Water, sewer costs to rise in Berkeley County
Residents to pay more for service because of loan interest rate increase
By Andy Paras
Residents to pay more for service because of loan interest rate increase
MONCKS CORNER — Berkeley County residents will have to pay more for water and sewer because County Council refinanced a loan in 2006 with an adjustable interest rate that shot up dramatically in recent weeks, Supervisor Dan Davis said.
County officials said that as of this week, the Water and Sanitation Authority will have to pay an extra $480,000 a year for the life of the current 23-year loan, unless they pay it off or restructure it. Either way, rate-payers will foot the bill.
"It's absolutely going to require a rate increase," Davis said. "We're just hoping to minimize the rate increase so it will be as painless as possible."
The county has yet to calculate just how much bills will go up.
Documents obtained by The Post and Courier show that in 2005 the county's financial adviser — Ross, Sinclaire and Associates — urged the county not to
refinance $36 million in water and sewer debt using a "synthetic fixed rate" loan because the risks were inappropriate.
The synthetic fixed rate loan uses a variable interest rate guaranteed by a bond insurance company. But the company that provided the insurance, XL Capital Assurance, recently was stripped of its high bond rating as a result of the sub-prime mortgage lending crisis, meaning investors require more money for holding the bonds.
Brian G. Nurick, senior vice president for Ross, Sinclaire and Associates, said the interest rate on the water and sewer loan has grown exponentially since XL Capital Assurance's bond rating was downgraded Jan. 24. The interest rate could go up again since Moody's Investors Service also downgraded XL's rating again on Thursday.
Nurick, whose company was fired six months after it made its recommendation and rehired after Davis was elected, said the county has two options. It can buy itself out of the loan by paying a fluctuating fee that was $1.9 million as of last week. That amount doesn't include the significant costs of refinancing a fixed-rate loan.
Or it can restructure the current loan with another bond insurance company with a higher rating, a less expensive option.
Davis said he and Nurick will bring the issue up for discussion during Monday's council meeting, but he believes it is in the county's best interest to get out of the synthetic fixed rate business.
"I certainly wouldn't recommend we play along with this. Government should not do risky investments or risky bond issues," Davis said.
South Carolina restricts municipalities, county councils and school districts from borrowing money on a synthetic fixed rate basis, but utilities such as the Water and Sanitation Authority are exempt.
Former Supervisor Jim Rozier urged the council to use the method in hopes of saving $2.8 million over the life of the loan. The council voted in favor of it, despite two letters Ross, Sinclaire and Associates wrote to the Water and Sanitation Authority at the time.
"After an extensive analysis, it is our recommendation that the county not proceed with the refinancing," Nurick wrote in a May 31, 2005, letter to the authority that outlined several risks.
The authority wrote a letter to Rozier the same day, recommending the county not undertake the synthetic financing based on several recommendations, including that of Ross, Sinclaire and Associates.
Rozier on Thursday said he did what he thought was right and that it's now Davis' and council's problem.
"I'm not there any longer," Rozier said. "He (Davis) took over the whole thing. He took what was there and what is there. If I was there I would solve the whole thing, but I'm not there anymore. It's his problem. It's the council's problem."
County Council Finance Chairman Dennis Fish said Thursday that while he remembers council borrowing the money, he doesn't ever remember being told that Ross, Sinclaire and Associates recommended against using the synthetic fixed rate.
He declined to talk about the issue further until he had more information.
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Comments
jdooders111 (anonymous) says...
Mr. Davis,
There are other ways to raise revenue besides always wanting to jump right to the taxpayer's pockets. So we have an additional loss from the past administration for refinancing a loan with an adjustable interest rate. Well, lets figure out what else we can do first to raise some money. Lets look at what other counties might be doing.
Spartanburg County Solicitor's office started several years ago a program to help merchants collect bad checks that they had received. The Solicitor doesn't believe that the merchant who is the victim in this case should have to pay the county a fee to try and collect the funds that are owned to them. Spartanburg County crackdown on worthless checks has generated more than $1.5 million for the area merchants and local government. In its first 30 months of operation, the program collected nearly $945,000 in restitution and service fees for Spartanburg County victims and more than $431,000 for the county's General Operating Fund. Several other counties have caught on to this great revenue and have been able to do the same for their merchants and their General Fund. Why don't we do this in Berkeley County. Doesn't cost the taxpayer a dime and makes money for the County's General Fund. We might even be able to pay for that mistake with this adjustable rate interest charge. Guess what merchants will sure like you and taxpayers to for not taking more money out of their pockets. By the way I mentioned this program to one of your present administration associates several months ago. He didn't even give me a few minutes of his time. How much revenue has Berkeley County lost from not providing this program to their merchants. As far as your close administration associate he has already cost Berkely County taxpayers money from not starting this program last year when I brought it to his attention.
