2020
FISCAL YEAR ENDING JUNE 30, 2020
Citizens Financial Report TOW N OF WA K E FORE ST ~ NORTH CA ROLIN A
1
Providing transparency about the Town’s financial operations The 2020 Citizens Financial Report provides citizens and other interested parties with an overview of the Town’s financial results. This report is prepared to increase awareness and provide transparency about the Town’s financial operations.
CONTENTS Town Leaders....................................................... 3 Strategic Plan........................................................ 4 Financial Results................................................... 5
The financial information provided here is obtained from the audited financial statements in the Town’s 2020 Comprehensive Annual Financial Report (CAFR). The CAFR is audited by Cherry Bekaert LLP and has received an unmodified or “clean” opinion. The Citizens Financial Report is not required to present the same level of detail as the CAFR and, therefore may not fully conform to generally accepted accounting principles (GAAP). This report is designed to provide a summary of the Town’s overall financial condition of the Town in a user-friendly format as well as serve as a supplement to the CAFR, not a replacement. To see the CAFR, visit the Town’s website at wakeforestnc.gov and search for “comprehensive annual financial report.”
Major Initiatives..................................................... 8 Debt Management............................................... 11 Budget................................................................ 13 Wake Forest by the Numbers.............................. 14
Finance & Budget Awards The Town of Wake Forest’s Comprehensive Annual Financial Report (CAFR) has won the Government Finance Officers Association of the United States and Canada (GFOA) award for 30 consecutive years. For the last six consecutive years, the Town has received the GFOA award for the Distinguished Budget Presentation. To earn these awards, the Town must produce easily readable and efficiently organized budget and CAFR, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and accepted legal requirements. In addition, the Town’s Citizens Financial Report has received the award for Outstanding Achievement in Popular Annual Financial Reporting for the last three years. The award is valid for a period of one year. To view all Town of Wake Forest financial reports, including the budget, visit the Town’s website at wakeforestnc.gov and search for “finance.”
Government Finance Officers Association
Award for Outstanding Achievement in Popular Annual Financial Reporting Presented to
Town of Wake Forest Text38:
North Carolina For its Annual Financial Report for the Fiscal Year Ended
June 30, 2019
Executive Director/CEO
Town Leaders A Message from the Town Manager We strive to make sure we retain that sense of character that continues to make Wake Forest the ultimate location to live, work and play.
The Town of Wake Forest is proud to present its Citizens Financial Report for the Fiscal Year ending 2020. As you can imagine, most of this year has been consumed by responding to the implications and restrictions placed on us by COVID-19. It has caused most of our popular events including Friday Night on White and our Concerts in the Park series to be cancelled. We have had to embrace a virtual environment to continue offering many of our popular classes and programs at the Renaissance Centre and through our Parks, Recreation & Cultural Resources Department. Outside of our response to COVID-19, Wake Forest Fire became a department of the Town on July 1, 2020. This was an eighteen-plus month process, but the transition was seamless. Additionally, the Town was able to complete the Stadium Drive street project, the Wait Avenue pedestrian project and the Northern Wake Senior Center renovation project was finalized. Construction is progressing at Ligon Mill Road and S. Main Street to bring relief to this congested intersection. Residential and commercial development continues to thrive with the construction of the Forbes 98 project which will include a Wegmans Food Market. This development and related improvements will make a substantial change along this popular gateway into Wake Forest.
