Bonding firm breaks down cost of project

Published 12:00 am Wednesday, September 18, 2002

Once the type of bonding for the courthouse project was decided, county commissioners quickly moved forward to get ready to issue the $26.3 million in bonds.

The board decided to designate Evensen Dodge to be a financial adviser administering the bond issue, and authorized the firm to start applying for the State Credit Enhancement Program.

The program is for the $9.1 million general obligation jail bonds portion. It gives a state guarantee for the bond payment, providing extra securities to bond holders. With the state as as backup, the bonds enjoy an elite credit rating and lower interest rate.

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The portion of the project for a new law enforcement center, $7.5 million, and other county functions, $8.6 million, will be lease-revenue bonds issued through the Housing Redevelopment Authority. The process of obtaining state approval for those bonds should take 35 to 40 days.

The LEC bonds will have an A2 rating while the courthouse bonds will be A3, because it will be attached to the county’s pledge to levy county tax for paying back.

The difference of interest between Aa1 and A3 would be around 0.25 percent, according to Evensen Dodge Senior Vice President Myron Knutson.

Kunutson said the current interest rate of the bonds is at a35-year low. Recent $7 million bonds with a 20-year maturity for a new law enforcement center in Beltrami County carried a 4.2 percent rate.

Commissioner Dan Belshan opposed hiring Evensen Dodge, pointing out that the topic was not on the agenda and the board should get more quotes from other bonding houses.

The county aims to start paying off the debt in the 2003 budget. If the start of payment were deferred to 2004, the annual installment would increase by more than $100,000, according to an Evensen Dodge estimate.