The Switzerland County Council continued its discussion about the future funding of the Switzerland County Technology and Education Center at its March meeting. The county is moving toward refinancing the outstanding balance owed on the building, which is to have a balloon payment due next month.
County Auditor Gayle Rayls explained the resolution wording concerning the language about 2009 bonds being included in the resolution. The 2009 bonds are not being included in this refinance process because the gaming revenues are being pledged to these bonds and the new bonds. This wording has to be in the resolution. If push came to shove and money was tight the county would have to pay on both bond issues proportionately with available casino revenue.
Angie Steno of Crowe Horwath, explained that both the 2009 bonds and the new 2017 bonds are to be paid with gaming revenue. The 2012 redevelopment bonds do not have a pledge of revenue. The County Council determines each year the source of revenue to pay them – which in the past has been gaming revenues; but there is no formal pledge. That is why these are not included in the current resolution.
Steno said the 2009 bonds currently have an outstanding balance of $830,000.00 (principal), and the 2012 bonds have an outstanding balance of $1,785,000.00. The 2009 bonds, held at the Friendship Bank, mature on January 15th, 2019. The 2012 bonds with MainSource Bank mature on January 15th, 2022.
The purpose of the new bond issue is to pay off the installment contract the county is paying on with Keystone (the contractor of the building) for construction of the TEC building.
The new bond issues would pay off the 2012 installment contract, which matured in November of 2016, but two extensions have been granted – and the balloon payment is due in May of this year.
To keep the same payment structure, a 10-year payment plan is being considered.
This will take care of the $2.4 million. This is a one-time deal; not for future debt. The whole reason to go through the building corporation, is for the county not to exceed the debt limit set by state statute. A government entity can’t use any property/assets as collateral; but any income can be used.
County Council President Glenn Scott asked County Attorney Wil Goering if he saw any problems with the ordinance. Goering said no, and that he has been through this process of creating a building corporation before. There is a state statute which currently says gaming revenue cannot be taken away when pledged for long-term debt. Council member Lisa Fisher asked if there is a penalty for early payoff. This would be negotiated with the banks who are interested in the bonds and in their offers along with rates and terms.
Rich Hall of Barnes and Thornburg said that the building corporation would report to the commissioners; but the commissioners want the council to also be involved in the repayment options decision. He said Steno will go to various banks to get the best rates and payment options and then come back to the commissioners and council for a decision – all the resolution did at the March meeting was pledge to pay off the bonds.
Council member Elizabeth Jones asked Steno if the 2009 and 2012 bonds could be paid off early. She didn’t have the paper work with her associated with those bonds. It would depend on whether or not the county would want to deplete their money resources.