As we move into Fiscal Year 2021, the Town’s Community Plan is in the process of being updated. This update will establish policies to guide the Town’s growth over the next twenty years. Although public gatherings are limited, staff has been reaching out through social media, direct mailings and our website to engage and receive feedback on the vision our residents have for Wake Forest. I would encourage you to take part in this process and reach out to our Planning Department should you have any questions. Our financial position remains strong. For the 30th year in a row, the Town has been awarded a Certificate of Achievement in Financial Reporting. Additionally, our auditors have finished their year-end review and reported no issues or irregularities and therefore issued a clean opinion of our finances. On behalf of our elected officials and staff, I want to thank you for your support of our continued efforts in Wake Forest. We strive to make sure we retain that sense of character that continues to make “our Wake Forest” the ultimate location to live, work, and play. — Kip Padgett, Town Manager
2020 Wake Forest Mayor & Board of Commissioners
Mayor Vivian Jones
Commissioner Jim Dyer
Commissioner Chad Sary
Commissioner Liz Simpers
Commissioner Bridget Wall-Lennon
Commissioner Adam Wright 3
Strategic Plan
Key Goals of the Strategic Plan As we look to the future, Wake Forest must plan for how it will continue providing services in a manner that efficiently meets the needs of our growing and ever-changing community. The strategic plan charts our course for the next five years towards providing excellent and sustainable quality of life for our citizens. The Town’s strategic plan has four goals as listed at right:
Mission Statement The Town of Wake Forest is committed to improving the quality of life in our community by preserving our character, fostering economic opportunities, strengthening our neighborhoods, delivering superior services and embracing the diversity of our citizens.
Goal 1 Economic Development Goal 2 Safe & Connected Community Goal 3 Values-Based Organizational Culture Goal 4 Fiscal Strength
A vibrant and diverse community that provides superior public services and an exceptional quality of life
A banner displayed at Joyner Park was part of the “Stay Strong” campaign to help keep community spirits uplifted.
Renovations to the Northern Wake Senior Center were completed, however the re-opening originally scheduled for March 2020 was delayed due to COVID-19.
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FISCAL YEAR 2019–20
Financial Results
Governmental Results The Governmental activities section in the Town’s financial statements include programs generally supported by taxes, capital contributions along with grants from federal/ state governments. Governmental revenue sources cover various services including: public safety, public infrastructure, general government administration and parks, recreation and cultural resources. Governmental activities also include special revenue activities, such as grants, and capital project activities, such as greenway and transportation projects funded by bond proceeds.
2020
2019
Change
$301,785,989
$297,370,623
$4,415,366
Total Liabilities & Deferred Inflows
69,395,731
78,639,802
9,244,071
Total Net Position
$232,390,258
$218,730,821
$13,659,437
Total Assets & Deferred Outflows
Management acknowledges that 2020 has been a challenging year. The most notable factor has been the widespread Coronavirus (COVID-19). While the impact and effect of the pandemic has been unprecedented, the Town has been able to successfully navigate these uncertain times given its strong financial position along with continued growth.
Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens.
Over time increases or decreases in net position may serve as a useful indicator of whether the Town’s financial position is improving or weakening. During FY 2019-2020, the Town’s net position increased $13,659,437.
2020
2019
Change
Revenues
$58,368,969
$97,901,442
$(39,532,473)
(Expenses)
(44,709,532)
(47,072,067)
2,362,535
Change in Net Position
$13,659,437
$50,829,375
$(37,169,938)
Total governmental activity revenue decreased 40.4% from prior year while expenses decreased 5.2%. The decrease is largely attributed to capital grants and contributions being significantly less than the previous year. Increases from previous fiscal year were recognized as follows: n
n
Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenditures). The difference between revenue and expenditures shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future.
Ad valorem taxes – 5.9% over previous year due to continued growth Local option sales tax – 4.2% increase over prior year, however significantly less than normal due to pandemic
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General Fund Revenues Year Ended June 30, 2020 $48,232,916
General Fund Results
Property Taxes
29,340,018
60.8%
Sales Taxes
8,594,400
17.8%
Grants & Other Taxes
3,877,446
8.0%
Permits & Fees
3,027,188
6.3%
625,102
1.3%
2,768,762
5.7%
Sales & Services
The General Fund is the Town’s primary operating fund. Property taxes and sales taxes are the two largest sources of revenue making up over 78% ($37,934,418) of the total received for the fiscal year. These revenues provide services to citizens and businesses within Town limits. Public safety, which includes police and fire protection, account for 40% ($19,818,764) of the total expended. This is followed by General Government at 27% ($13,209,979) which includes the governing body, administration, communications, human resources, finance, downtown development, information technology, planning, inspections, engineering, public works administration and fleet maintenance. The charts on this page show the breakdown by percentage of General Fund revenues and expenditures.
