Bond rating, interest rates better than expected 

Burnett County had some good news on several financial fronts in the last few days, including a better than expected Standard & Poor’s (S&P) bond rating, as well as a variety of bids on their subsequent bond sale for a more than $30-million public safety jail facility project, which means they will likely save up to $37,000 annually on interest costs, beyond their initial estimates.

The bond rating was revealed at last week’s Burnett County Public Safety Committee meeting, where county administrator Nate Ehalt showed the results of their review and queries by S&P ended up with a ‘AA’ rating, which is very good.

“Just one step down from ‘AAA,’ which is almost impossible to achieve,” Ehalt said, noting that the county will see the positive financial effects from the rating at their bond sale, which culminated in a bid opening at the regular county board meeting on Tuesday, Nov. 9.

At that regular board meeting, financial consultant Sean Lentz went over the bond rating, what it means and how S&P ended up with the mark. 

“The things you can control are very favorable,” Lentz told the board, praising their frugality, budgeting, priorities and the like, while noting that a higher rating was beyond their control, as it was based on things like county resident wealth, size, population and other factors. “But with your high (bond) rating, you opened the market to more buyers.”

In fact, five firms bid on the Burnett County offering, which they were initially hoping to have an interest rate of approximately 2.1-percent or lower – the number they based their financing costs estimates on.

“A number of institutions were looking very closely at the county,” Lentz said as he reveled that the lowest rate was indeed, quite low, as it came from Raymond James & Associates out of Florida, which offered a 1.812 % rates, only slightly lower than the next lowest bid, but far below what they were hoping for, and amounting to an annual interest rate savings of between $35,000-to-$37,000. 

Ehalt had figured the annual payments for the jail project to be approximately $1.835-million, but the revision means about a $1.8 million payment for 20 years.  

The county board was happy to hear the news, and while there were a few last-minute questions raised on the true need for a new jail and what the effects might be if they did not go ahead with the project, the overwhelming consensus was that the timing was right.

“Given that the interest rates are so low, I’m going to say that this may be the best time (to go ahead),” board chair Don Taylor stated.

Other concerns about the tax levy increase with the new jail were also alleviated, when Ehalt said the final impact would be approximately $67/ year for a $100,000 property for the duration of the note, until 2041, with the first two years having slightly higher impacts, due to the current debt on two notes, meaning the initial overall debt impact would be approximately $80-$90/ annually per $100,000  of property value. 

“Then it settles back to the $67 a year,” Ehalt assured.

There were also several ringing supervisor endorsements of the project, the research, planning efforts and the timing, while there were also a few noted concerns about current materials costs, which have stabilized and fallen in some areas but remain quite high, but the low cost of interest may offset that impact.

“Right now I see no viable alternative (to building a new jail),” Taylor added.

The board almost unanimously voted in favor of the bond sale to Raymond James, with Lentz stating that the 1.812 % rate has been locked and the bond closing will take place on Dec. 1. 

In other board action:

• With little fanfare or discussion, the board reviewed and approved the final 2022 county budget, with Ehalt outlining the final numbers and costs, which have not changed since a presentation several weeks ago to the full board.

He said the final overall budget amounts to $31.470-million, with a $12.137-million tax levy, and final mill rate of 3.98, which is in line with past years’ mill rates of 3.8, 3.62 and 3.54, respectively.

Ehalt did make one adjustment, adding that they have decided to spread the costs of creating a new countywide comprehensive plan over next year and into 2023.

“Our Comp Plan needs to be updated, it’s been many years our update,” Ehalt said. “With CAFOs and the campgrounds (issues), we figured it was an appropriate time to pursue (a new plan).”

• The noted campground issues did get some attention from the full board, which went over a few of the changes that were proposed but pulled from an October resolution after a last-minute threat of a legal challenge, regarding proposed limits on the number of campsites to either 25 or 100, depending on the zoning category. 

The issue was addressed last week by the Land Use and Information Committee, which later recommended that the county board reinstate the LUI Campground Work Group to further study the issue, and to possibly consider replacing a hard limit with a density requirement instead.

“It’s probably a better answer than a hard cap at 100,” stated one of the LUI committee supervisors.

Several supervisors were in favor of the LUI Work Group coming back, and it was also noted that several neighboring or nearby counties were watching what Burnett County does on the campground issue, which has been highly controversial and among the most watched of county actions.  

In the end, Chairperson Don Taylor re-appointed the previous work group members, with the group itself deciding how many times they need to meet to make a recommendation to the committee and later to the full board.