Staff report
MOORESVILLE ó Mooresville Town Commissioners have approved the first step in Langtree at the Lake’s request to finance public infrastructure with bonds secured by Langtree.
The resolution allows Mooresville to submit its application to the Local Government Commission.
“This kind of bond financing is new to North Carolina but has been used for over 40 states in the country, going all the way back to the 1700s,” Rick Howard, president of Langtree, said in a press release.
“The town commissioners did an excellent job in holding public information sessions and hearings to learn about this vehicle for stimulating the local economy without spending taxpayer money or risking municipal resources.”
The initial bond issuance of $15 million to $20 million should be completed by 2009.
Langtree at the Lake is a 155-acre, mixed-use development with nearly a mile of public shoreline on Lake Norman. It encompasses three quadrants of the emerging Exit 32 on Interstate 77.
Upon completion of Phase I (The Landings) and Phase II (The Village), Langtree at the Lake will include more than 300,000 square feet of corporate and professional office space and 650 exclusive residences.
Langtree at the Lake will include a planned 150-room boutique hotel, as well as a 300-room Hammons Embassy Suites Hotel with 75,000 square feet of convention space for the town
Russell Rogerson, executive director of the Mooresville-South Iredell Economic Development Corp., said Langtree at the Lake “should create nearly 7,000 new jobs for our community.”
“The utility infrastructure Langtree is building will open up the entire southern Iredell County region for development,” he added.
Phil Hunt, an underwriter for the firm of Gardnyr Michael Capital, said “in this economic environment, banks are simply not lending for basic infrastructure like water, sewer and road.”
Langtree at the Lake, with its large commercial component, is very attractive to bond buyers in the market at rates that are acceptable in this climate,” Hunt said.
John Q. Hammons recently announced he would be building a 300-room hotel with 75,000 square feet of meeting and convention space on the site, which was annexed by the town in December 2008.
The Langtree bonds were authorized by the N.C. General Assembly in August 2008. Only those properties that directly benefit and expressly petition to be assessed pay for the bonds.
Sen. Fletcher Hartsell Jr., R-Concord, was one of the key sponsors of the authorizing legislation. He said the town bears no liability for the bonds. Rather, the risk is that of the bondholder when issued.
Langtree at the Lake is the first development in the state to apply. When formed, the Special Assessment Improvement District would be the first of its kind in North Carolina.
During discussions at the public hearing, town officials said the construction of the entire Langtree at the Lake project, including the Hammons Hotel, will generate approximately $4 million a year in increased tax revenues for Mooresville as well as offer a convention center in partnership with John Q Hammons’ Embassy Suites.
At build-out, the town of Mooresville should see a 20 percent increase in ad valorem tax revenue. Iredell County should see a 5 percent increase in tax revenue.
Howard said, “The town of Mooresville has asked us to fund nearly $9 million in off-site infrastructure improvements for additional roadway and sewage upgrades, which will cost millions, as well as the basic infrastructure, such as sidewalks, roadways and sewer lines required to construct the project.”
“John Q. Hammons has taught us that building during a downturn is both good for business and good for the community,” said David Parker, general counsel for Langtree at the Lake.
“With bankers and the national press being so incredibly pessimistic, many private companies are going to the bond market for funds and are finding willing investors who will take all the risk of this timing.
“These bonds, assessed against our land, are a tool for such financing.”
Parker said Langtree at the Lake has already identified interested bond buyers.
“These types of bonds are popular with savvy investors because they are tax-free,” Parker said. “These bond buyers would not buy the bonds if they didn’t think we could pay for them, and they are certainly scrutinizing our project.”
Special Assessment Improvement District bonds are secured solely by the land and whatever is built on it.
“Regardless of what is built there, the bond buyers will be first in line for payment after taxes,” Parker said in the press release.
“Sophisticated bond buyers like the tax-free interest that comes with these ó and when Wal-Mart is having to go abroad for its private bonds, it is easy to see why the Legislature approved this approach in these trying times.”