Jefferson County’s sale of $339 million of refunding debt July13 at a lower-than-anticipated interest rate of 3.39 percent “represents the final piece of the puzzle” needed to restore the county’s financial health, said County Commissioner David Carrington.
The county returned to the bond markets and refinanced warrants for the first time since emerging from bankruptcy in December 2013, and last week received $1.7 billion in orders for $339 million in debt in a single hour.
After the debt service is paid, the refinancing will allow additional sales tax dollars for the county’s general fund, school systems, transit and other areas.
“Without raising taxes, the refunding provides a minimum annual funding of $25 million for roads and bridges, $18 million for the school districts in the county and $10 million to attract more jobs. Managed properly, this refunding will be a ‘game changer’ for our community,” said Carrington, who has chaired the county’s finance, information technology and business development committees.
Commission President Jimmie Stephens said, “This is great news for the county, and puts the county in a much better position to address the county’s needs and future opportunities going forward.
“It was a very strong endorsement by investors, rewarding Jefferson County for all its efforts to rebuild its name in the market,” said Stephens. “The interest level achieved by this very successful sale is quite remarkable, given where the county was just a few years ago.”
The cash-strapped county filed a historic $3.2 billion bankruptcy in November 2011, which at the time was largest municipal bankruptcy in U.S. history.
Receiving $1.7 billion in orders last week in a single hour was indicative of the county’s current and ongoing health, Carrington said. “In other words, the demand to invest in the county outstripped the supply by five times,” he said.
Buyers included insurance companies, mutual funds, money managers and individual retail.
Benefits of the sale went beyond Jefferson County, Carrington said.
“The GDP of the Birmingham metro area, anchored by Jefferson County, is greater than the GDPs of Mobile, Montgomery and Huntsville added together,” Carrington said. “So the easiest way to increase the state’s economic vitality and tax revenues without raising taxes is to have a healthy and growing economy in Jefferson County. We must never lose sight that a significant number of the citizens in the surrounding counties have jobs in Jefferson County.”
This story originally appeared on The Birmingham Times website.