Mecklenburg County leaders travel to New York each December to meet with bond rating agencies. That helps them determine how much the county will spend when it borrows money for construction.
In January, County Manager Harry Jones told commissioners that rating agencies had made it clear the county was “teetering on the edge” of being downgraded if they didn't get a better hold of their debt.
A year ago, the concerns prompted the county to revise its debt policy. This year, it led staff and commissioners to delay a $253 million bond sale. The county also is planning to limit how much new debt it takes on in the future, an effort described in a Sunday story.
So what are the concerns? Here are some excerpts from this year’s reports from Fitch, Standard & Poor's and Moody's.
- “Given that the county’s current debt position is already well above Moody’s national median for Aaa rated counties … leveraging to the levels allowable in the debt policy could have negative impact on the credit quality.” – page 4 of Moody’s report
- “Fitch believes the guidelines embody liberal debt burden and debt service spending targets relative to other highly-rated entities; the county contends that the high ceilings provide flexibility and that actual ratios will be below the guidelines.” – page 2 of Fitch report
The annual trips to the rating agencies are largely routine. But on the eve of this year's visit, Commissioner Bill James sent a letter to the rating agencies critical of the county's past debt decisions.
One of the agencies read part of the letter during their meeting with county officials. While some commissioners knew James had sent the letter, the full board did not see it until February. The letter drew strong criticism from some commissioners, who felt James was trying to jeopardize the county's finances. - April Bethea