Transcript Cass County Building Projects - North Dakota Association

Cass County Building Projects
Cass County Building Projects
• Cass County has had a few building projects, most with some debt
being issued
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We have used a variety of financing methods
Two of the building projects were proceeded by a vote of the public
One project was completed through the use of a Building Authority
Several of our projects were done using provisions of the Home Rule Charter
I will briefly touch on projects starting in 1980 as some of the lessons learned
are still important today.
• Each project and financing method is a learning process!
Cass County Building Projects
• 1980 Addition to Courthouse
• 1986 Addition to Courthouse
• 1994 and 1995 bonds for Social Services Addition to County Annex
• 1999 Sales Tax Vote to build a new jail
• 2005 Capital Lease to build an addition to the County Highway Shop
for Vector Control $900,000
• 2010 Courthouse GO Building Bonds $8.9 million
• 2014 Latest debt issuance - $50 million sales tax revenue bonds
Cass County Building Projects
• The 1980 addition to the Courthouse was significant in that it was the
first addition to the historic Courthouse.
• A vote was held in 1979 for a six-year 3 mill levy using the Extraordinary
Outlay mill levy authorized in the Century Code.
• A 1980 Attorney General opinion held that since the question on the ballot
did not authorize the county to issue bonds, the county could not borrow
funds to complete the Courthouse addition.
• The Courthouse addition dragged on for a number of years as the tax
revenues from the 3 mill levy was collected.
Cass County Building Projects
• The 1986 addition to Courthouse was financed through the use of a
Building Authority. This was a new process for Cass County and
offered the advantage of a much quicker financing and building
process compared to the 1980 addition. The county “leased” the
addition back from the Building Authority until the bonds used for the
construction of the project were retired.
Cass County Building Projects
• In 1994 the county commission voted to issued debt to finance the
addition of three floors to the County Annex. The county utilized the
County Loan Fund to fund repayment of the debt. Since the statute
for the County Loan Fund only allowed for payments for five years, we
issued debt for the amount of money we could pay off in five years.
• Since we knew this was not enough funds to complete the project, we
issued another year of debt in 1995 after we had paid the first year of
the original debt.
Cass County Building Projects
• In 1994 Cass County placed a Home Rule Charter (HRC) question on
the General Election ballot that significantly changed how we
approached new projects. A section of the HRC allows the county to
“control it’s own finances”.
• Another section allows for “ordinances” to enact laws that govern the
county.
Cass County Building Projects
• Home Rule Charter (Article 2, Paragraph 2)
2. Control its finances and fiscal affairs; appropriate money for its purposes, and
make payments of its debts and expenses; subject to the limitations of Article 9,
levy and collect taxes, excises, fees and special assessments for benefits
conferred, for its public and proprietary functions, activities, operations,
undertakings, and improvements; contract debts, borrow money, issue bonds,
warrants, and other evidences of indebtedness; establish charges for any
county or other services to the extent authorized by state law, and establish
debt and mill levy limitations subject to Article 9. Notwithstanding the other
provisions of this subsection, the Board of County Commissioners will not
commingle dedicated mill levies with one another or with the general fund levy.
Cass County Building Projects
• Home Rule Charter (Article 9, Section 1)
• Subject to the provisions of this Article, Cass County will have the authority by
ordinance or resolution of the Board of County Commissioners, to levy and
collect property taxes, sales taxes, income taxes, motor vehicle registration
fees, excises, fees and special assessments for benefits conferred.
• A limitation under Article 9 limits mill levies to 75 mills:
1. No ordinance or resolution may be adopted by the Board of County Commissioners
levying property taxes in excess of 75 mills in total until referred by the Board of County
Commissioners for approval by the electorate at any regular county election. This mill levy
limit does not include any levies certified to the Board of County Commissioners by any
other governing body.
Cass County Building Projects
• In the early stages of when the county considered building a new jail,
we considered both property taxes and sales taxes as vehicles to
finance the building.
• In the case of property taxes, we had the room within our levy limitations to
finance and construct the jail.
• In the case of a sales tax, we would need to go back to the voters to amend
the HRC to allow for the sales tax.
Cass County Building Projects
• We had a lot of discussion both internally and externally about both
options. The advantage the county had was there was very little
opposition to building a new jail facility—almost everyone
understood that we needed a new facility.
• Most of the people we talked to about the options preferred the sales tax
option. Retailers were a little less enthusiastic about a sales tax.
