Adviser outlines defeasance options for Clay County law‑enforcement center bonds; staff to bring final bill amounts

Tom Greenman of Colliers briefed the Clay County Board Oct. 7 on options to manage outstanding bonds issued for the law-enforcement center project. Using a sample scenario, Greenman described cash defeasance—placing funds in escrow to pay debt service on callable bonds—and compared that approach with simply holding cash on the project account.

Greenman said technical defeasance reduces the amount of outstanding debt on county financial statements because the escrowed funds are dedicated to pay a subset of bonds until call dates. He used an example that assumed roughly $7,000,000 would be put into escrow and said the illustrative analysis yielded annual gross savings in the low hundreds of thousands and a net present value benefit across the term. “By legally defeasing the bonds, then you’re actually reducing the amount of debt outstanding,” Greenman said.

He cautioned that Internal Revenue Service rules require arbitrage and rebate calculations for larger issues (he cited the $5,000,000 small-issue threshold) and that bond counsel must be involved. Greenman gave callable date guidance around December 2031 and January 2032 for portions of the issue and said that final decisions depend on the actual final invoice and market rates at the time.

County staff said they will provide the final contract and invoice figures when available and prepare the resolution required to move forward if the board elects to defease. No final defeasance action or expenditure was authorized at the meeting; commissioners asked staff to return with exact dollar figures and the administrative steps needed to proceed.

Next steps: Staff will deliver the final bills and a draft resolution for board consideration once all numbers and legal reviews are complete. Any defeasance would require bond counsel review, escrow setup and compliance with federal rebate rules.