Newton County supervisors are moving forward with plans to issue a $5 million general obligation bond to repair roads throughout the county’s five beats.
On Monday, the board heard from Park Berry, of Butler Snow law firm, which is handling the bond issue about the annual payments as well as the structure of the bond.
Should the bond be issued, Berry said the county will need to make three payments per year, one principal payment and two interest payments. The principal payment and one interest payment would be due in July and the second interest payment would be made in January.
For a 20-year bond at 3.5 percent interest, Berry said the three annual payments would come to about $350,000 per year. The board had previously been told the annually payment would be closer to $460,000; however, Berry said that was not accurate.
Also, Berry added, the county is likely to receive an interest rate lower than 3.5 percent, which was used for planning purposes only. Other counties issuing bonds in recent weeks have received rates between 2.4 percent and 2.9 percent, he said.
Supervisors are planning to use revenue from the Internet Use Tax, which is earmarked for road and bridge projects, to pay back the bond. Since the coronavirus pandemic shuttered many stores, the county is expecting use tax collections to rise as more people turned to shopping online during lockdown.
“Things are changing,” Board president Kenneth Harris said, “Brick and Mortars are going away. They’re being replaced by technology, and that’s where this money is coming from.”
Bond rates, currently, are at historic lows, and with the use tax expected to rise, the Board of Supervisors weighed seeking a bond term of 10 or 15 years instead of 20 years; however, they ultimately decided to continue with the 20-year bond issue to keep the cost to the county taxpayers low in case the Internet Use Tax was reallocated by the Legislature. If use tax collections allow, the board agreed to plan to pay the bond off in 10 years regardless of the term.
“Twenty years is a buffer in case something happens,” Board attorney Jason Mangum said.
Berry said the next step would be to advertise the bond notice, allowing banks to submit bids on the debt. The board will be able to review the bids at their next meeting.
If all goes well, Berry said the county could have the $5 million ready to spend by June 30.
