Oconto County gave up its debt-free status Thursday when the County Board agreed to borrow $10 million to help pay for a law enforcement center.
The county has been debt-free for five years but has relied heavily on its reserve funds to retain the level of services it provides.
Supervisors authorized the issuance of $10 million in promissory notes at an interest rate of 2.32 percent for 10 years. Closing is scheduled July 2.
This was the first of two bonding resolutions the County Board will consider. A $15 million note is scheduled to be approved, probably in January, depending on the funding needed to match the construction draw schedule. The $15 million note is anticipated to be another 10-year note, and the county plans to refinance both notes for another 10 years, spreading the payments over 20 years.
The county received good news from Standard and Poors Rating Services, which rated the county AA+. The only higher rating is AAA.
“That’s really a great rating,” County Board Chairman Lee Rymer said. “This is the type of publicity we have to get out to the people.”
“It’s all in an effort to compete at the highest level for investors’ dollars,” said the county’s bond adviser, Jeff Belongia, of Hutchinson, Shockey, Erley and Co.
Taxpayers will see the impact on their property tax bills beginning in December, of not more than 25 cents per $1,000 of assessed property value. The 25-cent limit was set previously by the board.
“If I have a $100,000 piece of property, it’s not going to be more than $25 on my taxes,” Belongia said.
The rate will be determined this fall when the county decides how to structure its debt and sets its budget.
“The finance committee is going to have to sit down with Jeff (Belongia) and figure out exactly when we’re going to impose that 25 cents and if it’s going to be 25 cents,” Oconto County Administrative Coordinator Kevin Hamann said.
The county will make payments on June 1 and Dec. 1 each year, with its first payment due Dec. 1, 2015. Sales tax revenues of $830,000 annually will be used to repay the notes initially. This is about half of the sales tax revenue the county generates, and the County Board might decide to use a larger percentage of sales tax revenues for the project in the future, Hamann said.
Construction costs are estimated at $23,539,000, plus $1 million for furnishings, which puts the project $766,000 over budget. To bring costs down, the bidding documents include alternatives that will provide the county with spending options. The reuse of equipment and furnishings from the sheriff’s office will also be considered.
