Development finance: how to

We all know that everything cities and counties do is linked to the statutory authority afforded to them by the General Assembly. And like it or not, NC law says that it is OK to give grants and loans to spur private investment. Cities and Counties are granted this authority (in a very broad, by golly it’s almost unconceivable how much faith the statutes put in us) under G.S. 158-7.1 the Local Development Act.

Here’s the language:  “each county and city…is authorized to make appropriations for the purposes of aiding and encouraging the location of manufacturing enterprises….and locating industrial and commercial plants…or OTHER PURPOSES (what purposes dear lawmaker? Well, you decide what that means, Miss local government)  which, in the discretion of the governing body…will increase the population, taxable property, agricultural; industries, and business prospects of any city or county.”

That’s wide-ranging authority, for sure!

But hold your horses. The Constitution of the state- you know, that little document that governs the structure and function of state government. The highest legal document there is. The one that subjugates all other NC law. King of the mountain, if you would. So, while the statutes are broad and allow you to “other purpose” your development incentives, the constitution isn’t so blasé with tax dollars. It specifically states that the power of taxation can be exercised  for public purposes only. And that our local governments can contract with and appropriate money to any person, association, or corporation for the accomplishment of public purposes only”.

So what does this mean? We've got to follow both the constitution and statutes..but they say two different things...can't I just pick one. Tthe answer is NO!

The next few post will center on how a local government can incentivize economic development. And whats really getting me…the answer I really want to know…when can a local government offer cash incentives for economic development? Or can it?

Development finance: Industrial Revenue Bonds

Industrial Revenue Bond (IRB) Program The Department of Commerce's Industrial Revenue Bond (IRB) Program allows all NC cities, villages and towns to support industrial development through the sale of tax-exempt bonds. The proceeds from the bond sale are loaned to businesses to finance capital investment projects at, primarily, manufacturing facilities. Even though IRBs are municipal bonds, they are not general obligations of the municipality. The company or business that will use the facilities provides the interest and principal payments on the loan. The local government is in partnership with the business, lending its name, but not its credit, to the bond issue.

Security	Revenue from financed projects
Legal projects	Projects that generate revenues (GS 159-81) and Special Assessment projects (GS 153A, Art 9A; GS 160A, Art 10A )  (County landfill)
Feasible projects	Projects that generate sufficient revenue (hospital expansion)
Voter approval	NO
LGC approval	YES
Bond counsel	YES
Public or private sale	Usually public or USDA
Method of sale	Negotiated

Learn more about submitting an application here:

Sustainability: wind farming

The News and Observer is reporting that the public will have the opportunity to hear comments on a proposed 11,000 acre wind farm in Beaufort County. The N.C. Utilities Commission, which is reviewing the application for the 80-megawatt project, will hold its first public hearing at the Beaufort County Courthouse at 7 p.m. Nov. 17. If approved and built on schedule, the 49-turbine Pantego Wind Energy Project is expected to be completed late next year. It would probably be the state's first industrial-scale wind farm.

The nation’s largest independent owners of wind-generating facilities in the United States are behind the plan.
Although the energy generated by the wind farm is destined to be shared with 12 other states and the District of Columbia, Beaufort County could see up to $1 million a year, including property tax revenue, lease payments to landowners and salaries to local employees, from the project.

Pantego Wind Energy LLC, a subsidiary of Chicago-based Invenergy, earlier this month filed an application with the N.C. Utilities Commission for permission to build 49 492-foot-tall turbines on 11,000 acres near Terra Ceia and Pantego.


The commission will hold a second hearing Dec. 6 in Raleigh to consider evidence from accountants, engineers and other experts.


The Pantego project was proposed in September by Invenergy, a company that operates more than two dozen wind farms in this country. The Pantego proposal will also require approval from federal environmental regulators and from military installations. The project would have a capacity factor of 25 percent to 36 percent, which means it would generate that portion of its maximum energy capacity.


Read more: http://www.newsobserver.com/2011/10/12/1558876/coastal-wind-farm-up-for-discussion.html#ixzz1aZv8g0dk