County looking at debt structure with new bond

BY CHUCK VANDENBERG
PCC EDITOR

LEE COUNTY – Lee County Supervisors are looking into how to structure current debt with the addition of an approximate $6 million bond for radio upgrades for county first responders.

Travis Squires, a bond counsel hired by the county to help navigate it’s current debt load said the county could look at several different options of integrating the communication upgrade bonds.

“As a Board of Supervisors you know the balancing act that you’re looking at in terms of overall rate, cost of the loan, and looking at the tax impact and annual payments,” Squires said.

He said the county has several options with regard to the length of the bonds in 10, 15 and 20 years.

Payments on a 20-year bond would be about $372,000 annually.

“I didn’t add much conservatism to these rates and you’re looking at a 2.15% conventional bond rating,” Squires said. “If we look at that tax impact on that it would be about 23 cents/$1,000 assuming no growth in current (assessed values).

Squires said a 15-year structure would lower the interest rate to just under 2% with annual payments of around $465,000. That scenario would carry a tax impact of about 29 cents/$1,000. The 10-year plan would carry $655,000 in annual payments and a 40 cent/$1,000 assessed value impact on taxes.

The county will also see a reduction in the tax levy in 2023 when portions of the debt for Lee County Jail and the landfill are retired. In addition, in 2024 some of the debt for the Lee County Conservation Building will also be retired.

“The decision making comes down to two decisions. One, do we want a level debt structure knowing that our levy rate will bounce around a bit more with a significant increase in fiscal 2022, a drop in 2023, and further drop in 24. Or Option 2, do we want to wrap our debt structure so we can help manage the debt impact,” Squires said.

He said the other decision rests on how long the county wants to take to repay the bonds.

Squires presented a 12-year debt wrap scenario where taxes would increase about .16/$1,000 through 2026 to help shoulder the remaining long-term debt more evenly and result in the payoff of the new bond in 12 years.

County Budget Director Cindy Renstrom said that was the option she preferred.

Squires said the tower assets of the communication upgrade financing may hold up to a 20-year bond, but some of the other equipment probably would not.

No action was taken on the financing measures, but Renstrom said the board will have to finalize the discussion in early January.

In an unrelated issue, the county approved the first reading of an ordinance removing language that would have ended ATV/UTV usage on secondary roads at the end of the year, called a “sunset”.

The “sunset” clause being eliminated doesn’t mean that riders have to stop riding at sunset. A ‘sunset’ in a code is a predetermined point in time when the law falls off the books unless revisited.

Language in the code permits operation of the vehicles on secondary roads from 4 a.m. to 10 p.m, well after sunset and well before sunrise.

In other action, the board:
• approved a recommendation from the County Compensation board of a 3% across the board pay increase for all elected officials. That move doesn’t set the actual pay increases, but is just an acceptance of the recommendation, which is required to be made by Iowa code. The board has the authority to set those increases anywhere between 0 and 3% but cannot exceed the recommendations.
• reappointed Paula Spiekermeier and Judy Bartachek to the Lee County Board of Health.
• approved an updated pandemic policy that permits for shorter quarantine times for employees who test negative for the coronavirus.
• heard an update from the Lee County Economic Development Group on it’s activities for the past year.

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