A Mooresville developer whose companies own land near Interstate 77 wants a bridge built over the highway that would improve public access to his properties. Opposition to these plans has drawn attention to recently enacted state laws that would allow the $9.5 million cost of the bridge and road improvements to be paid for by area landowners. The fees would repay bonds imposed through a special assessment district.
“That assessment would be on elderly residents,” said Henry Brantley, whose family has owned land in the area since the 1700s. “The way the general statute is now every landowner in North Carolina runs the risk of getting into the same situation.”
Mooresville officials said they never intended for homeowners to help pay for the bridge; they wanted only the owners of the 28 commercially zoned properties to finance the project. A majority of land owners who own at least 66 percent of the affected property would have to agree to the assessment before it could go forward, and town officials say Mooresville probably would pick up about a fourth of the cost.
“Most of our funding options are what I would call very traditional,” said Tim Brown, the planning director for Mooresville. “To advance a common goal often takes working together. Some of these nontraditional funding methods can be the right method to advance development.”
Opponents of the bridge question whether it meets a policy the town approved in June for use of special assessment financing. The policy requires projects to meet two of three criteria: 1) “have significant and strategic impact” in increasing assessed valuation and quality of life (2) create or retain at least one full-time job per $100,000 of financing or (3) involve bonds totaling at least $15 million in capital costs.
Brantley questioned whether the bridge would meet any of these and said that the increased traffic in the area would harm the quality of life.
“I don’t think this project meets either of those three,” Brantley said.
Town Manager Steve Husemann said the project would create jobs, but he wasn’t sure which other criteria building the bridge would meet.
“That’s something we would have to take a look at,” Husemann said. “We haven’t discussed the project since last summer. We certainly haven’t discussed that aspect of it.”
Husemann said he wasn’t sure if the bridge would be built or how it will be financed.
“We have not talking about financing this project whatsoever,” Husemann said.
A meeting about the proposed project is scheduled for 6 p.m. Thursday at the Mooresville Town Hall.
Mooresville, about 25 miles north of Charlotte, is home to many NASCAR racing teams and is known as “Race City USA.”
Special assessment financing is common in other states, but was limited in North Carolina to such projects as sidewalks and curbs. A city would install the improvements and receive payments from the landowners who benefited from them. The debt had to be repaid in 10 years, making the financing impractical for large, expensive projects.
A pair of laws passed in 2008 and 2009 expanded the use of debt for special assessment districts; they can now be repaid for up to 30 years and can finance everything from parking facilities to traffic signals.
Typically, all the property owners inside a district’s boundaries pay an assessed fee. Such districts are established after the property owners who want the improvements petition the local government. The 2009 law was sponsored by state Sen. Fletcher Hartsell, R-Cabarrus.
“Many cities and counties were interested in both the ’08 and ’09 legislation since the general bond market had dried up,” Hartsell told Brantley in an e-mail. He did not return phone calls or an e-mail.
The bonds are often called “dirt bonds” because they are secured by land and are unrated.
“They are secured solely by the value of the property,” said Eric Braun, a partner at K&L Gates in Raleigh. “It’s like a mortgage except there’s no ultimate liability on the part of the town. If the property owner doesn’t pay, the town can foreclose.”
In other states, the bonds have been hammered by the recession.
In Florida, community development districts issued $6.5 billion in municipal bonds to pay for improvements like roads and utilities.
Richard Lehmann, a Forbes columnist who is an authority on municipal defaults, said about 120 of Florida’s bond issuances are in default and he expects about 70 more to default within the next year.
“The state was too liberal in giving bonding authority to municipalities,” Lehmann said. “The system worked very well when times were good, but when the crunch came they found there was no real collateral and no pressure on the builder not to walk away from the project.”
Lehmann said special assessment district financing has worked better in Texas where developers are required to build the improvements being financed before the bonds are issued.
“There’s more inducement in Texas to stay the course,” Lehmann said.
In North Carolina, the Local Government Commission oversees the finances of local government, including bonds that the counties and towns want to issue. The commission has not received any formal requests to approve issuing special assessment district bonds, but it did look at a feasibility report about another Mooresville project, an $800-million, 350-acre mixed-use development called Langtree on the Lake.
Maia Setzer, Mooreville’s director of administration and finance, said the commission didn’t deny the proposal formally, but found that the feasibility report did not justify moving forward with the project. Setzer said the project needed some type of credit enhancement, such as a letter of credit from the developer saying it had additional financial backing.
David Parker, a partner in the Langtree at the Lake project, said the project has a $25 million commitment letter from a backer he won’t identify; he hopes the town will soon ask the Local Government Commission to approve the bonds.
Opponents of the bridge over I-77 question whether the overpass is even needed. A study done by WSP Sells said the bridge would reduce delay along North Carolina Highway 150.
Automotive Collision Experts, a company headed by developer Steve McGlothlin — who wants the overpass — paid half the $85,500 cost of the feasibility study. Mooresville paid the other half. Automotive Collision Experts and another company tied to McGlothlin, Oates Ventures LLC, own about 54 acres on the east side of I-77 near Oates Road. McGlothlin did not return phone calls seeking comment for this story.
David Hartgen, an emeritus professor of transportation studies at the University of North Carolina-Charlotte, reviewed the feasibility study for Carolina Journal, and said the bridge would not reduce congestion along Highway 150.
“Nothing would happen if you built this road,” Hartgen said. “Nothing would happen on 150. It looks to me like this is a proposed economic development plan that is hiding behind the smokescreen of traffic congestion reduction.”
Neil Burke, the town’s transportation planner, said the bridge is “kind of a multifaceted transportation improvement. … This improvement was not an end-all, be-all for 150, but as east-west connectivity,” he said.
Opponents also question why the map for what could be the special assessment district is drawn around the homes of Commissioner Chris Carney and Planning Board member Larry Stamm, meaning the local officials wouldn’t pay an assessment fee if homeowners are assessed.
Burke, who drew the map, said the map does not depict the assessment district.
“It’s an area of influence,” he said. “It’s not necessarily who would get assessed.”
Sarah Okeson is a contributor to Carolina Journal.