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Commission committee approves sending $125M tax‑anticipation note plan to full commission amid questions on fees and repayment timing
Summary
Budget committee advanced a substitute resolution to authorize up to $125 million in tax‑anticipation notes (Series A internal $25M, Series B external up to $100M via Regions Bank) to bridge fall cash‑flow until property tax collections; advisors said the external loan is variable rate and expected to be repaid by March, but commissioners requested more modeling of fees, origination costs and credit‑rating effects.
Shelby County’s Budget and Finance committee reviewed and forwarded a proposal for tax‑anticipation notes (TANs) providing up to $125 million of interim funding to cover operating needs before property tax receipts arrive.
Deputy Director Daniel Schombaugh explained the structure: an internal interfund TAN (Series A) up to $25 million from the debt service fund and an external bank facility (Series B) up to $100 million through a negotiated loan with Regions Bank. Financial advisor Albert Brown of PFM told the committee the external loan would be a floating‑rate note (indexed to SOFR) and that an initial market rate at the time of the meeting would price around 3.32%; he also described origination and unused‑facility fees that would be charged when the facility is drawn.
Committee members asked for greater detail on origination and utilization fees, modeled outcomes if interest rates rise, and the effect on the county’s credit outlook. Bond counsel and county staff said disclosure to rating agencies will follow and that rating agencies could react to a cash‑flow borrowing by placing the county on negative outlooks or taking rating actions; staff noted prior experience with a negative outlook after last year’s borrowing. The committee forwarded the substitute resolution without objection for full commission consideration.
