Archived News

Haywood’s capital projects prompt report from financial advisor

Haywood’s capital projects prompt report from financial advisor

With long-term debt rolling off the books and a number of high-dollar, high-profile projects on the horizon, Haywood County commissioners will have some tough decisions to make following a presentation by the county’s financial advisor.

“I think the information tonight will set you up nicely for being able to make some of those decisions on an informed basis,” said Ted Cole, senior vice president of Davenport Public Finance. 

On Jan. 17, Cole presented a detailed 37-page report on the county’s financial health, including the county’s credit rating, the county’s fund management practices, the county’s existing debt and the county’s capacity to take on new debt in an affordable, responsible manner.  

Previously, Haywood County was rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s. The Moody’s rating is three notches below the top AAA designation, while the S&P rating is two notches below their top spot. 

Bond ratings are important, as they factor into the interest rates the county could qualify for when borrowing. Over decades, even a small change in interest could cost the county hundreds of thousands of dollars. 

The county’s general fund remains balanced and has operated with surpluses over the past few years. Despite substantial appropriations of fund balance — the county’s “savings account” — in the 2022 budget, the total general fund balance remains at 17%, well above the county’s floor of 11%. 

Related Items

That figure puts the county far above its Aa3 peers, as well as above counties with Aa2 ratings. 

“Your finance staff has been fielding calls and inquiries from some of the lenders and none have had any concerns about the financial profile, the trends, it’s all been actually pretty positive,” Cole said. 

As of June 30, 2022, the county had more than $34 million in long-term debt, payable through 2058. Total yearly payments, however, begin to drop precipitously beginning this year. 

For 2023, the county appropriated $2.1 million toward its own debt service. In 2024 and 2025, that drops to $1.6 million. In 2026, that figure again declines to just over $1 million. After that, yearly debt service remains nearly constant around $832,000 through 2043 — if no further borrowing takes place. 

But that’s unlikely, given the long-planned detention center expansion. The estimated cost of the project is listed by Davenport is $19.8 million but for planning purposes has been listed as $21.5 million. Furnishings, fixtures and equipment, as well as staffing and other operating costs, are not part of that estimate. 

Currently, one cent on the county’s ad valorem tax rate is worth $975,527, meaning that for every cent that taxes are raised, the county would realize that approximate amount in new revenue each year. Conversely, for every cent cut from the tax rate, the county would lose that amount of revenue. 

Cole estimated the detention center project would have a tax impact of 1.72 cents. Contrary to a prior incorrect media report, the detention center would not “require” a tax increase of 1.72 cents — it would only have that amount of impact on the budget. 

The detention center could be funded through a combination of multiple policy initiatives, including fund balance appropriation, loans or budget cuts in other areas. 

Additionally, after this year, the county won’t need all of the $2.1 million currently appropriated for debt service and will begin to realize a savings of approximately $455,000 in each of the next two years, and more than $1 million in subsequent years. 

If those funds aren’t stashed away in the savings account or returned to taxpayers in the form of a tax cut, they could be used to defray some of the annual cost of the detention center project. 

The same goes for a much talked about overhaul of the Haywood County Library building in Waynesville. The project comes up every year during the annual budgeting process, but commissioners have balked at the price tag, around $10 million, especially since then-Sheriff Greg Christopher asked for the eight-figure detention center expansion back in late 2020

If the library project gets the green light this year, its tax impact would be nine-tenths of a cent. 

As with the inaccurate reporting on the supposedly “required” tax increase for the jail, the library would not require a tax increase; the figure only represents the amount of money commissioners would need to find through fund balance appropriation, loans or budget cuts in other areas. 

Another massive capital project, a $37 million general education and early college building at Haywood Community College, may also be considered in the near future by commissioners, making the decisions about the detention center, the library and the financing of it all especially critical. 

Cole said that he’d be back before commissioners on Feb. 6 to present the results of the financing proposals for review. 

Leave a comment

Smokey Mountain News Logo
SUPPORT THE SMOKY MOUNTAIN NEWS AND
INDEPENDENT, AWARD-WINNING JOURNALISM
Go to top
Payment Information

/

At our inception 20 years ago, we chose to be different. Unlike other news organizations, we made the decision to provide in-depth, regional reporting free to anyone who wanted access to it. We don’t plan to change that model. Support from our readers will help us maintain and strengthen the editorial independence that is crucial to our mission to help make Western North Carolina a better place to call home. If you are able, please support The Smoky Mountain News.

The Smoky Mountain News is a wholly private corporation. Reader contributions support the journalistic mission of SMN to remain independent. Your support of SMN does not constitute a charitable donation. If you have a question about contributing to SMN, please contact us.