Supervisors vote to add yet another bond issue
Published: June 21,2013
MERIDIAN — As Lauderdale County officials prepare to pay off one bond issue, supervisors voted this week to add another $14 million bond issue for city and county recreation projects, as well as courthouse renovations.
Before the board of supervisors’ action this week, there were 11 outstanding bond issues currently being paid for in the county. One is a bond issue passed in 1999 for recreation projects, which will be paid off next year, said Joe McRaney, county administrator.
Some residents have questioned the wisdom of taking on more debt while the county is paying down other debt but McRaney said the issue is not the number of bond issues, but the total amount, which the county is paying down at a rate of $3.4 million annually.
Since 1999, the year of the oldest outstanding bond issue, the county has borrowed about $56 million in bonds. Of that, it now owes a little more than $41 million on bond issues that funded everything from roads and bridges to land for industrial development, recreation, jail construction, and the MSU Riley Center.
What looks like heavy debt to some is actually about average for a county the size of Lauderdale, McRaney said.
Moreover, he said Moody’s Investors, which rates the financial viability of government bodies, has given Lauderdale County an Aa3 rating. That rating came in 2012 following the county’s $10 million bond issue for road projects. That’s a good rating, McRaney said, and is the same as the rating that the state received.
“They look at your bonded debt, they look at your revenues, they look at your expenses, they look at your fund balance, they look at the economy,” he said. “So our debt ratio has been examined by Moody’s Investors. We got the highest rating, so I feel comfortable with that.”
The Moody report noted that the county’s strengths are its relatively stable tax base and adequate financial reserves. The report said that the county’s challenge is its poor socio demographic profile.
Lauderdale County’s rating could go up, the report said, if there was a trend of growth in the tax base and improvement in employment levels.
The rating could go down, the report said, if there was a trend of a deteriorating tax base and if there was an operational imbalance that decreases the county’s reserves.
James Rainey, Lauderdale County Tax Assessor, told the board of supervisors last July that the county’s assessed value had decreased about 2 percent, which brought the county’s assessed value to just under $600 million. Asked if that was worrisome with regard to the upcoming bond issue and the county’s rating, McRaney said the county is prepared.
“We’ve anticipated zero growth. When I do something, I do it on the most conservative estimates,” McRaney said. “Anything above zero is gravy. That’s just the way I budget. If you get a little bit more, that’s great. You have a little indication that the economy is getting a little bit better so I’m optimistic. You prepare for the worst; hope for the best.”
Rainey will have the new figures for the county’s assessed value next month.
McRaney said the county’s debt is shrinking each year as it makes payments on the bonds.
“Your bonding capacity is based on your assessed value. You’ve got two things working for you. You’ve got the assessed value that’s either stable or hopefully increases but as the assessed value goes up, the bonding capacity goes up. The bonds go down every year because you are paying them off,” McRaney said.
Looking at the individual bonds, McRaney said the 1999 bond for recreation will be paid off in 2014. It funded improvements at Northeast Park and Q.V. Sykes Park.
Three bond issues were refinanced for better rates this year. Among those is a bond for $10 million that supervisors approved in 2006 for industrial property related to Tower Automotive. Tower is paying $385,000 annually on that loan; the county pays the remaining $20,000.
Another bond issue was refinanced this year, for the failed Loblolly project in which the county passed a $10 million bond issue in 2006 to purchase land and develop a site for a plant that later decided not to locate here. That and the Tower bond issues were combined and refinanced this year.
“Our bonding capacity is less than 50 percent, which is healthy,” McRaney said. “That’s why, when Moody’s analyzed us, we got a good rating on it.”
Here are Lauderdale County outstanding bond issues with dollar amounts rounded off.
— 1999: $2.7 million for recreation projects; $490,000 left on debt.
— 2004: $3.8 million for roads, highways and bridges; $1.4 million left on debt.
— 2007: $2.4 million for roads and bridges; $1 million left on debt.
— 2009: $1 million for roads and bridges; $745,000 left on debt.
— 2010: $2.1 million for taxable industrial development bonds $1.7 million left on debt.
— 2010: $2 million for jail construction bond; $2 million left on debt.
— 2011: $2.3 million for MSU/Riley Center; $2.2 million left on debt.
— 2012: $10 million for roads, highways, bridges and related land acquisition; $10 million left on debt.
— 2013: $15.8 million in refinanced bonds from 2006 for industrial development. Bonds for Tower Automotive originally $10 million; and Loblolly – originally $10 million; $15.8 million left on debt.
— 2013: $9.3 million in refinanced bonds from 2008 bonds for roads, highways, bridges and related land acquisition; $6.1 million left on debt.
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