DALLAS — Texas' least-populous county, but certainly not its poorest, is preparing to float $3.4 million of tax-supported notes to provide a local source of water for its 82 residents.
After this week's deal, the debt load for each of Loving County's residents will amount to what Standard & Poor's calls "an incredible $332,695." That's nearly 63 times the per-capita debt load in Harris County, the state's most populous county.
While the two counties present dramatically different demographics and climate, both have economies rely heavily on energy production.
Nearly 80% of Loving County's tax base is made up of oil and gas properties, with Anadarko Petroleum Corp. alone accounting for 22% of its assessed valuation.
By contrast, the combined taxable value of all the residential properties in Loving County is a mere $371,720, about the price of a single home in some Dallas suburbs. Residential property represents 0.06% of the county's tax base, so residents will not bear much burden from the new debt issue.
In the unincorporated town of Mentone that serves as the county seat, County Judge Skeet Jones on Monday put the notes issue before county commissioners who were expected to approve the sale to Trans-Pecos Bank in Reeves County.
With desalination equipment from the company Aqua Explorer in the Netherlands, a new well in Mentone is expected to increase the water supply nearly 50%, Jones said. The unit will also come with a solar farm that qualified for a $250,000 grant, he added.
"This desalination unit is very unique," Jones said. "It uses a compressor fan whose main component is made of steel manufactured in Germany. It puts water into a vacuum and then boils it at room temperature."
Jones' 11,000 acre ranch provides fresh water to the county via a six-mile pipeline financed by the Texas Water Development Board in 2006. "We have an ocean of brackish water," he said.
Water is not the county's only environmental problem. Dust kicked up by trucks working the oil and gas fields can also be a nuisance.
"It's so bad, it's like a fog today," Jones said.
To remedy that problem voters in November approved a $16.42 million general obligation bond issue to pave 28 miles of county roads by a vote of 48-16, Jones said.
The county issued those bonds in February, creating its first tax-supported debt. With a rating of A-minus from Standard & Poor's the bonds saw a "great" demand, county auditor Linda Clark said.
During the day, the county population grows to as many as 1,000 people, including Clark, who commutes 20 miles from Pecos in Reeves County.
"There's hardly anything in Mentone," she said. "There's one little store and a post office, and they're trying to shut the post office down. That's the only livelihood we have is the post office."
The owner of the store, Harlan Hopper, is also a county commissioner and uncle of Sheriff Billy B. Hopper.
Until recently, trucks were needed to bring water to Mentone, since the county had no source of potable water in its 677 square miles on the southern border of New Mexico. Water from the Pecos River is too salty to drink, and oftentimes New Mexico would claim all the stream flows, leaving the riverbed dry, according to Clark.
She replaced another woman with the same last name, Nichole Clark, as auditor a year ago after Nichole Clark ran for office as a commissioner and was defeated.
"Politics here is really different," Linda Clark said. "You can get beat by one write-in vote in an election."
To strategize this year's debt issues, Clark said she relied on Vince Viaille, managing director of financial advisor Specialized Financial Management in Dallas. Raymond James is the underwriter on the notes, which reach final maturity in 2020. That firm and Southwest Securities were underwriters for the February GO bonds, which were wrapped by Assured Guaranty.
"The county's population was a consideration, but an offsetting factor is the large tax base of the county due to it being in the Permian Basin and the oil boom it is experiencing," Viaille said as he drove to Mentone from Lubbock Monday for the county commissioners meeting. "We took the same care in structuring these issues as we do with all of our clients."
Loving County was and may still be the richest county in Texas depending on how you measure. The county's $663.3 million taxable assessed valuation is more than $8 million for each of the county's 82 residents.
The county government itself enjoys unreserved fund balances at 160% of operating expenses for the past three years.
After this issue, the property tax rate for debt service will increase from zero to 21 cents per $100 of assessed valuation. Including county operating expenses, the total property tax rate will be 79 cents per $100 of assessed value.
"The stable outlook, over the next two years, reflects Standard & Poor's opinion that the county will likely maintain its very strong reserves, in line with the historical trend," S&P analyst Emmanuelle Lawrence wrote. "We believe the county's limited and highly concentrated property tax base is a partially constraining rating factor."
In addition to its wealth and its sparse population, Loving County is notable for the fact that it was incorporated twice, once in 1893 and again in 1931 when the first incorporation by a Denver canal company was found to be fraudulent.
The county took its name from Oliver Loving, a famous rancher and pioneer of the cattle drive who partnered with Charles Goodnight to create the Goodnight-Loving Trail. Loving was fatally wounded by Comanches while on a cattle drive in the area in 1867.
When oil was discovered in the county in 1921, the population soared to 195 residents by 1930. By 1933, the population peaked at 600 before beginning a steady decline.
Loving County was also claims the distinction as the first in Texas to employ a female sheriff. Edna Reed Clayton Dewees was appointed to the job in January 1945, then won an election to continue in the office through 1947. She never carried a firearm, and reported only two arrests during her tour of duty. She became a county district clerk from 1965 to 1986.
In 2004, a group of libertarians sought to buy land in the county with the aim of settling there and taking over politically, according to various reports.
According to a website for the so-called "Free Town" movement, their goals were to "remove oppressive Regulations …and stop enforcement of Laws prohibiting Victimless Acts among Consenting Adults, such as Dueling, Gambling, Incest, Price-Gouging, Cannibalism, and Drug Handling."
The group said it also sought "to ensure that the Sheriff's Office or the Town Police are never allowed to waste valuable Town resources …to oppress our residents by the investigation or enforcement of violations of Laws that punish Truancy, Drug Trafficking, Prostitution, Obscenity, Organ Trafficking, and other Victimless 'Crimes.' "
Two members of the group claimed to have legally bought 126 acres in 2005, and registered to vote, but Sheriff Hopper said the land had been sold to a different buyer. Misdemeanor charges were filed against the three men, who by then had left the state.