How Butler County taxpayers will see $10 million in savings

Refinancing Liberty Way interchange bonds could save $9.7 million.

Butler County and Liberty and West Chester township taxpayers will see a $10 million savings from the county’s refinancing of bonds for the Liberty Way interchange.

The three jurisdictions issued $41.1 million in bonds that were backed by a Transportation Investment District (TID) in 2007. The current outstanding balance is $40 million and the entire debt will still be paid off in 2034, according to the county’s financial consultant Andy Brossart. He said if the current market rates hold, then $9.7 million in savings could be realized.

“Interest rates have continued to drop, this (his figures) has not been updated from the Brexit market drop,” he told county commissioners. “The market is still trying to find a floor, a setting and as we search in the next week we’ll have a better indication of what the end refunding savings for this issue will be. We don’t see anything happening with the current market.”

West Chester and Liberty townships will be approving the refinancing later this month.

The refinance will also be enhanced because Moody's, Investors Service just upgraded the county's rating to Aa1, the second best score on the rating service's 21-level scale. A year ago the county was given a "positive outlook" assignment by Moody's and affirmed its Aa2 rating.

A good Moody’s rating means lower interest rates when the county issues bonds to pay for new capital projects like roads and refinances old loans.

Two years ago, Moody's lowered the county's bond rating, citing pension obligations and "narrow" fund reserves among other concerns. Moody's also lowered the TID rating to Aa3 but now has upgraded that score to Aa2, because the county's rating directly impacts the TID, according to County Administrator Charlie Young.

The Moody’s analysts noted the county’s aggressive approach to righting what was once — not so long ago — a financial sinking ship, as one reason for the upgrade.

“The stable outlook reflects our expectation that continued economic development, growth in financial reserves and retirement of debt will support credit stability,” the report reads.

Just seven years ago county officials were considering a sales tax increase, until it downsized and reined in wage increase policies, among other measures.

Since then the commissioners have established a budget stabilization fund that will contain $6 million at year's end; instituted pay-for-performance to keep labor costs down; and committed to retire all of its general obligation debt by 2020.

The debt that stood at $91.3 million in 2009, was down to $43 million last year and will be zero by 2020 under the county’s debt reduction acceleration plan.

The cash balance at the close of 2012 was $10 million, and last year it was a “healthy” 32.1 percent — or $28.8 million — of revenues, according to Moody’s.

Brossart said he believes there are only two counties in the state with Moody’s highest rating, and he thinks Butler County can be one of them sooner rather than later.

The speed in which the county re-established its rating might be record-setting, according to Finance Director Tawana Keels. It usually takes three years to have an upgrade considered, but she said officials pushed to get it sooner.

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