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Bond rater affirms solid forecast for county

A bond rating service has affirmed ratings of AA- (double-A minus) for Henderson County financing of construction and a rating of AA for general obligation bonds.

Fitch Ratings delivered the positive evaluation for the county's general obligation bonds and for a form of financing called certificates of participation, which are repaid through installment payments and secured by a mortgage lien on property such as schools, a courthouse and other governmental buildings.
"Fitch does a review every two years," said county Finance Director Carey McLelland. "The rating basically is affirming our strong financial position and stable outlook for the future."
The county borrowed $25.8 million in 2005 for the Human Services Building and Dana Elementary School renovation and $41.6 million in 2006 for the Historic Courthouse renovation, Technical Building and Blue Ridge Conference Center at BRCC and Sugarloaf Elementary School.
"We later in 2012 and 2013 refinanced that debt because of lower interest rates during that period of time when public debt interest rates dropped to around 2 percent," McLelland said.
CareyMcLelland copyCarey McLellandThe county supplied financial information to the raters and McLelland, Tax Assessor Stan Duncan and Assistant County Manager Amy Brantley explained the county's plans and forecast and answered questions in a phone interview.
Among the factors Fitch cited in its positive assessment were:

  • Sound reserves. "The county has maintained strong reserve levels, even after recent drawdowns for capital purposes."
  • Positive job indicators: "The economic base, while limited in breadth, features consistent employment growth and below average unemployment levels. Income indicators are mixed, with per capita and household income close to or above state levels, but moderately below national averages."
  • Moderate debt: "Debt levels should remain moderate even with additional planned issuance. Overall carrying costs (debt service, required pension payments and other post-employment benefit [OPEB] payments) are manageable."

Henderson County, which had a population of 109,540 in 2013, grew by 23 percent from 2000 to 2013. Its unemployment rate in September of 4.5 percent had dropped 5.5 percent from a year earlier, and remained below the state average of 6.1 percent and national rate of 5.7 percent.
"The local economy is benefiting from ongoing economic development activity," Fitch noted. "A Sierra Nevada Brewing Company facility opened in 2014, providing about 100 new jobs and attracting new businesses to the area ... In early 2015, Sierra Nevada expects to open a tap room/restaurant facility, which will provide 150 new jobs."
The county has maintained healthy reserves despite spending $1.5 million in fiscal year 2012-13 on land and facilities.
"Although the initial fiscal 2014 budget assumed a deficit of over $6 million, the county generated a surplus after transfers of $2.2 million, or about 2 percent of spending," Fitch said. The county's unrestricted fund balance on June 30 was $33.1 million, or 30.3 percent of spending.
The county expects to borrow around $28 million to build the medical education campus, a joint project of the county, the city of Hendersonville, the Pardee Hospital, Wingate University and Blue Ridge Community College and commissioners are considering debt issuance for to an emergency services facility.
"County debt levels are expected to remain low even with these additional debt issuance plans," the ratings service said.
McLelland said it's unknown what form of borrowing the county may use for the joint medical education building because it would depend on market conditions next spring.