The Garfield County Board of County Commissioners voted unanimously on Monday to exercise its purchase price option under a lease-purchase agreement used to finance the Garfield County Jail and sheriff’s office in Glenwood Springs.
By paying off the remaining $8,840,000 principal owed as of July 31, the county will save $2,048,773 in future interest payments, including an estimated $81,263 in interest this year, according to a press release issued by the county. The total payment will be $8,932,872, less reserves of $988,635.
“Getting this done has been one of my biggest goals,” said John Martin, BOCC chair, in a statement. “We will be free of this commitment and own the jail and sheriff’s office outright. We also have addressed the concerns of any citizens who thought our fund balances were a little too high.”
Colorado Counties, Inc., reports that more than 80 percent of Colorado counties have some form of capital lease or other long-term financial commitment, according to the county’s press release. After retiring these certificates, Garfield County will be one of the counties free of these obligations.
Certificates of participation are a statutory capital financing method that is neither debt nor a multi-year financial obligation under the Taxpayer’s Bill of Rights. Under the arrangement, the county entered into a lease-purchase agreement in 1999 with the Garfield County Building Corp. (GCBC), a nonprofit entity whose primary purpose is to facilitate financing of the jail facility.
To finance the construction, the parties used an underwriter to issue certificates of participation in 1999, later refinancing in 2006. The county pays GCBC rent for the jail on an annual basis, and the corporation, through a trustee, uses rent proceeds to pay investors over time, according to county officials. The rent payments are roughly equal to the principal and interest payments owed to the certificate holders. The county has the option every year to continue its lease, or to purchase the facility. Certificate holders will be repaid on Sept. 7, and upon closing, the county will own the jail facility outright.
Payments for the certificates will be made from the Garfield County capital fund, which will reduce the total county fund balances by approximately $8 million. At the end of the year, the total balance of all county funds is projected to be $100 million.
The repayment comes on the heels of the BOCC’s decision earlier this year to pay off certificates of participation issued in 2001. Those certificates financed the construction of the Garfield County administration building in Glenwood Springs, and the Garfield County Road and Bridge District 2-3 facility and administration office building on Hunter Mesa near Rifle. That payment, which totaled $6.8 million, less $726,000 in reserve funds, saved approximately $2.4 million in future interest payments.
The combined effect of both transactions enabled the commissioners to reduce fund balances by approximately $14 million, saving taxpayers roughly $4.4 million in future interest payments. Of that number, interest savings from both transactions in 2012 is $285,873.