Supervisors proceed with initial law enforcement center bond sale

By Bob Steenson, bsteenson@charlescitypress.com

Floyd County supervisors agreed to sell up to $6.115 million in general obligation bonds before the end of the year, the first step in financing the new county law enforcement center and courthouse updates project that voters approved in May.

The total cost of the project is up to $13.5 million, but by splitting the bond sale between two years, the county should be able to save some money, according to Jeff Heil, senior vice president of Northland Securities, the county’s bond underwriter.

Heil had explained at a previous board meeting that the county can get what is called a bank-qualified rate if its total bond sales in a calendar year are less than $10 million. The bank-qualified rate would allow the county to sell bonds at a lower interest rate and save money on interest payments.

Heil had originally suggested selling about $3.9 million this year, then $9.6 million next year to keep the sales below $10 million in each calendar year.

But Supervisor Mark Kuhn reminded the board that the Charles City Area Development Corp. might ask the county to pay the initial cost to purchase a development site it is in the process of getting certified by the state.

The CCADC has an option to buy that property — almost 76 acres currently owned by Steven and Diana Swartzrock and Rockland Enterprises LLC, on the northeast corner of the intersection of South Grand Avenue and U.S. Highway 218 — for $2.156 million.

If the county does purchase the site it would be paid for by selling bonds, then be repaid to the county through tax increment financing revenue and through proceeds of a sale if the land or parts of the land are resold for commercial or industrial development.

The site purchase has not been finalized, and could occur later than next year, but by increasing the law enforcement center project bond sale this year to $6.115 million that would leave enough room to sell the remainder of the LEC bonds and purchase the CCADC site next year and still stay below the $10 million bonding threshold both years.

Heil said he has no way of knowing for sure, but interest rates appear to be trending up. Long rate 15- and 20-year Treasury note rates had increased in the last week, indicating investors may be anticipating higher returns, he said.

By selling some bonds now that also locks in a potentially lower current interest rate on that portion.

Heil said that by selling $6.115 million in November, the county should be able to save a total of about $103,000 on the interest rate of bank-qualified bonds versus non-bank-qualified bonds. That includes the extra interest that would have to be paid by selling some bonds early, as well as the interest that would be earned by investing the bond sale proceeds until they are needed to start paying for the LEC project costs.

Supervisor Doug Kamm asked what would be the downside of selling $9.9 million this year to stay below the $10 million but lock in a larger amount at the current rates.

“Interest prices could come down,” Heil said.

All three supervisors said they were comfortable with the $6.115 million amount for this year, and they approved a resolution authorizing Northland Securities Inc. to proceed with the steps needed to sell the bonds in November.

Earlier in the meeting the county board had approved an engagement letter with Northland Securities authorizing the company to proceed as the county’s bond underwriter, but not committing the county to issuing the bonds if the supervisors should change their mind before the actual sale.

Also at the meeting Tuesday morning, the supervisors:

• Approved submitting a petition to the Charles City zoning administrator asking that two residential properties the county has purchased be rezoned from R-3 multi-family residential to B-3 service business district zoning.

The properties, at 101 and 111 S. Jackson St., will be part of the law enforcement center project being built west of the courthouse.

A timeline suggests the petition will be submitted by Nov. 14, public hearings by the Planning and Zoning Commission and the Charles City Council would be held in December, and the ordinance approving the rezoning could be published in January.

• Received the annual weed commissioner’s report from Adam Sears, the director of Floyd County Conservation who is also the county weed commissioner. The report notes that buckthorn, Canada thistle, poison hemlock, garlic mustard and purple loosestrife remain a problem in the county. Many other varieties of weeds were also identified as present in the county but not designated as problems.

The report also said the county had spent $850 for herbicides in the last year, and ranked the “overall county weed situation” as “unchanged.”

• Set the time for the official canvass of county results in the Nov. 6 general election for 9 a.m. Wednesday, Nov. 14.