Three Year Trends General Fund Revenues
Other Sources
2020 Actual
2019 Actual
2018 Actual
$29,340,018
$27,713,298
$25,890,727
Sales Taxes
8,594,400
8,245,963
7,601,465
Grants & Other Taxes
3,877,446
3,855,450
3,725,604
Permits & Fees
3,027,188
2,751,352
2,966,351
625,102
930,868
696,350
2,768,762
1,751,684
2,187,875
$48,232,916
$45,248,615
$43,068,372
2020 Actual
2019 Actual
2018 Actual
$19,818,764
$16,674,495
$14,710,562
13,209,979
12,362,906
12,832,656
Debt Service
6,319,300
6,703,678
4,800,406
Environmental Protection
3,853,434
3,674,634
3,617,821
Cultural & Recreational
3,681,193
3,276,171
3,239,292
Transportation
2,371,653
2,487,546
2,456,873
$49,254,323
$45,179,430
$41,657,610
Property Taxes
General Fund Expenditures Year Ended June 30, 2020 $49,254,323
Sales & Services Other Sources Total GF Revenues
General Fund Expenditures
Public Safety
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Public Safety
$19,818,764
40.2%
General Government
13,209,979
26.8%
Debt Service
6,319,300
12.8%
Environmental Protection
3,853,434
7.8%
Cultural & Recreational
3,681,193
7.5%
Transportation
2,371,653
4.8%
General Government
Total GF Expenditures
FISCAL YEAR 2019–20
Financial Results
Proprietary Results Proprietary or business type activities rely on fees charged to customers for services rendered. The Town operates Wake Forest Power and reports as the Electric Fund. It is operated in a manner
2020
2019
Change
$30,861,745
$32,731,406
$(1,869,661)
Total Liabilities & Deferred Inflows
9,663,095
11,829,653
2,166,558
Total Net Position
$21,198,650
$20,901,753
$296,897
Total Assets & Deferred Outflows
similar to private business where the costs of providing the service are financed or recovered through user charges.
Balance Sheet A balance sheet provides a snapshot of what the Town owns (assets) and owes (liabilities). Net position represents the Town’s investment in the assets it uses in providing services to its citizens.
Change in net position for business-type activities increased $296,897 for the fiscal year.
2020
2019
Change
Revenues
$20,614,193
$21,152,283
$(538,090)
(Expenses)
(20,317,296)
(19,680,445)
(636,851)
$296,897
$1,471,838
$(1,174,941)
Change in Net Position
Charges for services from the sale of power decreased 2.5%, compared to the previous fiscal year as result of the pandemic.
Income Statement An income statement provides a summary of amounts received (revenues) and amounts spent (expenses). The difference between revenue and expenses shows the Town’s change in net position. A positive change indicates the Town had enough revenues to cover its obligations and has the ability to save for the future.
Wake Forest Power serves over 6,800 customers.
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Major Initiatives
Northern Wake Senior Center
T
he Town maintains a five-year capital improvement plan which serves as its planning document to ensure that its facilities, equipment and infrastructure are well maintained. This process provides the ability to plan for capital needs and allocate short and long term resources appropriately. The plan also serves as the basis for determining future debt issuance. The following projects have been completed over the past year or are currently in progress.
Renovations to the Northern Wake Senior Center were completed, however the re-opening originally scheduled for March 2020 was delayed due to COVID-19. The $3.1 million construction project consisted of adding almost 9,000 square feet, interior renovations to most of the existing center and a complete redecoration. Located at 235 E. Holding Ave., the senior center offers adults age 55 and older a full schedule of recreational activities, such as aerobics, line dancing, ballroom dancing, wood carving, painting, and craft making. The center also provides several social events each month, as well as educational classes on subjects including computers and ceramics.
Projects indicated with this logo were financed through general obligation bonds that were approved by Wake Forest voters in November 2014.
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Stadium Drive
Downtown Improvements
Completed in 2020, the Stadium Drive Complete Street project is designed to improve vehicle and pedestrian safety, as well as traffic flow. New features include sidewalks, crosswalks, accessible bus stops and left turn lanes.
Phase 3 consists of street and landscape improvements along South White Street: East Holding Avenue to Elm Avenue and East Owen Avenue: South White Street to Brooks Street. Total cost of the project is approximately $5.7 million, and construction was completed in December 2019.
