McLennan County sold its nearly $9.5 million certificate of obligation Tuesday with a 2.53 percent interest rate and commissioners at their regular meeting learned the county received a strong bond rating.
Commissioners also approved a proposed budget for the McLennan County 911 Emergency Assistance District, which includes plans for a $3.1 million backup facility able to withstand a tornado.
Bidding opened about 10 a.m. for the county’s $9.43 million certificate of obligation, issued to cover road projects and other capital work. Eight bids were received, said Andrew Friedman, managing director for SAMCO Capital Markets, the county’s financial adviser.
“Eight bids is a pretty incredible amount of interest to be garnering from the market,” Friedman said.
The company projected selling the bond at a 4 percent interest rate, he said.
Commissioners also learned Tuesday the county received a strong bond rating for the second year in a row. McLennan County received an Aa1 rating from Moody’s Investor Service.
The rating reflects the county’s large, growing and diverse tax base, strong financial position and manageable debt and pension burdens, according to the report. The report cites a healthy level of reserves in the county’s budget that has increased for the past three years. Prior to 2014, the county had experienced four consecutive years of budget deficits, cutting into the county’s general fund.
County Judge Scott Felton said the current group of commissioners has worked hard to build up the general fund in a reasonable manner while also offering tax-rate reductions. The county has submitted a proposed fiscal year 2018 budget that includes a two-cent reduction to the tax rate. Commissioners set the tax rate at 50.5293 cents per $100 of property value, down two cents from 2017 and down three cents from the 2016 rate.
The court plans to have its final vote to adopt the budget and tax rate Aug. 22. Felton said the county has been able to pay down debt, while also growing a healthy general fund and cutting the tax rate. The proposed budget for the upcoming fiscal year also includes putting $2 million toward paying down the $25 million debt owed to the Texas County & District Retirement System, issued by a previous court.
When companies look to purchase bonds, they look to ensure that governmental entity has enough reserves they can use to mitigate potential problems, should something go wrong, Felton said. While the court has worked in recent years to increase the county’s fund balance to at least 25 percent of annual expenditures, Felton has pushed to build that reserve up to 33 percent.
“We’re very proud of the work we’ve done and we need to continue to focus on not letting expenses get out of hand and also get caught up on our deferred maintenance,” Felton said.
Increasing McLennan County residents’ wealth levels is no easy task, but would further improve the county’s rating, Felton said. County leaders are funding economic development incentives with the goal of creating more higher-paying jobs, Felton said.
This is only the second bond rating the county has received since Felton joined the court as county judge in 2012, he said. The ratings are only issued when a bond is sold.
Commissioners at Tuesday’s meeting also approved the McLennan County 911 Emergency Assistance District’s proposed budget.
The budget includes $1.33 million of administrative and operational expenses and $1.32 million in capital outlay expenses, including the planning, design and construction of a 911 back-up facility, said district director, Jesse Harrison.
The facility is planned to withstand an EF5 tornado, he said.
“Right now, in the county, we don’t have such a facility,” he said.
To help with the funding of the new $3.1 million backup facility, the district is proposing a rate increase of .25 cents per residential and business line per month for a total maximum annual increase of $3 per year per line, according to county documents. That increase would generate an additional $190,000 of revenue per year. The district also plans to borrow about $1 million through a bond or loan to fund the proposed new facility, but Harrison said it’s unlikely they’d need that much.