Wilmington could raise taxes to help buy the former PPD building. What you need to know
As Wilmington leaders explore buying downtown’s former PPD building, city staff have been developing a game plan for financing the up to $70 million purchase.
In January, the city entered a 120-day due diligence period, allowing staff to assess the 12-story building and evaluate the feasibility of buying it to consolidate city offices on a single campus. City leaders will decide whether they want to move forward after that due diligence period ends.
Meanwhile, the city is ironing out a financing plan. The Wilmington City Council gave the city manager and other top staff the greenlight last month to negotiate an amendment to the city’s installment financing contract in an amount of up to $70 million to pay for the building. The council also directed staff to take other steps to solidify a purchase plan.
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Here are five things to know about how the city would pay for the building:
A series of bonds
The city plans to lean on three limited obligation bonds, according to Wilmington’s Finance Director Jennifer Maready.
2023B - A $23.8 million taxable bond with a variable rate. The city plans to pay down its debt as its existing downtown offices are sold off. The bond has a seven-year term.
2023C - A $10.2 million taxable bond with a fixed rate.
2023D - A $34 million tax-exempt bond with a fixed rate.
Taxes to rise
The city plans to raise property taxes by 0.015 cents per $100 of valuation. That means city residents could expect to pay an extra $15 for every $100,000 in property valuation, Maready said. The increase would raise the city’s property tax rate from 39.5 cents to 41 cents.
No voter approval required
The city opted to use limited obligation bonds instead of bonds that would have required voter approval because of the cost of a special election and the time required for a special election.
Other revenue streams
City leaders plan to sell existing downtown office buildings and undeveloped parcels around the former PPD building. In February, the council voted to declare nine properties as surplus, if Wilmington decides to move forward with its purchase. The city also plans to lease space in the building. City offices are expected to take up five to six floors.
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Next steps
The Wilmington City Council will hold a public hearing on the proposed bond amendment on April 18 and will consider a resolution to authorize the issuance of the bonds. The financing plan is expected to go before the Local Government Commission on May 2. City staff expect to complete the bond pricing and closing in late June, and the city could close on the property on July 13, Maready told the council. The deadline for closing on the sale is the end of July.
Reporter Emma Dill can be reached at edill@gannett.com.
This article originally appeared on Wilmington StarNews: Wilmington's plan to buy downtown's PPD building could raise taxes
