A one-year process that ultimately saved the county $11 million was lauded as the first time a county in North Carolina has refunded USDA loans for general government and school purposes.
In September, a year after Sampson County staff proposed refunding long-term USDA loans over a shorter period of time as a way to save money, county finance officer David Clack informed commissioners of the success. This week, Douglas E. Carter of DEC Associates, who has worked on Sampson’s financing projects and debt issues since 1994, lauded county officials and said that praise was echoed by the Local Government Commission (LGC).
The Board of Commissioners praised Carter as being instrumental in the arduous process and he likewise offered his perspective on the county’s debt service position.
“Our firm has the great privilege of serving a number of counties in this state and, at that time, I can say Sampson County was a model for how you adopt a financial plan, look at your future needs and decide on how you move forward,” said Carter.
He noted the decision to move forward more than a decade ago with a comprehensive plan for new school and county facility construction, as well as the recent process to refund the debt associated with that.
In fiscal year 2018‐19, the county was set to spend $4,070,198 to pay debt service on Clinton, Union and Midway high schools, Roseboro Elementary School, the courthouse, Law Enforcement Center and the Sampson County Animal Shelter, as well as Public Works offices and warehouse and offices for human services, Administration, Finance and Economic Development.
That debt service will drop to about $3,759,887 a year — a reduction of $310,311. In all, the county ended up issuing $64 million in bonds, generating total savings of $11,482,149 over the remaining life of the USDA debt. The total debt service was reduced from $119,434,861 to $107,952,712, with the repayment period shortened by three years to fiscal year 2047‐48. It was previously 2050-51.
“That refunding and how it occurred once again made you a leader,” said Carter, “much in the same way you were a leader in getting all these things done in the early 2000s. Through your efforts to get this $70 million refunding done, you have become the first county in North Carolina to refund USDA loans for general government and school purposes.”
It took a while to get to that point and Carter lauded the county administration’s work with the LGC.
“Anything that’s a first-time thing, there is always an extra look,” Carter attested, noting a number of conferences and meetings that preceded the actual approval. “It took nearly a year.”
The process started with a LGC meeting in September 2016, where county staff pitched the refunding of current bonds with a repayment period of 30 years, cutting three years off the total repayment period.
“This was somewhat unusual and it took several months for the Local Government Commission staff to agree to accept our application,” Clack has stated.
However, after the LGC’s approval, a meeting in August with the state treasurer and the sale of the bonds themselves — and many steps in between — the county’s refunding attempt was successful.
After the LGC gave its OK, county commissioners in February 2017 authorized staff to file an application with the LGC and take other actions necessary to complete the refunding of the USDA loans. In May, county officials met with the deputy treasurer, who expressed his reluctance to recommend such a long repayment period on a general government debt refunding. He told county staff that he would allow a presentation to be given in August.
At that meeting, county officials — Clack, county manager Ed Causey, chairman Clark Wooten and DEC — stated their case to refund the USDA loans in front of the state treasurer. Wooten emphasized that the reduction in debt service payments would equate to roughly half a cent on the tax rate.
“I consider it sort of a force of professionalism, perseverance, tenacity and really wanting to save money for the taxpayers,” Carter said, noting that August meeting in particular. “At the end of that appearance, there was 100 percent vote to make this first-time financing happen.”
The state treasurer, who chairs the LGC, and other members said it was an easy decision to make after hearing the story of the Sampson funding process, Carter said.
“One of the reasons they felt so right about doing this, even though it was the first time, is because the county had stuck itself out to make these improvements, and had been a leader in the early 2000s to get things done in the schools and other parts of general governments,” he said. “You don’t get anything done being afraid to be the model. This county has not been afraid to be the first. You’ve saved money and you’ve provided an ability to move forward in the future.”
Reach Managing Editor Chris Berendt at 910-249-4616. Follow the paper on twitter @SampsonInd and like us on Facebook.