Financial adviser: Garner has capacity for remaining 2021 GO bonds; larger borrowings depend on new revenue
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Summary
Davenport presented Garner's debt profile and scenarios showing the town can likely issue the remaining $19.1M of 2021 authorized general obligation bonds within current policies; larger packages would require explicit new revenue (penny-level tax commitments) to remain affordable.
Ted Cole of Davenport told the Garner Town Council on Feb. 3 that the town has strong credit characteristics and room to manage the remaining 2021 general obligation authorization but should weigh affordability before issuing additional debt.
Cole said Standard & Poor's rates Garner AAA and Moody's rates it Aa1, and that the town's debt outstanding is about $84 million, mostly general obligation debt. Key ratios presented included a 10-year payout of roughly 63% and a debt-to-assessed-value near 0.86%, both comfortably inside council policies. "Capacity exists," Cole said, but he distinguished capacity from affordability: "How do we pay for it?"
Using the town's existing debt-budgeting practice (the presentation modeled a dedicated tax-equivalent of 8.5 cents per $100 valuation), Davenport's base case showed the town could issue the leftover $19.1 million in the 2021 referendum and remain within policy thresholds while drawing on a debt service reserve of about $9 million. Cole then modeled scenarios that added 0, 1, 3 or 5 pennies of new revenue in FY2029 and demonstrated how each additional penny increases debt affordability.
Davenport also presented two perspective cases showing theoretical maxima under policy limits: one where the town reaches the town's 2% debt-to-assessed-value limit (a large amount beyond near-term needs) and another that staggers borrowings every other year to increase practical capacity. Cole cautioned the council that referendum ballot language and state rules now require more transparency than in the past; a ballot question must specify both purpose and estimated tax impact over the life of the bonds.
Council members asked about Moody's one-notch gap to AAA, and Cole explained that assessed-value and income metrics (which the town cannot change quickly) account for a portion of the rating. Members thanked him for the analysis and said they would use it to inform CIP prioritization and any future bond discussion.
The presentation concluded with an outline of financing options (GO bonds, installment financing, special obligation bonds) and a timetable if the town wished to pursue a November 2027 referendum.
