EDITOR:
For those who haven’t read the commission’s site promoting the new jail and half cent jail sales tax, I suggest you read it closely, especially for what is missing.
You won’t find the number $408 million, the total taxes to be generated over 20 years. Instead, you are told the project budget is $80-85 million.
You won’t find any discussion about the interest rate expected to be paid on the proposed general obligation (GO) bonds.
You won’t find any discussion about the county’s debt rating and how it impacts the bond interest rate.
You are told that the county’s outstanding debt is less than $10 million. You have to listen to the May 20 commission meeting video to learn that all this debt pertains to Neighborhood Improvement Districts (NIDs) funded by assessments on the underlying properties. The county is a cosigner on this debt.
Why state $10 million without context? For context, in 2005 the county had total debt obligations of $86 million. The county currently has no direct debt.
Platte County is supposedly the fastest growing county in Missouri. 2020 census data shows an average household income of $71,000. Only St. Charles County (St. Louis) is higher. Per capita income is $61,000, making Platte one of only six counties above the Missouri state average. Only St. Louis County is higher.
There are three proposed interest rates in the financial projection: 4.5%, 5.5%, and 7.0%. A 7.0% tax free rate translates to an 11%+ tax equivalent rate, i.e., high risk junk. Platte County, with no direct debt and the second highest incomes in the entire state, is considered high risk.
With such high relative incomes, why is Platte County considered a high risk borrower for “the most secured debt…which is secured twice…one by a sales tax…and two by the ability to levy taxes on property owners?”
The county was historically rated AA by the capital markets. Current 20 year AA interest rates approximate 3.8%, but the best we can do is 4.5%? What is the commission not telling the public?
The answer lies with Zona Rosa and a 2007 2-1 commission vote to supposedly back Zona Rosa’s parking lot revenue bonds, which were to be funded by a 1% Zona Rosa sales tax. In 2018, when sales taxes were not sufficient to cover the bond payments, the county was asked to make payment. The 2018 commission took the position that the county was not liable because voters didn’t approve the debt, a position with which I was then and still am in agreement. In fact, the Zona Rosa bonds are certificates of participation (COPs), which are subject to annual appropriation. That the 2018 commission didn’t appropriate funds for COPs issued by a private entity caused the rating agencies to get their panties in a wad and lower the county’s debt rating. Call it a bond market temper tantrum. Responsibility for paying the Zona Rosa COPs was turned over to the courts. When the fight was over, the courts sided with the county. It seems that the county’s debt rating should have been restored at this point.
Back to the jail bonds. Question 1 seeks approval to issue GO bonds and requires a 4/7 majority in compliance with the Missouri Constitution. Why is there no disclosure or discussion about debt ratings and interest rates on the commission’s jail information site?
This is no small matter. It could be a $40 million matter. Think about that. The commission is apparently unconcerned about taxpayers incurring a $40 million cost due to a temper tantrum.
I understand the concerns about the jail, but the jail has been a topic for over a decade. Yet it’s crickets when it comes to the county’s debt rating, the interest rate on debt, and $408 million of new taxes.
Taxpayers have a right to know what is needed to secure a AA debt rating. The county’s income and zero direct debt status warrant a AA rating. Placing a bond issue on a ballot before securing that AA rating is putting the cart before the horse.
The commission seems to be sending a message of desperation. That’s quite a message to send to the bond market, and sadly, to taxpayers.
-- Gordon Cook
Parkville