County Commission Refinances 2018 Bonds

The Clay County Commission has approved the refunding of two bond obligations from 2018, which will terminate some existing projects and offer the County more flexibility moving forward on new initiatives. 

This is a very positive thing financially for the County - Clay County Auditor Victor Hurlbert

Part of the 2018 COP Bonds were issued to finance a new annex facility that was to be built at the North Brighton and Highway 152 location. The current County Commission voted in January to halt all progress on this project, calling it unnecessary and a wasteful spending of tax dollars.

“Obviously the decision was made some time ago not to go forward with the annex at North Brighton,” said Clay County Presiding Commissioner Jerry Nolte. “What this does is eliminates that possibility, in that the money is no longer there. In my mind, this is one of the final steps in closing down this project.”

This refinancing of the 2018 bonds does several things for the county. First, it lowers the amount of the bond being borrowed from approximately $52 million to just under $20 million. The largest part of that amount is costs that have already been spent on things like roads, maintenance and infrastructure.

According to a press release from Clay County, “This decision will reduce the long term debt of the County by approximately $40.9 million, and save the County over $17 million in interest over the next 17 years. By choosing to refund the 2018 bonds, the County will see a net present value savings of over $2 million.”

Second, the retirement of the 2018 bonds reduces the duration of the debt, and reduces the County’s annual obligation to the debt. The original bonds were set to mature in 2038, but the new bonds will end in 2031. Clay County Auditor Victor Hurlbert noted that due to this decision the annual obligation of debt will be reduced from about $3.5 million to just over $1.5 million.

“In the long term, 2% more of our estimated $100 million budget is freed up so that we can better utilize elsewhere instead of being sunk into debt costs,” said Hurlbert. “This is a very positive thing financially for the County, and I’m glad the Commissioners took this step.”

Third, this ordinance lowered the principle, and the County received a better interest rate on the bond.

“We got a really good interest rate in this deal,” Nolte said. “The interest rate dropped considerably; almost in half.”

A final part of this issue is Clay County was obligated to spend the money in certain ways and particularly on a new annex building. The new bond structure is less restrictive and doesn’t limit the County on how it spends the money. The County has the flexibility to spend the bond money in more responsible ways which the County Commission has pledged to do.

“We’re doing the business of the people in a lot better way now,” remarked Nolte. “This new process goes through the Auditor’s office now, and he has the ability to certify or question an expense. That extra check and balance is a pretty important nuance.”

KPGZ News - Brain Watts contributed to this story