Second borrowing for jail approved

Crawford county ‘set the sale’ for $18 million in bonds

By Steve Van Kooten

The Crawford County Board of Supervisors took another major step toward completing the replacement jail/justice center project yesterday when they unanimously adopted a resolution for a second round of borrowing.

At the Feb. 5 Finance Committee and Feb. 18 Board of Supervisors meetings, Carol Wirth, president of Wisconsin Public Finance Professionals (WPFP), laid out the plan for the second round of financing in which the county will borrow $18 million.

The board needed a majority vote from the members present to adopt the resolution “setting the sale.”

“This is what’s known as a ‘heads up’ resolution,’ basically telling the county board, ‘Okay, we’re moving forward with the second phase; this is what it’s going to be for, and you’re going to sell these notes at a future date,” Wirth said.

That ‘future date’ is scheduled for early March. On March 3, the county, along with WPFP, will accept and verify bids from underwriters for $18 million in general obligation bonds. The Board of Supervisors will then adopt an awards resolution to lock in the issuance, terms and interest rate for those notes the next day at a special board meeting.

On Mar. 24, the Crawford County should receive the money through a wire transfer, which will be deposited into a segregated account at Community First Bank. The interest rate the county will earn on those funds will be 4.03 percent for the first 12 months.

Community First also holds the account for the first round of borrowing this past September.

“That is projected to fund project costs through early 2026,” Wirth said. Wirth based her estimate on the project’s draw schedule.

Previously, Finance Committee Chair Gary Koch said borrowing $18 million now, as opposed to the originally planned $13 million, will ensure the county does not run out of funds to pay project costs until the next round of borrowing next year, and it will lock money into a lower than expected interest rate.Wirth projected the interest rate for the borrowing to be 3.93 percent, which is significantly less than the originally expected five percent.

Borrowing more in 2025 will not increase the total project cost because the county board adopted a resolution this past June that only allows them to borrow up to $35 million for the replacement jail and mobile command center project. In the final round of financing, the county is limited to $4 million, but they can borrow less.

If the project requires more than $4 million, the county board will have to pass another resolution to give them the authority to borrow more money.

The county issues general obligation bonds for the borrowing, which are debt that allows local and state government entities to finance projects. The bonds are backed by Crawford County’s ability to levy taxes from its residents, according to the National Association of Insurance Commissioners.

Crawford County has received some fortunate breaks during the jail financing, including an upgrade in their credit rating from Moody’s, which helps attract lower interest rates. 

“The original plan was to go out to 2046, but our interest rates came in lower than we were projecting — we were projecting five percent for this project,” Wirth said.

The county also received a larger-than-expected reoffering premium during their first borrowing this past September.

According to Wirth, the estimated reoffering premium for the second round of bonds is expected to be approximately $638,000. After paying the underwriter’s expenses, the remaining premium is expected to be approximately $362,000.

Reoffering premium is money the county earns from the bonds’ sale on top of the borrowed principal.

“The premium cannot be used to pay project costs. The premium can only be used to offset your debt service tax levy,” Wirth said.

Those breaks will help the county reduce overall costs on the project, according to Wirth’s projections.

The original estimates for the project financing included a five percent interest rate and a repayment period of 22 years (2046), with an estimated annual debt payment of approximately $2.59 million and a total principal and interest cost of $56.9 million for the project.

But new estimates include lower projected interest rates for all three phases of borrowing (between 3.86 percent and 4.25 percent), 21 years for the total repayment, an estimated $2.49 million annual debt payment for the project, and a total principal and interest cost of approximately $51.9 million.

“We’re coming in $5 million less, so I think we’re doing pretty well,” Wirth said.

The adopted resolution also directs the county clerk and WPFP to prepare and disseminate a Notice of Sale, advertisement of the sale to prospective bidders, and an Official Statement, which is required by the Securities and Exchange Commission.

The next county board meeting will be Mar. 4, where the supervisors are expected to adopt the award resolution for the winning bidder.