PDT Staff Writer
On Thursday the Scioto County Commissioners passed a resolution that will eventually lead to the interest on the Shelton Industries Revenue Bonds being reduced from 7 to 3 percent.
The savings could be as high as $500,000 over the life of the bond.
“By doing this we hope to save about $40,000-$50,000 a year over the term of the bond,” said Mike Crabtree, Chairman of the Scioto County Commissioners. “Nothing much is going to change except for the amount of interest we pay. Our interest will be going from 7 to 3 percent. This will save us around $500,000 over the life of the bond, it’s kind of a no brainer.”
When asked when the new interest rate would take effect Crabtree said, “I think we are going to have teleconference with the groups that will be doing the restructuring, but we have not had that yet. This is another step along the way to get this taken care of.”
At a recent meeting of the Scioto County Financial Planning and Supervision Commission a vote was taken to allow the Scioto County Commissioners to refinance the bond.
When asked what the bonds where initially issued for, Crabtree said, “It was for the Shelton (Industries) building, the cosigning of the Shelton building. Over the past eight years that I’ve been here, we’ve tried to issue court orders for the gentleman who was responsible for the debt to come and testify to his current financial status. We have sent certified letters and they have all been undeliverable.”
Crabtree said the county has not been able to do anything else in the way of eliminating the debt.
“We’re stuck with it, so we were trying to minimize something that was a bad deal to begin with,” Crabtree said. “The building is part of the old steel mill property (in New Boston). Unfortunately the loan was never tied directly to any property, it was tied to the business.”
Crabtree said once the business folded, there was nothing to sell to help to pay down the debt.
“We are stuck with a cosigned loan that started in 1998 and will run through 2025,” Crabtree said.
In 2012 Scioto County made a payment of $262,020 towards the debt, marked the Grace Street Project Bond.
The commissioners recently received communication that their general purpose bond has officially been paid off.
The Scioto County Financial Planning and Supervision Commission approved an expenditure of up to $400,000 for the commissioners to pay off a general purpose bond.
Crabtree explained the purpose of the bond.
“A few years back, $500,000 was borrowed (by Scioto County) when the budget was tight to help make payroll,” Crabtree said. “This was discussed with one of the people that handle our bonds and my understanding was that was OK to do. That was one of the things they used to put us (Scioto County) in fiscal emergency.”
On Aug. 19, 2009, Scioto County was declared in a state of fiscal emergency by the Auditor of State. As a result of the declaration, a Financial Planning and Supervision Commission was established.
When asked if paying off this bond brings the county one step closer to being released from fiscal emergency status, Crabtree said, “Oh, yeah.”
“I think that if we did not do this, then they (the State Auditor) are going to carry us for another year of fiscal emergency and we need to be out of that,” Crabtree said. “We have the money, our revenue is strong and we still have over a million dollar carryover.”
Crabtree said the county has been paying on this bond since the money was borrowed around 2006.
With the news of paying the bond off, Crabtree said, “In the end it only cost us $366,578.82 to pay off the principal and the interest. We got notice that it was officially paid off on Sept. 12.”
Wayne Allen may be reached at 740-353-3101, ext. 228, or firstname.lastname@example.org. For breaking news, follow Wayne on Twitter @WayneallenPDT.