Hays commissioners approve COs for new government center

Hays County commissioners unanimously approved $72 million in certificates of obligation (COs) for a new government center on Tuesday, with one caveat: They will reconsider the debt structure before a March 30 sale date to see if the county can save money by splitting the issuance of COs between 2010 and 2011.

 

At the request of County Judge Liz Sumter, Hays County bond advisor Dan Wegmiller of Specialized Public Finance presented several possible scenarios for funding the government center. He explained that if interest rates increase between now and the end of March, the county might save significantly by doing a split issuance of COs: $60 million this year, which would cover the construction costs of the government center, and the remaining $12 million in 2011, which would pay to furnish and complete the building.

 

Unlike bond elections in 2007 and 2008, during which Hays County voters approved a $30 million parks bond and a $207 million road bond, respectively, the government center is being funded through the issuance of certificates of obligation, a form of public debt that does not require voter approval under Texas law.

 

Sumter called for the discussion on Tuesday, citing concerns about declining property values, possible budget shortfalls in 2011, and an increased tax burden on county residents in a down economy. In a column for the San Marcos Local News last week, Sumter warned that decreased property values would result in less money for capital projects at a time when the county has taken on tens of millions in borrowed debt.

 

“I really do think this is a bad year for raising taxes, period,” she said. “I think we have to be very careful. If we want to go ahead and publish the seventy-two (million) and have this discussion again in March when we actually issue, that’s fine with me. But I think we should be really cognizant of worst-case scenarios.”

 

One possible worst-case scenario for the county is the prospect of a decline in property values, which would make it difficult to fund capital projects like a $50 million jail, or roads and parks projects on the table totaling nearly $60 million.

 

But other commissioners did not share Sumter‘s level of concern about issuing $72 million in COs for the government center at the end of March. Pct 2 Commissioner Jeff Barton, who is running against Sumter for county judge in the March Democratic primary, argued for moving quickly on the project and also took the opportunity to take a shot at his opponent.

 

“We are under budget and we’re not talking about a tax increase for the government center,” Barton said. “I appreciate you coming to the realization that we’re in a tough economy, but I think it’s time for us to move forward.”

 

The court must issue the COs before contractor Balfour Beatty can begin construction on the 233,600-square-foot government center, which will house the court and most county offices.