A new method for the county selling the first $100 million of SPLOST VIII bonds has created an apparent division between county leaders.
At a recent work session, commissioners voted 3-2, with District 3 Commissioner Todd Levent and District 4 Commissioner Cindy Jones Mills opposed, to move ahead with a new process for the county for issuing the bonds.
In the past, the bonds were sold in a negotiated sale, which means the underwriter is selected to purchase the bonds before selling them to investor customers. Under those sales, the bonds are tailored to both the clients and the issuer and involve a presale.
Under the method approved by commissioners, known as a competitive sale, the bonds are advertised for sale and any broker-dealer or dealer bank can bid on the bonds at a designated date and time, with the bonds being awarded to the bidder offering the lowest interest costs.
“Part of what you’re seeing here is a little bit of evolution in the marketplace,” said Courtney Rogers, with Davenport and Company, which provides financial advisory services for the county. “When I started back in the ’90s, municipal bonds, some people knew what they were, some didn’t. Today, they’re becoming almost more of a commodity, and you’re at the top of the heap – AAA – you’re the most desired credit out there, so everybody wants it. It’s easy to sell, because we want the top quality.”
The decision to change came with some fiery discussion among county leaders.
Mills and Levent said they favored the process previously used by the county due to its track record of success, the flexibility from letting the previous underwriter hold the bonds until the most profitable moment, their relationship with the underwriter and the fact that the county obtained its AAA rating using that process.
Mills said the plan was “sprung on” commissioners and said she had “more confidence” in the previous underwriter than County Manager Eric Johnson or her personal financial advisor.
“You’re bringing it to us at the last minute when the decision has been made for us,” Mills said.
Johnson disagreed with Mill’s assessment and said the competitive sales were considered best practice by industry professionals, including government official organizations and those who sell bonds in and outside of government.
“There’s a few items that come before the board that the difference in how we do business could cost or save us hundreds of thousands of dollars, and I feel very strongly,” Johnson said. “… Ethically, I have to make this recommendation, but, commissioner, the board has every opportunity to go against our recommendation, our financial advisors. It’s a policy decision.”