DeKalb saves millions with bond refinancing — but missed out on more

Credit: Steve Schaefer

Credit: Steve Schaefer

DeKalb commissioners on Tuesday authorized the county to seek some $610 million in bonds, a package that will both allow for the refinancing of older outstanding debts and fund future water and sewer projects.

The move could ultimately save the county $30 million or more — but had administration officials acted sooner, that figure could’ve been much, much higher.

“Clearly,” Commissioner Jeff Rader said, “there has been a failure over the past year in our financial management.”

Zach Williams, DeKalb’s chief operating officer, said the county had merely been cautious.

“We see [the ultimate outcomes] as wins,” he said, “and we see them as benefits to the ratepayers.”

ExploreStone Mountain Park board selects creator of truth-telling exhibit

Under the item approved Tuesday by the commission’s 5-2 vote, bonds will be issued early next month. The money will effectively allow the county to do three separate things: pay off and restructure $70 million the county borrowed earlier this year as a “tax anticipation note”; fund $230 million in new water and sewer projects; and refinance more than $300 million in similar bonds issued back in 2011.

The latter is how DeKalb will situate itself to save tens of millions of dollars on future debt payments. And where some commissioners have lamented the lack of more timely action.

The bonds became eligible for refinancing in Oct. 2021. Rader, a longtime commissioner and chair of its finance committee, has repeatedly said the county administration should have been prepared to act when that deadline hit — timing that could have proven fortuitous, with the pandemic and other economic factors driving historically low interest rates at the time.

In an internal memo from February of this year, chief financial officer Dianne McNabb estimated that the county could’ve saved in excess of $100 million by refinancing at the time. CEO Michael Thurmond’s office ultimately decided it didn’t want to proceed without an outside financial advisor in place.

The county attorney later raised concerns about McNabb’s suggestion that a firm named Piper Sandler be hired for that role without a competitive bidding process taking place. The commission’s own policy requires as much.

That process eventually happened and resulted in another company — PFM Financial Advisors, the largest such firm in the country — being selected.

The commission approved the associated $1.6 million contract just last week.

That wasn’t easy either.

Rader at the time argued that PFM had “a checkered history in DeKalb.” He said PFM was the county’s advisor when the bonds now being targeted for refunding were initially issued. That is a problem because the bonds were issued before the county had an actual strategy for spending the money in place.

They were issued to help fund projects tied to DeKalb’s federal consent decree to repair its sewer system. The county famously wasted years without making much progress on that work and had to renegotiate the agreement with environmental regulators last year.

ExploreA year into new consent decree, DeKalb making progress on sewer repairs

Around the same time, the county lost its AAA bond rating because it used restricted funds to cover general budgetary obligations.

Administration officials nevertheless said they were confident in their decision. PFM officials were at Tuesday’s meeting and recommended the county move forward with the proposed bond issuance as soon as possible.

Rader and Commissioner Ted Terry cast the lone votes against the proposal. But colleague Lorraine Cochran-Johnson, who chairs the board’s public works and infrastructure committee, raised concerns as well.

“We’ve asked this question over the course of more than a year, many times: ‘When are we going to hear from you? When are we going to have a recommendation?’” she said, addressing Williams and the county administration.

“And we push this out to the very last moment. Shame on us all.”