Brad Briner will be our new North Carolina State Treasurer starting in January. Naturally (for us) we thought we’d offer some completely unsolicited advice for how the Treasurer’s office, through the Local Government Commission, could make life better for the LGC’s constituents. None of our suggestions requires new legislation, and we think they would only make life easier for the LGC staff. Several of our ideas are about changes to the website:
Post clear information (names, phone numbers and emails) as to who to call with what kinds of questions.
We all like to know how to reach the right person for our inquiry, and that can be difficult with regard to the LGC and the part-time clerk/finance officer who borrows money once every five years. Many state government websites have those sorts of directories and we’d like to see that at the LGC. Here’s how that shows up for the UNC School of Government.
This fix would make it easier for everyone to know to contact Tony Blalock with a general question about general obligation bonds, for example, and provide his contact information. Today, if you can find the “debt inquiry
spot you can type in your question there. But it seems that not as good as being able to call someone you know can help you with your question (This advice would apply just as well to the fiscal management side ).
Put the debt application forms on the website as fillable pdfs.
In the past, staff members have expressed reluctance to post the blank application forms for various reasons, but it is consistently identified to us as a source of annoyance. The on-line version of the applications could still include a prominent (big, bold, underlined) statement about being sure to consult with LGC staff before actually filing an application.
Post information about current rates.
We understand that LGC staff doesn’t want to be held responsible for quoting a rate that the unit later can’t obtain. But people who are contemplating a loan or just getting started only need a wide ballpark estimate. We are thinking about maybe two charts – maybe one showing the results of the last ten GO sales (issuer, amount, ratings, average life and TIC) and one for the last ten bank-placement installment financings. Anyone doing a public sale has a financial adviser for that information, and bank-placement revenue bonds are still too uncommon to warrant a chart. Of course the charts would include an appropriate disclaimer.
Two more non-website ideas
Fix the glitch with revenue bond application fees.
The current LGC regulations impose a charge of $12,500 for each revenue bond approval. It would be more appropriate for those application fees to mirror those that apply for installment financings—so make it $1,250 for a bank-placement financing and $12,500 for public offerings. It’s always easy to say that someone else would face only a minor decrease in fee revenues—but the current schedule creates an artificial disincentive to use revenue bonds, and seems to have been an unintended result of the last round of fee adjustments. Those fees should be easily findable on the website as well.
Expand the use of alternative forms of “competitive” sales for general obligation bonds.
The law currently provides that general obligation bonds (with the exception of refunding bonds and some sales for lower-rated units) have to be sold through a “competitive” process. In practice, the LGC has generally required these sales to be sold with a fully-developed official statement and ratings from the national bond rating services. “Competitive,” however, can mean something less expensive and time-consuming. The need to incur the related high issuance costs drives borrowers to forego small G.O. bond sales and instead pursue installment financings. An entity with $2 million in two-thirds bonds capacity and some land to buy is driven into a bank-loan 160A-20 because of the prohibitive financing costs; is that really what the LGC wants the outcome to be? The LGC runs a process for the sale of bond anticipation notes that is “competitive” without requiring the use of a fully-developed official statement or the cost of bond ratings. It would seem relatively simple for the Commission to adopt a policy or regulations to use a similar process for general obligation bonds with a face amount of $10 million or less (there may be a better number — $10 million is just a suggestion).
And one for the road . . .
It’s been great to see LGC staff members, including the Secretary and Deputy Secretary, attend some of the finance officer conferences and even appear on panels. But we could take that a step further. Panel presentations don’t provide the best forum for individualized questions, and folks often don’t know the other staffers. Why not have the LGC staff a booth when there are booths for sponsors? I know that NC – GFOA could afford to forego a sponsor’s fee for the LGC. This participation would give folks an opportunity to ask their individual questions and get to know the full staff.
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Our idea in this post has been to focus on simple ideas. We know there are plenty of other policy areas that will occupy the Treasurer’s time. If you like any of these ideas, or have your own, we encourage you to pass along your thoughts to the new Treasurer or an LGC staff member.
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