February 8, 2008 at 1:22 a.m. ( permalink | suggest removal )
BobH1962 (anonymous) says...
A bad investment choice by Berkeley County politicians now causing the customers to pay for their (the politicians) mistake. Since County Council made the mistake on going with an adjustable rate loan (adjustable means it can go up or down, in case the politicians didn't know that already) over a fixed rate loan (fixed rate remains the same, seems the politicians don't seem to know the difference) they (County Council) should have to pay the difference. No one asked the customers for their input in the decision of which loan to go with so let the politicians who made the decision pay for their decision not the customers. It's called ACCOUNTABILITY !!!!!!!
February 8, 2008 at 3:45 a.m. ( permalink | suggest removal )
Creeker01 (anonymous) says...
Seems to me that "Slik LOST tax" Rozier had a big hand in this. Rozier should still be held at least partly accountable, being the one to push it, rather than be allowed off of the hook by "I'd fix it if I were still there, but I'm not, so its not my responsibility."
I'm no Davis Fan, but Rozier is still a sorry sore loser.
February 8, 2008 at 4:19 a.m. ( permalink | suggest removal )
moonpie (anonymous) says...
I guess that's why Rozier always claimed he never had to raise taxes? He was putting the taxpayers at risk by using risky financing. Hey if you don't like what your advisors are telling you fire them, right?!
It's a stupid thing that was done that now has to be fixed and I agree look else where besides my pocket or I'll go some where else for my water and sewer, oh yeah I can't do that can I?? I have a project where I could use water and sewer and the county would only let us hook into their lines can't use wells or septic tanks. Talk about a monopoly.
February 8, 2008 at 6:23 a.m. ( permalink | suggest removal )
Hey_U_Guys (anonymous) says...
I used to live in Berkeley county, and I'll tell you, it seemed like every other week the price of SOMETHING was going up. It's really a pain in the a$$ living in that county. They have to start paying more to poop and flush it, now.
February 8, 2008 at 7:12 a.m. ( permalink | suggest removal )
Tomahawk (anonymous) says...
Sounds as if there is plenty of poop to flush.
February 8, 2008 at 7:25 a.m. ( permalink | suggest removal )
oldglory (anonymous) says...
Good grief! I couldn't believe my eyes when I saw the County Council had refinanced with an ARM loan! Are members of the Council so young that they have NO financial experience? Did they bet among themselves on a daily basis as to whether interest rates would be up or down? I hope someone made out on this bad, bad deal! Certainly residents of the county didn't. I mean, come on now, this Council gambled with tax payers money!
Did the finance information come from some Council member's buddy? I won't even ask the obvious about good ol' boy, because after reading the morning paper for a year, I know the club is pervasive.
Clue # 1 - INVESTIGATE the COST of REFINANCING NOW! Interest rates have dropped pretty low. See the logic? (or is the payoff on the current loan outrageous, hmmm?)
Clue # 2 - REFINANCE NOW! Whatever the refinancing costs are should not be as much as this overall debt over 23 years.
(I moved from another state to Berkeley in the fall of 2006.)
February 8, 2008 at 7:49 a.m. ( permalink | suggest removal )
teeitup (anonymous) says...
Rozier says he can solve the problem he created?
Good that he still isn't in office.
He needs to keep his mouth shut before the people
of Berkeley County realize he is still around.
February 8, 2008 at 8:14 a.m. ( permalink | suggest removal )
realityck (anonymous) says...
Rozier is still just a spiteful, bitter man, everyone knows that, let's move on.
It wasn't too long ago that Davis and Colin Martin tried to ram down our throats this "reimaging" nonsense, changing the name of Berkeley County Sewer and Water to Berkeley Environmental Services. New name,providing the same service, they wanted to make it sound more environmentally friendly. The name change was going to cost a boatload of money. Now, our water rates are going up.
It seems that they have no problem finding ways to squander OUR money. If county council and other elected officials want to keep coming for our pocket bokos, we'll just have to VOTE our pocketbooks come next election!
February 8, 2008 at 8:17 a.m. ( permalink | suggest removal )
To_live_and_die_in_Dixie (anonymous) says...
You know, Rozier made his mistakes just like everybody does. Nobody's perfect. But he did bring lots of new business to BC and he always tried to find alternative ways to pay for things besides just increasing our taxes. He was a pro-active supervisor and not just a reactive one like Davis is. Davis will just jump in and raise our taxes and then put the blame on the previous administration. I'd be willing to bet that if Rozier was still in office and the mistake came to light, he would find a way to take care of it without raising our taxes!
