BRADENTON, Fla. – The Nelson County Public Library District in Kentucky plans to competitively price $1.6 million of general obligation refunding bonds on Tuesday.
The deal is expected to be the first of many that will bring other Kentucky public library districts back to the bond market after winning a series of lawsuits, according to financial advisor Chip Sutherland, with J.J.B. Hilliard, W.L. Lyons LLC.
The Nelson County library district deal is being issued within existing maturities between 2016 and 2026.
It is expected to save the district more than $200,000 or 10.2% of refunded par, said Sutherland.
The bonds are rated Aa2 by Moody's Investors Service, after an upgrade from Aa3.
The Aa2 rating reflects the district's stable, growing tax base and strong financial position including healthy reserves and liquidity, said Moody's analyst Nathan Phelps.
The library district, 50 miles south of Louisville, has a modest debt burden and manageable pension liability, Phelps said. The district has $3.3 million of outstanding bonds.
The local economy is supported by manufacturing and bourbon distillation and bottling. Major distilleries in the district include Heaven Hill and Jim Beam, and are among the largest taxpayers.
The county is home to Bardstown, which boosters call the "Bourbon Capital of the World."
Kentucky library districts have been unable to bring deals to the capital market since a series of lawsuits were filed in early 2013 challenging their ability to assess property taxes, Sutherland said.
"While a lot of issuers have refinanced the last couple of years, libraries haven't been able to," he said. "Nelson County just happens to be the first one out of the block, and they just happen to also receive a rating upgrade independent of these lawsuits."
While the suits were pending many districts had to rely on bank financing, though they received favorable rates, Sutherland said, whose firm advises several library districts.
In December, the Kentucky Supreme Court denied a motion for discretionary review and let an appellate court ruling stand that allows library districts created by a petition of voters to increase their annual property tax levy up to 4% without voter approval.
Seventy-nine of the 120 counties in Kentucky have libraries that were formed by petition.
In the Nelson County Public Library District, property taxes accounted for 94.1% of the district's total operating revenues in 2015 and a property tax rollback would have reduced the district's property taxes by more than 50%, according to Moody's.
In Tuesday's offering, Nelson County will use about $500,000 of general fund reserves, plus proceeds from the refunding, to refinance the district's 2006 GO bonds.
Rubin & Hays is bond counsel.
