Polk County Board of Supervisors Pursues Debt Refinancing to Save $15.9 Million; AAA Bond Rating Reaffirmed
Thursday, January 17, 2013
Deb Anderson, Budget Manager
Polk County Board of Supervisors
At today’s meeting, the Polk County Board of Supervisors approved the marketing of $131.7 million of General Obligation bonds to be sold July 10th. The majority of the bonds ($115.4 million) will be used to refinance existing debt and capitalize on the lower interest rate market. It is anticipated interest savings will approximate $15.9 million over the life of the debt and permit one series of bonds to be repaid six years earlier than originally planned.
“The Board of Supervisors is pleased to achieve this savings through debt refinancing,” stated Polk County Board of Supervisors Chairperson Angela Connolly. “This is a fiscally responsible opportunity to improve the County’s finances.”
The debt to be refinanced includes $50.7 million for construction of the County jail in 2006 and $20.7 million for construction of the Iowa Events Center in 2002. Also scheduled for refinancing is $21.2 million of debt issued from 2008 through 2011 to fund a joint sewer project with the cities of Ankeny and Polk City. New debt totaling $16.3 million also will be included in the bond sale.
In preparation for the upcoming bond sale, Polk County underwent rating reviews with Moody’s Investors Service and Standard & Poor’s Ratings Services. Both agencies reaffirmed Polk County’s AAA credit rating with a stable outlook. The rating agencies noted the strong and diverse local economy, low overall debt burden, and healthy financial operations as factors in awarding the highest available credit rating.
Polk County has historically abated a large portion of its debt expense through revenues received from ownership of the Prairie Meadows Racetrack and Casino. This includes, most notably, debt service on the Iowa Events Center. No tax revenues are utilized to finance or operate these facilities.
Only 39% of annual debt expense is paid from tax revenues, for which the County levies a tax of $0.60 per $1,000 of taxable valuation. For a home with an assessed value of $100,000, County debt service taxes approximate $30 per year. Debt financed through taxes includes construction of the County jail, construction of the River Place social services complex, renovation of the County Health Department and Emergency Operations Center, and annual contributions to housing programs designed to revitalize distressed communities.
The County anticipates this refinancing will achieve annual savings of nearly $685,000 in its operational funds beginning FY 2014/2015 and continuing through FY 2025/2026. Additional cost savings measures approved today by the Board of Supervisors include (1) a benefits plan for non-bargaining employees under which all non-bargaining employees, including department heads and elected officials, who receive health care coverage will pay a portion of their premiums; and (2) position modifications including deletion of three vacant positions arising from an early retirement program aimed at reducing the County’s personnel expense.