$306,000 Bond Fifth in Two Years
WINNSBORO (Feb. 19, 2016) – Fairfield County Council has issued its fifth general obligation (GO) bond in barely more than two years, this one in the amount of $306,000.
The new bond, like the four previous GO bonds, is being issued to pay off the County’s $24 million bond debt.
In a circuitous arrangement, County Council created a shell corporation in March 2013 that enabled the County to borrow $24 million for specific economic development projects. A month later, on April 15, 2013, Council passed an ordinance that allowed the County to issue GO bonds to pay off that $24 million debt. The GO bonds would provide funds from property taxes to make installment purchase payments to the shell corporation which it (the shell corporation) would use to pay off the $24 million debt.
After the first GO bond was issued Feb. 12, 2014, surprised residents complained that the County’s scheme to make payments (to the shell corporation) to pay off the $24 million bond debt with a string of GO bonds had not been explained to the public by Council in open meetings. And the GO bond ordinance was short on specifications as to the amount of the bonds to be issued, date of issuance and the total number of bonds authorized by the ordinance.
So long as the bonds issued did not exceed the County’s eight percent debt limit, Council could issue bonds without the voter’s permission. Even so, the state statute provided a 60-day window that allowed the voters of Fairfield County to initiate a petition that could have forced a referendum on the GO bond ordinance, effectively halting the issuance of the GO bonds altogether. But elected officials and newspaper accounts may have derailed any such petition effort by wrongly referring to the ordinance passed on April 15, 2013 as the $24 million bond, not the GO bond ordinance which was subject to the initiative petition.
Adding further confusion, then County Administrator Philip Hinely and then Director of Economic Development Tiffany Harrison, were quoted in The Voice as saying the $24 million bond would not increase taxes. But a chart obtained in 2014 from the County showed that it is actually the GO bond debt (that is continually levied to make the installment purchase payments on the $24 million bond) that keeps the County’s debt millage at an elevated level of approximately 10 mills (or about $1.27 million) each year until about 2042, at which time the debt millage will begin to decrease steadily, reaching zero by 2047.
While the County borrowed $24,690,000 to pay for economic development projects, it will repay $43,200,663 for just the principal and interest on that bond debt, according to the bond document.
Although County officials have long aligned the payments for the $24 million bond debt with the dates the County would realize additional income from the second and third units at V.C. Summer nuclear plant, the County’s Interim Administrator Milton Pope, noted during a joint meeting of the Fairfield County Council and the Fairfield County Legislative Delegation in 2014, that the semi-annual installment purchase payments on the $24 million bond do not depend on income from the V.C. Summer nuclear plant. He said it was planned from the beginning to pay off the $24 million bond with property tax revenue from GO bonds.
