AGENDA #5d
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Ralph D. Karpinos, Town Attorney
SUBJECT: Questions regarding use of Bond Funds
DATE: March 30, 2004
This report provides information in response to two questions that have been raised regarding use of proceeds of General Obligation Bonds:
There are two statutorily-established maximum amounts for any project that may be built using Town equipment, employees and other resources. Projects exceeding either limit are required to be built in accordance with the competitive bidding requirements found in State Law (N.C.G.S. Sec. 143-135, as modified by Chapter 97, 2000 Session Laws, Sec. 1).
1. Projects that exceed a total cost of $175,000, including all direct and indirect costs of labor, services materials, supplies and equipment are subject to the bid laws; and,
2. Projects that have a total cost of labor in excess of $75,000 are subject to the bid laws.
Based on the definition of capital costs contained in North Carolina laws on long-term financing (N.C.G.S. Sec. 159-48(h)), as long as these limits are not exceeded for any particular project, bond funds could be used to pay for projects constructed by Town employees. It is important to further note, however, that under N.C.G.S. Sec. 143-135 construction projects may not be divided up for the purposes of evading the provisions of the bid laws.
In the November, 2003 Bond Election, Chapel Hill voters approved the issuance of bonds for parks and recreation facilities and for open spaces. Both of these bonds, but especially the open space bond, contemplated at least some use of funds to purchase undeveloped land.
a. Land for parks and recreation programs can be purchased by a city, under North Carolina General Statute Section 160A-353, “either within or without the corporate limits of the city.” Thus, provided the land being considered is suitable to be used as park land for the benefit of the citizens of Chapel Hill, such lands need not be within the Town’s limits or even within its extra-territorial jurisdiction.
b. Land for open space may be purchased pursuant to the authorization provided to the Town by Part 4, Article 19, Chapter 160A of the North Carolina General Statutes. The purpose of that Part is to preserve open spaces for public use and enjoyment. When a city determines that the acquisition of property is necessary to achieve the purposes of that Part, it may acquire such property “within its respective jurisdiction.” (N.C.G.S. Sec. 160A-403) The first statutory section under Article 19 (N.C.G.S. Sec. 160A-360) provides that all of the powers of the Article may be exercised within a municipality’s corporate limits and within its ETJ. Thus, the Town could use Open Space Bond proceeds to acquire open space in the ETJ.