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County adviser says Shaw Elk Road bonds can likely be defeased once November receipts arrive
Summary
Greg Vardenberg of Raymond James told the commission that projected sales-tax receipts should be sufficient by mid-November to defease outstanding Shaw Elk Road bonds, after CPA escrow verification and a legal opinion; commissioners discussed residual uses consistent with voter intent.
Greg Vardenberg, municipal adviser with Raymond James and Associates, told the commission the county is approaching the point at which sales-tax receipts will cover the outstanding bonds for the Shaw Elk Road project and allow an early payoff, a process known as defeasance. "We should at some point in November and maybe December the latest, have a fund balance of 2,510,000," Vardenberg said, adding that outstanding bonds then would total about $2,425,000.
Vardenberg described the steps required: county cash would be placed in an escrow account invested in U.S. Treasury securities (the State and Local Government Series, SLGS), a CPA firm would verify the escrow will meet bond obligations and bond counsel (Gilmore and Bell) would provide a defeasance legal opinion. "Once we have the CPA report, then your bond attorney, Gilmore and Bell, will provide a legal opinion or a defeasance opinion that states the bonds are no longer payable by the county," he said.
Commissioners asked whether receipts and accounting lags would affect timing; Vardenberg said defeasance requires cash on hand and that sales-tax collections typically lag by a month or two, so staff is watching weekly receipts. He also advised the cleanest use for any residual funds is a project consistent with what voters originally authorized; commissioners discussed using excess for additional Shaw Elk Road improvements. "The cleanest and simplest use is something consistent with what the sales tax was authorized for," Vardenberg said.
Vardenberg said his office will update calculations after the November receipt, deliver a preliminary verification to a CPA (Robert Thomas CPA was identified as the escrow verifier) and prepare the final legal and escrow documents for commission approval before any funds are moved. The commission did not take immediate action at the meeting; Vardenberg said staff will return with a final package if the November receipts meet projections.