February 8, 2008 at 8:48 a.m. ( permalink | suggest removal )
Beerkrugul (anonymous) says...
You folks need to write county council and Davis. Good comments and ideas here, but I doubt that Davis or council read these blogs.
realityck I agree. Why would anyone want to spend thousands of dollars to change BCW&SA logo. That's exactly what it is, water and sewer.
February 8, 2008 at 8:52 a.m. ( permalink | suggest removal )
sdr35hw (anonymous) says...
The comments here show a lack of understanding of municipal bonds and their ratings. There will be similar stories as the debt bubble continues to unwind.
February 8, 2008 at 9:12 a.m. ( permalink | suggest removal )
SCHoser (anonymous) says...
This was no mistake-it was a stupid and financially irresponsible decision! I mean, they were advised against this, and they did it anyway! To top it all off, Rozier adds salt in the wound and basically gives Berkeley County the finger. What an a$$. And now we, the taxpayers, again have to solve their stupid "mistakes"! Government at its worse! Business as usual in Berkeley County....Old Glory, you got the right idea, and they need to do it NOW!
February 8, 2008 at 9:23 a.m. ( permalink | suggest removal )
sherlock (anonymous) says...
does anyone know davis' email address? i went to the berk co website and then contact info but there is no email address for him. it figures that government doesnt want to hear what one has to say i guess.
February 8, 2008 at 9:35 a.m. ( permalink | suggest removal )
crankyyankee (anonymous) says...
Is it just me or does anyone else wonder how come when the private sector serves more houses or produces more of a product the price per unit goes down. In the Government sector the more you serve the more it costs per unit. Is there some reason or some circumstance I don't understand for this phenomenon?
February 8, 2008 at 9:35 a.m. ( permalink | suggest removal )
tmetts (anonymous) says...
Hind sight is always 20-20! As they say, there's always three sides to a story; your side, my side, and what really happen! Perhaps we need to know what really happen! I can only tell you that progressive leaders gather information and advice, make a decision or recommendation and move on. Variable interest rates were and are common place. Like most things in business and life, there are risks. As one writer has already commented, there are several options other than raising the rates. It is interesting that when Mr. Davis took office, the BCW&SA had a surplus of approx. $20 million dollars (pretty good leadership by Mr. Rozier). If the BCW&SA and Mr. Davis are concerned about raising rates, why would the County borrow $10 million dollars from the $20 million dollar surplus?? My assumption is Mr. Davis has made some commitments/promises he can't keep, so he is reaching for available funds from within with the hope of replacing it through increase taxes/rates!
February 8, 2008 at 9:55 a.m. ( permalink | suggest removal )
To_live_and_die_in_Dixie (anonymous) says...
sherlock -- I don't know Davis' email address per se, but for BC, the email addresses are the person's first name initial and full last name (i.e. 'jdoe') @co.berkeley.sc.us
So you might try ddavis@co.berkeley.sc.us -- don't know if that will get you there or not -- good luck!
February 8, 2008 at 10:09 a.m. ( permalink | suggest removal )
prosperous_hb (anonymous) says...
What the hell is going up next in Berkeley County?
February 8, 2008 at 11:17 a.m. ( permalink | suggest removal )
prosperous_hb (anonymous) says...
We want Rozier back!!!!!!
February 8, 2008 at 11:17 a.m. ( permalink | suggest removal )
bigmouth (anonymous) says...
Actually, Water & Sewer is only lending $5 million to the county not the $10 that was originally asked for... Apparently, Cypress Gardens will have to be bailed out some other way and BCWS gets to keep $5 mil. Wonder how come that never made it to the paper?
February 8, 2008 at 11:19 a.m. ( permalink | suggest removal )
hgbyrd (anonymous) says...
this is berkeley county not charleston county get your head out and quit doing stupid stuff to hurt the people who elected you. a fair adjustment on the billing procediure would make the sewer charge the same as the amount charged for water so that the big users would be paying their fair share and i want to see a for sale sign in front of that fancy unnessary building in moncks corner. next election we will remember how much common sense was used to solve this situation.
February 8, 2008 at 12:21 p.m. ( permalink | suggest removal )
dwfrance (anonymous) says...
Let ROZIER come back and solve the whole thing...:)
February 8, 2008 at 7:18 p.m. ( permalink | suggest removal )
jammer007 (anonymous) says...
Dan Davis is the root of the problem . He and deputy coroner Bill Salisbury bring new meaning to the "SUCK".
February 8, 2008 at 10 p.m. ( permalink | suggest removal )
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