Oakland County has closed a bond deal that it estimates will save taxpayers about $130 million, County Executive L. Brooks Patterson and Treasurer Andy E. Meisner announced on Sept. 27.
The county issued $350 million in limited taxable general obligation (GO) bonds on Sept. 26 with the majority purchased by Bank of America, N.A. The county will use the proceeds eventually to refinance existing debt and to supersede the county’s future retiree health care obligations.
“Bank of America sees Oakland County as a good investment because it has confidence in our budgeting practices and AAA bond rating,” Patterson said. “In return, the county will see a substantially lower interest rate which will save taxpayers well over a hundred million dollars.”
The deal with Bank of America will lower the county’s interest rate from 6.2 percent to 3.62 percent when the remaining balance on the current debt is paid off.
Because of the growth in investment value of the county’s two retiree health care trust funds, the county will utilize available assets to pay down some of the principal. This will leave the two trust funds about 108 percent funded, ensuring that both will remain fully funded and future retiree health care costs are covered. The net savings to the county’s budget will be approximately $13 million a year until the GO bonds are paid off no later than 2027.
"Saving taxpayers millions and affirming our commitment to our retirees' healthcare is a big win for all," Meisner said. "We worked together as a team, demonstrating the outstanding leadership of Oakland County."
Working in conjunction with Oakland County, its bond counsel Axe & Ecklund, P.C., and other interested county and local governments, the State of Michigan passed Public Act 329 of 2012 which was effective Oct. 9, 2012. The law gives certain local units of government the authority to issue GO bonds to fund retirement-related costs.