Updated Thu, Nov 7, 2013 10:22 am
The Athens County Commissioners are considering borrowing $1.5 to $2 million from county coffers to pay for capital improvement projects.
On Tuesday, the Athens County Investment Committee set the interest rate the county would charge itself, and also amended the county’s investment policy to allow additional types of investments to be made with county money. Currently the county has about $33 million invested, almost entirely in certificates of deposits. The policy changes update it to reflect Ohio law. The Athens County Investment Board is made up of County Commission President Lenny Eliason, Commissioner Chris Chmiel and County Treasurer Bill Bias.
Eliason said the possibility of the county issuing a bond for improvements — and then buying the bond itself — was raised by Bias, although Eliason said he’d heard of other counties doing it.
“Instead of paying interest to a third party, you pay interest to the county,” Eliason said.
Prior to Tuesday’s action, Eliason, Bias and County Auditor Jill Thompson met with bond counsel about about the matter.
The bond would fund building improvements that could include weatherizing and window replacement in the Courthouse annex, painting in the annex and Courthouse, computer and software purchases and improvements to the county engineer’s facility.
Eliason said the final determination of what would be included would be made after bids were received for the work.
The Messenger reported in May that County Engineer Jeff Maiden presented the commissioners with a list of $1.6 million in improvements he’d like to see at the engineer’s facility, with the big-ticket items being construction of a salt storage building and a fabrication building for making bridge components and box culverts.
Eliason said the fabrication building likely would not be included in the proposed bond issue, but the salt storage building would be — with gas tax revenue used to make that portion of the bond payment.
At Tuesday’s meeting the Athens County Investment Committee set the interest rate the county would charge itself as an amount equal to the interest rate on five-year treasury notes plus 0.5 percent. Currently, that would amount to just under 2 percent, Eliason said, whereas borrowing money the from a bank would result in the county paying an interest rate of about 2.75 percent.
Eliason said the county commissioners hope to make a decision on issuing the bond in the next two to three weeks. He said they want to see an updated estimate of 2014 revenue to make sure the bond payments are affordable.
The revised investment policy adopted by the Athens County Investment Committee expanded the types of investments the county can make. Now included are investments in bonds or other obligations of political subdivisions in the state. The county’s previous policy limited such investment to political subdivisions in Athens County, Eliason said. Also added as allowable investments are commercial paper/bankers acceptances and also notes issued by corporations.
Eliason said commercial paper is short-term debt that corporations issue to cover operating expenses.
Although Ohio law would allow investment of up to 25 percent of the county’s portfolio in commercial paper, Bias and Eliason said they can’t see the county ever investing anywhere near that amount. Bias said he can’t see it exceeding 5 percent.
According to Eliason, such investments are very low risk.
“The risk is slightly higher (than the county’s prior investments), as is the return,” Bias said.
Currently, almost all county money is invested in FDIC-insured certificates of deposit.
“We are heavily ladened in CDs. There would be those who would be critical of that,” Bias said.
Bias said the reason for expanding where the county can invest its money is to get better interest rates. Currently, the county is getting about 0.2 percent. Bias said the county is essentially getting nothing for its money.