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EDWIN GILL
Bate Treasurer

State of North Carolina

DEPARTMENT OF THE TREASURER

LOCAL GOVERNMENT COMMISSION

HARLAN E. BOYLES
Secretary

ALDEMARLE BUILDING. 325 NORTH SALISBURY STREET RALEIGH, N. C. 27611 AC 910, 829-3064

OFFICIAL STATEMENT

relating to

CITY OF CHARLOTTE, NORTH CAROLINA

$8,465,000 PUBLIC IMPROVEMENT BONDS, SERIES 1976

MARCH 19, 1976

INTRODUCTION

This Official Statement, including the cover page and the appendices, is intended to furnish information in connection with the public invitation for bids for the purchase of $8,465,000 Public Improvement Bonds, Series 1976 (herein called the "Bonds") of the City of Charlotte, North Carolina (herein called the "City").

The information furnished herein includes a brief description of the City and its government, revenue structure, budget, debt management, and economic conditions. The City has assisted the Local Government Commission in gathering and assembling the information contained herein.

DESCRIPTION OF BONDS

The Bonds are dated April 1, 1976 and mature annually, April 1, $365,000 1977, $350,000 1978, $300,000 1979 to 1990, inclusive, $350,000 1991, $400,000 1992, $475,000 1993, $850,000 1994, $1,200,000 1995, and $875,000 1996, without option of prior payment.

The Bonds are in the denomination of $5,000 each and are coupon bonds registrable as to principal only. Interest on the Bonds is payable semi-annually on the 1st days of April and October of each year, and both the principal of and the interest on the Bonds are payable in legal tender at North Carolina National Bank, in the City of Charlotte, North Carolina, or, at the option of the holder or registered owner, at Manufacturers Hanover Trust Company, in the Borough of Manhattan, City and State of New York.

PURPOSE OF BONDS

The Bonds are being issued pursuant to the provisions of The Local Government Bond Act, as amended, Article 7, as amended, of Chapter 159 of the General Statutes of North Carolina and ordinances and orders duly adopted by the City Council of the City, each of which ordinances and orders was approved by the vote of a majority of the qualified voters of the City who voted thereon at an election or a referendum duly called and held. The proceeds of the Bonds will be used for the purpose of providing funds, with any other available funds, for constructing a number of street, sidewalk and bridge improvements, including the acquisition of land and rights-of-way therefor, and for purchasing

the existing privately-owned bus system in the City, acquiring new equipment therefor and installing certain improvements in connection therewith, including shelters for passengers. No notes have heretofore been issued in anticipation of the receipt of the proceeds of sale of the bonds.

SECURITY FOR BONDS

The Bonds are general obligations of the City, all the taxable real and tangible personal property within which is subject to the levy of an ad valorem tax, without limitation of rate or amount, to pay the Bonds and the interest thereon.

Under State law, an action of mandamus would lie against municipal officers to compel the levy of taxes sufficient to make the required payments of principal of and interest on the Bonds.

THE NORTH CAROLINA LOCAL GOVERNMENT COMMISSION

The North Carolina Local Government Commission (herein called "The Commission"), a division of the Department of State Treasurer, is a State agency which approves and supervises the issuance of the bonded indebtedness of all local government units and assists these units in the area of fiscal management. The Commission is composed of nine members: the State Treasurer, the Secretary of State, the State Auditor, the Secretary of Revenue, and five others by appointment (three by the Governor, one by the Lieutenant Governor, and one by the Speaker of the House of Representatives). The State Treasurer serves as Chairman and selects the Secretary of the Commission, who heads the administrative staff serving the Commission.

The major function of the Commission is the approval, sale and delivery of all North Carolina local government bonds and notes. A second key function is monitoring certain fiscal and accounting standards prescribed by statute for the units. In addition, the local governments receive, upon request, on-site assistance from the Commission respecting exising financial and accounting systems as well as aid in establishing new systems. Further, educational programs and materials are provided for local officials concerning finance and cash management.

Before any unit can incur bonded indebtedness, the proposed bond issue must be approved by the Commission. In determining whether to give such approval the Commission may consider, among other things, the unit's debt management procedures and policies, its compliance with the Local Government Budget and Fiscal Control Act, and its ability to service the proposed debt. All general obligation issues are sold on the basis of formal sealed bids submitted at the Commission's offices in Raleigh and are subsequently delivered to the successful bidder by the Commission. The Commission maintains records for all local units of all principal and interest payments coming due in the current and future fiscal years and monitors the payment by the units of their debt service through a system of monthly reports.

As a part of its role in assisting and monitoring the fiscal programs of local units, the Commission attempts to ensure that the local units follow generally accepted accounting principles, systems, and practices. The Commission's staff also counsels the units in treasury and cash management, budget preparation, investment policies and procedures, and accounting machine acquisition. Educational programs, in the form of seminars or classes, are also provided by the Commission in order to accomplish these tasks. The monitoring of the units' financial systems is accomplished through the examination and analysis of the annual audited financial statements and other required reports. Annual audited financial statements are required by law for all local units. As of the date hereof, all audits are performed by certified public accountants. The Commission must approve the audit contract, particularly as it relates to the scope of the audit, before the audit may begin, and must also approve invoices for the audit fee. Approval of final payment is not given until the audit report is rendered in accordance with the requirements of the contract.

