The Scott County Board of Supervisors advanced a bi-state emergency radio project Thursday night agreeing to sell $12.68 million in bonds to a Dallas investment group.
Scott County will use the new bonds to pay for the Iowa portion of the $17.6 million radio infrastructure project with Rock Island County. The major capital project, which will purchase new communications towers, transmitters and individual radios for first responders, will create a single emergency radio network for the Quad-City region.
The board voted 5-0 to accept the bid of BOK Financial Securities Inc. The low bid was recommended by the county's bond adviser, PFM Financial Advisors.
Jon Burmeister, PFM's managing director, told the board that the bond issuance received 11 bids representing a total of 44 underwriters from across the country. "We're excited by the number of bids."
He attributed the competitive bidding to the county's strong Aa1 bond rating, the bonds' short nine-year term and the fact "the structure really was attractive."
Before the meeting, Burmeister added, "The bond supply is down so there is more demand than there is supply."
David Farmer, the county's budget and administrative services director, said all 11 bids included a premium, or an upfront payment they were willing to pay to the county to buy the bonds. "It shows how interested they were in our debt," he added.
BOK Financial's bid included a $1.8 million premium. With the premium taken into consideration, BOK Financial's bid was for 1.3920% True Interest Cost over the life of the bonds.
In an interview earlier Thursday, Farmer said BOK Financial will pay $14.56 million for the county's $12.68 million in bonds.
"The bids are what the county will pay investors in interest, that's why we want it low," he said.
The county's total debt service over the life of the bonds is $15.36 million.
The issue cover three general obligation purposes, two of which deal directly with the radio infrastructure project: $6.48 million for the radio infrastructure upgrades and $5.41 million for the purchase of new radio replacements.
Additionally, the county included $2.9 million in refunding bonds in order to refinance its outstanding debt from the 2009 creation of the county-wide dispatching center, Scott Emergency Communications Center, or SECC.
Farmer said the county also will use $3.6 million in cash from its E911 fees to pay down half of that remaining SECC debt.
As a result of the refinancing, he said the county's debt service will be reduced by $1.15 million and the bonds will be paid off five years earlier.
"We saved $1 million out of actual costs going out the door over nine years," he told the supervisors.
Farmer said Scott County will pay a total debt service of $15.36 million back to BOK Financial between 2019 and 2028.
He attributed the county's high credit rating to sparking more interest in the county's bonds and ultimately, obtain the lower interest rate.
Last month, Moody's Investor Services affirmed the county's credit rating of Aa1, the second highest rating possible.
Of the 35 Iowa counties with credit ratings with Moody's, only Scott and Pottawattamie counties have Aa1 credit ratings. Only three — Dallas, Linn and Polk counties —rated higher with an Aaa rating from Moody's.
With nearly $17 million in new debt for its radio infrastructure project, Scott County still is well below its legal debt margin, Farmer said.
Before the new bonds, the county's debt level was $33 million. Its legal debt margin is $751 million.
"Iowa has a cap of 5% of your assessment (actual value of all the property in the county). We're only at 3 or 4 % max," he said.
He said since emergency communications is considered a essential county service, the bond issue did not require a referendum.