The Hawaii County Council will soon be asked to authorize borrowing as much as $50 million to $60 million in general obligation bonds, as Mayor Billy Kenoi works to finish a list of projects before his term ends late next
The Hawaii County Council will soon be asked to authorize borrowing as much as $50 million to $60 million in general obligation bonds, as Mayor Billy Kenoi works to finish a list of projects before his term ends late next year.
Council members have been positive about a new bond float during budget hearings this week, although few details are available. Most want to know more before committing.
Kenoi said Thursday that county officials are still assembling the best mix of projects to be financed with bonds.
“We’ve got a bag of potatoes, a bag of meat,” Kenoi said, likening the list of projects to assembling a dinner menu. “We don’t have all our groceries in one bag. It’s not all together yet.”
The county’s annual debt service — how much interest and principal it pays annually on its borrowing — is 7.9 percent. That figure would go up to 12.12 percent if all the borrowing currently authorized by the council were issued.
The Government Finance Officers Association recommends a ceiling of 15 percent.
Total bonded indebtedness for the county now stands at $357.6 million, or $318.7 million if bonds maturing this year, bonds reimbursable by the county Department of Water Supply against its revenues and bonds to be repaid by improvement districts are subtracted.
The full faith and credit of the taxpayer is pledged under general obligation, or G.O., bonds, compared to other types of bonds that rely on revenues from services or special districts, for example.
One project almost sure to be on the bond list is the Waimea Regional Park, a project long on the wish-list for residents.
Gov. David Ige earlier this year released $4 million to implement phase 1 of the master-planned, 50-acre park that will feature recreational activities including soccer, baseball and football. Also planned are a community gymnasium, multipurpose building and a trail system. The county is expected to provide matching funds.
The first phase is intended to cover 24 acres. The second phase would add 26 acres and convert the area into a regional park.
On the Hilo side, Councilman Dennis “Fresh” Onishi is hoping money will be found to improve Kalanianaole Avenue near the harbor to make it more tourist-friendly. Currently, visitors arriving on cruise ships must navigate a dangerous stretch of roadway to make the short walk from the harbor to downtown.
Onishi hopes the county can put in a bike lane and sidewalks so people don’t have to walk in the road.
Finance Director Deanna Sako said the proposed bond issue authorization won’t be before the council until sometime next month.
Kenoi said there was no special timing about the bond issue, that generally when there is borrowing to be done, the administration asks the council for authorization after the operating and capital budgets are fairly set.
The mayor is currently under investigation by the state attorney general and faces a county ethics hearing on allegations he misused his county credit card.
The council last authorized a bond float earlier this year, when it approved borrowing $20 million for roads and other infrastructure damaged or threatened by the Puna lava flow. That bond issue has not yet been floated, but the county on Feb. 19 issued a $10 million bond anticipation note — a short-term borrowing that will be paid back by bonds.
Fitch ratings, one of the three bond rating firms, earlier this year reaffirmed Hawaii County’s solid financial status. Fitch ratings affirmed its previous rating of county bonds at AA-. The rating agency cited the county’s strong financial management, resilient tourist-dominated economy, centralized governance and independent ability to raise revenues, low debt burden and rising retiree costs as factors in its rating.
An AA- rating is considered a high bond rating , but not as high as the prime rating AAA or other high ratings AA+ or AA, according to the Fitch rating system. An AA- rating means the county has a strong capacity to meet its financial commitments.
