Settle back, folks. This is a story that involves something in Raleigh that you likely don’t hear much about — The Local Government Commission. Here is an explanation of the commission from the state treasurer’s web site:
[…] In 1931 the North Carolina General Assembly established the Local Government Commission to help address the problems in local government finance caused by the depression. In 1933, 62 North Carolina counties, 152 cities and towns, and some 200 special districts were in default on the principal or the interest or both of outstanding obligations.
Currently, the State of North Carolina has a larger percentage units rated “AAA” by national bond rating agencies when compared to other states, and the debt of its local governments in general finds a significantly better reception on the national bond markets than the national average. Many attribute this fa-vored credit status, in part, to the work of the Local Government Commission.
The Local Government Commission or LGC, established by G.S. 159-3, provides assistance to local governments and public authorities in North Carolina. It is staffed by the Department of State Treasurer and approves the issuance of debt for all units of local government and assists those units with fiscal management.
The primary mission of the LGC is focused in three areas of responsibility and authority. First, a unit of government must seek LGC approval before it can borrow money. In reviewing each proposed borrowing, the LGC examines whether the amount being borrowed is adequate and reasonable for the projects and is an amount the unit can reasonably afford to repay. Second, once a borrowing is approved, the LGC is responsible for selling the debt (or bonds) on the unit’s behalf.
While state agencies in some other states are charged with approving local government debt; it is the combination of the power of approval with the power of sale that makes the LGC unique in the nation.
Third, the LGC staff regulates annual financial reporting by oversight of the annual independent auditing of local governments, by monitoring the fiscal health of local governments and by offering broad assistance in financial administration to local governments.
The Commission is composed of nine members: the State Treasurer, the Secretary of State, the State Auditor, the Secretary of Revenue, and five others by appointment (three by the Governor, one by the General Assembly upon the recommendation of the President Pro Tempore and one by the General Assembly upon the recommendation of the Speaker of the House). The State Treasurer serves as Chair and selects the Secretary of the Commission, who heads the administrative staff serving the Commission. […]
Soooo — this is a pretty important group. And now, thanks to the McCrory loss and lack of seriousness in taking on Beth Wood or Elaine Marshall, the Democrats have a 6-3 majority of voting members.
Well, it looks like this group has put the taxpayers on the hook for a nice chunk of the cost of constructing a new minor-league baseball stadium for High Point:
[…] The Local Government Commission on Wednesday approved up to $35 million in limited obligation bonds to build a multi-use stadium. The Guilford County Board of Commissioners has yet to approve the city’s request for county revenue.
City resident James Adams objected to using public money on what he and others believe is a risky venture.
“I am not against the stadium,” Adams said. He opposes the construction rush to host the unaffiliated Bridgeport Bluefish team for the 2019 season.
Local Government Commission Secretary Greg Gaskins said the city met commission minimum requirements for bond approval, to be paid back over 20 years. Standard & Poor lists the city’s bond rating at AA+. Fitch rates it AA-. The city already paid $16 million in land acquisition and other upfront costs.
Frank Boulton of New York owns the Bluefish, which is losing its stadium in Connecticut and will be strictly a road team in 2018. A nonprofit ownership group has been assembled in High Point to acquire the team. A sports foundation was formed, and it would pay any stadium costs above the $35 million bond cap.
The Bluefish play in the Atlantic League, which isn’t affiliated with Major League Baseball. The team would evenly split a 140-game schedule at home and on the road once a stadium is built.
Adams said many economists have concluded taxpayers rarely get their money’s worth from publicly funded sports stadiums. He cited ballparks in New Jersey. Camden and Atlantic City hosted Atlantic League pro baseball teams that failed to attract fans and revenue. The stadiums closed, leaving taxpayers footing multimillion-dollar bills.
Shuttered stadiums across the country have common elements, Adams said. More and more taxpayer money is spent, construction costs exceed initial estimates, and projected revenue doesn’t materialize.
Nearby Thomasville, Greensboro, and Winston-Salem all field professional baseball teams..
But City Manager Greg Demko said studies show a potential market of 230,000 people, mostly south of High Point around Archdale, High Point, and Trinity. Data shows those areas have higher median income than Greensboro and Winston-Salem to the north, and their residents are unlikely patrons of the existing baseball teams.
Demko told the Local Government Commission that bringing the Bluefish to High Point is vital to revitalizing the downtown core. The prospect already generated local commitments to build a children’s museum, events center, park, hotel, and 200 apartments encircling the stadium, with plans for restaurants and retail shops.
High Point University President Nido Qubein spearheaded a philanthropy committee that raised $50 million in pledges toward revitalization projects, Demko said.
“I’ve never experienced the amount of optimism in our city that I feel right now,” Demko said.
But the city needs the bond package. In the past eight years the downtown core lost about $125 million in tax value, as blight, drug issues, lack of zoning inspections, and other problems have surfaced.
“Our downtown resembles kind of a Hollywood movie set 48 weeks of the year,” said Demko, who cited idle furniture showrooms, Demko said. Those once-bustling buildings now buzz just a few weeks in April and October when about 80,000 visitors shop at popular annual furniture trade shows.
Because so much of the downtown is expansive showroom space the city can’t reclaim its unique business district in a traditional block-by-block renovation of restaurants and shops by private developers, Demko said.
City officials aren’t sure why Guilford County has yet to vote to support the project, but its contribution isn’t needed to make the deal work. High Point wants the county to plow any tax revenue generated from development of a 649-acre economic development zone into bond repayments. The county has said it needs more time to vet the proposal.[…]
There was ONE voice of reason in the room:
State Treasurer Dale Folwell, Local Government Commission chairman, expressed reservations about approving the bond.
“My fear is as things get cranking, and more people throw more money at you, that you will not use money to ease this debt, that you will use it to expand something else,” he said.
He abstained from what was an otherwise unanimous vote for approval, hinting at concerns over publicly funded sports venues.
“I have had a long history with stadiums, and I can tell you no one in this room wishes you as much success as I do,” said Folwell, a High Point native. “Maybe you can be the shining example of how to do this properly.”