By COLLIN BROOKS
Mayor Dan Eldridge announced to the Washington County Commission on Monday night that he has initiated the refinancing of the $130 million debt that was incurred by the county in 2007.
While the exact numbers weren’t readily available, Eldridge did say that the county will save more than first anticipated, which was $700,000 per year for the two decades remaining on the loan.
The mayor said that the old interest rate of 4.44 percent has been refinanced to 2.44 percent on the tax exempt piece, while the taxable part ($4.5 million) received a 1.24 percent interest rate.
“The timing of this deal just could not have worked better,” Eldridge said. “The result is something that Washington County is going to benefit from greatly. One of the challenges that we have had since the beginning of my time in office, until now, is that we were locked into that debt.”
Eldridge, Commissioner David Tomita, Commissioner Joe Grandy and Commissioner Mitch Meredith took a trip to New York a couple of weeks ago in order to meet with Standard & Poor’s and Moody’s Investor Services in order to review the county’s financial condition with the pending refinancing.
“Both rating agencies viewed the financial conditions of Washington County to be very strong,” Eldridge told the commission.
That resulted in Moody’s giving the county their AA-2 and S&P giving them an equivalent AA rating. The rating is two notches below AAA. Those ratings helped the county achieve such a phenomenal interest rate, Eldridge said.
Another resolution that could help the county’s debt service was passed on Monday night, as the county commission voted 21-2 to support an interlocal agreement between Johnson City and Washington County pertaining to educational capital projects.
The local agreement would give Johnson City a waiver of the required shared funds in consideration of Washington County’s agreement to make annual cash payments equivalent to the debt service payments that would have been made by the county for the city’s share of the bond. That means, if Washington County was to borrow $30 million for a new school, it wouldn’t have to borrow Johnson City’s $30 million, it could simply pay them an equivalent annual amount over the life of the debt.
The interlocal agreement was in the process of making its way to the general assembly before they adjourned last session, but never made it.
“It was dead in the water with the general assembly, that is when we made the decision to treat it as an interlocal agreement, rather than an amendment to the state law,” Eldridge said. “As an interlocal agreement, we can negotiate with the city of Johnson City and come to terms that benefit both and that is where we are.”
Even though the county commission gave its approval of the document, the city will still have to agree to it. The documents language could change and go back-and-forth as the two sides work out the details. And there is a possibility that nothing may ever come of it, according to Eldridge.
However, Tomita, who is also a Johnson City commissioner and vice mayor said that the city is aware that the document is coming and is in the hands of the city’s attorneys.
“As soon as we get a ruling back from our attorney, we will take it under advisement,” Tomita said after the commission meeting on Monday night.
The city commission could see it in July or at the latest August, Tomita said as a guess.
“I think it is good to have an extra tool in your tool belt,” Tomita said. “It might not fit every situation, but having gone up and met with the rating agencies, one of their concerns is our amount of debt. So we have to look at that.”