County to use high bond rating to fund capital improvements

Kaua’i earned top grades as county officials received word this week from representatives of Standard & Poor’s that the county’s rating has been elevated from A to A+ — the highest rating the county could have been given, according to county Public Information Officer Mary Daubert.

Five county officials flew to San Francisco last week to make presentations on a bond float for agency representatives that rate organizations on their borrowing power

Fitch Ratings leaders rated Kaua’i’s $49.1-million general obligation bonds (GO), series 2005A, “A+” according to information from the Business Wire.

The bonds will be sold via negotiation with officials from UBS Financial Services Inc. on Thursday, Oct. 27, according to a Business Wire press release.

Fitch leaders also upgraded the rating to “A+” from “A” on $44.1 million in outstanding GO bonds.

Daubert said with the ratings in, the county will seek a new bond issuance of approximately $50 million to finance a number of capital-improvement projects, and to refund prior bonds.

A portion of the bonds are earmarked for public-improvement projects (the following list is subject to change), including the solid waste program, regional-park improvements, Waimea swimming pool renovations, Lihue Stadium baseball field improvements, Kekaha Gardens Park, Wailua Golf Course maintenance facilities, historic County Building renovations, Maluhia Road improvements, a new Kaua’i Fire Department Kapa’a fire station, affordable-housing projects, public-access and open-space acquisition, and neighborhood-center repairs.

According to Business Wire, the rating upgrade is based on Kaua’i’s good economic performance, strong and sustained financial results including high general-fund balances, and prudent and proactive fiscal policies.

The county also has benefited from a growing and diversifying economy, which has led to continued employment growth. County officials said the island has a very strong visitor and second-home-buyer base with a largely affluent profile; assessed real-property values on the Garden Island are on a positive trend, and are providing county leaders with a stable revenue source, and the county has a strong fund balance and a low debt burden.

The Kaua’i contingent flying to San Francisco to make the presentation included Mayor Bryan J. Baptiste, Council Chair Bill Kaipo Asing, Finance Director Michael Tresler, Director of Economic Development Beth Tokioka, and Treasurer Dave Spanski.

Daubert was unable to provide The Garden Island with information on how much it cost taxpayers to send county officials to San Francisco, and whether or not it was necessary for all five people to make the trip.

She said not all the expense-account forms have been filed yet.

She said county officials had been advised by UBS Financial Services leaders to send a “strong management team.

“The end result is a good thing for the county. There will be projects that will improve people’s lives,” Daubert said.

Daubert said a Moody’s Investors Service representative called to say county officials had maintained their high rating of A1.

Daubert said other participants in the bond-float presentation included bond counsel Brian Hirai, a Kaua’i native who works for McCorriston, Miller, Mukai & McKinnon in New York, along with representatives from underwriter UBS Financial Services, Inc., underwriter’s counsel Orrick, Herrington & Sutcliffe LLP, escrow-verification agent Causey, Demgen & Moore, Inc., escrow agent Bank of New York, and bond printer Reischling Press Inc.

The rating considers some uncertainty regarding property-tax revenues collected on 10 percent to 15 percent of the county’s real-property-tax base, according to the Business Wire report.

Currently, taxes are levied under a county-imposed ordinance put in place in response to a voter-approved charter amendment, which was subsequently ruled unconstitutional.

The amendment’s proponents have appealed the decision to the Hawai’i Supreme Court.

The current ordinance in fact grants more in tax relief than the amendment, covering all owner-occupied residential real property, about 15 percent of the tax base, while the amendment covered only a subset of this group, or about 10 percent, according to Business Wire information.

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