Alamance County’s board of commissioners has cleared the way for the county to issue roughly $174 million in bonds on April 20 that area voters approved for the local school system and Alamance Community College in the fall of 2018.
These bond issues, which the commissioners authorized during a regularly-scheduled meeting on Monday, include the entirety of a $150 million bond package that the local electorate had approved for the Alamance-Burlington school system, as well as some $23.76 million of the $39.6 million that it simultaneously passed for Alamance Community College.
The commissioners have also agreed to issue some additional bonds over and above the voter-endorsed sums in order to cover the cost of the forthcoming bond issues.
The commissioners nevertheless stopped short of authorizing enough additional, or “premium,” bonds to increase the amount of revenue available to ACC and the school system beyond what the county’s voters had authorized nearly two and a half years ago.
A consultant in the county’s employ had projected that, in light of historically low interest rates, the county could potentially issue an extra $20 million in premium for the school system and $3 million for Alamance Community College while keeping its debt payments within a previously-projected ceiling. Representatives of both ACC and the school system had assured the commissioners that they had no shortage of ways to expend the additional revenue. But the commissioners were reluctant to authorize bond issues that were substantially more than what the voters themselves had approved.
“There are needs that are above that particularly with ABSS. . . But we don’t know what those costs are. We don’t know what could fund it. I think it’s irresponsible for us at this moment to put 20 years of [additional] debt on this county for projects that we don’t know if other sources can cover.”
– Alamance County commissioner Craig Turner
Commissioner Craig Turner more or less summed up the board’s prevailing view when he argued that the county should explore other, alternative revenue sources for each institution’s needs before issuing bonds that the voters didn’t explicitly pass in 2018.
“There are needs that are above that particularly with ABSS,” he told his fellow commissioners before Monday’s unanimous vote. “But we don’t know what those costs are. We don’t know what could fund it. I think it’s irresponsible for us at this moment to put 20 years of [additional] debt on this county for projects that we don’t know if other sources can cover.”
At Turner’s suggestion, the commissioners approved only enough premium to cover the cost of the bond issues in spite of requests for more even money from the top brass at both the school system and the community college.
Shortly before Monday’s decision, ACC’s president Algee Gatewood declared that the community college could use the proceeds from a higher bond premium to supplement the cost to furnish and equip a new biotechnology center of excellence, whose construction expenses are already included in the bonds to be issued later this month. Gatewood added that the college has, so far, received private donations to cover just over a third of the $3.7 million it will need to fully equip this facility.
“We are working very hard to raise that money, but we might not raise it,” he went on to warn the commissioners, “and we need about $3.7 million or so.”
Meanwhile, Todd Thorpe, an assistant superintendent with the Alamance-Burlington school system, told the commissioners that he and his colleagues will need an extra $2.5 million for road construction at Southern High School and another $3.2 million to cover road work and a vocational building at an as-of-yet unnamed high school that’s rolled into the school system’s bond package.
County manager: school system will still benefit because construction bids coming in lower than expected
Alamance County’s manager Bryan Hagood informed the commissioners that even without a premium, the school system will still have an additional $6,148,887 on its construction budget of $150 million thanks to bids that have come in lower than originally anticipated. Thorpe nevertheless told The Alamance News that it would be overly risky for the schools to allot these cost-savings for needs that weren’t included in the original bond package.
Following Monday’s decision, Thorpe told the county’s finance director that he’ll ask the school board to seek the county’s permission to draw nearly $6 million for these added expenses from the school system’s capital reserves.
“You’ve got to remember the center of excellence is a high-tech facility. The last thing I want us to see is for us to have a brand new [ACC] center of excellence ready, but we can’t put anybody in it because we don’t have the equipment.”
– Alamance County commissioner Steve Carter
The requests for more bond revenue that Gatewood and Thorpe presented on Monday seemed to gain traction with some of the commissioners. Steve Carter, the vice chairman of the county’s governing board, was particularly amenable to the prospect of using bond premium to equip ACC’s new biotech center.
“You’ve got to remember the center of excellence is a high-tech facility,” Carter told his fellow commissioners. “The last thing I want us to see is for us to have a brand [ACC] new center of excellence ready, but we can’t put anybody in it because we don’t have the equipment.”
“Premium has to be paid back. It is not a gift. I want to take the exact number that the voters and the taxpayers told us to get.”
– Alamance County commissioner Bill Lashley
The pleas for additional revenue didn’t go over as well with commissioner Bill Lashley, who championed a bond issue that mirrored the sum which the voters approved.
“Premium has to be paid back. It is not a gift,” Lashley, a commodities trader by profession, went on to assert. “I want to take the exact number that the voters and the taxpayers told us to get.”
Lashley’s position was later echoed by Turner, who argued that the county may ultimately be able to tap other revenue sources, such as federal pandemic relief and cost savings on construction, to cover the school system’s additional needs. Turner added that the county ought to serve ACC from the same ladle as the school system although he couldn’t identify as many alternative revenue sources for the community college.
“To say that we’re going to take premium at all for ACC and not ABSS is inconsistent,” he added.
Turner went on to make a motion that the county should only issue enough premium to cover the cost of the upcoming bond sale. His motion went on to pass by a margin of 5 to 0.
Rather than reject the proffered premium outright, Ted Cole, a consultant with Davenport & Company, advised the commissioners to accept whatever bond premium the market will bear in order to secure the best possible interest rate for the county. Cole added that, if the commissioners want their net revenue to equal what the voters approved, they would do better to accept the proffered premium and scale back the principal accordingly rather than to refuse the premium and keep the principal intact. In either case, Cole said that the county will wind up with lower debt payments than it had originally projected on the bond packages.
“Premium is real money that comes to the county for project costs and you have to pay it back,” Cole told the county’s governing board. “If you take the premium you would have a higher debt service schedule for 20 years than you would if you did not take premium.”
At the consultant’s suggestion, the commissioners agreed to accept the premiums that the bond market will bear and lower the principal to end up with the figures that the voters approved two and a half years ago.
They also authorized the additional premium necessary to cover the cost to issue the bonds.
