County consultants: debt capacity exists but school financings will require additional revenue or phased plan
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Summary
Davenport consultants told commissioners Harnett County has debt capacity under policy metrics but school projects (Highland High, CTE high school) create cash‑flow shortfalls on the school side that would require additional revenue (modeled as 'pennies' on the tax rate) or other funding strategies.
Davenport consultants presented a multi‑page financial review to the Harnett County Board on Feb. 10, concluding the county’s credit ratings (Moody's AA2, S&P AA) and fund‑balance reserves put it in a strong position to borrow for planned capital investments — but that school projects create affordability challenges.
The firm reported tax‑supported debt outstanding of roughly $220 million (principal) with total principal and interest of just over $300 million, and noted the county has approximately $33 million of committed fund balance built up for debt service. Davenport said Harnett meets its internal policies on key ratios (10‑year payout, debt to assessed value, debt service to expenditures) and therefore has technical capacity to issue additional debt for county and community college projects.
However, consultants and the finance officer modeled three near‑term projects that the board is considering: an animal services facility (~$12M), Highland High School (planning estimate ~$120M), and a CTE high school (~$60M). The presentations showed that issuing debt for Highland alone would create a school‑side cash‑flow shortfall (roughly $23M across FY30–36) unless revenue adjustments are made. Davenport put the options in tax‑rate equivalents: waiting to raise revenue later requires larger increases (modeled as up to ~3.5 pennies); starting earlier spreads the cost (roughly 1.5–1.8 pennies, depending on timing and assumptions).
Finance staff and consultants emphasized the distinction between policy capacity (ratios and peer comparisons) and cash‑flow affordability. The Local Government Commission’s approval for issuing debt depends on demonstrating the county’s ability to repay without impairing operations; the finance officer warned that drawing down reserves without a restoration plan risks LGC pushback on future financings.
Commissioners were asked to consider phased revenue approaches, use of committed debt‑service balances and timing of bond issuances. No bond authorizations were approved at the meeting; staff were asked to return with updated cash‑flow analyses, proposed revenue options and timing scenarios for the board’s budget and policy deliberations.
"You have the debt capacity to take on debt for these 3 potential projects," a consultant said, and added the affordability question is how to generate the annual cash flow to meet school debt obligations over time.
