Back in 2013, the Town of Hillsborough issued North Carolina’s first “special assessment revenue bonds.” Most of the proceeds went to pay costs of constructing a road through Waterstone, a large development that includes a variety of housing units and the UNC Health – Hillsborough complex. Sanford Holshouser LLP served as Hillsborough’s bond counsel for this $4,630,000 bond issue. The last scheduled bond payment date is February 1, 2024.
For these special assessment revenue bonds, the Town promised the bondholders that it would levy special assessments in the benefitted area that were calculated to be sufficient for timely payment on the bonds. The Town’s promise to pay the bonds was limited to payment from those assessments; the Town would not legally be on the hook for any payments in excess of the collected assessments. Under the statute, the landowner had to petition for the levy of the assessments, and the Town and landowner worked closely to calculate the appropriate assessments.
We like this project because:
- It shows public-private cooperation. The Town and the landowner had to work closely to define the area to be subject to assessment, to set the assessment levels, to prepare the forms of the landowner’s required petition and the assessment proceedings, and to work out the terms of the bond issue. It’s the Town’s bond issue, but it could not have happened without close cooperation between the Town and the landowner.
- Even beyond these technical aspects of the process – it would not have happened if the landowner and the Town had not established an open and trusting relationship before the financing idea started to percolate. When the landowner asked for this support, it had already established its bona fides with the Town as a trustworthy, above-board business partner.
- The Town did not hesitate to ask for what it needed to make the undertaking worthwhile. This process was completely optional for the Town, so the Town made sure it got a benefit from the financing – it didn’t settle for the old refrain of “there’s no downside to you.” If someone is asking your community for help, make sure there’s an upside for the community.
- The Town did not retreat to the easy comfort of saying “no.” Sometimes there’s a risk in not doing something as much as there is in doing something. The Town wanted the planned development, and believed that the support of the bond issue was necessary to get it done (because the Town trusted the landowner). So the Town staff and governing board took their time for due diligence on the project and the process, worked through the LGC’s particular requirements for this type of financing, and did something they didn’t have to do because they were willing to say, “let’s take a look.”