No Answers for $1+ Million Issue
WINNSBORO – Without a word to the public, County Council has issued another general obligation (GO) bond, this one in the amount of $1,156,000, half again as large as the one issued on Feb. 14 for $769,177.88 and almost three times as much as the County needs to make the Sept. 1 interest and principal payment on the County’s $24 million Installment Purchase Revenue Bond (IPRB) issued in the Spring of 2013. The newest bond was filed with the Fairfield County Clerk of Court on Aug. 7. Both bonds were issued for the stated purpose of making interest payments on borrowed money – the County’s $24 million IPRB. But the Aug. 7 GO bond was issued for $702,528 more than the $453,472 needed for the Sept. 1 payment. No information has been made available to The Voice by the County as to what the additional $702,528 will be used for.
The issuance of the two GO bonds was made possible by Ordinance 614, passed by County Council on April 15, 2013. At the time, members of Council led the public to believe that Council was issuing the $24 million IPRB. But last spring, interim County Administrator Milton Pope told The Voice that the $24 million IPRB was not issued by the County, but by the Fairfield Facilities Corporation. A number of state and municipal officials have described such facilities corporations as non-profit shell corporations created as a way for local governments to borrow more money than they could otherwise legally borrow and without asking for the voter’s permission.
A unique slight-of-hand feature of IPRB’s is that, with the passage of Ordinance 614, the County was able to create a mock revenue stream to pay off at least part of the IPRB by providing for the issuance of GO bonds that are then paid off with property taxes levied without voter approval. Ordinance 614 allows the County to continue to issue GO bonds without voter approval so long as the County’s total GO bond debt does not exceed the County’s legal debt limit, which is 8 percent of the County’s assessed property values. That amount was $4.5 million when the Feb. 14 bond was issued. The Voice has not been able to learn what the County’s current debt limit is after the issuance of the $1.156 million bond. But according to one County report acquired by The Voice, the assessed value of all taxable property of Fairfield County (as of June 30) for purposes of issuing GO bonds was $131,127,268.
According to County records, it used the proceeds from the Feb. 14 bond to pay the March 1 interest payment ($443,472) on the $24 million bond; $40,000 in bond issuance fees, $5,000 for other fees and $285,706 to reimburse itself for general fund expenditures it made for an additional interest payment in the fall of 2013. In addition, the County will pay $69,000 in interest on that bond. But it is not known exactly what the new $1.156 million bond is to be used for or what it will cost the County in interest.
The Voiced emailed County Administrator Milton Pope on Tuesday asking for details of how the bond would be used, but Pope had not responded by press time on Wednesday.
Both the Feb. 14 and Aug. 7 bonds are to be paid back over seven years beginning in March 2015. The Voice learned from two sources with GO bond expertise that it is customary that GO bonds taken out to pay for debt are usually paid off within a year, and that the seven-year payout is unusual. Both sources speculated that County Council could be extending the payoff to seven years to avoid raising its millage rate. At this point, in addition to making the annual interest payments on the $24 million bond, which in 2015 will total $896,681, the County will also have to make payments of $1,195,197.68 on the new GO bonds beginning March 1, 2015.
