County Issues 3rd GO Bond

Mills Chart color Sept 19 copyWINNSBORO – Fairfield County Council has issued a new general obligation (GO) bond in the amount of $306,000, according to records in the Fairfield County Clerk of Court’s office. The bond was filed July 22, but at press time The Voice had no information as to how it was distributed or the cost of issuance. Interest on the bond over a six-year period is $46,100.18.

This is the third GO bond Council has issued since February 2014. In March 2013 County Council created a shell corporation (Fairfield Facilities Corporation) for the purpose of borrowing $24 million to pay for certain County properties and projects. To have use of these properties and projects, Council agreed to make semi-annual installment purchase payments to the shell corporation in the same amount as the payments the shell corporation was making to pay for the $24 million bond.

Since Council did not have the revenue to make those payments, it passed an ordinance on April 15, 2013 that allowed the County to issue an undisclosed number of GO bonds, without permission of the taxpayers, to make those installment payments. Those bonds are then paid back with property tax revenues.

Howard Duvall, retired Executive Director of the S.C. Municipal Association, put it simply.

“This (shell corporation) allowed the County to borrow more money than it could afford to pay back,” Duvall said, “and to levy taxes on the residents to pay off that debt without getting their permission to do so.”

While a 60-day window allowed the voters of Fairfield County to initiate a petition to stop the GO bond ordinance from going into effect and thus stop the issuance of the GO bonds, the plan was not spelled out for Fairfield County voters at meetings or in newspaper interviews. While the title of the ordinance was read aloud in Council chambers each time it was voted on, it was not discussed or explained and did not specify an amount for the bonds to be issued, a date of issuance or the number of bonds authorized by that ordinance.

At the same time, at Council meetings and in newspaper interviews, former County Administrator Phil Hinely and members of Council further confused the issue of what exactly had been voted on, whether intentionally or negligently, by wrongly referring to Council’s vote for what was actually the GO bond ordinance, as a vote for the $24 million bond.

A year later, on Feb. 14, 2014, the first GO bond authorized by the ordinance was issued in the amount of $769,177.88. By then the 60-day window for initiating a petition to rescind the bond ordinance had closed.

The Voice also quoted Hinely and the County’s then Director of Economic Development, Tiffany Harrison, as saying the $24 million bond would not increase taxes. But a chart distributed last year by the County’s administration showed that it is the GO bond debt (which was levied to make the interest on the installment purchase payments on the $24 million bonds) that keeps the county’s debt millage at an elevated level of approximately 10 mills (or about $1.27 million) each year from 2020 until about 2042, at which time it will begin to decrease, reaching zero by 2047. From 2013 – 2019, approximately 1 mill per year is levied to pay for GO bond debt initiated by this ordinance. The Council is currently issuing GO bonds at a rate of two each year. The total property taxes needed to pay the interest on the installment purchase revenue payments over 39 years is approximately $30 million.

While making an explanation about the payoff of the $24 million bond during a County Council meeting last year, the County’s Interim Administrator, Milton Pope, said it was planned from the beginning to make the interest payments on the $24 million bond with property tax revenue from these GO bonds. He said the interest payments do not depend on income from the V.C. Summer nulear plant.

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