Kauai delays
big bond sale

The county is hoping for
better interest rates

By Anthony Sommer
Kauai correspondent

LIHUE -- Kauai County has delayed the largest bond sale in its history until the new year in hopes of attracting better interest rates.

County Finance Director Wally Rezentes Jr. said the county's bond underwriter, Paine Webber, recommended holding off on selling the bonds until January in the belief there will be more investment capital available and thus lower rates. The county had hoped to sell the bonds before year's end.

Rezentes, Mayor Maryanne Kusaka and Councilman Jimmy Tokioka returned earlier this week from meetings in San Francisco with rating firms Standard & Poor's and Fitch IBCA, which are expected to issue ratings on the bonds next week. Kauai holds an A rating but Rezentes noted the county hasn't sold a bond in 10 years and hasn't refinanced its debt in five years. He hopes the rating will be higher, which would mean lower interest rates.

The $25 million bond issue will hike the county's debt from $36 million to $61 million. The current debt would be refinanced at the same time at interest rates lower than the county is now paying.

The bonds are general obligation, meaning they will be repaid from the county's general fund, which is supported mostly by property taxes. The county has increased residential property taxes 18 percent over the past two years.

The lion's share of the bond proceeds, $15.4 million, will be used to build a new police station, Civil Defense headquarters and prosecutor's office on Kapule Highway near the entrance to Lihue Airport. A new courthouse approved by the Legislature last spring is slated to be built nearby. Another $2.3 million will be used to upgrade county facilities to comply with the Americans with Disabilities Act, $1.4 million will be used for improvements at the county's landfill in Kelaha and another $1.4 million will pay for upgrades to county offices.