Construction bonds sale set
WINDSOR – The next step for the new Bertie High School is a big one.
The sale of the Qualified School Construction Bonds is set for Monday, Oct. 29, according to Ted Cole of Davenport Associates.
During the regular meeting of the Bertie County Board of Commissioners Oct. 15, Cole said the sale of the bonds was the next major step for the financing of the $21.9 million new high school.
“We are entering the final phase of the process,” Cole said.
He said all the bond documents had been drafted, the Local Government Commission has approved the loan and work is continuing with the bond rating agencies to provide information about the county.
The county will sell $18 million worth of Qualified School Construction Bonds on Monday. On that day, they will lock in the interest rate which will be charged. They will also learn that day what the federal subsidy for the interest rate will be.
Cole said it is possible the federal subsidy could fully cover the interest rate, but his agency doesn’t believe that will be the case. At this point, Davenport is projecting the county will be left paying one-half of one percent interest on the loan.
He said the calculations as far as payback of the loan had been based on a 20-year term, but that the term could be extended as far as 23 years should that benefit the county. The federal government sets the term of the loan and the federal subsidy.
While all of that is moving well, Cole said there was a blip on the radar screen that could be of concern to the county.
The federal government has issued directives that if a budget is not passed by January, the federal subsidy could be cut by seven percent for the payment due next year.
“For you that would mean about $30,000 for FY13 which will be due in May,” Cole told the Bertie Commissioners.
He said the money would be an issue, but the information coming from federal agencies indicated that if the subsidy were cut it would likely be a one-time event.
“There is no absolute this will happen at all,” Cole said.
He indicated there was a possibility the January 2, 2013 deadline for the budget could be extended because of the election in November, giving the new members of Congress and whoever the President of the United States would be the opportunity to work on the issue.
Commissioner Charles L. Smith asked if it would be a one-time thing and Cole said he believed it would be, but if it continued the county could get out of the loan and enter a traditional tax-exempt loan if that would be more beneficial.
Commission Vice Chairman J. Wallace Perry asked what the benefit of the county getting itself out of the loan would be and Cole said it would depend on how much it would cost to finance it through normal government financing options.
“What if we can’t improve our situation,” Commissioner Rick Harrell asked.
“You wouldn’t try to get out unless you could improve the loan or somehow had the cash on hand to pay it off,” Cole said.
The board asked to be kept abreast of whether or not the federal government would be making those cuts.