Spokane County weighs ARP funds, bonds to cover $35 million campus boiler and infrastructure project

Spokane County officials asked the Board of County Commissioners on June 2 for direction on financing a multiyear campus infrastructure project that includes replacement of boilers, switch gear and other systems estimated at about $35 million.

The issue: Construction contracts and invoices are already being billed and county staff said they have spent about $3.1 million to date on the project. Staff recommended creating an appropriate capital account and asked commissioners whether they want to commit remaining ARP (American Rescue Plan) balances, unrestricted general fund balance, internal borrowing or a municipal bond issuance for the remainder.

Why it matters: The work is large, affects multiple county buildings and involves both immediate cash flow (existing invoices) and long‑term financing decisions. Commissioners must weigh short‑term cash available in ARP accounts against preserving unrestricted fund balance for other contingencies, or choose bond financing that spreads cost and preserves cash.

What staff proposed: Options laid out to the board included (a) use of roughly $10 million in remaining ARP funds as an immediate source to pay invoices; (b) apply some portion of unrestricted general fund balance (staff discussed $10 million as a possible figure, but commissioners asked staff to test a smaller “up to $5 million” placeholder); (c) internal borrowing from REIT/reserve accounts or the treasurer for short‑term cash; and (d) issuing bonds or a private placement to spread costs long term (20‑year bond scenarios and market rate assumptions were discussed).

Financial context and timing: Bond counsel said market conditions had stabilized compared with recent months and that municipal financings were proceeding again, though interest rates remain well above historic lows; financing examples discussed used planning ranges with mid‑single‑digit yields (counsel referenced a typical market range around 4–5% as a budgeting placeholder and said official actions often use a conservative “not to exceed” percentage). Counsel and staff noted that the county could issue bonds and reimburse prior capital expenditures if commissioners adopt a formal declaration of intent; staff also noted an internal loan option with a five‑year limit if the board prefers to stay in‑house.

Operational details and tradeoffs: Commissioners asked whether lease payments from county tenants (for example, City of Spokane occupants in county buildings) would increase to offset capital costs; staff said lease adjustments could be phased and would not fully cover up‑front financing. Presenters noted the project includes multiple tranches of work and that cash demand is highest now for the next material and equipment orders; staff recommended committing ARP funds as an interim measure to pay current invoices while the board decides whether to issue bonds or use other financing.

Decision and next steps: Commissioners gave tentative support for using a limited portion of remaining ARP to address immediate bills but asked staff to build comparative cost scenarios showing: ARP+fund balance, partial internal loan, and a bond issuance with estimated debt service. Commissioners asked for specific cost estimates of issuance and a reimbursement timeline and requested the scenarios within weeks so any reimbursement election or bond authorization can fit procurement and market timing.

Ending: Staff said they will return quickly with detailed options and cost comparisons, including estimated annual debt service, interest assumptions for market issuance and the impact of each choice on fund balance and future budget capacity.