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Islanders Bank to buy county bonds; proceeds to lighten solid waste debt
Islanders Bank bested the offers of two other banks to win the right to purchase $810,000 in general obligation bonds issued by San Juan County, proceeds of which will be used to reduce the lingering debt amassed by the solid waste operation of the county public works department.
San Juan County Council will formally extend its "thanks" to Islanders Bank for its proposal, which, at a fixed interest rate of 3.125 percent, was the only one of three offered at a rate below 4 percent, according to county officials.
“This is a good deal for the council and a good investment for our local bank," county administrator Pete Rose said in a press release. "It’s genuine ‘win-win’ situation for the people of San Juan County.”
The proceeds of the bond sale will cover debt accumulated by the county solid waste utility in 2009 and 2010. During that time, the operation faced expensive investments in capital projects required to keep its transfer stations operating, while at the same time it saw a dramatic drop in the volume of waste collected at the transfer stations, and in its revenue stream, as the local economy contracted.
Rose calls the bond sale “an action of finality for preparing the county to move beyond an uncertain financial period in solid waste.”
Founded in San Juan County in 1980, Islander’s bank was acquired by Banner Bank in 2007, but it operates under local management and a local board of directors. It's the only bank headquartered in the county, notes Islanders Bank President Brad Williamson.
"We feel like it's very important for us to support the county and its citizens," Williams said. "We're excited it worked out for the county and its citizens and we're just very happy to be involved in the whole process
The annual principal and interest payment on the 15-year bond will be approximately $65,000. The county has relied on loans from various county departments to help pay the solid waste operations debt.
Although the county must pledge its full faith and credit to repay the bond, the council intends to use revenue generated by the excise tax collected from the county's franchise solid waste hauler -- currently that's San Juan Sanitation -- to cover the cost of bond payments. The franchise hauler is expected to handle most of the garbage and recycling that residents now drop off at the county's three solid waste facilities.
The county is setting the stage to get out of the solid waste collection business and turn over its three transfer stations to privately run enterprises after voters rejected a parcel fee in November that would have provided a new source of revenue for the county run solid waste operation.
County officials are preparing paperwork to issue "Requests for Proposals" for private operation of the county’s drop-off facilities, however, both the county and the franchise hauler are preparing, according to county officials, for the possibility that the facilities could be closed if no acceptable proposals are received.
At its May 22 meeting, the council also is expected to consider raising the local excise tax on solid waste disposal from 10 percent to possibly 16 percent. The transition from primarily drop off to roadside collection is scheduled to begin late this summer.
— Scott Rasmussen