10-3-22 BOC Regular Meeting - Laserfiche WebLink

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Summary: Lee County, North Carolina;Appropriations; General Obligation reserves would have totaled more than 30%of operating expenditures. Very strong liquidity In our opinion,Lee County's liquidity is very strong,with total government available cash at 31.7%of total governmental fund expenditures and 3.Ox governmental debt service in 2017. In our view,the county has strong access to external liquidity if necessary. Lee County's strong access to external liquidity is demonstrated,we believe,by the county's issuance of GO debt and COPs over the past 20 years.The county does not engage in the aggressive use of investments that we view as likely to add significant volatility to its liquidity position. In addition,the county is not exposed to variable-rate debt that could result in undue liquidity pressures. The county has entered into several private placement COPS.While its private placement transactions contain acceleration provisions,we believe the liquidity risks are partially mitigated by the provisions of Section 160A-20 of the North Carolina statutes,which does not allow for deficiency judgments. In addition,on review of these provisions and other terms of the agreements,we believe the events of default are remote. Adequate debt and contingent liability profile In our view,Lee County's debt and contingent liability profile is adequate.Total governmental fund debt service is 10.7%of total governmental fund expenditures,and net direct debt is 137.8%of total governmental fund revenue. Approximately 67.6%of the direct debt is scheduled to be repaid within 10 years,which is in our view a positive credit factor. Since our last review,we have changed our assessment of the county's debt profile to adequate from strong because, following the sale of the series 2018 issuance,overall debt-to-market value is estimated at 3.1%.We make positive adjustments for overall debt-to-market value being less than 3%. Lee County has no additional debt over the next two years.As a result,and given the growing economy,we believe the county's debt profile will likely improve to what we consider to be strong within the next two years. Direct debt of the county is about 2%. Based on our understanding of the proposed structure of the 2018 LOBs,we estimate that more than 65%of debt will be retired over the next 10 years.In subsequent reviews,should the 10-year pay-out fall below 65%,our view of debt may weaken. Lee County's combined required pension and actual other postemployment benefits(OPEB)contributions totaled 2.1% of total governmental fund expenditures in 2017. Of that amount, 1.4%represented required contributions to pension obligations,and 0.7%represented OPEB payments.The county made its full annual required pension contribution in 2017. The county participates in three pension plans:the North Carolina Local Government Employees'Retirement System (LGERS),the North Carolina Registers of Deeds'Supplemental Pension Fund(RODSPF), and the Law Enforcement Officers'Special Separation Allowance.According to Governmental Accounting Standards Board Statement No.68, employers with benefits administered through cost-sharing,multiemployer pension plans such as LGERS and RODSPF must report their proportionate share of the net pension liability.As of June 30,2017,the county's proportion of net LGERS liabilities was$5.1 million. In addition,the plan fiduciary net position as a percent of the total pension liability of LGERS was 91.5%.As of June 30, 2017,RODSPF was overfunded with a plan fiduciary net position as a percent of WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 6,2018 5