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Council approves lease resolution to advance Howard County jail financing
Summary
Howard County Council voted May 26 to approve a resolution that authorizes a lease-and-building-corporation financing structure for the county jail project, advancing the bond issuance process and scheduling further hearings and appropriation steps.
The Howard County Council voted May 26 to approve Resolution HCCR-10, a step that clears the way for bond-financed construction of a new county jail under a lease structure using a building corporation as the bond issuer.
Max Adams, an attorney at Barnes & Thornburg serving as bond counsel, told the council the building corporation will issue the bonds and enter into a lease with the county for the project site and temporarily include the county courthouse as a leasable asset during construction so lease rental payments can start before the jail is occupiable. Adams said the approach “saves the county several million dollars in those first few years in interest payments and principal payments depending on how the bonds are structured.”
Adams explained the courthouse is included in the lease only during construction to provide a leasable asset; after the project is completed the county will execute an addendum removing the courthouse from the lease so the project site becomes the collateral for the bonds. He described the technique as a commonly used financing structure that helps avoid direct mortgage-style encumbrances on county property while meeting bondholder expectations for early debt service.
Council members asked about the building corporation’s duration and potential consequences of default; Adams said the building corporation is expected to exist for the life of the bonds and described the county’s remedies as liens and potential state withholding of tax distributions in extreme cases, rather than a traditional mortgage. The resolution passed by voice vote; the board of commissioners will follow with a hearing and execution steps next week, and the council expects to return in June for a pledge resolution that will clarify the final financing structure and additional appropriations tied to bond proceeds.
The approval advances the county’s formal steps in moving the jail project toward construction and public hearings but does not itself authorize construction contracts or final borrowing terms; those will come in subsequent actions and public notices.
