Lower interest rates save money By PAUL C. CURTIS – TGI Staff Writer Being the fiscally prudent lot they are, the folks in the Kaua`i County Department of Finance didn’t break out the champagne when word came down that two
Lower interest rates save money
By PAUL C. CURTIS – TGI Staff Writer
Being the fiscally prudent lot they are, the folks in the Kaua`i County Department of Finance didn’t break out the champagne when word came down that two of three leading bond-rating companies had given the county improved ratings or outlooks for its municipal bonds.
But they were about as jazzed as they could get when given the information about straight-A ratings from three companies.
“The finance people are really excited about this,” said Beth Tokioka, county spokeswoman.
Improved ratings means better interest rates on the bonds, and a percentage rate savings of 1 percent equates to a savings of nearly $500,000 to the county over the life of the bond issue, she explained.
Moody’s Investors Service upgraded the county’s rating from A2 to A1, with a stable outlook. Fitch kept the county’s rating as A, but upgraded the county’s outlook to positive from stable. Standard & Poor’s kept its previous A rating and stable outlook.
All three companies saw the stable visitor industry, willingness to raise taxes when necessary, and other fiscal measures as reasons why the county’s financial near future is bright.
The county last week began selling $45 million in general obligation bonds, underwritten by UBS PaineWebber and First Albany Corp. Of the sale, $30 million will refinance existing debt service, providing debt-service savings.
The remaining money will be spent on improvements to buildings and street curbs to meet Americans with Disabilities Act requirements, acquiring a new landfill, renovations to the Historic County Building, improvements at Kekaha Gardens Park, Lihu’e Civic Center expansion, design for expansion of the Waimea sewer system, Lydgate Park improvements, including a pedestrian and bicycle path, and new playground equipment.
“We’re obviously delighted” with the bond ratings, said Mayor Maryanne Kusaka about the ratings companies. She credited budget administrator Alvin Honda and treasurer David Spanski.
“The bond rating agencies have given a strong vote of confidence in the financial condition of Kaua’i County and its prospects for the future,” said Frank Lauterbur, director of UBS PaineWebber’s municipal securities group.
He said the upgraded A1 rating from Moody’s Investors Service, and the favorable commentary contained in the credit reports of the three bond-rating agencies, “reflect the overall strength of Kaua’i County’s economy and its record of sound fiscal management.”
Moody’s said the improved rating “primarily reflects a healthy trend of tax base growth based on a robust tourism sector and increased economic diversification, strong management as reflected by a willingness to raise tax rates and pare expenditures during the recent period of economic stagnation in the state, and a manageable debt position.”
The county’s “conservative budgeting” during the mid-1990s and “willingness and ability to raise property tax rates as needed” also were cited by Moody’s.
“The rating and positive outlook reflect Kaua’i’s stable tourism base, continued economic development, very low debt burden, and improving financial operations,” reported Fitch. “Building activity continues, expanding the island’s visitor infrastructure and providing a positive outlook for continued sound economic performance.
“Along with the tax increases, strong management is indicated by the county’s success in having a $15 million Federal Emergency Management Agency loan reclassified as a grant,” and using volunteers “as the required local match for federal highway funds.”
Standard & Poor’s said the county has practiced “prudent management.”
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
