County OKs sale of bonds
Published 8:29 am Thursday, April 9, 2015
By Mike Barnhardt
Selling $54.5 million in General Obligation bonds is a complicated process.
And when the bids come in at 20 percent over projections, it becomes even more complicated.
That’s what county commissioners faced Monday night. The agenda included a resolution providing for the sale and issuance of bonds to build a new high school.
The problem: voters approved $54.5 million, bids came in at over $60 million (See separate story.).
Commissioners struggled with the decision, but voted 3-2 to go ahead with the bond sale, scheduled for April 21. Chair Terry Renegar, Richad Poindexter and John Ferguson voted to go ahead with the sale. Commissioners Mark Jones and Dan Barrett voted against it.
Paul Bellow, bond counsel hired by the county, said the state Local Government Commission will require that the county prove it can pay back the bonds, which amount to a loan to build the school. If the voters approved $54.5 million, that means the county can tax (An estimated 10.8 cents per $100.) to pay that back. If they can’t prove they can pay for a costlier project, the state won’t sell the bonds.
Ferguson said approving the resolution to sell the bonds not only gives the school system an amount to work from, it is what the voters approved.
Barrett said the confusion comes in with a bond premium, an un-promised likelihood that the institution that buys the bonds will offer the county up-front money. It could be as high as $6 million.
“I am concerned we can be re-sparking that debate if we don’t stick to the will of the people,” Barrett said. A bond premium could put available funds well above $54.5 million.
Ferguson disagreed. “We are doing the will of the people. The people said $54.5 million, that’s all we’re asking for.” A premium could help but all the county is asking for is $54.5 million, he said.
Jones said the project costs are close to $67 million. “That is clearly not what the people voted for. There are way too many questions right now.”
Poindexter read from the ballot approved by voters, “… up to $54.5 million … together with any other funds.” The school system has committed $2 million to the project. Poindexter said that if there’s no premium, the school will have to be built for $54.5 million; if there is a premium, it should go to the project.
Barrett made a motion to table the decision until the schools come up with a new figure after negotiating with the contractor and architect.
“What will that change?” Renegar asked.
Jones said the county has no recommendation or plan from the school system. “We have no idea they can get to that.”
“If they can’t get to that, we won’t sell the bonds,” Ferguson said. “Get things in motion so they can deal with it.”