Underground Fiber Infrastructure Construction began in February 2020 on a high-speed fiber network that will interconnect 14 Town facilities and span 25 route miles. The $2.5 million project will support the Town’s public safety efforts and critical administrative activities. Construction is expected to be complete by spring 2021.
Looking to the Future The Town continues to make strategic public investments that will spur private development. The following developments in progress are direct results of that investment: n
Joyner Park Community Center Construction of the new Joyner Park Community Center was completed during the fiscal year. The new 32,000 square foot facility includes a walking track, gymnasium for basketball, volleyball and pickleball; multi-purpose rooms, dance studio and kitchen. It also houses the staff offices for the Wake Forest Parks, Recreation & Cultural Resources Department. The grand opening was held October 19, 2019.
Indoor walking track around the upper perimeter of the building as well as gymnasium inside Joyner Park Community Center.
Situated in E. Carroll Joyner Park, 701 Harris Road, the Joyner Park Community Center is designed to blend in with current Joyner Park structures and the natural habitat.
Ligon Mill Operational Improvements Improvements consist of widening the existing narrow corridor from two-lanes to a four-lane median divided highway with left-turn lanes, bike lanes, curb and gutter and extra wide sidewalks. Construction started in May 2020 and is expected to be completed by the end of 2021.
Pedestrian Improvements to Wait Avenue & Oak Avenue
PowerHouse Row
This project consists of two multi-use buildings facing South White Street and extending downtown Wake Forest’s main street activity. The estimated investment of $13 million, is part of many public and private investments in the Renaissance Area of Wake Forest. The first phase has been completed and includes approximately 9,800 square foot building with retail and restaurant spaces on the first floor with apartments on the upper floors. n
Wegmans Food Markets
The supermarket will be located on Dr. Calvin Jones Highway/NC 98 Bypass between US 1/Capital Boulevard and Siena Drive. Construction is underway with estimated completion and opening in 2021. n
Loading Dock
Loading Dock is a coworking and collaborative workspace incubator with existing Raleigh locations. This $2 million building revitalization project will introduce 24,000 square feet of entrepreneurial coworking space to the community in addition to the continuation of expanding and enhancing downtown Wake Forest. Private offices, coworking space, conference rooms, dining space, indoor and outdoor event space and mezzanine spaces are all included in this innovative space. Construction is slated to begin in late 2020 with projected opening date sometime in 2021.
Construction was completed on pedestrian improvements to Wait Avenue and Oak Avenue. Final punch list items are currently underway. This effort was part of the Priority Pedestrian Corridor project.
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Fiscal Year Highlights
In March 2020, Wake Forest was impacted by COVID-19. Despite the pandemic, Wake Forest continued to improve in fiscal year 2020. Due to sustained growth in the region, Wake Forest benefits from above average economic indicators as compared to the rest of the state and nation.
6 staff positions were added to meet the needs of our growing community. Two of these positions are for Joyner Park Community Center which opened October 2019.
Board approved Town merger with The Fire Department. Representatives from the Town and the Fire Department collaborated to address a range of topics and facilitated a smooth transition in July 2020.
Planned use of fund balance (reserves) - our policy affords us the opportunity for funding one- time items.
Started in 2020, major updates to the Northeast Community Plan and the Wake Forest Community Plan will define and create a blueprint for our future.
To be fiscally prudent going forward, the Town changed its policy for all employees hired on or after July 1, 2018: upon retirement, medical and life insurance benefits will not be provided.
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Debt Management
T
he Town issues debt to fund General Governmental and business-type capital needs. Total outstanding debt as of June 30, 2020 totals $42,199,689. This includes general obligation bonds (voter approved debt), revenue bonds (electric) and installment purchase agreements. The chart below provides the breakdown of debt type at the end of the fiscal year.
