City wants extension of bond-sale deadline
By Barbara Arntsen
Published in News on December 30, 2004 2:02 PM
The public may get a chance next month to voice opinions on whether Goldsboro should ask the state to extend the life of its sewer bonds.
On Tuesday, the City Council plans to set a hearing on extending from seven to 10 years the period for issuing the bonds.
The city needs more time to sell the bonds because the money will be used to finance an annexation that is being debated in the courts. It can't sell the bonds until the judge decides whether the annexation can proceed.
The proposed annexation includes the east and west sides of Salem Church Road and the north and south sides of Buck Swamp Road.
The Local Government Commission oversees debt issues for cities and won't allow a city to sell bonds and simply hold the money without a project under way.
The city's authority to issue these particular bonds expires in 2005.
In 1998, Goldsboro voters approved $28 million in sewer and street bonds. The city had planned to use the $22 million in sewer bonds to expand its wastewater treatment plant, make improvements in the sewage system and meet environmental regulations designed to reduce pollution in the Neuse River.
But the city opted not to issue the bonds for the improvements in the sewage system. Instead, it received a $15 million low-interest loan and a $3 million loan from the Clean Water Revolving Loan Fund. The interest rate on the state loans was about half what it would be from the sale of the city bonds.
The city then decided to use $7 million of the sewer bond money for extending sewer lines to the annexed area.
Finance Director Richard Durham said last spring, when the bond sales were originally postponed, that the sewer bond proposal had been written broadly because at the time city officials did not know the specifics of the project. That gave the city the flexibility to use it to finance the sewer lines for the proposed annexation.
But as long as the legal fight with residents of the proposed annexed area continues, the city can't get the money from the bonds.
State law says that bonds must be issued within seven years of voter approval. That gives the city until 2005 unless it receives an extension from the state. The extension would be for no more than three additional years.
If the city can sell the bonds, it plans to repay the debt within 19 years, according to City Manager Richard Slozak.