If a local unit of government defaults on a required payment of principal or interest, the Commission has the power to assist the defaulting unit to refinance or otherwise correct the cause of the default.

THE CITY

General Description

The City is located in the Piedmont Crescent of the Carolinas, the nation's sixth largest urban region according to an Appalachian Regional Commission study based on the 1970 Census, and is the largest city in this region. It was incorporated in 1768, became the county seat of Mecklenburg County (herein called the "County") in 1774, and has grown from an initial 360 acres to a present area covering approximately 105 square miles, including approximately 32.5 square miles annexed on January 25, 1974. The present population of the County is estimated at approximately 394,000, of which the City accounts for approximately 305,000, including approximately 45,000 acquired by such annexation.

The City is empowered by statute to levy an annual ad valorem property tax on the appraised value of all taxable real and tangible personal property located therein. The tax rate may not exceed $1.50 per $100 assessed valuation for operating purposes (unless the voters of the City shall approve a higher rate), but is unlimited for debt service purposes; however, see "Debt Information-Legal Debt Limit" herein respecting the amount of debt that the City can presently issue. The County is the only other unit levying such taxes on property within the corporate limits of the City (see "Debt Information-Direct and Overlapping Bonded Debt" herein).

The City is empowered by statute to extend its corporate limits by annexation, and is engaged in an on-going review of areas for possible future annexation; however, no annexation proceedings are pending as of the date of this Official Statement. The Charlotte-Mecklenburg Planning Commission estimates that the aggregate assessed value of non-municipal properties which presently qualify under the statute for annexation is approximately $350,000,000.

Economic Characteristics

The City is a center in the two Carolinas for trading and distribution. According to the 1975 Survey of Buying Power published by Sales Management Magazine, the metropolitan area (Charlotte-Gastonia, Standard Metropolitan Statistical Area ("SMSA"), which includes Gaston, Mecklenburg, and Union Counties) is ranked 20th among the nation's standard metropolitan statistical consolidated areas for wholesale sales and 15th for such sales excluding merchant wholesalers, as compared to a population ranking of 53rd. Diversified manufacturing (more than 690 various concerns) includes textiles, hosiery, food products, wearing apparel, printing, machinery, and industrial chemicals; the Charlotte-Gastonia SMSA ranks 5th in the United States in wholesale sales of industrial chemicals.

Offices of five of the nation's 100 largest banks and a branch of the Federal Reserve Bank are located in the City. Bank debits to demand deposit accounts in the Charlotte-Gastonia SMSA's banks were approximately $55,330,989,000 on December 31, 1975, an increase over 1974 of approximately 8 percent, placing the Charlotte-Gastonia SMSA in 40th position among the nation's SMSA's. There are presently 16 banks operating 130 branches in the City and County. They employ approximately 4,300 people with an estimated payroll of approximately $34,694,000.

According to the Charlotte Chamber of Commerce the Charlotte-Gastonia SMSA is ranked 6th in retail sales per household and 9th in department store sales among the Southeastern SMSA's in the nation as compared to a population ranking of 12th. The 1970 census showed the City ranking 9th in the percent of households with two or more cars among cities having populations of 250,000 or more.

Government

The City is governed by a mayor and seven council members elected bi-annually. The mayor presides over all council meetings, but can only vote in case of a tie and lacks any type of veto power. The Council enacts all general and technical ordinances, including budgetary appropriations and construction and zoning ordinances, approves all contracts in excess of $5,000, and originates general management policies. The Council employs a City Manager who directs the daily operations of the City through appointed department heads.

Education

The City and County have a consolidated public school system which is a part of the State public school system. The fiscal 1976 budget for the City-County school system contemplates that current operating expenses, including salaries of teachers, clerical workers and janitors, and the costs of transportation, fuel, water, and lights, will be funded by the State, County, and Federal governments in percentages of approximately 52, 42, and 6 percent, respectively. The County is responsible for capital improvements, maintenance of plant, instructional supplies, and insurance; however, the State has funded a substantial amount of capital improvements in the City-County system in recent years by allocating proceeds of State bond sales to such system. The City has no direct financial responsibility for any part of the school system.

Among the colleges in the Charlotte-Gastonia SMSA are six senior colleges and four junior colleges, including the University of North Carolina at Charlotte, a member of the State consolidated system of higher education. Nurses training programs are offered at three of the five hospitals located in the City.

Transportation

Major expansion, maintenance, and betterments of primary and secondary highways within the City limits are primarily the responsibility of the State. The City is pri.narily responsible for acquisition of right-of-way for such expansion or betterments, related sidewalk improvements, street lighting, and traffic signals. At June 30, 1975 the number of miles of streets in the City maintained by the State was approximately 190 linear miles.

