Surry County commissioners plan to borrow $55 million


By Andy Winemiller - awinemiller@mtairynews.com



Surry County Board of Commissioners Chair Eddie Harris discusses the county’s finances as financial consultants Andrew, left, and Doug Carter look on.


Andy Winemiller | The News

Surry County Finance Officer Sarah Bowen explains a spreadsheet regarding the county’s financial plat to Commissioners Buck Golding, left, and Larry Phillips.


Andy Winemiller | The News

STATE ROAD — County commissioners approved a plan for Surry County to take on $55 million in new debt over three years.

Still, the Surry County Board of commissioners, at its annual planning retreat on Friday, intends to fund the debt service without a tax increase.

On Friday morning, the county board met at Klondike Cabins at Grassy Creek Vineyard in State Road for the retreat, which lasted into the afternoon hours.

In December 2015, commissioners opted to hire D.E.C. Associates, a Charlotte-based financial consulting company, to formulate a long-range financial plan for the county in order to give commissioners an idea as to how much the county can spend on capital projects in coming years.

The board faces more than $170 million in school capital requests, according to facilities studies completed in 2014.

The county also has significant capital needs for county-owned buildings, according to county staff.

“You made the decision to freeze $5.2 million for your capital fund,” Doug Carter, the firm’s founder, told the board. “That was a good, long-term, strategic decision.”

In the initial phases of developing the plan, Carter identified how much the county had included in its annual operating budget for capital needs. The dollars were spread throughout the county’s many funds, and commissioners opted to pool them all together into a capital improvement fund.

In the upcoming fiscal year, the county will have about $9.5 million in that capital fund, according to Carter’s projections.

It gave commissioners an idea how much capacity the county had to pay debt service and fund pay-as-you-go improvements, said Andrew Carter, another financial planner.

In constructing the plan, which uses conservative growth rates and interest rates which are likely different than reality, the firm discerned how much Surry County could borrow without increasing revenues by way of a tax increase, said Carter.

The plan the board unanimously approved will direct county staff and the financial planners to work toward issuing $10 million in debt in the 2018-19 fiscal year for general capital needs.

Though commissioners did not earmark the funds for projects, they made mention of a need for a new or expanded jail, costs associated with the renovation of the historic courthouse and aging structures such as the county’s Agricultural Extension office.

In the following fiscal year, the county intends to borrow $30 million to put toward school capital needs.

Commissioner Larry Johnson made mention of how the money ought to be allocated between the county’s three school systems, noting Surry County Schools had about 8,000 students, while Elkin City Schools and Mount Airy City Schools have only about 1,000 students each.

“I think $24 million would go to the county schools and $3 million each to Elkin and Mount Airy,” said Johnson.

It was mentioned the first item needing attention on the Elkin district’s facilities study is a renovation of its gymnasium, a project expected to cost more than $5 million, but commissioners noted it will be up to school boards as to how funds are used.

“This will give the schools a higher degree of predictability from year to year,” noted Commissioner Larry Phillips. “We can debate amounts, and they can debate the priorities.”

Phillips also noted “special appropriations will have to stop to some extent,” and the county must maintain funding for the capital improvement fund without dipping into that to cover operating expenses.

Planning for a third issuance of debt was approved, also, with commissioners looking to finance another $15 million in the 2020-21 fiscal year for more general government capital projects.

The plan called for a fourth stage, with $30 million to be borrowed in 2022-23 for school capital projects; however, the fourth issuance was not included in the motion.

Commissioners noted they wanted to see how the projections regarding the first three worked out prior to approving the final $30 million D.E.C. Associates had included in their plan.

The plan also incorporates $410,000 per year in pay-as-you-go monies for county facilities needs. Three million dollars for pay-go projects for the three school districts is included in the next three fiscal years in the plan, which includes the school districts’ per-pupil capital funding.

County Manager Chris Knopf told the board the schools pay-go figure will drop to about $1.6 million in the 2020-21 fiscal year, as the need for pay-go schools monies should be alleviated by the larger projects financed in the first $30 million earmarked for schools.

Doug Carter also noted in about a decade, as more of the county’s debt rolls off of the books, there will be additional debt capacity, and Andrew Carter said, given the firm used conservative figures “as reality hits it will come in better.”

“Hopefully,” clarified Doug Carter.

Doug Carter called the plan financially prudent in nature, noting it will require $1,200 per person in funding based on Surry County’s population.

“It’s not an extraordinary per capita amount,” said Carter, noting some counties’ per capita debt is $3,000 to $5,000. “And you’ve shown how you are going to pay for it.”

Surry County Board of Commissioners Chair Eddie Harris discusses the county’s finances as financial consultants Andrew, left, and Doug Carter look on.
http://www.elkintribune.com/wp-content/uploads/2017/02/web1_2017Retreat1-1.jpgSurry County Board of Commissioners Chair Eddie Harris discusses the county’s finances as financial consultants Andrew, left, and Doug Carter look on. Andy Winemiller | The News

Surry County Finance Officer Sarah Bowen explains a spreadsheet regarding the county’s financial plat to Commissioners Buck Golding, left, and Larry Phillips.
http://www.elkintribune.com/wp-content/uploads/2017/02/web1_2017Retreat2-1.jpgSurry County Finance Officer Sarah Bowen explains a spreadsheet regarding the county’s financial plat to Commissioners Buck Golding, left, and Larry Phillips. Andy Winemiller | The News

By Andy Winemiller

awinemiller@mtairynews.com

Andy is a staff writer and may be reached at 415-4698.

Andy is a staff writer and may be reached at 415-4698.

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