Tuesday, November 2, 2010
POLK COUNTY -- The Polk County Board of Commissioners is considering acquiring municipal bonds to pay for remodeling at the Academy Building and road maintenance.
Unlike general obligation bonds, these bonds, called certificates of participation (COP), don't require the county to have voter approval and levy property taxes. These bonds are repaid with funding already in the budget.
County Administrator Greg Hansen presented the option to the Board of Commissioners and the county's budget committee on Oct. 26. Hansen provided example plans calling for a $3 million bond for facilities and $6 million to $6.5 million for roads.
However, final amounts will depend on final project lists and how much the board feels comfortable acquiring.
Hansen said the bonds have advantages over other methods of financing or just completing projects as budgets allow.
"We would benefit from a positive bidding climate," he said. Hansen noted that bundling projects affords the county economies of scale. At around 3 percent interest, these bonds are more economical than other loans local governments can acquire and they offer more flexibility in how the money can be used, Hansen said.
The public works bond could address roads that the 2006 road bond and last year's overlays didn't cover. Funding to pay back the bond would come from increased gas tax revenues coming to the county, estimated to be $1.2 million more annually.
A $3 million facilities bond could complete updates at the Academy Building and improvements at the Polk County Courthouse.
The county already has repaved the Academy Building's parking lot and replaced the roof. The bond would pay for HVAC upgrades and some remodeling. Work at the courthouse includes repairing or replacing the parking lot and carpet and updates on the exterior of the building.
Hansen said money to pay back the bond would come from revenues from facility rentals at the Academy. He said the likely bond term would be 15 years.
At the meeting Oct. 26, budget committee member Phil Walker said the county should keep in mind the regular maintenance needs when considering dedicating money to paying back debt.
Hansen said longer terms would address that concern.
"I think the 10-year option is better than the 5-year option," Hansen said of the public works bond. "It doesn't hamstring the department."
The board was to discuss its options again on Nov. 2.