Cobb boasts low debt, high credit score

From the Marietta Daily Journal on Thursday, October 19, 2006, by MDJ staff writer Amanda Casciaro

County's rating places it in Georgia's top three

Despite road improvements throughout Cobb and expensive priorities such as the arts, public safety and parks, Cobb has maintained an outstanding debt of less than $40 million - one of the lowest in the state.

Taxpayers are subject to a lower millage rate than any other urban county in metro Atlanta, and Cobb is only one of 20 counties in the country with a Triple AAA credit rating, given by independent credit agencies.

As of fiscal year 2006-07, Gwinnett County and the State of Georgia are the only other governments in the state with a Triple AAA, and Cobb's millage rate is about 15 percent lower than Gwinnett's.

"It speaks to the quality of our employees and the fact that the leadership, to expressly include elected officials and the county manager, have made those tough decisions in the past that have served our taxpayers very well," Cobb Commission Chairman Sam Olens said.

Cobb owes about $19.6 million on a 1996 parks bond and about $19.5 million on a 1993 bond to build the Cobb County Jail on County Services Parkway in Marietta.

The outstanding bonds only account for about 1.35 percent of an eligible debt of $2.88 billion, Cobb Finance Director Brad Bowers said.

"Throughout the history of Cobb County, we have not issued a whole lot of debt," Bowers said. "One of the reasons for that is back in the 1970s, a lot of infrastructure put in for the water and sewer systems for treatment plants used grant money. While we did borrow a portion of it, we did receive a lot of funding from the federal government to build that. I think probably 75 percent came from that."

State and federal grant money, which Cobb actively seeks, along with four Special Purpose Local Option Sales Tax issues have allowed Cobb commissioners to "have a practice of constantly keeping up with our needs rather than letting them get out of hand," Olens said.

The SPLOSTs, approved by voters in 1985, 1990, 1994 and 2005, have predominantly helped finance road improvements. The most recent also earmarks money for 800 MHz radio upgrades for public safety officers and construction of a new courthouse annex.

Because of voter approval and surpluses the past couple years, "we are fully up-to-date on maintenance of our existing buildings," Olens said. "For example, our elevators, our roofs, our (heating and air-conditioning units) are on a current schedule whereas in other governments that's the last thing that's budgeted. We're in a good financial state."

Public-private partnerships such as what helped fund the Cobb Energy Performing Arts Centre also have helped maintain a low level of debt while providing services residents want and need, Olens said.

Debt limits are determined by the total of real and personal property values throughout the county, more commonly known as the tax digest. Those values usually increase each year based on home reassessments and new construction, Bowers said.

In 2005, Cobb was eligible for about $2.6 billion in debt and only used about $45 million of it. This year, the debt limit increased to about $2.88 billion.

Because Cobb uses such a small amount of its limit and has never defaulted on a payment, independent credit agencies such as Moody's have awarded the county a Triple AAA credit rating. The rating helps Cobb borrow money at low interest rates.

Only 19 other county governments in the United States have earned that distinction including Gwinnett County, Palm Beach County, Fla.; Mecklenburg County, N.C.; Greenville County, S.C.; Monmouth County, N.J.; Fairfax County, Va.; and Arlington County, Va.

A top credit ratingCobb was awarded Triple AAA for its general obligation bonds in 1997, and its water and sewer system, which is paid using fees, in 2001.

"We were the first county in the state of Georgia with a Triple AAA," Bowers said. "You get the best interest rate, and therefore it saves you money whenever you do borrow.

"Plus, because these ratings are given by outside agencies, it's an outside confirmation that you're doing what you're supposed to be doing. We were the first water and sewer system in the nation with the Triple AAA, and we're one of three in the nation with Triple AAA for our water and sewer system now."

On a 20-year bond issue, which typically is what governments obtain, a good interest rate could "easily" save several million dollars, Bowers said.

Of the outstanding debt Cobb maintains, its jail bond will expire in 2010 and the park bond, used to buy land and develop parks, will expire in another 10 years.

Because the county's fiscal year ends before property taxes are collected, Tax Anticipation Notes are implemented, but it's paid off in less than a year, Bowers said.

"We collect our property taxes at the end of the fiscal year (in October), so there's a cash flow need in the middle of our year," Bowers said. "We borrow money for less than one year, generally in the beginning of April, and it has to be paid back by the end of December that same year."

If voters approve a new park bond that appears on the Nov. 7 ballot, the debt percentage would essentially double, given the plan calls for $40 million to purchase land for future parks throughout Cobb.

The measure is a general obligation bond, which is paid back using property taxes as opposed to revenue generated through a particular system.

But, according to Olens, that's the only area where Cobb isn't on top.

"Where we haven't kept up is, frankly, more park land," he said. "With the passage of the SPLOSTs, that was the one glaring concern."