Money for roads that was invested in bonds by the Beaufort County Treasurer's Office has lost about $40,000 on paper -- but might become real if the county sells the bonds early, staff and officials say.
"As hard as we struggle to find money to fill potholes, the fact that we've lost $40,000 indicates to me that it was a poor investment decision," County Council Chairman Weston Newton said Wednesday during a budget workshop. "Maybe it's easy for me to Monday-morning quarterback, but I don't think it ever should have been put at risk of losing that."
Treasurer Joy Logan has sole authority for county investments. Logan did not attend the meeting Wednesday and attempts Thursday to reach her for comment were unsuccessful.
Treasurer-elect Doug Henderson, who takes office in July, told council that state law restricts the county to highly rated investments, and the bonds purchased with about $2 million of road money meet those standards. If bonds are held to maturity, they are a safe investment, he said Thursday.
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But the road funds will probably be needed before the bonds' terms expire -- county chief financial officer David Starkey said they mature in 2021 and 2039 -- and selling them in the market carries risk. Interest-rate increases have driven down their market value.
"In this case, we were expecting to use these funds, so it should not have ever been put into a bond, anyway," Henderson told council. "That's just what happens when you get caught in a rate environment where the rates start going up a little bit. The bond values drop."
Right now the loss is only on paper. Prices could recover. However, staff and council members weren't encouraged by these points Wednesday.
"We shouldn't lose a penny -- period," county administrator Gary Kubic told council.
Newton joked the county would be better off if it hadn't invested the money at all.
"We invested road monies in some form or fashion, that now we have $40,000 less to build our roads, as opposed to if we had just put it in Mr. Kubic's drawer," he said.
Henderson said Thursday he has written a policy to govern investment decisions once he takes office.
He said primary factors to consider -- more important than an investment's return -- are its safety and liquidity. In this case, the money might have been put into in a money market or state-government investment pool.
"It pays a little less interest, but it's liquid, and it's secure and available all the time," he said.
The policy also would create a county board to monitor and advise on financial investments.