Monday, October 26, 2015

Kaliner Interviews Janet Cowell

Pete Kaliner interviews NC Treasury Secretary Janet Cowell


KALINER: Your office has had a little bit of a role in our local debate over the water system. I guess you did a report or you gave an opinion to the effect of how a transfer, how this merger would or could impact the city's finances.

COWELL: So, yeah, to clarify, the Treasurer's Office...we are also very unique nationally in that out of the Depression came a system of oversight of local government. We had one hundred and sixty defaults during the Depression. Not good.

KALINER: Not all from here, though. Most of them, probably.

COWELL: Well, all over the state.

KALINER: There were...but...yeah, but there were a bunch from Asheville.

COWELL: All over the state.


COWELL: And so we put in an oversight system, called the Local Government Commission run through the Treasurer's Office and we look at the finances for every single unit of government. We help them issue debt and just make sure that everything stand between the guard rails. In the situation with Asheville, we are sort of the technical adviser to the situation and all of this gets complicated because, actually, the bill is drafted strangely, so it was not clear: does this need to go through the Local Government Commission? But we're goal is to make sure that everything is smooth-functioning, that there's no disruption to the bond market in North Carolina, you know, that the operations continue and try to work with everyone to make sure that that is what happens.

KALINER: So, well, because Asheville city leadership has been saying that your office gave this report that basically supports their position that this could disrupt their credit rating.

COWELL: I think the piece that we spoke to is that there was some conception that: oh, this won't impact the...the, um, you know, the budget of the city and in fact, you know, there are city administrative services, like technology or the city manager, and you allocate portions of that, so there's a two million hit to their budget with this transfer and so we wrote a note explaining that, and showing... saying why that's legitimate, that's not a problem. But you just need to understand...

KALINER: That doesn't undermine their triple-A. That would not...a two million dollar hit.

COWELL: No, not in and of itself. And their documents have been much more clearly written. We have weighed in more on the Charlotte Airport because it is a...their documents on that bond transfer did not foresee a transfer. Asheville's did foresee a transfer. There are still complications, um, but in Charlotte it's also eight million dollars of outstanding bonds. That is a very big issuance and it is very unclear how that would all roll out.

KALINER: And I'm just...and you've also've got the Feds involved on that side of it because you've got FAA stuff, I'm sure.

COWELL: Exactly. So...once...anything with airports, I think it's even more complicated than local. But we are also running a bill trying to clarify for water/ know, Asheville is a great system. You guys are solid, you're a very well-run unit. But that is the biggest problem with local government. I said it is not the Randy Parton Theaters or these, you know, crazy kind of entertainment complexes. Water/sewer is a huge problem. We're just trying to make a predictable path so that everybody can have a good system. If there is a change, or you do go regional, that there are clear guidelines and there are no surprises.

KALINER: Because the MSD, the Metropolitan Sewerage District that runs the sewer side of things, the regionalized, sort of, sewer system, they...they've got good bond...they've got a good bond rating as well.


KALINER: So...and if these are Revenue Bonds versus G.O. Bonds, I would assume that the ownership follows...or the, you know, because it's supported by the revenue stream.

COWELL: Yeah, and I think...I think folks sometime overly fixated on the bond rating's going to be the issue. I think, sometimes it's an ancillary issue. Like, the City of Raleigh called me when Dick's...the Dicksly's...would that effect their bond rating? It's, like, no, it's not going to effect your bond rating. It doesn't mean that it's a good idea or bad idea. But it's not going to effect your bond rating. It takes a lot, you know, impact that. But that's not the only issue. There's obviously continuity of operations, those kinds of issues are probably the bigger...the bigger issues.

KALINER: So, how much guidance are you your office able to offer and what does that sort of look like on a...on a merger deal if this thing does get through the courts at some point? And it's going to be a while.

COWELL: Yeah. We're working hard. We have a public counsel, where we've been trying to understand the bill, because, again...and having been a state senator...sometimes things are not well-drafted. I know it's hard to believe.

KALINER: Shocking.

COWELL: Yeah. And this one been...the drafting was a little unclear. So, we are working both on that aspect as well as with the financial markets, the lawyers, to make sure that, you know, everything goes as smoothly as possible.

KALINER: North Carolina's treasurer Janet Cowell. We appreciate you stopping by today. Thank you very much. Are you heading back to Raleigh today or are you spending any time...?

COWELL: We are, if you have restaurant recommendations, we will be out on the town tonight...uh, yeah, we've got some more meetings tomorrow, so...

KALINER: All right. We appreciate you stopping by. Thanks so very much. Enjoy the rest of your stay here in the mountains.

COWELL: Thank you.

KALINER: Thank you.