grants Program

5 Example CIP, Durham NC

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7 Capital Reserve Funds A capital reserve fund shall be established by resolution or ordinance of the governing board which shall state (i) the purposes for which the fund is created, (ii) the approximate periods of time during which the moneys are to be accumulated for each purpose, (iii) the approximate amounts to be accumulated for each purpose, and (iv) the sources from which moneys for each purpose will be derived.

8 Other Types of Capital Reserves Accumulation of reserves within general fund or other operating fund balance. Designating general fund balance for future capital purposes. Undesignated Equipment replacement or infrastructure rehabilitation revolving fund. Balances in special revenue or capital projects fund balances.

9 Funding Capital Reserves Ad hoc, as extra money becomes available Excess above general or other operating fund balance target, Policy committing annual appropriation to capital reserve, Policy earmarking annual revenue for reserve Special tax General tax or revenue, e. g., 3 cents of tax rate. Usage or depreciation charges for equipment or buildings.

10 Debt Gate Keepers: Local Government Commission Division of the Department of State Treasurer Supervises issuance of bonded indebtedness All North Carolina units of local government Most public authorities Provides assistance in fiscal management Monitors compliance with fiscal and accounting standards Statutory authority to assume full control of financial affairs

11 Authorized Capital Costs Construction or acquisition of real or personal property Acquisition of unimproved land Preparation of land for construction Plans, specifications, studies, reports, surveys Financing Costs underwriting, legal, administration, credit Interest expense during construction (+6 months) Debt Service Reserve Funds

12 General Obligation (GO) Bonds Full faith and credit pledge Required to levy taxes without limit as to rate or amount Voter referendum and LGC approval required Base financing structure: 20 year term / level principal / 10 year call Bond details, covenants, and provisions outlined in Chapter 159, Article 4 Strongest security resulting in lowest all-in cost of funds Offered through competitive sale

13 Revenue Bonds Secured by pledge of utility system net revenues Voter referendum not required / LGC approval required Base financing structure: 20 year term / level debt service / 10 year call Bond details, covenants and provisions outlined in Chapter 159, Article 5 Requires financial feasibility study Primary legal provisions include: Rate Covenant Additional Bonds Test Debt Service Reserve Fund Offered through negotiated sale

14 Installment Financing Contracts Private placement or public offering of Certificates of Participation Secured by Deed of Trust granting first lien on assets financed Can substitute or release mortgaged property Voter referendum not required / LGC approval required Base financing structure: 20 year term / level principal / 10 year call

15 Impact Fees Many names: User Fee, Capacity Charge, Availability Charge, Facility Investment Fee, System Development Charges. Many justifications: buy in, contribute to reserve Different methods: house size, impervious surface

16 Impact Fee Example Carolina Beach

17 Special assessments Cities G.S. 160A art. 10 Counties G.S. 153A art.9 Based on frontage, acreage, per lot, increased value of property Payments can be made over a period of 10 years No petition of property owners is required Some exemptions for state and federal land