Pitkin County looks to bond market for financing
Pitkin County commissioners are leaning toward financing a new $24.6 million county building on Main Street by selling the debt on the bond market.
County Treasurer Tom Oken told commissioners Tuesday that a previous idea of financing the cost of the building using sales tax revenue bonds — which would be backed by the county’s existing share of sales taxes — might not be best way to go.
That’s because voters in Colorado — whose OK is required before such bonds can be issued — are likely to approve more than $1 billion worth of them in November, Oken said. And that flood of sales tax revenue bonds will likely drive up interest rates and negate any savings Pitkin County might have reaped from choosing that path, he said.
Sales tax revenue bonds generally come with a lower interest rate than so-called Certificate of Participation bonds because the sales tax collateral is considered more solid, Oken said. The county could, in theory, walk away from the Certificate of Participation bond debt, though it would forfeit the property in question if that occurred, he said.
The current difference between interest rates for sales tax revenue bonds and Certificate of Participation bonds is two-tenths of a interest percentage point, meaning that if the bonds were issued at the same time the county would save that much in interest using the sales tax bonds, Oken said.
With Certificate of Participation bonds, the county also could wait until March or so, when interest rates might come down from the expected post-election spike caused by the glut of sales tax revenue bonds likely to be approved by voters, Oken said. However, Oken pointed out that county financial officials haven’t had much success predicting interest rates and there’s no guarantee they’ll come back down.
So instead, Oken recommended commissioners ask for bids from participation bond sellers prior to the November election, which would take advantage of low current interest rates, he said. The county will likely need to finance about $20 million, Oken said.
The three commissioners present Tuesday — George Newman, Steve Child and Patti Clapper — all agreed that was the way to go and directed staff to issue the request for proposal.
“Given the uncertainty (of the election) and the impossibility of predicting interest rates, it’s prudent to go out for the (Certificate of Participation request for proposal),” Child said.
Newman agreed, noting that it should be a decision for a full board and that merely issuing an request for proposal doesn’t commit the board to any course of action.
The county plans to scrap its current 17,000 square foot Courthouse Plaza building at 530 E. Main St. to a shell and start over again. It also plans to add a 24,000-square-foot addition to the back of the building that will create an L-shape, with Veteran’s Memorial Park serving almost like a courtyard between the new building and the historic courthouse. The new building also will house an 8,000-square-foot, underground parking garage.
The county needs the added space because it is legally mandated to provide a range of services to the public within the county seat of Aspen that have been inadequate in recent years because of lack of space, County Manager Jon Peacock said. Once the building is completed, community development employees will move out of Aspen City Hall, while the county assessor, treasurer and Sheriff’s Office will move out of the county courthouse.
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