BCC votes 3-1 not to pursue borrowing $40 million for transportation projects

GRAPH PRESENTED at the Aug. 22 Walton County Board of County Commissioners (BCC) meeting showing funded prioritized transportation projects ($25.904 million) versus prioritized unfunded transportation projects ($40.115 million)

By DOTTY NIST

Walton County will not be moving ahead with borrowing $40 million over time for unfunded shovel-ready and immediate needs transportation projects following a 3-1 vote not to seek loan proposals at this time.

Borrowing a total of approximately $40 million had been under discussion by the Walton County Board of County Commissioners (BCC) since early 2023. The decision not to issue a request for proposals (RFP) from financial institutions to initiate the first of a series of loans came at the Aug. 22 BCC meeting at the South Walton Annex.

The vote followed a report from financial consultant Jeremy Niedfeldt of PFM Financial Advisors, L.L.C.

Introducing Niedfeldt, Walton County Chief Financial Officer (CFO) Melissa Thomason told the commissioners that the decision being requested was “simply whether or not the board would like to utilize debt financing to begin structuring these projects.”

“Following the decision either way by the board regarding the funding, staff will be bringing back a five-year plan to the board to allow the specific plan for the individual roads to be discussed,” Thomason added before giving Niedfeldt the floor.

Niedfeldt quantified the cost estimate for transportation projects prioritized by staff as $65.9 million, with 60 percent of that, a little over $40 million, not currently funded.

Of the $40 million, $33.3 million in shovel-ready projects was identified, along with $6.7 in immediate needs projects.

“So we’ve been working towards a plan to provide some options to secure funding for that $40 million,” Niedfeldt told the commissioners.

He explained that a large part of total road project cost, about $55 million, was anticipated for 2024 and 2025, with that amount dropping off for the following three years (to below $15 million per year).

“Anticipation is that there will continue to be a high level of demand for road construction projects as development continues here in the county,” Niedfeldt said.

         His recommendation was for multiple privately-placed bank loans over time to provide funding for the unfunded transportation projects, utilizing loan structures that could vary based on market conditions and provide flexibility for the county to draw funds at the times needed. This would be while the county would continue to apply for grants to offset the amount required from future loan proceeds.

         Niedfeldt noted that with direction from the BCC, on behalf of the county his company would issue an RFP to 75 or 80 qualified lending institutions.

In response, District 5 Commissioner Tony Anderson acknowledged that projects needed to be done and said that he was not against exploring the plan—but observed that “now’s not a good time to borrow money,” speaking of high interest rates that could go still higher. He was also reluctant about “saddling future boards with an enormous debt.”

Anderson also spoke about the county’s “shrinking budget” due to tourism and sales taxes being down currently. While noting that “a lot of these projects” are in his and District 4 Commissioner Donna Johns’ districts, “and I want them done,” he was not sure putting the county into debt was the best way to do that.

Johns was in agreement with Anderson. “I think it’s a terrible time to be borrowing money. I wouldn’t refinance my house,” she said.

Johns said she believed that (initially) the county would not be borrowing $40 million but $15 million with the funding plan of finance. She asked what the county would be paying per year on the loan.

Niedfeldt confirmed that the initial loan would be for $15 million and suggested going out for options of 15, 20, or 25 years. He estimated total payments on the loan at between $1 million and $1.5 million a year on the $15 million loan, depending on rates. Later he clarified that this would be the annual payment for principal and interest.

Johns said she would not want to “saddle the next board with that kind of debt, either.”

“Here’s the other side of the coin,” said District 1 Commissioner Boots McCormick. He noted that construction costs would go up over time. He also said he had pledged when he ran for office that “I would not sit here for four years and kick the same cans down the road.”

“And,” McCormick continued , “this is starting to sound like we’re trying to kick the can, unless finance can show me where we can start some of these shovel-ready projects with money we have in house—I can live with that—but we’ve got to move forward with something somewhere.”

Asked for a prediction regarding construction costs over time, Niedfeldt spoke of “multiple factors that are going to drive inflation, even above supply and labor.”

BCC Chairman Danny Glidewell brought up a Walton County School Board project under construction that he said had been a $31 million project three years ago. “I believe the current cash-out-the-door price is over $90 [million],” he said.

Glidewell predicted that the cost of the $15 million in projects would become $40 million in three years, “and we’re going to be sitting here with still no money.” He noted that sales tax revenue had “gone flat.” “And that’s where the bulk of the money’s got to come from,” Glidewell said.

He emphasized that none of the shovel-ready or immediate needs projects were in his district (District 2).

Johns spoke for redoubling efforts with grant funds, along with the BCC putting a stop to “giving out money for every cause that comes before the board and wants to ask for money from us.” She stated that the BCC cannot continue providing funds to the private sector and other entities who ask for money.

Johns said she was definitely not for kicking the can down the road and wanted to get things done. “But I am certainly not in favor of saddling anyone with the interest rate that we have right now,” she commented. She thought it worth the wait to see if the situation were better in another year’s time.

There was discussion on permits that would expire if projects were not begun soon. Johns countered that reapplying for permits would be “something we can do.”

She moved that the BCC not move forward with the financing plan, and Anderson seconded.

In public comment, Lynnie Scott provided details and numbers on shovel-ready projects, funded versus unfunded projects, project permits, projects for which grants have been applied for, budget allocations for roads and bridges, and amounts associated with the South Walton Tax Increment Financing (TIF) District.

 “We’ve got plenty of money to not just fund them,” she said of the projects under consideration, “but get started on them, and it’ll carry us out to 2025.”

“So I cannot see where we need to even think about borrowing any money,” Scott concluded.

In other citizen comment, Barbara Morano recommended, regarding the plan of finance, “I would say no to this.”

She urged the officials to instead, for project funding, look to other alternatives, including the mobility fee program which is being researched and on which a consultant’s report is upcoming. 

“I absolutely think this is kicking the can down the road,” Glidewell stated, “and I find it ironic that the two north commissioners are fighting for south end projects.”

“Just remember this day when things don’t get done,” McCormick agreed.

“I think we may have to borrow money sometime, but I don’t think today’s the time,” Anderson countered. “I think interest rates are too high.”

“So I want my roads fixed, I just think there’s other options,” he added.

After some additional public comment and the closing of public comment, Glidewell called it “short sighted” not to proceed with the RFP as recommended by the Niedfeld, “and find out exactly what we’re talking about,” 

He called for a vote shortly afterward.

The motion not to proceed with the RFP to lending institutions carried in a 3-1 vote, with Glidewell dissenting, resulting in direction not to move forward.