$42M bond sale moves forward
By Steve Herring
Published in News on March 22, 2017 10:00 AM
Wayne County commissioners Tuesday morning approved the hiring of two firms to manage the county's pending $42 million bond sale.
The bond includes $20 million for a new Meadow Lane Elementary School and $12,042,604 for the Maxwell Regional Agricultural and Convention Center.
The Meadow Lane project also includes a wing to house the Edgewood Community Developmental School.
The limited obligation bonds sale requires a public hearing, but not a public vote. Commissioners are expected to schedule the hearing for April 18.
Repayment of the bonds over a 20-year period will not require a tax increase, County Manager George Wood said.
During their Tuesday morning meeting, commissioners authorized Wood and Finance Director Allison Speight to pursue a negotiated bond sale for the $42,368,473.
The board approved a recommendation by the county's financial consultants, Davenport, and Wood's recommendation to select R.W. Baird of Winston-Salem as the senior manager and PNC as the co-manager.
Both are well-respected firms and do a lot of work in the state, Wood said.
The Local Government Commission, which must approve the financing, requires two underwriters for any financing of more than $20 million, Wood said.
The first is the senior manager, and the second is the co-manager, Wood said. Typically the split is around 70/30, Wood said.
Davenport recommended the negotiated sale instead of a competitive bid sale.
That is how most limited obligation bond sales are handled in the state, Davenport's Ted Cole told commissioners during the meeting.
Commissioner Joe Daughtery asked about the differences between the two methods.
It is confusing to a lot of people as to why the county would negotiate instead of put it out on the open market, Daughtery said.
In a competitive sale the county would pick a date and seek bids on the open market, Cole said.
General obligation bonds in the state are voted on through referendum since they are based on the full faith and credit of the county, Cole said.
In other words, tax dollars.
Those types of bond must be sold on a competitive basis, Cole said.
"Which mans you pick a day, let's just say you pick a day in June, let's say June 10," he said. "You accept bids for your bonds on that day from the market. It is a very straightforward type of transaction.
"The only credit that is being sold is the general obligation taxing power of the county in a general obligation bond. That type of credit lends itself well to that competitive offering."
A limited obligation bond, which the county will use, is secured by some asset or combination of assets related to the financing, Cole said.
In this case, the assets are the buildings.
"You are still going out and soliciting the bond market for bids and investors for bids," Cole said. "But you are choosing the firm that is going to manage that process up front. You are negotiating with them to say, 'We want you XYZ firm to go out and sell our bonds on our behalf.'
"We still pick (for example) a day in June, June 10, that that actually happens. Between ourselves as your advisor and the Local Government Commission staff, we are helping to ensure that when that bond sale occurs you're getting the pricing commensurate with the market on that day."
The remainder of the $42 million will be divided among several other projects:
* $2,615,869 for a sewer line between Grantham Middle School and the county landfill at Dudley.
* $610,000 for an information technology project for the public safety offices fiber optic loop and extension to the Maxwell Regional Agricultural and Convention Center.
* $1.3 million for software for the Sheriff's Office, dispatchers, 911, EMS and the jail.
* $2.22 million for the Canterbury Village street repairs. This will be repaid by residents of the subdivision through a special property tax levy.
*$3.2 million for a new gym and six classrooms at Southern Wayne High School.
* $400,000 to install HVAC systems in three middle school gyms.