Bond package will raise per capita debt by 538% over 2015

September 20, 2016 Asheville , City - County Gov. , News Stories 2634 Views
Bond package will raise per capita debt by 538% over 2015


Graphic courtesy: AshevilleUnreported

Highest of any comparable-sized city in NC; fifth highest in state overall

By Roger McCredie-  If November voters approve three general obligation bonds put forward by city government, Asheville will carry the fifth highest per capita debt burden of all cities in North Carolina, beginning next year.

According to the city’s own figures, its 2017 per capita debt – total indebtedness divided by the city’s population – will come to $1,748.  That’s 54% higher than this year’s figure of $947 and a whopping 538% over the $247 per capita load of 2015.

The three-bond package totals $74 million, but the city has confirmed that debt service over the life of the bonds will come to another $36 million, for a total payback of $110 million.

Those new obligations would give Asheville the highest per capita debt of any city in North Carolina with a population under 100,000.  The $1,748 figure is greater than the per capita indebtedness of Greensboro (population 296,666), Winston-Salem (229,617), Durham (228,330), Cary (135,234), Wilmington (106,476) and High Point (104,371), according to figures published in January of this year by the North Carolina State Treasurer’s Department.

It is also only $103 less than the $1,851 annual per capita debt of Charlotte, which with a population of 809,958 is just under 10 times Asheville’s size.

The three bonds – one for $32 million earmarked for transportation, one for $25 million allotted to affordable housing, and one for $17 million to go towards parks and recreation – are to be voted on separately.  Those three categories and the amounts for each were arrived at by city council and administrators during a series of work sessions conducted over the summer.

The idea of a bond issue, in turn, emerged from a capital improvement program drawn up  by the city in 2013.  That June, City Council passed a three-cent property tax increase to finance “economic development, capital improvements … and infrastructure maintenance.”  Among the capital improvements was a $2 million contribution towards the Asheville Art Museum’s expansion program. Opponents of the program at the time pointed out that the city was tying up money  amounting to one-third of a deficit that, only two months earlier, had caused then Mayor Terry Bellamy to urge citizens to join her in a 24-day fasting and prayer vigil in light of the city’s precarious financial situation.

Critics have also maintained that the city is operating from a skewed values system that has prioritized “sexy” items – such as multimillion-dollar incentives programs to lure companies like New Belgium Brewing, as well as ambitious cosmetic projects such as greenway development – so that now City Hall must return to the well for money to finance basics.

Responding to that line of criticism, councilor Gordon Smith said earlier this year that the city has been “doing its level best” to meet citizens’ needs, but “what the bond questions allow is for the people of Asheville to decide whether to accelerate towards those aspirations they have communicated to us.  And if they choose to do so, we’ll be right there with ‘em.”

And councilor Cecil  Bothwell noted during an August City Council meeting that the city estimates that funding the bonds will cost the owner of a $275,000 home – which is said to be the average price of an Asheville house – about an additional $10 per month.  “That’s not a big hit,” he said.

During that August meeting, Bothwell’s remark drew fire from local businessman and former Vice Mayor Chris Peterson, a vocal opponent of the bond issue, which he has repeatedly called “a Ponzi scheme,” a sentiment that helped get him forcibly ejected from a Council meeting last May.

“You have taxed and taxed and fee-ed us to death,” Peterson told Council during the August meeting. “You’re not telling the people the truth.  You’ve got $36 million in interest [on top of $74 million].  You already owe $80 million.  Do the numbers,” he said, adding that the bond principal and interest, plus existing debt, would give Asheville a total debt of $190 million.

“You sit there and proclaim that you’re for poor people?” Peterson asked.  “That’s just bull.  This affects poor people worse than rich people,” he said.  “If rich people get taxed, they can afford it.  You’ve got people [employed by the city] with salaries over $200,000 a year.  The average person in Asheville makes $28.000.  That’s wrong.”

And during the same meeting attorney Sidney Bach delivered a scathing indictment of the bond proposal “There can be no doubt,” he said, “that for the unelected staff at City Hall [the bond money] will become a $74 million slush fund to use as they please.”

Bach was referring to a point that has been frequently cited by bond opponents: that beyond the three broad headings under which the bond purposes are grouped – transportation, housing and parks/recreation – there is no restriction as to how the monies can be allocated. In July, Barbara Whitehorn, the city’s Chief Financial Officer, confirmed that fact, saying, “When we write the bond question, the question [will be] written in such a way that it leaves the option open for Council to add or remove particular projects.”

Mayor Esther Manheimer tempered Whitehorn’s assertion by saying, “We do have community trust that we will spend the money on what we say we will spend the money on, it’s important that we stick to that plan.”

“In reality,” Bach told council members, I believe all this [inviting public input] is merely window dressing by the City Council.”  He said there is a “collaboration with the city and certain unelected city staff to foist a fully planned and unnecessary pie-in-the-sky $110 million financial burden upon the city and its residents for years and years to come.”

“As of June 30, 2015,” the City of Asheville’s website says, “the City’s per capita debt was only $274, compared to an average of North Carolina’s largest cities of $1,171.”  Between that date and June 30, 2016, the $274 per capita indebtedness figure rose 345% to $947.  The projected $1,748 per capita figure would put Asheville 66.9% above the state’s all-city average.








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