The Register-Herald, Beckley, West Virginia

Local News

July 11, 2012

City, county not on hook for MSU bond issues

BECKLEY — Millions of dollars Mountain State University floated in bonds with the assistance of the city of Beckley and the Raleigh County Building Commission impose no liability on either government entity, Beckley Recorder/Treasurer Gary Sutphin emphasized Tuesday.

Questions about the bond indebtedness arose after word came from the Higher Learning Commission that the Beckley school had lost its accreditation.

“Technically, we were nothing but a conduit,” Sutphin said.

“It’s more or less a pass-through bond issue. We’ve been assured by the bond counsel, Steptoe and Johnson (in Charleston), that we have absolutely no liability in this whatsoever.”

Moody’s Investors Service recently disclosed that MSU had some $5.6 million in rated debt through the city and building commission, and that some $11 million of its $16.5 million worth of long-term debt entailed bonds issued through the city to refinance the Beckley school’s debt. Money from that was invested in a 200-bed student housing unit.

Sutphin said he was “99 percent sure” that neither the city nor the county is out one cent for the bonds.

“Bond issues come to us from bond counsel,” the recorder/treasurer said. “They assure us the language is in there that we’re off the hook.”

No one has ever contacted the city “saying you’re the issuer of this bond issue and we want our money back,” he said.

“Nobody has ever called us on that,” Sutphin said. “It is my understanding they (MSU) are current (on the bond payments).

“On these, when you’re dealing with pass-throughs, the bond counsel brings them in, they say, ‘Here it is, you’re a conduit, you’re not liable, would you please pass this for us?’”

Sutphin said the practice isn’t unusual and, in fact, the city has been involved in a few others, including one for Beckley Water Co.

“This is just to be able to use the tax-exempt status of Beckley to help better the community, to make the place a better place to live,” he said.

If any default occurred, Sutphin explained, the money would be on the bank of the lending institution, not the city or county.

“And I’m sure property is tied up with the deed of trust and everything else,” he said.

“Of course, that doesn’t help them if there’s no revenue.”

Sutphin took exception with a recent report published in Charleston that implied the bonds undertaken by MSU were considered “junk.”

“If we were involved, and we have a responsibility, it wouldn’t be junk bonds,” he said.

“And No. 2, nobody has called us and told us we owe any money. It’s because we’ve been told we don’t have to. It’s simply a conduit.”

Raleigh County Administrator John Humphrey, likewise, assured taxpayers they won’t have to pick up the tab, if and when any of the bonds fall into default.

“They’re pass through,” he said.

“There’s no liability ever on a bond like that for the county. If they default, the taxpayers don’t have to pick up the tab.”

In its findings, however, the Higher Learning Commission painted a grim picture of MSU’s finances, saying it has an overall debt of $27 million.

In fact, it said, a bank is holding $10.8 million in cash as security for a $9.7 million promissory note due one year from Sunday because a recently-constructed dormitory is considered insufficient as collateral.

And, the school’s bond rating fell from Baa stable to Baa negative in view of its financial instability.

— E-mail: mannix@register-herald.com

 

1
Text Only
Local News
  • Raleigh’s $19.6 million budget approved at special meeting

    Raleigh County’s $19.6 million budget for fiscal year 2014-15 is on the books. The budget and the levy rate were approved at a special county commission meeting Tuesday morning.

    April 16, 2014

  • Calendar — Wednesday, April 16, 2014

    April 16, 2014

  • Learn about advance directives at RGH

    Today is National Healthcare Decisions Day and personnel will be available at Raleigh General Hospital from 9 a.m. to 3 p.m. to anyone interested in learning more about advance directives or who are ready to prepare them at no cost.

    April 16, 2014

  • Greenbrier Valley Famer’s market to open

    The Greenbrier Valley Farmers Market will be opening for the 2014 season Saturday at its “green space” on the corner of Arbuckle Lane and U.S. 219 in downtown Lewisburg.

    April 16, 2014

  • Oak Hill council discusses vacant buildings

    Oak Hill City Council met in regular session Monday to talk ordinance adoption and smoking issues reported in Oak Hill City Park, which was an issue recently raised to Oak Hill City Manager Bill Hannabass.

    April 16, 2014

  • Beckley’s emergency preparedness efforts still ongoing

    Although the City of Beckley Director of Emergency Services position was eliminated two months ago, the county is continuing Kevin Taylor’s emergency preparedness efforts.

    April 16, 2014

  • Old GHS building may get new life

    A Ronceverte school building that was shuttered by consolidation in 1992 may find new life as apartments for senior citizens, if plans floated by a Kentucky development firm come to fruition.

    April 16, 2014

  • Faculty recital set for Wednesday at Concord

    Concord University’s fine arts faculty will perform during a recital Wednesday at 7 p.m. in the Main Auditorium of the Alexander Fine Arts Building.

    April 15, 2014

  • Press conference Body found near Wyoming-Mercer county line

    Human skeletal remains have been recovered near the mountainous border of Mercer and Wyoming counties, officials said Monday.

    April 15, 2014 1 Photo

  • Mega-Site Project: Are we ready?

    The economic success of any area in West Virginia is dependent on many factors, but one essential element is an educated and trained workforce. And increasingly, an educated workforce doesn’t just mean people with four-year college degrees, but instead references residents who are proficient at ready-to-work skills in construction, health care and other fields.

    April 15, 2014