County Cuts New Bond

Some Council Members in the Dark

WINNSBORO – County Council has issued another general obligation (GO) bond in the amount of $306,000. Signed by Council Chairwoman Carolyn Robinson on Jan. 13, 2015, the bond was filed with the Fairfield County Clerk of Court on Jan. 16.

Robinson said the revenue from the GO bond is earmarked for payments to the Fairfield Facilities Corporation (FFC), a non-profit shell corporation created by Council on March 25, 2013 for the purpose of issuing $24 million in bonds which the FFC then uses to pay for certain County renovations, recreational facilities and other projects. The County then issues GO bonds to pay the FCC which, in turn, uses that revenue  to pay off the $24 million bond.

Asked about the new bond on Tuesday, four of the seven County Councilmen told The Voice they had not been informed that the bond was issued or that it was going to be issued. A fifth councilman had not returned phone calls from The Voice at press time and a sixth referred all inquiries about the bond to Robinson. Robinson told The Voice that a representative of Parker Poe, the County’s bond attorneys, brought the bond documents for her to sign and that she believes the GO bonds will continue to be issued at regular six-month intervals until the $24 million bond is paid off in 2042.

“I am embarrassed to say I know nothing about the issuance of a new bond,” Councilman Billy Smith told The Voice on Tuesday. “And I am surprised I haven’t been told about it since it was issued more than a month ago.”

The County will pay Parker Poe a $20,000 issuance fee on the $306,000 bond, and the bond document includes a schedule of principal payments to be paid in the following increments: $59,714 on March 1, 2017; $60,341 on March 1, 2019; $149,695 on March 1, 2021 and $36,250 on March 1, 2022. According to the bond document, interest on the bond is due each March 1 and Sept. 1 through maturity (March 1, 2022), commencing Sept. 1, 2015. Robinson told The Voice that she does not know how much interest or other fees the County is paying on the bond.

The new bond is the third GO bond issued by the County since February 2014. The bonds were authorized by Ordinance No. 614 that was adopted by Council on April 15, 2013, following three readings and a public hearing in Council chambers. Passage of the ordinance allows the County to issue an unlimited number of GO bonds in any amount so long as they do not exceed the County’s bonded debt limit, which was $4.5 million as of March 2, 2013. And even if a GO bond does not exceed the bonded debt limit, the public has a 60-day period during which they can force a referendum (public vote) on the ordinance. If the referendum defeats the bond issuance, the County can not issue the GO bonds.

Some who oppose the bonds say they were not aware the County had passed the ordinance to levy the GO bonds.

According to digital recordings of the three meetings in which the ordinance was voted on, Council only read the title of the ordinance, but did not discuss or go into an explanation that the GO bond issuances provided for in the ordinance were planned to pay for the $24 million bond or the millage consequences for tax payers. Instead, it was reported by Fairfield County newspapers that members of Council said, on April 15, 2013, that Council had, that evening, passed a $24 million bond. That did not happen. Council passed Ordinance 624 that night. The $24 million bond was never passed by Council. It had been passed three weeks earlier by the non-profit shell corporation. The newspaper also reported that Hinely said the $24 million bonds would not come with a tax increase. But no mention was made that the GO bonds authorized by Ordinance 614 that evening would keep the county’s debt millage at a higher level over a longer period of time than if the GO bonds not been issued.

At a Council meeting last September, Parker Poe bond attorney Ray Jones shed new light on how the $24 million bonds and the newly issued GO bonds would affect the County’s debt millage. In response to questions as to whether the revenue from the two new nuclear units would materialize in sufficient time to make the payments on the $24 million bond, Jones said the County is not dependent on the new revenue from the nuclear plant to pay off the $24 million bonds. Rather, he said, the plan is for the County to continue issuing GO bonds over the life of the $24 million bond without exceeding the County’s current 10.4 debt service millage.

When asked by Tom Connor of Ridgeway if there was any possibility of a tax decrease for the taxpayers from the County’s current annual 10.4 debt service millage (1 mill = $126,954) over the duration of the payoff of the $24 million bond, Jones said, “This model says we will not go over 10.4 mills. That’s all I can tell you.”

A chart provided by County Administrator Milton Pope in September and published in The Voice on Sept. 19 showed that eventhough the County’s 2009 ($6.5 million) bond will be paid off in 2019, the County’s10.4 mills of debt service will continue for tax payers until 2040 and to a lesser degree until 2047 as the GO bonds continue to be issued to pay off the $24 million bond.

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