Asheville Reporter

At their May 28, 2024 meeting, the City Council directed staff to take the first steps toward a 2024 General Obligation (GO) Bond Referendum for voter consideration and to appear on the November ballot.

A general obligation bond is long-term borrowing in which a city pledges its full faith and credit (taxing power) to repay the debt over a specified term. The purpose of a bond issue is to borrow money to finance major capital projects.

A bond referendum is a vote by the electorate to authorize the City of Asheville to issue bonds to generate revenue for a specific project. If voters approve the referendum, the City will issue bonds to fund projects that would assist in creating diverse housing choices across the city, improve transportation, address parks and recreation facility needs, and fund public safety needs. Bonds are considered one of the safest municipal funding tools available. Because Asheville has an excellent credit rating (Standard & Poor’s “AAA”), the City benefits from low interest on bond issues. The wording of the bond question on the ballot is prescribed by state law. In issuing general obligation bonds, a city pledges its “full faith and credit” to repay the bonds. To ensure that it will meet that commitment, the bond questions on the ballot are required to ask voters to authorize a tax levy to repay the bonds if needed.

The additional revenue that could be realized from a bond referendum would allow Council to prioritize projects that are planned for future years and address current and long-term community needs.

General obligation bonds are a common way for cities to invest in community infrastructure.

If the bonds are approved, the City will have seven years to issue them and approximately 20 years to pay off the bonds after receiving funds. City Council will approve any property tax rate changes from the bonds after the vote in June of 2025. However, as of this year, state law requires all ballot language must include:

- A statement that the bond may result in tax increases and indicate potential property tax increase needed.

- The estimated bond cost over its total life based on average interest rate assumptions recommended by the State.

This potential property tax rate increase shown on the ballot will likely be higher than what will be required when Council approves it in June 2025.