Oakland County Bond Rating Presentation
Pontiac, Michigan -- Oakland County expects to retain its AAA bond rating in the face of challenges posed by Detroit’s Chapter 9 bankruptcy filing, County Executive L. Brooks Patterson said today following the annual bond rating meetings with Moody’s Investors Service and Standard & Poor’s.
"Our presentation to representatives from Moody’s and S&P went well," Patterson said. "We demonstrated why Oakland County is the best-managed county in America and why we stand apart in our region."
The outcome of the two meetings will impact the county’s issuance of between $325 million and $350 million in low-interest general obligation bonds in September to refinance its Certificates of Participations, or COPs. Oakland County issued nearly $557 million in COPs in 2007 to fully fund traditional retiree health care benefits as it switched new employees to health savings accounts. The county achieved huge savings. The retiree health care debt service dropped to roughly $48.5 million annually for 20 years versus the pre-COPs annual contribution of $60.2 million over 30 years. That reduced payment schedule has already saved the taxpayers more than $100 million.
Last November, the Board of Commissioners approved Patterson’s request to refinance the COPs using low-interest GO bonds under a new Michigan law. County taxpayers will save more than $100 million, or between $10 million and $14 million a year, from the refinancing of the COPs because interest rates have dropped. In addition, because of the growth in the investment value of the county's two retiree health care trust funds, the county will be able to pay down the principal on the outstanding COPs balance by at least $75 million. This will leave the combined trust funds 110 percent funded.
"I often use the phrase ‘thoughtful management versus crisis management’ to describe our approach to budgeting. The savings speak for themselves," Patterson said.
Oakland County predicts the bond sale will be successful because of its fiscal strength and its plans to market the county to potential bond investors before the bond sale.
"We will hold a live podcast with potential bond buyers to highlight why Oakland County is worth the investment," Deputy County Executive Robert Daddow said. "Our fiscal strength is unequaled in Michigan and across the nation."
The exact dates of the podcast and the bond sale are pending.
During the meetings with Moody’s and S&P, Patterson and members of his team highlighted Oakland County's best budgeting practices and economic development success stories, including a balanced three-year rolling, line-item budget through 2016 and beyond; a budget surplus that far exceeds the guidelines of the Government Finance Officers Association; and economic development and diversification initiatives such as Emerging Sectors, Medical Main Street and Automation Alley.
Joining Patterson in the annual bond rating meetings were Daddow; Deputy County Executive Phil Bertolini; Deputy County Executive Matthew Gibb; Management & Budget Director Laurie VanPelt; Oakland County Treasurer Andrew Meisner; Tom Middleton, chairperson of the Board of Commissioners Finance Committee; bond counsel John Axe of Axe & Ecklund, P.C.; and Brian Lefler of Robert W. Baird & Co., the county’s financial advisor. The meetings were held at Oakland County’s Executive Office Building in the Dennis R. Toffolo Conference Room.
For media inquiries only, please contact Bill Mullan, media and communications officer, at 248-858-1048.