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Hays County issues $71 million in bonds to build government center

Wednesday, March 31, 2010 by John Davidson

Hays County issued $71.2 million in certificates of obligation on Monday for its new government center. The sale happened on a day when the market was “tough,” according to Hays County bond adviser Dan Wegmiller of Specialized Public Finance, but he added: “Bottom line is that the sale went very well.”

 

Now that the certificates of obligation are sold, construction can begin on the county’s 233,600-square-foot government center, which will house the court and most county offices. It will be the largest single building ever constructed by the county, with an estimated construction cost of $58.3 million. Wegmiller said the county has a strong AA credit rating.

 

Pct 1 Commissioner Debbie Ingalsbe, who has spearheaded the effort to build the government center, says the project “has a good chance” of coming in under the bond amount. Last week, commissioners mandated that expenditures of $50,000 or more will require court approval if construction costs reach $67.5 million.

 

Aside from a few minor features such as awnings to create shaded areas, the design work is completed and the site, near Wonder World Drive and Stagecoach Trail in San Marcos is ready for construction. A groundbreaking is scheduled for April 23, according to Ingalsbe.

 

The exact amount of the certificates of obligation sold Monday came in at $67,325,000—about $3.8 million less than the $71.2 million the county was seeking for the government center. But the difference is only on paper, according to Wegmiller.

 

“With rates as low as they are right now, most (bond) issuances are selling at a premium,” Wegmiller said. “This $67.325 million produced a premium of $3.82 million… So we are funding the $71.2 million that you directed at the last commissioner’s court through the proceeds plus the premium.”

 

If the county repays the debt by 2035, at an estimated interest rate of 4.46 percent, the total amount of the COs will be approximately $120 million, according to projections from Specialized Public Finance.

 

Wegmiller described the county’s rating as “very high,” with only AA+ and AAA being higher. A report issued by Specialized Public Finance regarding the credit rates stated, “Hays County‘s financial performance has been consistently sound,” and cited sustained growth of the property tax base and steady growth of household income as reasons for the high credit score.

 

The county also issued $12.3 million in bonds to refinance prior debt, a 2001 unlimited tax bond, which back then had interest rates of 4.3 to 5 percent. The refinancing bond has interest rates of 2 to 3.6 percent for annual savings of about $61,000.

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