The Bulloch County government received a “very strong” credit rating and then, with the competitive bond sale Tuesday morning, about a $5.6 million break from the predicted 20-year cost of repaying bonds that net $61.6 million to build Phase 1 of the Bulloch County Jail expansion, according to Davenport & Company.

Christopher Holt, vice president of the company that provides financial advice to the county and other local governments, reported first to the three county commissioners who make up the Bulloch County Public Facilities Authority at a 5 p.m. Tuesday, Aug. 5, special meeting and then again to the entire elected Bulloch County Board of Commissioners during its 5:30 p.m. regular meeting.

The county had received initial credit ratings of Aa3 and AA- from the rating services Moody’s and S&P Global, respectively. Both ratings are the lowest of three possible ratings within the second tier, or “very strong” category, thus also third below the highest possible “top tier” ratings of Moody’s Aaa or S&P Global’s AAA.

3.62% ‘true cost’

With four companies participating as potential buyers in the bidding that morning, Wells Fargo Bank National Association was top bidder – in other words offering the lowest overall interest rates for the bonds, and will be the sole buyer, Holt reported. Wells Fargo offered a true interest cost, or TIC, of 3.62%, compared to the 3.6975%, 3.7422% or 3.856% offered by Mesirow Financial, TD Securities and Robert W. Baird & Co., respectively, according to the chart supplied by Davenport & Company.

With bonds issued to mature annually from Dec. 15, 2026 through Dec. 15, 2045, the annual interest rates vary, with “coupon” or preset annual rates starting at 5% and decreasing in stages while the calculated yields start at 2.41% and increase over the first 13 years.

“Investors are wanting the higher coupon, which is a higher cash-flow payment than what the yields are currently trading at. In order to do that, our bonds are being sold at more than 100 cents on the dollar … which is resulting in the county receiving a premium,” Holt told the Facilities Authority commissioners.

Because of this premium, the county will be able to fund the projected $61.6 million in jail expansion costs while only having to issue $58.2 million in par value of bonds, according to Davenport & Company.

“So we’re able to issue less bonds. In turn that will result in lower interest payments for the county,” Holt said.

In April, the Davenport firm had forecast that the total debt service – the cost for the county obtain to the $61.6 million from the bonds and repay it with interest over the full 20 years – would be $84.5 million. The actual debt service cost seen from the Aug. 5 bond sale would be approximately $78.9 million, or roughly $5.6 million less than the earlier projection.

“So this was just a tremendous result for the county,” Holt said. “We also came in under budget on the cost of issuance, which is paying the legal fees and advisory fees and … agency fees. We came in about $100,000 lower on that side as well.”

The cost of issuance is now listed as $484,000.

The 6-year SPLOST

For repaying the bonds, the expected funding source is the 1% Special Purpose Local Option Sales Tax. An 85.8% majority of Bulloch voters in a March 18 referendum approved a six-year extension of the SPLOST.  But, with a $51 million up-front share of the revenue earmarked for the jail and the remainder of the first $138 million dedicated to other projects of the county and four cities and towns, money from at least one further six-year SPLOST referendum should be needed to finish paying for the Phase 1 jail project.

So the financial planners frontloaded the bond series so that the amount being repaid annually will be much greater the first six years, allowing all $51 million in SPLOST funds already committed to the project to be applied to the debt service. Annual principal amounts to be repaid range from slightly less than $5.5 million to $6.9 million for 2026 through 2031. Then the expected repayment amount drops dramatically, to a little less than $1.1 million in 2032 before gradually rising back to $1.9 million the final year, 2045.

During the 5 p.m. meeting of the Bulloch County Public Facilities Authority board, consisting of county Commissioner Timmy Rushing, Commissioner Anthony Simmons and, as chair of the authority, Commissioner Toby Conner, unanimously approved the “final supplemental bond resolution.” Then, in the same meeting room at the County Administrative Annex, those three were joined by the other three district commissioners and Chairman David Bennett for the 5:30 p.m. Board of Commissioners regular meeting.

Closing date: Aug.  21

After approving a change in the order of the agenda, the whole board heard Holt present much of the same information near the start of that meeting. After also hearing briefly from County Attorney Jeff Akins, the commissioners by a 6-0 vote approved an intergovernmental agreement, a contract and other documents that recognize the Public Facilities Authority as issuing the bonds and promise that, if sales tax falls short, the county government will levy property tax to repay them.

The bond sale isn’t final yet or the money in hand. Some documents are slated for delivery next week before the authority closes on the bond sale with Wells Fargo on Aug. 21.

Phase 1, to construct a new jail housing unit with 160 beds for male and 128 beds for female inmates, would cost almost $61.6 million, according to an estimate from earlier this year. Phases 2 and 3, to demolish the older, neighboring Bulloch County Correctional Institution facility and build expanded replacement buildings, are projected to cost almost $39.5 million and almost $66.4 million, respectively. But only Phase 1 is being funded at this time.