(The Center Square) – A policy change by a North Carolina state agency could bring more bond business back to the state, according to state Treasurer Brad Briner.
The North Carolina Capital Facilities Finance Agency, which issues tax-exempt bonds for nonprofit institutions, changed its policy this week to allow for bonds that can mature up to 40 years after they are issued.
The previous maximum maturity was 25 years for most projects, which was causing some nonprofits to issue their bonds in other states, such as Wisconsin, Briner said.
“We hope that this policy change provides opportunities for eligible borrowers to take advantage of the strong reputation and customer service experience the agency provides,” the treasurer said. “I think it is a good thing for the state of North Carolina and this particular agency to oversee issuers within our borders in a much more detailed way than we can if they issue outside of our borders.”
The North Carolina Capital Facilities Agency approved the change on Tuesday.
The agency provides tax-exempt bonds for projects at nonprofit secondary schools and colleges and for other public-interest facilities.
Even though North Carolina law allowed for 40-year-board maturities, the Capital Facilities Agency a decade ago changed its policy to limit most maturities to 20 years for projects that produced revenue and 25 years under “certain defined circumstances,” the treasurer said. Bonds could have a maturity date for more than 25 years only “under extraordinary circumstances,” Briner said.
The result of the shorter maturity periods was that many nonprofits went out of state for their bonds, the treasurer said.
“In that 10-year period, more than twice as many qualified borrowers sought services outside of North Carolina than through NCCFFA,” Briner’s office said in a news release.
Following the adoption of longer maturity dates on Tuesday, the state’s Local Government Commission approved $75 million in “limited obligation” bonds for those portions of a downtown hotel project that will serve the public. The hotel is designed to support the expansion of the Raleigh Convention Center.
“The Raleigh bonds will be paid with room occupancy and prepared food and beverage tax revenues,” Briner’s office said in a news release. “The $75 million in bonds will not be issued until the hotel developer secures its private financing.”
