Tuesday, May 26, 2009

County debt rating: 'Teetering on the edge'

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

12 comments:

Anonymous said...

I see fraud and waste everyday. Millions. People are paid for very little work. Relatives get jobs. Projects are approved that seem to benefit only the developer or contractor. Amazing isn't it.

The illegals that taxpayers support with education, health care (they show up in emergency rooms and are not treated), jailing of them when they commit a crime. non-payment of taxes, etc. Why is it the CMS provides translators to illegals of kids of illegals. If illegals were deported then the county would have more money.

Anonymous said...

And what exactly did Mr. James think he was going to achieve with his little letter. Rating agencies would give the county reps a spanking? No, he intended to have some impact on the county bond rating. That will lead directly to higher interest rates. As a CPA he should know that.

This letter behind the back of the Board stinks.

Anonymous said...

The short version: Our county leaders have been blowing money like a sailor on shore leave in Phuket. Now they are finally being told, "Enough."

And yet they will STILL push for a $1B+ light rail line which is going to push us much, much deeper into debt.

Insane.

Mia said...

To the commenter that said "And yet they will STILL push for a $1B+ light rail line which is going to push us much, much deeper into debt."

You really need to learn something about rail development and the impact it has had along the light rail line already. The new line will take it through an area that desperately needs it and will use it. Development will add considerable dollars to county and city coffers and will be a boon to the region. Just because you are either to slow to realize it or live outside the area does not mean you should bash a concept that has been proven with the blue line. It has been a dream development tool to the south corridor and added considerably to the county and city and it is a considerable net addition to the coffers - IT HAS BEEN PROVEN TO WORK, ACCEPT IT.

Anonymous said...

Mia - are you insane? The light rail concept is proven to work by the blue line results? Have you actually been down the south corridor? Developers have to be given incentive to build along the line. Businesses are closing shop and South Blvd is as desolate as ever. Yes, the train is a cool way to get to work if you live in the southern part of the county or the Rock Hill area. But the costs far outweigh the gains.

Also, this post is focused on the county commissioners - the City of Charlotte and CATS control light rail development, funding, etc...

Anonymous said...

Mia - You're nuts. The city had to GIVE LAND AWAY TO DEVELOPERS (Google "Scaleybark Station") to get ANYONE to build there.

Show me the figures that prove it's "a considerable net addition to the coffers".

You. Can't. Do. It.

Anonymous said...

Mia at 3:50,

Yeah, the light rail has done wonders for development! I see lots and lots of development along there. Lots of office space and lots of condominiums! It's a darn shame that they're all empty. Empty, just like the vacant lots where South 21 used to be. Empty like that lot on the corner of Remount and South Blvd. Empty like all those lots nearer Atherton Mills where would-be Carlton Sheets'es thought it'd be a great place to invest. Speaking of Atherton, empty like most of that too.

One thing the light rail has done though...it's done wonders for whatever company it is that makes those plastic "For Rent" signs.

Anonymous said...

6:37,

Thanks for bringing some reality to the discussion. I think "mia" must be Mary Newsom!

Anonymous said...

Mia said,
"The new [one billion dollar plus) line will take it through an area that desperately needs it and will use it."

If the area desperately needs and would use public transportation, wouldn't a bus route be a lot cheaper?

Anonymous said...

Bill James writes a letter leading to higher interest rates? What's his angle there? Something about that really stinks. I mean the guy is enough of a shitheel that he has an aura of stench around him anyway, but this stinks, this really stinks.

Anonymous said...

No, Bill James writes a letter and the County is forced to stop selling bonds for a year and has to impose a limit on sales going forward. He got what he wanted, a limit to unfettered spending. He forced them to prioritize spending and to choose what is most important. CMS will now have to choose and will likely get about 25% of the $2.5 billion in bond requests they want over the next 10years. You all obviously didn't read the letter from O link.

Rick said...

Exactly last anon.

Bill James can speak the truth on financial issues until he's blue in the face, but the rest of the board doesn't listen to him. Some don't like him and some most likely simply don't understand what he's saying.

However, when one of the rating agencies makes his letter part of their presentation, that can not be ignored.

Blaming Bill James for speaking the truth is akin to blaming an abuse victim for telling the authorities.