Smith County government officials are moving forward with borrowing $39.5 million to fund new road projects.
The Smith County Commissioner’s Court is planning to borrow the money through three separate general obligation bonds — $12 million in 2018, $12 million in 2019, and $15.5 million in 2020 — each with a term of 10 years.
However, on Tuesday, the commissioners approved a resolution that would allow them to spend up to $1 million on road projects now and later reimburse themselves once the bonds are sold.
Although the best time to do roadwork is in the summer, when it is warm, there are some projects the county can start now, during sunny, winter days.
Steven Adams, a financial analyst for Specialized Public Finance in Dallas, said the bond package would increase property taxes by no more than .7 cents per $100 in assessed property value per year during the terms of the bonds.
“These bonds will be paid off in total in 2030,” Adams said. “In 2023, when the (Smith County Jail) bonds are paid off, you’ll still have plenty of capacity to sell other bonds without a tax rate increase.”
Smith County currently has an AA+ bond rating with Standard and Poor’s, meaning the county has the second-highest credit rating available from that rating agency. Standard and Poor’s will need to issue a new rating when the new bonds go to market.
Because of the county’s currently high credit rating, Adams predicted seven to 12 different bidders would compete to buy the county’s bonds. Potential bidders include JP Morgan Chase, Bank of America, and Citigroup, he said.
Adams said parties would submit bids through May 14, and the commissioner’s court would award them to the winning bidder on May 15. The county would then receive the first bond proceeds on June 12.
Nathaniel Moran, the county judge, who presides over the commissioner’s court, said the county is borrowing the money in chunks so taxpayers do not end up paying interest on money that is not yet ready to be used on road projects.
“We sat down and said, ‘How long can we wait to sell the bonds so we’re not paying interest on money that’s just sitting there and not being used?’” Moran said.
Frank Davis, the county engineer, said he has spoken to Moran about doing work on some road projects in the coming months “so the public can see that we are proceeding on with this.”
Davis said the county could start scheduling major road projects, such as widening roads, in May or June.
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