County could return to state commission for mall loan
Published 12:10 am Thursday, February 12, 2015
Just a week after getting approval for a loan to build a new Rowan-Salisbury School System central office, Rowan County could return to the state’s Local Government Commission with another financing proposal — this time to pay the purchase price of the former Salisbury Mall.
After extensive discussion during last week’s Board of Commissioners retreat, a loan for the former Salisbury Mall, now called West End Plaza, is once again up for consideration Monday during the board’s regularly scheduled meeting. During the retreat, Finance Director Leslie Heidrick said the county’s bond rating could be lowered without a loan to replenish the $3.4 million in fund balance money used to pay for the former mall. The county is currently rated as Aa2 by Moody’s, AA- by Standard and Poors and AA by Fitch. All are near the top of the agencies’ rating scales.
An agenda item for Monday’s meeting from County Manager Aaron Church to commissioners lists two options. The first would allow the county to solicit bids for financing rates and terms of a loan. The second proposal from Church — “any other motion desired by the board” — leaves the commissioners’ options open.
The agenda item doesn’t list the exact amount of money commissioners would seek in a financing for West End Plaza, which the county is looking to use as a space for government departments.
When asked Wednesday about a West End Plaza loan, Commissioner Judy Klusman said she would support returning to the Local Government Commission with a financing proposal to replenish the fund balance.
“I have always believed that, since the mall was a large capital purchase, number one, the citizens should have been able to vote on it,” Klusman said. “That was a big, big, big chunk of money. Secondly, I do believe that we need to go before the Local Government Commission to get the proper financing for the mall because we do need to pay for it like any other capital purchase.”
A presentation given last week during the county commissioners’ retreat showed the county’s unassigned and available fund balance — functioning partially as the county’s savings account — declining before the mall purchase.
If proceeding with the loan passes Monday, commissioners Chairman Greg Edds said it would be be a decision to uphold the county’s financial strength.
“It’s 100 percent about ensuring our bond rating,” Edds said.
The unassigned fund balance reached a peak in 2009, according to a presentation given by Heidrick during the retreat. The unassigned fund balance dipped to its lowest point in 2010. At the time, commissioners decided to spend the county’s fund balance instead of raising taxes during an economic recession. The most recent numbers in the presentation — for the year 2014 — show the fund balance at its lowest amount since 2005.
But Heidrick said the county is still in sound financial shape. The Local Government Commission — a county and municipal regulatory agency — looks at the county’s available fund balance as a measure of financial stability. If the available fund balance drops to 8 percent, the Local Government Commission could take over the county’s operations. Currently, that number for Rowan is more than double the 8-percent rate.
“We do not have good trends for rating agencies, but we’re nowhere near the 8 percent,” Heidrick said.
Worries about bond ratings were mentioned by commissioners in 2014 as a reason to secure a loan from the Local Government Commission. The county looked to secure approval from the state commission multiple times in 2014, but was ultimately unsuccessful and dropped its application. At the time, Commissioner Craig Pierce said it would be better to wait for new commissioners to be sworn in before proceeding with any type of loan.
Edds said he wouldn’t be overly concerned about the county’s debt if the loan proceeds to the Local Government Commission because the county’s amount of outstanding debt is considered low. Heidrick’s presentation during the county’s retreat shows Rowan’s debt payback ratio as stronger than all of its peers. Alamance, Catawba, Franklin and Davidson counties are shown as peers in Heidrick’s presentation. The county’s debt payback ratio is also stronger than the national median for Moody’s Aa2 rating.
Contact reporter Josh Bergeron at 704-797-4246