Floyd County hears financing options for health department building; council to consider short-term BAN in March

Floyd County Council members heard details Tuesday about options to finance the county's planned purchase and renovation of a health department building, and were told staff will return in March with formal bond parameters.

Tim Berry, with Crow (financial advisory), told the council that S&P reviewed the county's local income tax (LIT)-backed bonds and "affirmed Floyd County's rating as an A and ... on a stable basis," praise he said reflected the county's recent steps to stabilize LIT revenue.

Berry said the county is preparing to buy a building for the health department priced at "approximately $2,200,000" and expects to come back at the March meeting with maximum bond or BAN parameters for council approval. He described a BAN as a short-term borrowing tool that would give the county flexibility on timing and repayment: "It gives you the flexibility to pay interest only, to make payments, or to convert" to a longer bond later.

The nut graf: Council members pressed for options that avoid locking the county into a long-term obligation before revenues and state legislation are clearer. Berry said a BAN would preserve flexibility during an uncertain revenue period, while a long-term bond could lower interest costs but limit near-term flexibility.

Council members and staff discussed how much the health department could contribute to debt service. Berry summarized counsel-provided limits on what health-department funds can be used for and said the department currently had an annual amount available for debt service of "$87,000" based on presented information; using a long amortization could let the department cover a significant share of payments, he said.

Several council members asked whether a BAN would cost more than a bond. Berry replied that short-term BAN rates are often a bit higher than long-term bond rates but that the difference depends on market conditions and structure. He also warned of pending legislative changes: "There were some amendments to Senate Bill 1 today that might impact general obligation bonds," he said, and recommended staff review the bill before finalizing recommendations.

Berry said the March presentation will include legal documents and the maximum parameters the council would be asked to approve. He also thanked county staff and specifically singled out Diana Topping for assembling the backup documentation provided to the rating agency.

The council did not take a financing vote at the meeting. Berry said he will return in March with bond parameters and documentation for the council's consideration.

Looking ahead: The council will consider the proposed BAN and bond parameters at a future meeting; Berry said staff will provide detailed documents and recommended maximums to let the council decide whether to use a BAN, a bond, or a conversion path later.