While the city is still conducting its due diligence period on the so-called ‘Downtown Campus,’ which included the Thermo Fisher office building, parking deck, and adjacent properties, council will vote to move forward on preparing the financing for the acquisition.
Related — Deep Dive: City of Wilmington considering $68-million purchase of Thermo Fisher building
The final cost of the Thermo Fisher building has not yet been determined, but the city is preparing to issue up to $70 million in limited obligation bonds to finance the purchase.
If approved on Tuesday night, the city would move forward with negotiating the details of the bond issuance, including what properties the city will list as collateral. It will also include scheduling a public hearing and calendaring the financing and purchase for the Local Government Commission (LGC).
The public hearing is slated for council’s meeting on April 18. The city plans to present to the LGC on May 2.
State requirements mean the city will have to show it has the increased tax revenue to pay off the bonds. In the agenda documents published last Friday, that increase was ‘anticipated’ at 2.5 cents per $100 of ad valorem property tax — but city staff believe it will be less than that when the financials are finalized. For reference, a 2.5-cent increase would mean an additional $62.50 in property tax on a $250,000 house.
Editor's note: Prior to Tuesday night's meeting, staff completed financial projections that estimated a 1.5-cent tax increase; again, for reference, that would be $37.50 in annual property tax on a $250,000 house.
But it’s not as simple as a tax hike. Because the city’s plan to purchase the Thermo Fisher building is more complicated than a straightforward property acquisition, some of the financial effects, including property taxes, revenue from selling other properties, and other budget considerations, will take a while to sort out.
A portion of the bonds the city is prepared to issue are variable rate bonds, meaning the city can pay them down early without financial penalties.
That’s important because there’s something of a property swap happening; city council has already approved rendering a number of city-owned properties as surplus if the Thermo Fisher purchase is approved.
As Thermo Fisher campus comes off the tax roles as private property generating revenue, several city-owned buildings could become privately owned or part of public-private partnerships – meaning both sale revenue and increased property tax.
The sales of the properties and tax revenue won’t completely balance the cost of the downtown campus — but they will offset it, although officials can’t say when or how by how much, exactly. That means that the extent to which the tax increase to cover the bonds figures into the 2023-2024 fiscal year budget is unclear. It also remains to be seen what other priorities council wants to pursue, which would independently increase or decrease the city’s tax rate.
You can read the agenda item here.
