LGC Votes to Hire Auditor to Review Winston-Salem/Forsyth Schools Finances

Local Government Commission (LGC) members cleared the way on Sept. 9 for the state to contract for an outside, independent audit of the Winston-Salem/Forsyth County Schools. The school system has been cited for financial mismanagement and a $46 million budget deficit that led to eliminating 350 positions.

Commission members unanimously passed a resolution at Tuesday's monthly meeting directing LGC Secretary Denise Canada and LGC staff "to work with expediency" with the N.C. Department of Public Instruction staff to hire an outside auditor to assess the school district's substandard financial controls. The resolution states that the LGC will identify "a list of firms qualified to perform a review of the District's internal controls," and assist DPI in developing "the scope of work and agreed-upon procedures for a review of the District's internal controls."

State Treasurer Brad Briner, who chairs the LGC, commended the State Auditor's Office for its investigation and report. As a father of four school-age children, "reading this makes me so angry for the people in Forsyth County who elected a school board who obviously wasn't paying attention" as far back as 2017 and possibly further, Treasurer Briner said. "The abject failure for the students in Forsyth County makes me mad, makes me sad."

Treasurer Briner also sits on the State Board of Education (SBOE), which voted last week to move forward with the outside, independent audit. Once an auditor is selected, the North Carolina General Statutes require the LGC Secretary's approval of audit contracts.

State Auditor Dave Boliek, a member of the LGC, has said his office confirmed the school district's $46 million budget deficit, found that the school system "is on the verge of a financial crisis," and identified "severely mismanaged" financial resources and "poor accounting procedures." At Tuesday's meeting he said the school district had no plan to resolve the problems, and he hopes that replacing the district's auditor succeeds in getting its books and processes in order. However, he cautioned his auditing staff could return to the district to perform another financial review if warranted.

In another high-profile action, LGC members voted to deny the appeals of 11 local government units that are not in compliance with state law for submitting timely audit reports to the LGC. As a result of those appeals being denied, a portion of sales tax distribution will be withheld from those 11 local governments. Commission members granted the appeals of 15 other municipalities, thus avoiding withholding of a portion of their sales tax. Action was deferred until November's LGC meeting for Speed (Edgecombe County), whose Town Council may vote to dissolve its charter at its October meeting, and Taylortown (Moore County), whose representatives said confidential legal issues fundamental to its appeal could not be discussed with LGC staff publicly.

Votes on the appeals to avoid withholding a portion of sales tax were taken on municipalities in the following counties:

• Anson County: Morven, denied.
• Bertie County: Aulander, Colerain, approved. Kelford, denied.
• Beaufort County: Aurora, Chocowinity approved.
• Bladen County: East Arcadia, approved.
• Carteret County: Newport, approved.
• Chatham County: Siler City, denied.
• Craven County: Dover, approved.
• Cumberland County: Spring Lake, denied.
• Edgecombe County: Princeville, approved. Macclesfield, denied. Speed, decision deferred until November LGC meeting.
• Franklin County: Louisburg, approved.
• Halifax County: Littleton, denied.
• Johnston County: Micro, approved.
• Martin County: Robersonville, approved.
• Moore County: Robbins, approved. Taylortown, decision deferred until November LGC meeting.
• Moore and Montgomery counties: Candor, denied.
• Northampton County: Gaston, approved. Rich Square, denied.
• Polk County: Columbus, approved.
• Sampson County: Autryville, denied.
• Wilson County: Stantonsburg, approved.
• Wilson and Nash counties: Elm City, denied.
• Wilson and Johnston counties: Kenly, denied.

Local governments were required to submit fiscal year 2024 audit reports by Oct. 31, 2024 - four months after fiscal year 2024 ended. Initially, 118 counties and municipalities did not meet that deadline and were notified in April 2025 that they were not compliant with filing a timely audit. One unit chose not to appeal that notice. But to avoid sales tax withholding, 55 units took corrective action by submitting the 2024 audit report, and another 37 units that had submitted all prior audits except the FY 2024 audit report successfully filed appeals that were granted at the commission's August and September meetings.

In other matters on the agenda, the N.C. Housing Finance Agency (NCHFA) received approval of an application for $1.25 billion in financing so it can help expand home ownership for low- and moderate-income households.

The NCHFA will now issue a series of revenue bonds through 2027. The goal is to provide affordable home ownership through proceeds that would be used to purchase mortgage loans and other obligations to obtain loans at lower interest rates. A portion of the proceeds would refund previously issued bonds.

The NCHFA was created by the General Assembly in 1973 to help provide safe, affordable housing opportunities through public funds and private investments. In 2024, NCHFA produced $2.68 billion in real estate activity, financing 11,920 homes and apartments. Bond activities are a portion of these overall activities. The agency regularly issues debt through the LGC to fund its programming.

The LGC is staffed by the Department of State Treasurer (DST) and has a statutory duty to approve most debt issued by units of local government and public authorities in the state. The commission examines whether the amount of money units borrow is adequate and reasonable for proposed projects and confirms the governmental units can reasonably afford to repay the debt. It also monitors the financial well-being of more than 1,100 local government units.

Other affordable housing issues also received affirmative votes, including two requests from the Durham Housing Authority (Durham County), which will issue about $32.3 million total in conduit revenue bonds for two projects on Old Oxford Road in Durham. Conduit revenue bonds allow for bond proceeds to be loaned to a third party. One application was for $22 million to be loaned to KB Carver, LLC, a North Carolina company, to acquire, construct and equip a 132-unit low- and moderate-income multifamily housing development to be called Sandy Ridge Station. The second application was for $10.25 million in bonds that will be loaned to KB Carver II, LLC, to pay for a portion of the acquisition, construction and equipping costs for a 66-unit, multifamily, low-income rental housing development to be known as Sandy Ridge Villas.

