KXLG – Watertown, SD At Codington County Commissioners Tuesday’s meeting, Toby Morris, Senior Vice President with Colliers Securities LLC, presented the financing options for the proposed detention center project.
The discussion centered around the potential issuance of bonds and the strategic timing of debt to maximize financial benefits for the county.
Morris emphasized the importance of timing when issuing debt, highlighting how interest rates and market conditions can significantly impact the financial outcome. He used Lawrence County’s recent experience as a case study, where strategic timing and careful management of bond proceeds led to enough earnings to cover annual payments for a new jail. As a result, Lawrence County didn’t have to raise taxes to cover the payment that year. Morris made the point that a municipal advisor can help local governments with timing the issuance of debt.
Morris explained the process of investing bond proceeds to generate additional revenue. He noted that current market conditions allow for higher investment returns than previous years. For example, investments that once yielded half a percent offer returns between 3% and 4.5%.
The upcoming election was identified as a potential source of market volatility. Morris advised the commissioners to consider the timing of bond issuance in relation to the election to avoid unfavorable market conditions.
The presentation covered the balance between using equity and issuing debt. Morris explained that the decision should be based on interest rate trends, with the goal of locking in favorable rates while meeting IRS regulations to avoid penalties.
Morris highlighted the importance of adhering to IRS regulations to avoid arbitrage rebate penalties. He provided an example from Harrisburg School, where careful management of bond proceeds resulted in significant earnings without incurring penalties.
Morris also outlined the benefits of hiring a good underwriter with experience in South Dakota to manage the bond issuance. He explained that underwriters can access wholesale prices for treasuries, providing cost savings and better returns for the county.
Emphasizing a long-term approach, Morris expressed his commitment to working with the county throughout the process, from bond issuance to managing investments and ensuring compliance with regulations.
Next Steps:
· Hiring an Underwriter and an Advisor: The commissioners discussed the potential benefits of hiring an advisor like Morris to guide them through the bond issuance and investment process. They acknowledged the need for a separate underwriter to handle the actual issuance of bonds.
· Market Monitoring: Morris and his team will continue to monitor market conditions and provide recommendations on the optimal timing for bond issuance and investments.
· Community Engagement: The commissioners plan to keep the community informed about the financing process and the benefits of the proposed detention center project.
The meeting concluded with the commissioners expressing their appreciation for Morris’s detailed presentation and looking forward to the next steps in the financing process.
KXLG – Watertown, SD In a public meeting held at the Heritage Theater at the Watertown Event Center last night, “concerned citizens,” led by…
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