This one addresses the final presentation at the work session by county financial counsel Mark Valenzuela of Bosque Advisors LLC on the potential issuance of a general obligation bond to be decided at the General Election.
[This is the fifth in a series of articles on the Grant County Commission meetings.]
By Mary Alice Murphy
In the last presentation at the Grant County Commission work session on June 21, 2022, county bond financial counsel Mark Valenzuela of Bosque Advisors LLC and Luis Carrasco of Rodey Law Firm, county bond legal counsel, gave an overview of general obligation bonds.
Valenzuela explained that general obligation bonds must be voter approved at a general election. "General obligation bonds are paid for out of county property taxes. They include a strong legally binding pledge to repay the bonds, so the county gets a high credit rating as a result. In theory, that should bring the lowest interest rates. They can be used for infrastructure, any brick-and-mortar project, with a life longer than three years. The general bonds are separated from the county operating budget. You have a strong opportunity to engage voters and find out what they would like bonds spent on."
He noted that property taxes and assessed valuations are dropping here mostly because of "copper, I suspect. Residential and non-residential are growing slightly."
Valenzuela said the county could sell bonds up to $32 million, but Grant County already has debt. If the county were to sell $26.6 million in bonds, it would cost about $900,000 a year. "Your outstanding debt will pay off next year, but you have $4.5 million outstanding from 2019. Without increasing your current tax rates, you could issue $6 million in bonds and propose that to voters." He also noted in his presentation, if no additional bonds were passed, the tax rate would drop in half in 2024.
He said that action would have to be taken in July or August to be able to get the general obligation bond issue on the general election ballot by the deadline of Sept. 3, "if the county wants to move that way.You would need to give your reason for getting the bonds."
Carrasco said he thought it was more prudent to put the resolution on the agenda in July to leave plenty of time. "The earlier the better."
District 4 Commissioner Billy Billings commented: "Let's say we decide to move forward with some amount, I think it would be prudent for us to say exactly what we would spend it on."
Valenzuela said if the county chose to spend it on roads, for instance, the bond issue would have specific language. "That is the kind of projects that are in your domain."
Carrasco confirmed that the use of bonds has to be in a call of the issue before voters. "The way we structure the language has to have some flexibility within a broader description."
David Buchholtz, also with Rodey Law Firm and on the telephone with Carrasco, said the language could have a question for roads and another for buildings, for instance. "If you choose roads and/or buildings, you should tie an amount to that question."
District 5 Commissioner Harry Browne asked if they could say "up to $6 million for roads and up to $6 million for buildings, would we need to have a clause in each that said, 'if the other one need more then it's only up to $3 million?"
Buchholtz said it could be done, but the commission would need a way to explain it properly. "We could work with you on that concept."
District 3 Commissioner Alicia Edwards said she assumed the county would talk about the $6 million for the potential bond. "I can't see us pushing something that would raise taxes. Would it be possible, likely, feasible to do a short survey to find out what people want? Maybe six questions to rate the priorities. That would give us an idea for where voters might approve the bond issue."
Buchholtz said there would be a timing issue.
Valenzuela said he had seen it done in cities. For instance, a city might send out the survey with the utility bills. "You could not use county resources to advocate, but you could say, this is what we are proposing."
Billings asked what interest rate might the county be looking at.
Valenzuela said even though interest rates have been rising, "it's still no expensive." He noted the Federal Reserve had raised rates recently by .75 of 1 percent and are planning on doing the same next month. "That gets us to about 2 percent where the rates will be in July. The market has already priced that in. The taxable rate is about 3.3 percent, but you get tax-exempt bonds. General Obligation bonds will get you the lowest rate. To give perspective, say the voters say yes, and you could sell the bonds by February. What I keep hearing in the market that a lot of this will settle out. I think the 3.5 rate is a good rate. I don't think capital knows where to go right now, so the borrowers are having to go out on a day-by-day basis to see where to buy."
Billings agreed that capital doesn't know where to go. "The ups and downs are crazy. We may do the resolution in July, and things may have changed more by November."
Valenzuela said he could get a draft to the commission in July.
Administrative Assistant Kevin Hubbs, said the county has only two weeks in July to get it done, unless a special session takes place.
The commissioners took a short recess and came back to hold discussion on potential abandonment of a county road and to begin the review of the regular meeting agenda. The next article will start with the discussion.
For previous articles on this meeting, please visit: https://www.grantcountybeat.com/news/news-articles/72686-grant-county-commission-holds-lengthy-work-session-062122-part-1 ; which addressed the Gila National Forest presentation on the Black Fire and potential flooding impacts; and https://www.grantcountybeat.com/news/news-articles/72716-grant-county-commission-hears-several-presentations-at-work-session-062122-part-2 ; which addressed the SE Group presentation on the Outdoor Recreation Plan; https://www.grantcountybeat.com/news/news-articles/72717-grant-county-commission-hears-several-presentations-at-work-session-062122-part-3 , which addressed the Lodger's Tax Advisory Board report; and https://www.grantcountybeat.com/news/news-articles/72765-grant-county-commission-hears-several-presentations-at-work-session-062122-part-4, which addressed the Tu Casa update.