The Raleigh Housing Authority (Wake County) was given a green light to issue $63 million in conduit revenue bonds. Proceeds will be loaned to Union at Capital, LP, an Indiana limited partnership, to finance a portion of the acquisition, construction and equipping costs of 195 units in a low- and moderate-income multifamily housing development at 3600 Lee Road in Raleigh.

LGC members gave a thumbs-up to Inlivian (Mecklenburg County), Charlotte's housing authority, to issue $18 million in conduit revenue bonds. Proceeds will be loaned to The Vue at Honeywood Avenue, LLC, a North Carolina company, to help acquire, build and equip a 108-unit multifamily rental housing development for low-income residents.

The town of Clayton (Johnston County) received authorization to issue $14.5 million in conduit revenue bonds to finance a portion of the cost of acquisition, construction and equipping of a 90-unit multifamily residential rental facility to be called Shotwell Apartments, on Mechanical Drive in Clayton.

The city of Charlotte (Mecklenburg County) successfully petitioned the LGC to sign off on just over $200 million in long-term, general obligation bonds at fixed rates to refund previous short-term bond issuances.

The LGC approved two Henderson County applications totaling $95.4 million. One request was for $78.7 million in limited obligation bonds to renovate and expand the county's detention facility as part of a county judicial center. Unlike general obligation bonds, limited obligation bonds do not have to be approved by voters. The existing detention center is at capacity and the county population is growing, according to state data, at a projected rate of 12.3% from 2020 to 2030. The second request was to issue $16.7 million in limited obligation bonds at lower interest rates to refinance higher-cost 2015 bonds at a savings of $602,343.

The town of Holly Springs (Wake County) was granted approval to obtain $22 million in revenue bond anticipation notes for phase 1 of the Utley Creek Water Reclamation Facility.

The town of Edenton (Chowan County) was authorized to obtain $7 million relating to an installment financing to build a parking deck, acquire and renovate a three-story building at 211 South Broad St. for economic development; to improve a building at 115 West Hicks St. to develop for use as a fire station; and to acquire property at 311 North Oakum St. to add additional parking for the police department. The town also received approval for a lease financing agreement with Main Street Edenton, a nonprofit corporation dedicated to redeveloping the downtown area for the property at 211 South Broad St. The nonprofit would sublease space to tenants to offset its lease payments to the town. The economic development project will utilize New Market Tax Credits.

The city of Kannapolis (Cabarrus and Rowan counties) was authorized to issue $12 million in revenue bonds to level the Kannapolis Lake dam embankment and spillway and to replace the chute. The dam is categorized as a high-hazard potential structure by the N.C. Department of Environmental Quality because the spillway lacks adequate capacity to prevent the dam from overtopping during a 100-year storm. Water and sewer rates will increase to pay for the work.

In other action, LGC members approved applications from:

• Edgecombe County, $5 million in limited obligation bonds for HVAC and electrical improvements and roof replacements to county buildings and facilities, vehicle fleet additions and solid waste disposal equipment.
• The town of Southern Shores (Dare County), about $4.65 million for an installment financing contract that will allow the town to assume a sublease being paid by Southern Shores Volunteer Fire Department. The fire department would dissolve and transition into a municipal department.
• The town of Franklin (Macon County), about $3.3 million for an installment financing contract to construct a 250,000-gallon clearwell, which is an enclosed water storage tank, and a pump station. They would replace a 56,000-gallon clearwell and pumps at the Franklin Water Treatment Plant. The project will accommodate a future addition of a second 250,000-gallon clearwell.
• The city of Creedmoor (Granville County), a $2.75 million installment financing contract to acquire and build a new police station, and to provide larger space in the Town Hall building for the community development office to use after vacating leased space.
• The town of Blowing Rock (Watauga County), for an installment financing contract totaling nearly $2.3 million. The money would pay for design, acquisition, renovation, construction and equipping of land for water system uses, public park facilities, roof repairs and other improvements to the fire and rescue services building.
• The town of Farmville (Pitt County), $2 million for an installment financing contract for phase 1 construction of an 11,972-square-foot Farmville Fire Department building with five apparatus bays, a decontamination, gear storage and radio rooms, and other auxiliary rooms.
• The town of Beaufort (Carteret County), for a $1.2 million installment financing contract, to install a fuel tank farm supplying vessels using the Beaufort Town Docks. F3 Marina would contract to manage the facility after Dec. 31.
• The town of Hillsborough (Orange County), for a State Revolving Fund loan for $616,730 to inspect about 7,000 feet of sewer pipes, and to clean and rehabilitate over 5,200 feet of sewer pipes. The funds also would pay for other repairs, removing and replacing pavement, roadways, driveways and curbs.
• Jones County, an installment financing contract for $500,000 to install a shell commercial building for use by the county and its economic development nonprofit organization to attract businesses. Funds would be borrowed from the Jones-Onslow Electric Membership Corporation.
• The town of Walnut Cove (Stokes County), for a $143,816 repayable loan from the state Department of Environmental Quality, to inspect water lines for the presence of lead and copper.
• The town of Norwood (Stanly County), $130,289 to lease two police vehicles from Enterprise Fleet Management.

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