Major expansion, maintenance, and betterments of the local street system is primarily the responsibility of the City. Major expansions are funded principally by bond issues and current revenues. Maintenance and betterments are funded principally from the City's proportionate share of the amount produced by a one-cent State tax on each gallon of motor fuel. At June 30, 1975 the number of miles of streets maintained by the City was approximately 984 linear miles.

On December 1, 1974, the City entered into a lease-purchase option to acquire the privatelyowned bus transit system and a management contract for its operation. $2,500,000 of the proceeds of the Bonds will be applied to the acquisition and improvement of the system's capital facilities. In addition, the City has applied for a capital assistance grant of approximately $6,100,000 from the Federal Urban Mass Transit Administration (“UMTA") for such purposes. UMTA has allocated such sum to the City, subject to compliance by the City with certain conditions. The City anticipates that it will be able to comply with such conditions. The City is also receiving operating assistance from UMTA to assist in the development of a public transit system that meets the community's needs for dependable and efficient transportation.

The City's Douglas Municipal Airport has developed into the major air carrier airport in the Carolinas. This is evidenced by a recent report issued by the Federal Aviation Agency which ranks the airport thirty-sixth nationally in air carrier movements during 1974. According to a report released by the Airport Operator's Council International, the airport has advanced in ranking among the nation's thirty-eight medium-hub airports for enplaned passengers from fifteenth in 1970 to tenth in 1974. During the same period, this source reports that the airport, as compared to other medium-hub airports, advanced in air cargo volume from ninth in 1970 to fourth in 1974. The airport has regularly-scheduled flights by five airlines: Delta, Eastern, Piedmont, Southern, and United.

Federal grants-in-aid will finance 75% of the estimated $15.8 million cost, excluding land, for a new parallel runway currently under construction. There is currently litigation pending which seeks to enjoin the paving of such runway (see "Litigation" herein).

According to the Charlotte Chamber of Commerce, more than one-third of the nation's largest trucking firms ranked by gross operating revenues operate terminals in the Charlotte-Gastonia SMSA. Eight of the ten largest firms operate such terminals in such SMSA. The City is also served by Illinois Central Gulf Railroad, Seaboard Coast Line-Louisville & Nashville Railroads, and Southern Railway Company.

69-141 O-76-30

Other

For additional statistical material concerning the City, see "Statistical Summary" herein.

REVENUE STRUCTURE

The following is a description of the City's revenue structure. See Appendix A for a detailed statement of revenues for the three fiscal years ended June 30, 1975.

General and Special Revenue Funds

The City has three basic non-enterprise operating funds which have been consolidated for financial and budgetary reporting purposes into the General and Special Revenue Funds: the General Fund, Powell Bill Fund, and Park and Recreation Commission General Fund. The General Fund is the principal fund used to finance the City's non-enterprise operations. The Powell Bill Fund has been established to account for receipts from the State of the City's share of gasoline tax dedicated for the purpose of local street maintenance and betterments. The Park and Recreation Commission is a separate legal entity comprised of a commission appointed by the City Council whose principal source of revenues is City property taxes. A description of significant General and Special Revenue Funds' revenues follows below.

Ad Valorem Taxes An annual ad valorem property tax is levied by the City on the appraised value of all real and tangible personal property located therein as of the January 1 preceding the fiscal year in which such tax is due. All counties and municipalities are on a July 1-June 30 fiscal year. Such tax may be paid without penalty not later than December 31 of the year in which it is levied. The tax rate may not exceed $1.50 per $100 assessed valuation for operating purposes (unless the voters shall approve a higher rate), and is unlimited for debt service purposes. The County Tax Collector acts as agent for the City in listing and collecting property taxes levied by the City. Such taxes represent over one-half of total revenues in the General and Special Revenue Funds.

Sales Taxes-A one percent local sales tax levy is shared between the County and all incorporated municipalities in the County, including the City, based on their respective property tax levies. This tax was imposed under a 1967 State law applying only to the County. The County is also authorized to levy, but does not presently levy, an additional one percent local sales tax under the 1971 Local Government Sales and Use Tax Act, the proceeds of which would be shared by the County and all incorporated municipalities in the County, including the City, based on their respective property tax levies. As of the date of this Official Statement, 95 of the State's 100 counties are imposing the tax authorized in 1971.

Intangible Personal Property Tax O Certain items of intangible personal property are classified taxable by the State, in behalf of counties and municipalities. The base and rates are as follows: accounts receivable less accounts payable, notes and bonds receivable less notes and bonds payable, cash on hand, and shares of stock at market value on December 31 are all taxed at 25¢ per $100, and bank deposits, average of quarter balances, are taxed at 10¢ per $100. The value of shares of stock representing the portion of net income taxable in North Carolina is deductible from such stock. The net revenue, after deduction of the cost of collection and administration, is distributed to counties and municipalities. Intangible taxes received by the City are shared by the City's General Fund and Municipal Debt Service Fund (hereinafter mentioned), and the Park and Recreation Commission General Fund based on the ratios of their respective tax levies.

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