BoCC talks update project funding

On Feb. 18, the county commissioners held an afternoon workshop to discuss possible financing scenarios for upgrades and replacements coming to the courthouse and jail.

The main purpose of the meeting was to see how much cash from the general fund would be used to fund the upgrades and replacements at the courthouse and jail, upon approval of the commissioners.

Gary Petrovich, county administrative director, presented, as of the week prior, the general fund held approximately $8.6 million, the restrict reserve fund held $1.6 million and the operating reserve fund held about $600,000.

Petrovich said the estimated cost of the entire project would be approximately $8.5 million, including sales tax.

The upgrade and replacement projects are to be completed by McKinstry Co., which is a construction engineering company that is headquartered in Seattle, but also has offices in Spokane and Pasco.

Upgrades and replacements are being considered for roofing, HVAC, elevator, windows and doors, plumbing, electricity, jail facade, generators, cabling, etc.

Brandy Dean, county facilities management director, said at the Monday commissioners workshop that McKinstry came by to look at the windows and doors of the courthouse.

She said it was identified that an ADA-approved door will be at the front of the courthouse due to the elevator. All other windows and outside doors of the courthouse will be replaced.

“What we are looking at here is an $8.6 million project and taking a look at how much you would like to commit of our general fund cash,” Petrovich said. “We were first thinking in prior discussions of maybe $2 million and we do have some extra cash in reserves, so we can contemplate either a $3 million or $4 million cash infusion.”

Petrovich explained the commissioners need to make a decision on how much they are willing to take from the general fund before any additional financing decisions are made.

“It’s going to be subjective to how you feel about how much cash we have available and how much you’re willing to use, how much you’re willing to finance,” Petrovich said. “Our financing is either going to be a 15-year or 20-year financing package from what I can see.”

Commissioner Michael Largent said with the uncertainty of year-to-year expenditures, particularly in regards to employee costs and inflation, he would be comfortable with $2 million out of the general fund.

“For pulling something out of the air, because I don’t like the uncertainty of those expenditure trends,” Largent said. “If we are just going to grab from what little we know now and nothing before us, I’m going to go with minimum cash down on the loan. That’s how I trend.”

While Largent was going one direction, Commissioner Art Swannack said that he would have the tendency to go in the opposite direction.

“My view is the more money you have out and the longer you have it out you have more risk you’re sitting there assessing,” Swannack said. “If we had $8 million in cash and we use $4 million of that you decrease your outstanding obligations significantly, when it comes to long-term costs.”

Chris Nelson, county treasurer, mentioned at the workshop how she has been looking at a local program at the state level to help finance the project.

Nelson said that nothing is certain, but in her discussions with the state she is very positive that they would be able to borrow a large sum of money.

“There are no costs, you just have to put in an application to the state. There are no bonding fees and all that other stuff, it is based off the state,” Nelson said. “If we can get an application in by the middle of March, the funding would be in June, the next funding would be in the fall. The interest rate was ranging anywhere from two percent to 2.54 percent. I did inquire $8.5 million to fund the whole thing, $6.5, $5.5 and $4.5 million.”

Petrovich brought forth that if the commissioners would rather go with their local lender, Columbia Bank, there would be some additional costs associated, but more flexibility.

Nelson added that a traditional bond won’t necessarily always give the lowest rate.

Largent suggested that they could contribute $3 million and then finance the rest.

“I would prefer our cash not fall below $5 million by initiating this project; the $3 million would accomplish that and we would still be well above $5 million,” said Commissioner Dean Kinzer.

Petrovich agreed with the commissioners in putting forth $3 million from the general fund for the project.

“I think $3 million is a good number to use because it gives Chris something to put down on the application in terms of getting the process started from the state,” Petrovich said. “We have to have a backup plan in case the state says no. If we are going to start the construction in April, we will start needing cash and need cash from external sources by the end of July, so it sounds like our fallback position would have to be with Columbia Bank.”

Nelson said that when she originally talked with the state about funding the entire $8.6 million project, the state didn’t flinch with that amount of money. She added that they have been very responsive in communicating with her and shouldn’t take long to get a commitment.

With the commissioners contributing $3 million, over 15-years the county will make an approximate annual payment of $500,000 that they aren’t used to paying.

“We will have a debt being dropped off the books of $87,000 a year,” Petrovich said. “$420,000 will be what we aren’t used to paying in the end.”

It was suggested if the commissioners wanted to, they could put off for another year in terms of some of the components of the construction and finance some of the critical things this summer.

“Most of these things we have no choice on, you have a roof, a HVAC system, elevator, walls and plumbing on the jail need to be done, electrical upgrade needs to be done to do the elevator,” Swannack said. “Your entire cabling system for this building is at the end of life and the IT system, you need to have that.”

Dean said she hopes to have the final investment grade audit by the end of February or the beginning of March from McKinstry Co.

A final decision on whether the county will move forward with the project and financial decisions on the project is planned to be made at the March 16 county commissioner meeting.

It is estimated, if the project goes through, that it may take two months for each section to be completed.

Dean said McKinstry is interested in closing the entire second floor at one time, taking 10 weeks to complete that section and then for each wing on the first floor would be eight weeks. She mentioned that these time frames are still negotiable.