Panel OKs debt issuance of $12.625 million for school projects

Cumberland County, Tenn.'s debt management committee approved moving forward with the issuance of general obligation school bonds not to exceed $12,625,000 for the construction project at Crab Orchard Elementary School and improvement projects at Cumberland County High School (CCHS).

Scott Gibson, senior vice president and financial advisor with Cumberland Securities, advised the committee the group would be best to first move forward with $8 million to start the project this year and follow-up with the remaining amount next year.

"You'd need a bond resolution and it's my recommendation that you try to move forward sooner rather than later. Interest rates are heading up and they may continue. The new fed (Federal Reserve) chair may change the dynamic and rare already higher than a couple of months ago. There's the new tax bill. There are several things that can stir the pot and change things," Gibson said.

school-54218629-adobe
Cities, counties, school districts and the state would be allowed to enter into public-private partnerships to upgrade energy services under a bill winding its way through the Washington Legislature.

"I'd recommend you do $8 million this year to get started on the contract and get that locked in. We'll sell the bonds the week after Thanksgiving and continue to monitor market. If it starts to go up you can go again and get the balance done next year."

The debt service would be at a fixed rate spread out over a 20-year period.

"I met with Nathan (Brock, Cumberland County finance director) and Scott (Gibson) and worked this out and it looks like a solid plan," 4th District Commissioner and Debt Management Committee Chairman, Allen Foster, said.

Rebecca Stone, 3rd District commissioner, asked, "This is at a fixed rate. Is there any time we could refinance at a better rate in the future?"

"We're going to be looking at sub three-percent rates and that's going to be hard to beat. It could be possible," Gibson said.

He added the calling date would be set in June 2023 — 5.5 years from now.

"You've got a good chunk of change locked in now at and attractive rate and you can lock in the balance when you're done with this," Gibson said.

Tim Claflin, 8th District commissioner, made a motion to recommend to the county commission the county adopt the resolution prepared by Cumberland Securities to authorize and issue General Obligation School Bonds to be used for the construction and renovation of Crab Orchard Elementary School and renovation of Cumberland County High School in the aggregate principal amount not to exceed $12,650,000.

Nancy Hyder, 2nd District commissioner, supported the motion and it was unanimously approved in a 6-0 vote.

Subject to financial market movements, it is anticipated that $8 million will be issued in calendar year 2017 and the remainder in calendar year 2018 to take advantage of "bank qualified" financing.

The committee also favorably recommended to the budget committee the approval of a budget amendment to enable the exercise of the call provision to pay off bonds in the current principal amount of $1,075,000 that were originally issued to purchase land for the Plateau Partnership Park, or Tri-County Industrial Park.

Foster said, "This is something we've been looking at for a while and now's our opportunity."

The funds would come from the debt service fund balance.

Gibson said the payoff would save the county more than $200,000 in interest. Cumberland Securities will word both the bond resolution and the payoff resolution for the county.

Stone made the motion to recommend the payoff to the budget committee and county commission. Her motion was supported by Terry Carter, 6th District commissioner. It was also unanimously approved.

Committee members and commissioners Terry Lowe, 5th District; Elbert Farely, 7th district; and John Patterson, 9th District, did not attend the meeting.

Tribune Content Agency
School bonds Tennessee
MORE FROM BOND BUYER