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Council & Commissioner Continue to Look at Bond Refinancing

June 24, 2014

M.C. Jail 8-9-12_distantMembers of the Marshall County Council and Commissioners met in a special joint meeting Monday morning to receive information on the options to refinance the Marshall County Jail Bonds of 2006 as a way to save the county some money.
Todd Samuelson from Umbaugh presented information on the amortization of the outstanding principal, the sources and uses of funds, and refunding scenarios.
There is nearly $12 million left to pay on the original bond. Samuelson explained that the .25% special CAGIT (County Adjusted Gross Income Tax) brings in about $2.4 million annually. The annual bond payments are approximately $1.2 million. The remaining funds are used to pay daily operations cost of $600,000 to $800,000 annually and the rest is put into a special reserve fund which has a balance of nearly $5 million.
Two options were presented to the joint boards with the first being to refinance the bonds in February 2016. The decision could be made to refinance the bonds through the remaining life of the bonds, 2026 and reduce the annual payment to approximately $1.15 million. This would have a net savings to the county of approximately $474,000.
The second option would be to pay the bonds off about 4 years early. To do this the recommendation was to use about half of the special reserve funds, $2.5 million and then keep the annual payment at $1.2 million and be able to pay off the bonds in 2022. Estimated net savings to the county would be $1.9 million.
After some the discussion the joint board come up with a hybrid that would not include the use of the special reserve funds until the very end of the refinance. Members were concerned of using the $2.5 million and then would have a need to build a new pod or say the roof was blown off and needed to be replaced. Several members were interested in paying off the bonds early but not using the reserve funds so Samuelson will crunch some numbers and bring back another scenario.
The joint board has additional concerns with the bonds. Once they are paid off the special CAGIT goes away unless there is a need to make improvement to the correctional facility.
Commissioner Overmyer suggested looking at the possibility a new CAGIT for correctional facility operations once the current one goes away. He admitted to just throwing out a number but there would be the need to approach state legislation just like they did for the jail project.
Both the County Council and County Commissioner approved resolutions unanimously to move ahead with the refinancing. They will both make the determination of which way they want to proceed once the third scenario is presented