Thanks to what one county official termed an "incredible" bond sale, Lee County will pay less interest than expected on a $33 million loan.
The final payment on the bonds — which will cover construction of the new W.B. Wicker elementary school project and upgrades to several of the county's parks and the courthouse — will be nearly 17% less than projected earlier this year, after the interest rate on the 20 bonds dropped by .25 percentage points.
"We were dancing," County Manager John Crumpton told the Lee County Board of Commissioners on Monday.
The savings, at least compared to the county's expected total debt service, could be considered fairly significant. According to County Finance Manager Lisa Minter, the county originally was projecting a "conservative" 5% interest rate, which would have meant paying off the debt would cost $53,387,049. Right before the sale, at the 3.43% rate, the total debt service was projected at $45,615,142.
But at the new rate, the county will only have to pay $44,506,664, a 16.6% and $8,880,385 decrease from the original estimate.
"That's a significant savings to the county over the life of the loan," Crumpton said.
Lee County was the only North Carolina entity that sold during its week, which Crumpton designated as the "real reason" for the good news. He added that the interest rate dropping answered some criticism about the borrowing.
Some in the community, including former county commissioner and current Lee County GOP Chair Jim Womack, criticized the board for not pursuing General Obligation Bonds (GOB), which require public approval and usually cost less. Womack spoke on the topic in February at a commissioners' meeting, saying that certificates of participation (COP), a similar type of bond to the limited obligation bond the county took out, were a bad choice.
"Everybody knows that COPs are one of the most expensive ways to finance debt," he said. "What you're doing is burdening these citizens with more interest on the debt than what they would have to pay. If you really want to do this right, put it out to the vote of the citizens. You're virtually guaranteeing that you're not going to cut citizens' tax rates in the near future."
However, the county manager said "there wasn't much of a difference" financially between GOBs sold last year and the Limited Obligation Bonds the county sold in this offering.
"That criticism was overcome," Crumpton said.
The news comes as the county and school system are preparing for groundbreaking on the new Wicker school at 900 S. Vance St., Sanford. The ceremony is 10:30 a.m. Thursday, with a reception following.