Bond refinancing saves $7.4 million

Knox County issued a release today, noting that it's gonna save $2.4 million more in folding paper than initially projected due to "lower-than-anticipated" interest rates.

This is all tied to some bond refinancing. Or something. 

Anyhoo, the county overall will save $7.4 million in avoided interest payments over the life of the bonds, which is until 2027. 

However, don't expect Mayor cheapo to cut you a check.

“While our state and federal governments are having trouble balancing budgets, Knox County continues to find ways to save money through efficiencies, and it’s always great when efforts like this turn out better than planned,” Mayor Tim Burchett said. “When we can save taxpayers millions of dollars by simply refinancing a portion of our debt, we’re going to do it. Common sense steps like this, combined with conservative fiscal budgeting, have put Knox County in a sound financial position.”

Knox to issue $39 million in bonds

The county on Friday will issue almost $40 million in bonds, which will fund work for number of projects tied to schools, roads and government buildings that officials hope to complete during the next couple of years.

Officials initially thought about issuing $17 million last year, and $22 million this year, but by holding off and issuing everything at once, the county will save roughly $250,000, according to Knox County Mayor Tim Burchett.

(The savings is essentially issuance fees, kind of like closing costs on a house. He said the savings will go back into the general fund.)

You may ask: "Well, Tim you always talk about paying off the debt, but aren’t you adding to it? Not really. The mayor says if the county continues to pay off more and issue less coin, then it still saves money.  

You can click right smack here for the 2013 capital improvement projects officials want to do and right smack here for this year’s stuff.

And, here’s a snapshot of some stuff just in case you’re lazy:

• Parkside Drive improvements: $6 million
• The Juvenile Court Building expansion: $3 million
• Karns Senior Center $ 1 million
• Karns Connector $4 million
• City County Building improvements: $500K
• AJ Building improvements: $475K
• School security: $3.9 million
• Safety Center:  $1million

In addition, about $15.8 million in bonds will help the school system for a number of projects including overall physical plant upgrades and work on Belle Morris Elementary, Chilhowee Intermediate and Gresham Middle (just to name a few of the schools)

County's credit ratings reaffirmed

Moody's and Standard & Poor, a couple of nationally recognized credit rating agencies, affirmed Knox County’s strong bond ratings of Aa1 and AA+, respectively, according to a spin release issued about an hour ago while I was at lunch by Big "Michael Grider" Sexy.

Here's what he had to add: "Citing Knox County’s 'historical maintenance of strong finances,' S&P went a step further by upgrading Knox County’s financial outlook from stable to positive.  This indicates that Knox County is approaching a AAA rating." 

He also said that Moody's cited the county's "strong financial position and reserves, improved liquidity, sizable revenue base and manageable debt burden as factors in their rating decision."

A number of county leaders, including Mayor Tim Burchett, noted that the county's efforts to pay down debt . . . blah, blah, blah as reasons for the awesome ratings.

No one mentioned that the main reason is because we've got like the super-cheapest property tax rate in the world, which provides a cushion in case stuff goes bad. In other words, if we're in trouble, we can jack up taxes without bankrupting residents. That's key to bond rating agencies.

Yeah, the other stuff helps, too. But not like this.

Still, this is good news, since it means lower interest rates when the school system needs to borrow money. Heh.

Moody's changes shouldn't affect Knox

This stuff kind of boring, but certainly important, although whether it affects Knox County remains to be seen. Now, THAT was a schizophrenic sentence.

Anyhoo, here's the deal: Moody's Investors Service, a nationally recognized bond credit rating agency, is changing the way it analyzes pension plans for local governments as it puts more emphasis on the risks associated with the retirement programs. Now, I'm assuming this has to do with new GASB (Governmental Accounting Standards Board) changes, but I'm not going to get into that. (If you know what it is, then you know the changes and don't need me to explain. If you don't know what it is, I doubt you'll care.)

Still, the bottom line is that things are going to change, and for some the outlook might not look so rosy. Right now, as I recall, Knox County has an Aa1 rating, which is its highest ever. That's mostly because we've got super low taxes and the mere fact that we can raise them without bankrupting the community makes Moody's feel all warm and fuzzy.

Still, a healthy reserve tank doesn't hurt either, so expect Knox County Mayor Tim Burchett to push to put any remaining surplus monies – and there's going to be a bunch – into the reserve tank.

Who really owns that county school?

Officials with the Knox County Commission and the Board of Education in the next month or so will meet to discuss which party's name gets placed on the deeds of four elementary schools.

But, at this point, it looks like there's just no way the BOE will get official ownership of at least one of them.

Here's the deal: The school board recently approved a resolution that puts the deeds to Brickey-McCloud, Amherst and Gibbs elementary schools and the yet-to-be-built “Southwest” Elementary School in its name, rather than the county's name.

Officials say – and you can find the story right smack here – that it's just in case the buildings are sold as surplus property then it will be clear that the money goes back to the school system. (There's a whole 'nother debate going on about whether a name on the deed really means jack, and that's coming.)

The resolution was then brought to the county commission, which balked. Instead, members said the newly formed education committee will more than likely take up the issue in February.

Still, at this point, it doesn't appear that the deed for Southwest Elementary School, which doesn't actually have an official name, will be transferred.

You see, the county took out Qualified Zone Academy Bonds, or QZABs, to build it. In fact the county issued $29 million worth in fiscal year 2011, according to finance records. The Southwest piece is a little over $15 million and the rest is for various other schools.

Now the problem. If the county turns the deed over, then it would violate the loan agreement (which says you can't transfer property) and risk losing the entire $29 million. That would mean heading back out to the market and issuing more bonds, possibly at a higher interest rate.

In other words, it would create a big headache.

As for the other three pieces of property. I think it's possible that the commission approves the resolution to transfer the deeds. But, I would not be surprised if a new issue comes up: Whether it really matter whose name is on them.

There is some talk that it is all “county” property, meaning any money from surplus school property – even if the deed says “Knox County Board of Education “ – goes into the county's general fund for the administration and commission to spend.

County refinances bonds, saves some coin

In an effort to prove that he really does earn his paycheck and outdoes his colleagues on the city side of the Deathstar, Big “Michael Grider” Sexy this afternoon issued what might be his fifth spin release in as many days. (Or it might not be.)

According to the release, the county will save $1.43 million in interest payments during the next two years after refinancing some bonds this week. The savings beat expectations by more than $400,000.

Half the savings is supposed to benefit Knox County Schools, the spin job states.

I assume that's a message to the school administration, which is more than likely going to ask the county for millions more in folding paper this year.