Monday, July 22, 2024

LGC approves Pender County school bonds despite late audits, other concerns

Pender board of ed
The Local Government Commission approved Pender County’s $178 million bonds; the funds will be issued in three tranches to cover school bond projects. (Port City Daily/Amy Passaretti Willis)

PENDER COUNTY — While a multi-million-dollar bond referendum was already approved by voters more than eight months ago, the state signed off Tuesday on Pender County’s debt, the final step prior to proceeding with school bond projects.

READ MORE: Pender identifies land for school bond projects, RO plant for $13.9M

ALSO: Pender school bond ‘hits a snag,’ timeline delayed at least a year

The Local Government Commission, the state committee overseeing local governments’ finances, approved $178 million in general obligation bonds.

State Treasurer Dale Folwell, also LGC chair, asked about the margin for and against the bond vote in November, which was 53% for and 47% against.

“It’s a pretty tight margin for a school bond, at least in my experience,” Folwell said. “What do you attribute that to?”

Pender County manager David Andrews responded the county has seen a shift in its economy, away from rural, agricultural based and leaning more into tourism. However, he said many households in Pender are still low-income and may find it difficult to cover a tax rate increase.

To cover the bond payments, the county has increased its tax rate by 9.25 cents from 64.5 cents to 73.75 cents, effective July 1. The tax rate went into effect prior to issuing the bonds so the county could build up debt reserves.

“This is a very much needed capital project and there’s a good understanding countywide there’s a need to do it but it’s whether people want to pay more taxes or not, you know?” Andrews said.

The Pender commissioners certified the bond election results at their Jan. 3 meeting.

Prior to hearing Pender County’s request, the LGC noted the government had three “financial performance indicators of concern”: The county submitted its audit late, reported budget violations in three non-major funds and neglected to do its general ledger reconciliations in a timely manner.

“Pender has a long history of not having audits done on time,” LGC Secretary Sharon Edmundson said. “This audit actually came in fairly close to the deadline compared to other years.”

The county submitted its 2022 audit on Jan. 5, 2023, a little over two months after the Oct. 31 deadline.

Edmundson said the county has established new procedures for its budget process and hired an audit compliance officer. Pender County finance director Meg Blue confirmed the tax reconciliation system in her office has been problematic since before she was hired.

“Now it’s down to a science and everything is rolling smoothly,” Blue said of the monthly ledgers.

Based on the county’s response and fixes, Edmundson recommended approval of the bonds.

Andrews said the money will be procured over five years, as school-related projects are slated to be completed on a phased schedule. The money will be borrowed in three series: 2025, 2027 and 2028.

Blue said the first and largest portion of the bond will be about $111 million to build a new K-8 school in the Scotts Hill area, expected to open in 2026. 

The next tranche would be roughly $28 million used for renovations at Topsail Middle and to Burgaw Middle’s cafeteria, along with an elementary school addition. The projects are anticipated to break ground in 2026.

The final round of $38 million will cover the construction of an eight-bay maintenance garage and new central services building and be issued in 2028. Pender County commissioners approved Monday the $1.5-million purchase of 55 acres near Rocky Point Elementary to build the structures on.

Aside from the tax increase from the school bond, Pender County commissioners have kicked off the revaluation process, which will also aid in its future revenue. 

“We believe, once we get the revaluation done, there’s going to be even more significant revenue capacity in the budget,” Andrews told the LGC Tuesday. “I couldn’t say with 100% certainty but we may be able to reduce the [tax] rate for whatever revenues we need.”

The commissioners signed off Monday on allowing staff to release a request for proposals for a vendor to assist; it also approved moving up the next revaluations from 2027 to 2026.

Tax administrator Melissa Radke told the county officials 63% of Pender County parcels are undervalued by an average of 37%. She said this equates to the county losing more than $25 million in revenue annually.

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