Deciding how and when to finance the Carlton County Justice Center brought up many questions from county commissioners and staff during the board's special Committee of the Whole meeting on Monday, Oct. 18.

Arcelia Detert, senior managing consultant for PFM Financial Advisors, explained what officials could do for financing and provided some options her firm has come up with.

Detert walked through three options, in which the county would issue bonds all at once or incrementally starting as soon as the end of the year.

Option 1 would issue $60 million in bonds in 2023 at a rate of 3.43% and have a total debt service of $96.4 million.

Option 2 would issue bonds in 2022 and 2023 at rates of 2.28% and 3.43% respectively, and have a total debt service of $92.9 million.

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Option 3 would issue bonds in 2021, 2022 and 2023 at rates of 1.90%, 2.28% and 3.43% and would have a total debt service of $89.2 million.

The interest rates for the bonds are not only dependent on the year, but also the size of the bond. Option 2 and 3 include bonds for less than $10 million, which allow them to be bank-qualified, meaning they can be sold to a bigger customer base at better rates.

Issuing bonds in 2023 would be beneficial to the county, as officials will know if the sales tax referendum passed in 2022.

"You are completely assuring yourself that you will have sales tax to pay for those bonds,” Detert said. “You are issuing bonds as you need them.”

PREVIOUSLY: Carlton County officials answer public questions on proposed justice center

Options 2 and 3 have bonds being issued before the local option sales tax referendum, as the county will start to incur costs for the project.

“I have raised the question to bond council, if you can issue that as sales tax bonds, or jail bonds and reimburse yourself with sales tax as you receive it,” she said. “I am still waiting for that answer.”

Detert said before the vote, the county can not pledge any sales tax.

County coordinator Dennis Genereau asked what the projections would look like if the county would issue $60 million worth of bonds by the end of 2021 to lock in a low interest rate.

“If we plan on doing the project regardless, isn’t it best to get the money at the lowest rate we can?” he asked.

While the options include rate projections with extra padding, Genereau said the county knows what the rate would be now.

Detert would have to look into that option, and said an issue the county might run into would be how it would pay for it. The referendum on the sales tax does not go to voters until Nov. 2, 2022. Should it pass, the first collection would be in April 2023.

Should the county take out bonds this year, the principal payments could be delayed, however interest payments would be needed semi-annually.

While the project will move ahead regardless of how the sales tax referendum goes, the county would instead use a tax levy to pay for it.

The idea of locking in the lowest interest rate was received well by the county commissioners, who asked Detert to look into that option.

District 5 Commissioner Gary Peterson said with rates being so low for multiple years, he would expect them to go higher before they went lower.

“With inflation the way it is and everything going on, I think things are going to switch the other way,” he said. “I think we need to capture this right now before it goes the other way.

County officials are still trying to balance the pros and cons on the timing of financing for taxpayers, said county auditor Kevin DeVriendt.

“We are evaluating the options for the lowest financing cost of the county for the project as a whole,” he said.

The commissioners plan to discuss the possibility of taking out $60 million worth of bonds with projections on whether the county can afford it during the next board meeting at 4 p.m. Monday, Oct. 25.