Nashville leads Southeast ballot measures with bond implications

Voters in the Southeast will decide the fate of several large bond proposals on Election Day, including a Nashville, Tennessee, measure that would back some $2 billion of debt, and $590 million in two bonds in Cary, North Carolina.

Other large bond measures in the region include $588 million in property tax supported bonds in Lancaster County, South Carolina; $400 million of property tax-backed bonds in Charlotte, North Carolina; and $306 million in GO bonds in Fairfax County, Virginia.

Nashville

Nashville voters will decide on a half-cent sales tax dedicated to a transportation plan dubbed “Choose How You Move.”

The plan aims to improve safety on the city’s streets, offer public transportation 24 hours a day, 365 days a year for the first time in the city’s history, upgrade two-thirds of the city’s intersections to smart signals so drivers spend less time at red lights, and complete a walk and bike network.

The tax would support $2 billion of revenue bond debt, according to an audit commissioned as part of the tax measure process.

Nashville had a failed transportation funding referendum in 2018, Muni Credit News Publisher Joseph Krist said.

“This plan clearly learned from that experience. The light rail element is gone and the associated displacement concerns associated with that and a proposed tunnel at the time are all gone,” he said.

“This time the political landscape seems much more favorable with prior opponents either supporting the plan or sitting out opposing this vote, especially the big money opposition from 2018,” Krist said.

“On a federal level, Nashville has a finite and unprecedented opportunity available only if we act now,” says a city-prepared presentation. “The passage of the Infrastructure Investment and Jobs Act by Congress in 2021 provides Nashville with a once-in-a-generation opportunity to leverage billions in federal formula funds and competitive discretionary grants through a variety of federal grant and loan programs.”

The IIJA money is available through the end of fiscal 2026 but without its own transportation funding stream the city is at a disadvantage in competing for the federal funds, the city said.

The pitch to voters is that, given Nashville’s draw to visitors, tourists and commuters would provide 42% of the funding through the sales tax, new federal, state, and fare revenues would provide 30%, and Nashville residents would provide 28%, also through the sales tax. The sales tax surcharge is projected to yield $150 million a year for the transportation program, some of which would be used to pay off the bonds.

Nashville’s general obligation bonds are rated Aa2 by Moody’s Ratings. In a September report Moody’s cited the city’s strong $213,610 full value per capita, and healthy available fund balance of 37% of annual revenue and liquidity ratios of 42% of annual revenue. However, it noted an elevated debt profile with long-term liabilities at 227% of annual revenues at the end of fiscal 2023.

S&P Global Ratings rates the city’s GO bonds AA-plus.

Cary

Voters in the Raleigh, North Carolina, suburb of Cary will see two general obligation bonds on the ballot: a $560 million parks and recreation bond and a $30 million housing bond.

The parks and recreation bond would pay for seven projects in the town of 180,000, the most expensive of which would be a sports and recreation center.

The bonds would be paid through increases in property tax rates. The current rate of 32.5 cents per $100 of assessed value would increase 3 cents in each of 2026, 2028, and 2030, though the timing isn’t set.

Some residents have set up a website in opposition to the proposed bonds.

The measure would finance a $300 million sports and recreation center and $150 million for the Mills Park Community Center, which would include a senior center, basketball courts, a walking track, classrooms, and other facilities.

The bond would also expand the Cary Tennis Park at a cost of $60 million.

The $30 million housing bond would use various approaches to support affordable rental properties in the county and prevent displacement of low-income residents.

The town council on May 2 unanimously approved putting the bonds on the ballot.

“I believe that these upcoming bonds represent critical investments in our community’s future and quality of life,” said Town Council Member Lori Bush, calling them essential for enhancing the city’s recreational offerings and green spaces.

“The $30 million housing bond addresses a crucial need in our community by supporting affordable housing initiatives, in alignment with our Cary Housing Plan and this investment will ensure that Cary remains a place where people from all walks of life can live, work, play and thrive,” Bush said.

Cary’s GO debt is rated triple-A by S&P Global Ratings, Moody’s Ratings and Fitch Ratings.

The town benefits from strong local commercial and employment bases as well as its proximity to the state capital, Raleigh and the Research Triangle Park research and development hub, Fitch said in July when it affirmed its AAA rating.

Lancaster County

Lancaster County, South Carolina, voters will decide on a $588 million GO bond measure for the school district.

The school district bond would build a new high school in the unincorporated community of Indian Land, in the county’s north; three elementary schools across the county; and complete renovations to school and athletics facilities.

The bond would be paid for by a 14-mill increase on the existing 65 mills rate for property taxes.

The Lancaster County School District Board of Trustees voted 6-1 in favor of the bond.

The county has 96,000 residents and its seat in Lancaster is about 40 miles south of Charlotte.

S&P Global Ratings rates the county school district’s bond debt AA-minus. While it doesn’t have a report available particularly on the school district, it says the median South Carolina AA-minus rated school district has $81,500 market value per capita, cash at 104% of annual expenses, and available general fund level at 39%.

Charlotte

Charlotte voters will have three bond measures on the ballot: a transportation bond for $238.3 million, a housing bond for $100 million and a neighborhood improvements bond for $61.7 million.

All three would be paid for by property tax increases: the transportation bond would be paid for by an increase of $1.00 per $100,000 annually, the housing bond by an increase of $1.30 per $100,000 per year, and the neighborhoods improvement bond by an increase of 20 cents per $100,000 per year.

A group has set up a website advocating for the bonds saying the transportation measure would enhance safety, the housing bond would create affordable housing, and the neighborhood improvements bond would provide services to an underserved area.

Charlotte’s GO bonds are rated Aaa by Moody’s and AAA by Fitch.

Moody’s says the city is a regional economic center. It has reserves and liquidity exceeding 70% of revenues. Long-term liabilities are somewhat elevated at 300% of revenues but are manageable given growing revenues and long-term planning.

Fitch points to similar factors, also noting the city’s large population, 896,000, and economic diversity.

Fairfax County

Fairfax County voters will vote on two GO bonds, one that would raise $180 million for transportation and another that would pull in $126 million for public safety projects.

The county of 1.1 million is in the Northern Virginia suburbs of Washington, D.C.

Virginia law generally requires voters to approve GO bonds.

The bonds would not lead to increases in taxes.

The transportation measure would provide the money for the county to contribute $45 million a year for four consecutive years to the Washington Metropolitan Area Transit Authority. The authority would use the money for improving and maintaining its Metro subway system.

The public safety bond money would be used to renovate three fire stations, construction and renovation of civil and criminal justice facilities, police training and operational facilities, and to acquire land for these purposes.

Fitch Ratings rates the county’s GO debt AAA. It cites excellent financial resilience, with unrestricted reserves at 15.3% of general fund spending at the end of fiscal 2023. The county can be expected to show economic resilience to any national economic downturns.

There is an exceptionally high market value per capita, it says. However, the county has a high ratio of liabilities to personal income.

The county is rated Aaa by Moody’s and AAA by S&P.