Bamberg gets ‘A’ credit rating; Smith: Rating ‘something we all can be proud of’

County Council was informed last week that the county received a credit rating of “A” from credit-rating agency Standard and Poor’s.

County Controller Gina Smith also reported on a separate “A-minus” credit rating the county received from Standard & Poor’s as the county prepares for the issuance of a bond to refinance its 2015 installment purchase revenue bonds, or IPRBs, along with the issuance for its courthouse renovation.

“There is a new rating, and there is the existing rating. The new rating … was the rating on the new ($16.975 million) bond that was issued in December, the 2021 IPRB. So that’s why they call that a new rating, because it was a new bond issue. We received an ‘A-minus’ rating on that,” she said.

She continued, “On a broader scale, they actually look at what’s called an issuer credit rating. They affirmed our existing issuer credit rating, and that credit rating is ‘A.’ So ‘A’ and ‘A-minus’ are in the top tier of credit ratings. That’s exactly where you want to be.”

Smith said, “We work hard to maintain this credit rating. It’s known as investment-grade. … We did have a stable outlook, and despite losing some manufacturers, we demonstrated that we have gained others and that we had additional employment that was working to offset job losses and population loss.”

The controller said the report also noted that the county continued to have conservative revenue and expenditure assumptions in the budget and that it had very strong reserves.

“This is something we all can be proud of,” Smith said.

County Administrator Joey Preston said, “That’s a big deal for us, especially for a county of 15,000 people. If you go back and you look and you talk to the Association of Counties, you don’t have that many counties our size that even have a credit rating.”

“This allows you to be able to borrow at lower interest rates, which is a good thing because I know nine years ago, we couldn’t get anybody to loan us any money. … And for a finance staff of our size … that’s a big deal,” he said.

Smith later said that the credit rating made it possible for the county to be able to refinance the old debt and take on additional debt to renovate the historic courthouse at the lowest prevailing market rates as compared to unrated bonds.

“Purchasers of municipal bonds looking for investment-grade credits would not be interested in our bonds without a solid and continued good credit rating. … The county did better itself with lower interest rates, but, at the same time, we extended the payback period of the prior bonds,” Smith said.

“The payback period of the old hospital bond was extended by a period of 23 years, from 2028 to 2051, and the payback period of the 2015 IPRB’s were extended by a period of 19 years, from 2032 to 2051,” she said. “The goal of these maturity extensions was to soften the long-term mill impact of the overall plan of finance.”

The county has taken on new debt to refinance its 2015 bonds and the county’s 2008 hospital bond, along with the layering in of $7 million in courthouse renovation costs.

“The net new debt is $8,340,000; $7,000,000 of this is allocated for the courthouse renovation, and the remainder is escrow requirements, accrued interest and costs of issuance,” Smith said.

Some council members and county residents raised concerns about additional debt during council’s Nov. 1 meeting, when it approved a resolution to refinance a portion of its debt with a new 2021 IPRB plan of finance following a financial presentation by its bond attorney and financial adviser.

“The purpose behind this financing strategy was to find a solution to fund the historic courthouse renovation. Current projected cost for the project is close to $7 million, and the county has not been successful in financing the renovation through traditional methods. We have exhausted our discussions and applications with the USDA, which for the past several years appeared to be a viable financing option but ultimately did not work out,” Smith said.

She continued, “The county also wanted to pay off the existing general obligation hospital bond issued in 2008. The county combined the 2015A/B IPRBs and the outstanding general obligation hospital bond and refinanced these as one unit. We also added the $7 million needed to renovate the historic courthouse to this issuance.”

Under the plan, Smith said the county would not only renovate the courthouse immediately, but also eliminate the need to have a separate debt service levy for the hospital general obligation bond.

“For the first 11 years, the debt service millage on all the new bonds will be less than it would have been on just the old bonds and will result in tax savings to Bamberg County citizens. This will be years 2021 through 2032,” she said.

For fiscal year 2023, Smith said debt service payments would total $819,180, compared to previous debt payments of $1,020,615.

This would result in a reduction in millage of 6.95 mills and result in a tax savings of $20.85 for the owner of a $75,000 home and $27.80 for the owner of a $100,000 home.

For fiscal year 2024, the controller said debt service payments would total $697,605, compared to $1,019,082. This would result in a reduction in millage of 11.09 mills and result in a tax savings of $33.27 for the owner of a $75,000 home and $44.36 for the owner of a $100,000 home.

Smith said the 2021 plan of finance is a viable option for the county to renovate its courthouse, while eliminating the need for a separate hospital tax levy and lowering debt service for the next 11 years as compared to “doing nothing.”

“This plan was a good option for the county and has solved the county’s largest and long-standing infrastructure issue, that is the renovation of the historic courthouse,” she said.