Debt Issuance The Town’s total debt decreased by $5,750,528 (12%) during the fiscal year. Along with retiring a significant amount of debt during the year, the Town issued the following debt: Installment Purchase Agreements: n
Town’s Credit Ratings The Town benefits from its outstanding credit ratings. A priority of the Town is to maintain public trust in the sustainability of the Town’s financial system. This commitment has resulted in the Town receiving the following credit ratings: n n n
Standard & Poor’s AAA (highest rating) Fitch Ratings AAA Moody’s Aa1
$536,925 Police Vehicles April 2020, three year term, 1.66%
In addition, the Town took advantage of lower interest rates and refunded the Series 2009A Public Improvement Bonds which had an outstanding balance of $4,015,000. The new interest rate over the remaining life of the bonds is 1.79% with approximate savings of over $300,000.
Another priority of the Town is to maximize return on town funds. By maintaining or improving bond ratings result in lower interest rates on debt.
Breakdown of Debt Year Ended June 30, 2020 $42,199,689
Town employees adapted to the challenges of working during the pandemic. General Obligation Bonds
$25,110,000
59.5%
Installment Purchase Agreements
$16,030,380
38%
$1,059,309
2.5%
Revenue Bonds
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Debt Management Debt Policy Compliance
Future Debt Issuance
The Town actively monitors and manages its debt capacity and affordability. In keeping with the goal of enhancing fiscal strength identified in the strategic plan, the Town has a formal policy which provides guidance and direction when considering the impact of future debt.
The Town utilizes a debt model to plan the issuance of future debt. The model was last updated during FY 2017-2018 in conjunction with issuing general obligation bonds in June 2018. The updated debt model includes planned issuances through 2021. A debt service fund with specific revenues including a portion of the tax rate, vehicle fees and downtown municipal service district tax funds are earmarked to repay general fund debt.
How the Town’s Debt Compares to Policy Town’s Current Debt Town’s Policy for Debt
0.8%* 2%*
North Carolina State Statute
8%* *of assessed valuation
In November 2014, voters overwhelmingly approved issuing $25,100,000 in general obligation bonds for street and sidewalk improvements, parks and recreation facilities and greenway improvements. The Town has until November 2021 (seven years, but can apply for a three-year extension to 2024) to issue these bonds. As of June 30, 2019, $4,920,000 remains authorized but unissued. Plans are underway to issue these bonds in July 2021. After June 30, 2020, the Town issued the following dept: n
n
n
$2.5 million – installment purchase agreement for fiber optic infrastructure July 2020, 7 year term, 2.17% $738,170 – installment purchase agreement for equipment and vehicles September 2020, 3 year term, 1.04% $1.8 million – Refinanced existing 2018 street installment purchase agreement July 2020, rate modification from 3.39% to 2.13% - resulting in savings over $65,000
The Wake Forest Fire Department merged with the Town of Wake Forest in July 2020. 12
Budget & Planning Fiscal Year 2020–21 Budget Highlights Despite the appearance of renewed fiscal growth and other positive changes in economic conditions, the Town will continue to focus on financial sustainability. The budget represents the fundamental philosophy of being conservative with revenue projections and maintaining fiscal constraint on the expenditure side.
Much like an average household, the Town uses a balanced budget to ensure that it maintains a healthy financial position. North Carolina law requires local governments to approve a balanced budget each year. The Town plans for its financial needs of the future by utilizing a five-year capital improvements plan that is updated annually, financial forecasting, debt models, various other studies and plans. Governmental Activities: The 2020-2021 Adopted
Budget increased (10.5%) from the 2019-2020 Amended Budget, this also increased 16.7% over the 2019-2020 Adopted Budget. The foundation of this budget is the strategic plan which sets the roadmap for all decisions over the next few years. The budget endeavors to achieve the four key goals in the strategic plan by maintaining current service levels, enhancing infrastructure and providing for employees. Seventeen (17) new positions were included in the approved budget. Of these positions, six are directly related to the Wake Forest Fire Department merger, which is discussed below.
and workforce housing. The final budget for the General Fund totaled $56.05 million. In addition, the Downtown Municipal Service District tax rate remains unchanged at $.14. Effective July 1, 2020 the Wake Forest Fire Department merged with the Town of Wake Forest. The fire department operates five fire stations, with 84 paid personnel, 24 part-time employees and 30 volunteers, which were included in the merger. In addition to the cost of operations, this merger resulted in increases to personnel expenditures. In addition, included in the budget is the purchase of an additional ladder truck estimated to cost $1.4M. Effective January 1, 2021 the town will be charging a solid waste user fee of $21 and included on the monthly water and sewer bills. The City of Raleigh offers this service to all the merger towns through an interlocal agreement. Since 2008, the cost of providing this service has been covered in the property tax revenue. Business-Type Activities: Utility rates were
Property Tax Rate The Town’s tax rate has been reduced from $0.52 to $0.495 for the coming fiscal year.
