Commission hears jail financing options; votes to pursue infrastructure loan application

Walsh County commissioners on June 17 heard a detailed financing update on a proposed county jail and voted to apply this funding round to the Bank of North Dakota(BND) infrastructure loan fund while staff continue design work.

Anne Willette of PFM Financial Advisors told the commission she re-ran financing scenarios based on current market rates and county sales-tax estimates. Willette said the county currently has about $5 million in cash set aside for the project and that, without any BND low-interest money, the county should be able to finance roughly $26.7 million combined from sales-tax revenue bonds and the capital projects (10-mill) levy. With a hypothetical $5 million from BNDinfrastructure loan funds at about 2% interest, the total project funding could rise to just above $28 million, Willette said.

Why it matters: Willette told commissioners the North Dakota Public Finance Authority (PFA) and the BND programs require coverage tests for revenue bonds. She said PFA typically requires about 1.2 times debt-service coverage for sales-tax revenue bonds; that coverage requirement shapes how much can be borrowed and how much can be dedicated to construction versus debt service.

Willette recommended a two-track approach: (1) proceed with a base project sized to the funds currently available and (2) treat additional BND funds as alternates that could be added if the county secures them. She urged the county to apply during the current BND application window so it would not miss the opportunity, noting BND had about $20 million revolving and was taking applications this round.

Commission action: Commissioner (motion) and a second moved that the county submit an application to the BND infrastructure loan fund. The motion passed on a roll call vote: Amy, Danny, Perry, Paul and the chair all voted yes. (Transcript roll call recorded at the meeting.)

Discussion highlights - Willette: "If the county were not able to get any low-interest funds from BND, it's looking like we should be able to get right around $26,700,000, and that includes $5,000,000 in cash that the county has set aside for the project." (Anne Willette, PFM Financial Advisors) - Willette described the mechanics and constraints: the capital projects fund levy(10 mills) can be used to secure bonds for capital projects but those bonds are typically limited to 20 years; sales-tax revenue bonds are often structured up to 30 years. She cautioned that interest-rate movement would change the exact amounts. - Commissioners asked whether a project design must be finalized before applying for BND funds; Willette said it would not hurt to apply now and applications can be cancelled if the county later decides not to pursue the loan.

Next steps: The commission approved staff to begin the BND application process this round and instructed staff and the jail committee to continue design and cost-estimating work. Willette and PFM indicated they will continue to model scenarios if the county secures any portion of BND funds and advised issuing capital-project bonds early so construction can progress while pursuing additional low-interest funding.

Provenance: The presentation and the vote were discussed in multiple segments of the June 17 transcript, including PFMpresentation (Anne Willette) beginning at the meeting transcript segment where she introduces herself and summarizes financing options and coverage requirements.