Town Finances on Solid Ground
With all the discussion on the news networks about economic plans and financial accountability in this run up to the presidential election, I am pleased to report that our town’s financial stability is stronger than ever. The Town of Hilton Head Island issued $27.885 million general obligation (GO) refunding bonds at the beginning of September, which enables us to garner substantial savings in future years through lower interest rates.
The hard work of our finance director Susan Simmons, along with the leadership of John McCann on our council’s Finance & Administrative Committee, made this achievement possible by seeking out and taking advantage of favorable market conditions. I am grateful for the teamwork shown by staff and Town Council on this important matter. The new general obligation (GO) bonds replaced 2005, 2008 and 2010 bond issues totaling $28.440 million. As a consequence, our town will realize more than $3 million in savings over the life of the bonds, which will be used to repay the new bonds faster. In turn, the town, which is funding an aggressive Capital Improvements Plan, can now do so without increasing millage rates for the Debt Service Fund. Therefore, residents and tourists will benefit from new projects without a tax increase.
The achievement was due in large part to the favorable ratings the town recently received from the nation’s three major bond rating agencies, Moody’s, Standard & Poor’s and Fitch, following a rigorous bond rating process. Moody’s rating was Aaa, which is the highest rating it provides. Standard & Poor’s was Aa+ (which is defined as very strong credit worthiness) and Fitch’s was AA+ (which is defined as very low default risk relative to other issuers or obligations in the same nation).
The favorable ratings reports by those three credit rating agencies attested to the Town of Hilton Head Island’s financial strength. Essentially, all three concluded that our finances are well-managed, with healthy reserve balances, and our economic outlook is solid. As a result of this strong performance, the town expects to issue $25 million of bond anticipation notes as an interim source of funding for new projects in our previously approved Capital Improvements Plan. The town will pursue permanent financing in about a year with general obligation bonds as well as beach preservation fees and tax increment financing (TIF) special revenue bonds.
The Capital Improvements Plan includes expansion of the Island Recreation Center, island-wide beach renourishment, Coligny/Pope initiative area improvements, and a number of other items specified in the town’s fiscal year 2017 budget. For more information about our ratings and debt management policies, I welcome you to visit the town’s website at HiltonHeadIslandSC.gov.