Most county debt tied up in projectsPublished 12:00am Sunday, September 9, 2012
NATCHEZ — Break it down, and every man, woman and child living in Adams County has a $388 debt they probably haven’t factored into the family budget.
Those residents living in the city have a bigger debt tally — the $388 plus another $1,259 for a total of $1,647 per person.
The creditors have no plans to come calling, but that doesn’t lessen the burden on the books for the Adams County and City of Natchez governments.
Adams County’s current $11,745,350 debt in the form of bonds, negotiable loans and lease-purchase agreements and the city’s $19,883,000 in bond debt and negotiable loans is, ultimately, the responsibility of 30,297 county residents and 15,792 city residents, but local leaders say they’ve got the matter under control.
Adams County debt
Of the existing $11.7 million debt, largest single debt Adams County is carrying is a $7.96 million special obligation bond that encompasses $3.9 million in debt owed on the county juvenile justice building, $3 million for the construction of the t-dock at the Natchez-Adams County Port and $600,000 for renovations made at the Adams County Department of Human Services.
County Administrator Joe Murray said the three debts were bundled together to get a better rate for the bond.
The annual payments for the bond come to approximately $816,000. In fiscal year 2013, the county will pay $565,000 in principal and $251,000 in interest on the bond.
By the time the bond is paid off, the county will have paid $1,494,275 in interest on it.
An annual fiscal agent fee of $3,600 is also associated with the bill.
Murray said the Natchez-Adams County Port pays a portion of the bond. The allocation of funds from the port is determined by the amount of traffic through the port facilities.
“What we are envisioning with the current industrial development we are seeing is with the increased interest in the area and the increased barge and rail traffic through the port, they will start paying more to relieve the debt on the dock,” Murray said.
Supervisors President Darryl Grennell said the port portion of the bond was originally a bond being paid by the port, but when the port got behind on the bond, the county — which is liable for the note anyway — picked up the payments and consolidated them with the two other notes in 2003.
The county was able to do so because at the time Grennell, Chancery Clerk Tommy O’Beirne, then-board attorney Marion Smith and their bond attorney were able to go to Moody’s and get a good bond rating for the county.
The county’s bond rating has since been downgraded, a reality that Grennell said is partly attributable to the close of the International Paper and Johns Manville facilities and shrinking of the county’s tax base.
The year-end cash balance in the county general fund was also cited as a reason for the downgrade, and the projected budget for the coming year plans for a bigger cash balance than in recent years.
“The county has been able to stay afloat and pay our bills, but unfortunately, because of the recession, our bond rating has gone down,” Grennell said.
“We are making our payments. We are hoping at the end of this audit we are able to turn those books over to Moody’s and we will be able to get our bond rating turned around.”
Getting a better bond rating is important, Grennell said, because the county needs to make infrastructure improvements related to several recent commitments from industry to come to the area, as well as for future growth.
The supervisors have plans to add a $3 million loan soon for the construction of a levee at the former Belwood Country Club, the site where alternative fuels company KiOR plans to locate.
The second largest single debt the county has is a $2.03 million general obligation bond that was used in a road-paving project in 2011.
The bond was originally a five-year note, but the county restructured it earlier this year to run for seven years to make payments smaller. The board also sought to move when payments came due from October — a time that is generally lean for the county — to March, after the county has started to receive tax revenues.
A principal payment of $289,349 and an interest payment of $30,906.75 are due March 1, with a second interest payment of $25,239.44 due Sept. 1.
The county also has a second road-paving note, $650,000 dedicated for work in 2013. The board of supervisors has applied for a match grant for those funds but plans to use them even if the grant does not come through.
In 2013, the principal payment on that note will be for $125,000, and interest will be $11,310.
Included in the county’s debt schedule is an agreement to pay $420,000 toward the maintenance of Copiah-Lincoln Community College, and $373,396 for Co-Lin improvements.
Grennell said the maintenance allocation is part of an agreement between the county and Co-Lin because the college has a branch in Natchez, and the improvements allocation was made when the college needed a new health science building.
The county will retire the debt it owes on renovations made to its Market Street building, which houses the road department and District Attorney’s offices, making its final $32,102.39 payment on the $300,000 note in December.
The lease-purchase debt the county holds totals $938,404.81.
That includes 12 vehicles for the sheriff’s department, nine Chevrolet Tahoes and three Crown Victoria models. The debt $25,947.62 owed on the Crown Victorias will be retired in 2013, but Murray said that debt retirement will be a wash because the supervisors authorized the purchase of three new vehicles for the sheriff’s office in the coming year.
The county owes $156,971.58 for seven trucks bought for the road department and $139,014.96 for two new tractors purchased this year, in addition to $118,301.61 for general road equipment and $46,300.14 for the Pac-Mac truck that was purchased after Hurricane Gustav to pick up limbs.
In electronics-related lease purchases, $41,093.19 is owed on an electric control console for the juvenile justice detention center that had to be purchased three years ago after the old one shorted out beyond repair.
The county also owes $146,090.40 for computer upgrade lease purchases.
Murray said the county will likely need more computer upgrades in the future — specifically, a server upgrade — but his recommendation to the board would be to wait.
“If we can limp along with what we’ve got without compromising our system, I will recommend we try to go with that until our debt is retired,” he said.
The county uses lease-purchase to buy some equipment because it does not in general have the cash on hand to buy something outright, Murray said.
Some purchases made in the past year — for example, a new truck for the maintenance manager — were made with cash, however, because the funds were in the maintenance budget.
“If we have the cash in those funds, then we are going to do that,” Murray said.
“But generally speaking, you can’t have the cash in the funds (for major purchases) without raising the (tax) mills.”
The supervisors are scheduled to adopt the budget for 2013 after a public hearing at 9 a.m. Thursday.