The Town’s tax rate has been reduced from $.52 to $.495 for the coming fiscal year. This reduction is the result of the property tax revaluation along with the shift of solid waste fee to a user fee. The revenue-neutral tax rate was calculated to be $.4613. There was a projected increase of between $.02 to $.03 related to the Wake Forest Fire Department merger effective July 1, 2020. In addition, the rate is inclusive of $.015 for transportation initiatives and $.005 for affordable
How Your Town Property Tax Dollars Are Spent
unchanged in the Electric Fund with the Adopted 2020-2021 Budget. The total budget is $22.7 million for the Electric Fund. The town is currently engaged in an electric rate study. The study began during the FY 2019-2020, however, due to the pandemic the study, as well as any potential changes to the rates have been delayed. The results of the study will be shared with the town board during the Fall 2020, and any potential changes should be taking effect Spring/Summer 2021.
Total Budget FY 2020–2021 $86,645,395
General Government
27.5%
Public Safety
26.3%
Fire Services Transportation Environmental Protection Cultural & Recreation Debt Service
13.6% 7.4% 5.2%
Personnel Costs
$35,385,405
40.8%
Operating Costs
$26,795,070
30.9%
Purchase for Power
$12,456,200
14.4%
Debt Service
$7,648,865
8.9%
Capital Outlay
$4,359,855
5.0%
8.7% 11.3%
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Wake Forest by the Numbers
47,220
$39,102
4 th
$88,394
town population
per capita personal income
largest municipality in wake county
35 yrs
median household income
median age
130
miles of town - owned streets
19.4
644
land area in square miles
building permits issued during fiscal year
11,840 acres within town limits
6.8%
108
full-time and part-time firefighters
wake forest unemployment rate
40
fire department volunteers
5
fire stations
81
full-time sworn police officers
6
police stations
14
282
town employees
6,810
number of wake forest power customers
MAJOR TAXPAYERS
Rank Taxpayer
MAJOR EMPLOYERS
Taxable Assessed Valuation
Rank
Principal Employers
Approximate # of Employees
1
Wake County Public School System
1251
2
CenturyLink
439
3
Southeastern Baptist Theological Seminary, Inc.
435
4
Walmart
400
5
Chick Fil A
309
6
Town of Wake Forest
291
7
Lowes Foods
205
8
Target Corporation
200
9
Sams Club
185
10
Pack-Rat
170
$356,716,678
11
Lowe’s Home Improvement
170
$5,659,864,744
12
Rex Healthcare (Wake Forest & Wakefield)
165
13
Home Depot
164
14
Hillside Nursing Center of Wake Forest, Inc.
160
15
Franklin Academy
152
16
Texas Roadhouse
123
17
Publix
120
18
Kohl’s
110
19
Moffat Pipe
80
20
Carolina Ale House
60
1
Wake Forest Apartments LLC
2
Legacy Wake Forest LLC
36,335,954
3
Caveness Partners LLC
35,075,009
4
Wake Forest Crossing Owner LLC
32,500,382
5
Crossroads Holdings LLC
27,664,604
6
Wake EMC
27,348,386
7
WMCI Raleigh IV LLC
26,803,533
8
Heritage Gardens LLC
25,090,020
9
1-800 Pack Rat LLC
22,855,523
10
Waypoint CapCreek MF Owner LLC
22,813,286
Total Total Assessed Valuation Source: Wake County Revenue Department
$39,620,368
Source: Wake Forest Economic Development
15
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The 2020 Citizens Financial Report is a publication of: Town of Wake Forest FINANCE DEPARTMENT 301 S. Brooks St. Wake Forest, NC 27587 For more information about the Town of Wake Forest visit wakeforestnc.gov
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