County to vote on bonds

Feb 26, 2010 — Chattanooga Times/Free Press

Matt Wilson

Feb. 26, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- Hamilton County commissioners will vote next week on whether to refinance up to about $30 million in county bonds.

"It is not new money," said Assistant Finance Administrator Albert Kiser. "This is simply refinancing some bond anticipation notes that are coming due March 1."

Governments issue anticipation notes as a short-term financing mechanism for larger future bond issues.

The vote comes just a few weeks after Standard and Poor's (NYSE:MHP) Ratings Services gave the county a AAA bond rating, the highest awarded by the agency.

Commissioner Richard Casavant said locking in to a long-term interest rate "has to be a very smart thing" with the U.S. Treasury Department's short-term rates at almost zero.

"The only ways interest rates can go will be up if the business cycle picks up at all, and we all hope and anticipate that it will," he said.

Funds raised through municipal bonds are paid back to bond holders over time with a set amount of interest.

Commissioner John Allen Brooks asked how much money the refinancing effort would save the county.

Mr. Kiser said he couldn't say for sure.

"At this point, we don't know what the interest rate will be until we do a competitive bid sometime around the first part of March," he said. "We anticipate with our AAA rating from S&P that we will get the best interest rate available."

Mr. Brooks also noted that some of the bonds are not tax-free, which Mr. Kiser said is true. That means the county would have to pay federal tax on the bonds.

He said two of the bond issues use funds from the federal stimulus plan. One of the three issues is tax exempt, Mr. Kiser said, while two are standard taxable issues for economic development and work related to the Volkswagen plant.

Newstex ID: KRTB-0202-42396063