Platte County’s public safety committee, the group that has been coming up with a recommendation to present to the county commission about how to handle jail population, hosted a public event Monday night that was very lightly attended by the general public. The sparse attendance comes as no surprise. The committee was looking for public input on its planned recommendation, but since the planned recommendation had not been widely distributed in advance, did they really expect members of the public to show up with input? One person, a personal friend of commissioner Dagmar Wood, eventually stepped to the microphone to provide brief comments and the acting chair of the committee read a couple of emails he had received in advance of the meeting. That was it.
Again, no surprise. The creation of this public safety committee has become an action that county commissioners probably regret. It went off the rails as soon as circuit court judges gained traction among some committee members with their “we want a new courthouse” campaign.
The only piece of widespread general public reaction to the committee’s discussions has been negative and focused on the wild talk of proposing a new courthouse outside of Downtown Platte City. That kind of talk pushed any jail population discussions out of the stream of consciousness of the general public, and if you’re surprised by that then I don’t know what to tell you.
Finally, and wisely, county commissioners in recent days shut down the committee’s discussions of proposing a new courthouse and again told them to focus on the jail.
Time will tell but all the distracting stuff about a new courthouse–the judges like to refer to it as a justice center but common folk like us refer to it as a courthouse–may have created a public relations problem that will need to be overcome as the county moves forward with informing the public about a jail proposal that is presumed will eventually appear on an election ballot in the near future.
Michael Short, a former Platte County commissioner who is now a managing director for Stifel, Nicolaus & Co., a full service brokerage and investment banking firm, gave a presentation on financial information about general obligation bonds, which the county would like to use for a new jail. Short made it clear that the county’s financial planning for a new jail will be impacted, and not in a good way, by the county’s bond rating being at junk bond status. Technically, officials say the county’s bond rating is Ba3, which is assigned to debt instruments that are considered speculative in nature. Non-investment grade bonds, commonly known as junk bonds or speculative-grade bonds, are fixed-income securities issued by governments with lower credit ratings.
As we know, the county’s bond rating plummeted to junk status a few years ago when the county chose to quit covering debt payments on Zona Rosa parking garages. The courts agreed the county was not legally obligated to cover those payments but as a result of deciding not to do so, the county’s credit rating was tanked.
The public safety committee’s apparent plan that seems likely to be recommended to the county commission later this month suggests adding 320 beds to the 151-beds the current facility was designed to hold, bringing the total capacity to 471. The committee presented a cost estimate on this as being $61 million, but color me skeptical that’s going to be enough to cover a proposal of that magnitude. I would anticipate a bond issue question on your ballot being notably more than $61 million.
The proposal recommends expanding the jail at the current site to the northwest, in the area of a current small parking lot used by a few employees and some county-owned vehicles. The committee did say the $61 million does not include things such as legal, issuance and finance fees, and potential parking lot replacement. Also does not include any other offices, the committee said.
Going back to Platte County’s extremely low bond rating and how it would impact financing.
During his presentation, Short displayed a slide for potential non-rated bonds that showed an estimated true interest cost at 5.614% on 10-year general obligation bonds. Joe Vanover, county commissioner, asked Short a hypothetical question. “What if Clay County were to issue bonds right now for a jail. Would their interest rates be about the same or would they be lower because they have a better credit rating?” Short answered by saying Clay County’s interest rates “would be much lower,” citing Clay County’s much better credit rating than Platte County.
Vanover tried to push Short for a specific answer, asking if that meant one percent lower, two percent lower, three percent lower, but Short declined to be more specific, explaining he is not currently contracted with the county and was there to present general fact-based information. “As a general matter they (Clay County’s interest rates) would be substantially lower,” was as specific as Short was willing to say.
According to Short’s presentation, a $70 million project fund would mean the county’s average annual debt service would be $9.6 million per year. Total of $24.3 million in interest paid on a $70 million project over 10 years, which means a total debt service of more than $94 million over 10 years.
Numbers, and interest rates, are even higher for 15 or 20 year financing options, of course.
(This column was way too serious. Let’s get back to crazy stuff next week, maybe propose a new courthouse or something. In the meantime, email ivan@plattecountylandmark.com)