Davenport: County's remaining school bonds covered; courthouse would require new revenue

At a Pender County Board of Commissioners retreat, the county's financial advisers from Davenport said the county's strong credit profile gives it access to the capital markets, but that funding a new courthouse would require additional revenue.

Mitch Pulio, a Davenport adviser, told the board that Pender County carries a Double-A rating (Moody's Aa2, S&P AA) and that the county's financing plan and dedicated debt-service revenues put the county in a position to issue the $34 million remaining in school general obligation authorization without new revenue. "Those dedicated revenues you've put in place cover the rest of this authorization," Pulio said, summarizing Davenport's scenario modeling.

Davenport modeled two scenarios. Under Scenario 1, issuing the $34 million in remaining school GOs at a planning rate of 5% over 20 years would result in roughly $51.8 million in total principal-plus-interest and, using the county's existing dedicated tax-rate and other school-dedicated receipts, would not require new revenue under conservative growth assumptions.

Scenario 2 added a proposed courthouse estimated by the county's engineers at $58 million (Davenport used a 5% rate and 20-year term for modeling). Pulio said that financing would increase total payback to roughly $88 million and would create a multi-year revenue need beginning in fiscal 2029. "We would need additional revenues in place to be able to cash flow this project," he said, noting Davenport's estimate of roughly $27 million of additional revenue requirements distributed through fiscal 2035 under the conservative assumptions used in the presentation. Davenport presented that amount as equivalent to a peak tax-rate impact in the neighborhood of 6.25 cents in the years with the highest cash need under the modeling assumptions, with impacts declining thereafter.

Commissioners and staff discussed how the county's financial policies interact with these scenarios. Davenport noted two ratios the board sets policy for: debt-to-assessed-value (policy max 2.5%) and debt service to expenditures (policy maximum ~15%). Pulio said the county's debt-to-assessed-value sits near 2.8% under current assumptions and would be slightly out of policy in the near term but that the forthcoming tax revaluation is expected to raise assessed values and improve that ratio. "Rather than fix the policy, fix the fact that you're out of compliance with it," one commissioner said; Davenport recommended continuing to track the ratios and to make informed decisions rather than changing policy solely to remain in technical compliance.

County staff and several commissioners emphasized the contingency that key metrics could improve with a favorable revaluation and continued revenue growth. The board did not take a vote; instead, members said they wanted to review the revaluation results and other updated estimates before deciding whether to proceed with courthouse planning or to identify dedicated revenue sources.

What happens next: staff and advisers will update models when the county's revaluation data are available and return to the board with revised affordability estimates. Any formal decision to proceed with courthouse financing would require board direction to staff and a public process to identify and authorize revenue sources.