• At the same time, the North Dakota Legislature was considering legislation to
take away the ability of counties to use sales taxes. Fortunately that
legislation failed.
Cass County Building Projects
• Once we were assured that sales taxes were still an option, we
needed to talk to the retail segment to find out about their concerns
and how we could address them.
• The concern was that the county would implement a tax and it would never
go away. We were talking originally about a 1% sales tax for 2 years, and
retailers were not convinced the county would end the tax after two years.
Also, 1% was too high of a tax considering the state and city sales taxes. One
retailer told us that an 1/8% forever would be looked at more favorably
because they didn’t believe a sales tax once enacted would ever go away.
Cass County Building Projects
• We listened!
• We lowered our proposal to ½% and stretched it out to a maximum of 4 years.
We also committed to ending the tax earlier if we had paid all the costs of jail
construction, and had established a special fund of $6,000,000 to fund the
first addition to the jail.
• We built the jail considering current and future needs going out about five years. The
county had projected that at the five year point, we would need to add on to the jail and
we felt it was prudent to have a fund in place to do the first addition to the jail.
Cass County Building Projects
• The retail community, while not being enthusiastic about the
prospect of a sales tax, was supportive of the project and didn’t
campaign against the sales tax.
• We did have one radio talk show host that used his show try to cast
doubt about the need for the project but that didn’t resonate well
with the voters.
• We did outreach. We visited all the small town cafés, senior centers,
and basically accepted any opportunity to speak with people about
the need for the jail.
Cass County Building Projects
• The sales tax issue passed by over 70%
• I think the large margin was because this project was universally accepted.
• The public knew the project had to be built and if not funded by sales tax,
would have to be funded by property tax.
• The commission kept their word and ended the sales tax after 3 ½ years—or
6 months before the deadline as they had met their goal to pay for all the
construction and had a reserve fund with a sufficient balance to construct the
first addition. The first addition was built 5 years later and with the funds
remaining in the fund after that addition we purchased additional land by the
jail.
• These actions bought us some trust and respect in the community – a lot of people were
skeptical that the commission would end the sales tax.
Cass County Building Projects
• We did learn by our mistakes—the ballot question clearly stated the
county could borrow money and use the sales tax to pay debt
although the tax generated funds so fast we never did have to issue
debt.
Cass County Building Projects
• Two other projects that we have done, the addition to the County
Highway Department and the addition to the Courthouse, were done
under the HRC by creating an ordinance to issue the debt. I’ll
highlight some of the aspects of the ordinance used to finance the
addition to the Courthouse.
Cass County Building Projects
• The first ordinance was passed in October 2009 and contained the
basic information we had at that time.
• Since we did not intend to go for a vote, we needed to point out this
was different from the normal procedure in the NDCC.
• PURPOSE:
• It is the purpose of this Ordinance to facilitate the construction and financing
of an addition to the Cass County Courthouse at 211 9th Street South in Fargo,
North Dakota. It is also the purpose of this ordinance to provide for the
construction and financing through a process and manner that is different
from and supersedes that provided in North Dakota Century Code 11-11-16,
11-11-18 and 21-03-07.
Cass County Building Projects
• We needed to point out where our authority came from to supersede
state law.
• AUTHORITY:
• The County is operating under a Home Rule Charter approved by the voters of Cass
County on November 1, 1994 with 57.75% positive vote. Paragraph 2 of Article 2, Home
Rule Powers of County, reads in part:
• “Control its finances and fiscal affairs; appropriate money for its purposes, and make
payments of its debts and expenses; subject to the limitations of Article 9, levy and collect
taxes, excises, fees and special assessments for benefits conferred, for its public and
proprietary functions, activities, operations, undertakings, and improvements; contract
debts, borrow money, issue bonds, warrants, and other evidences of indebtedness;
establish charges for any county or other services to the extent authorized by state law,
and establish debt and mill levy limitations subject to Article 9.”
Cass County Building Projects
• We also needed to address that the county had sufficient levy
authority to generate revenues to pay the debt.
• Article 9 of the Home Rule Charter deals with revenue authority and Section 2
– Limitations, Subsection 1 reads in part:
• “No ordinance or resolution may be adopted by the Board of County
Commissioners levying property taxes in excess of 75 mills in total until
referred by the Board of County Commissioners for approval by the electorate
at any regular county election.”
Cass County Building Projects
• And again in the paragraph of the ordinance that dealt with the levy,
we again mentioned this was different from the normal process
outlined in the NDCC.
• The tax levied to retire the debt contracted for this building will be dedicated by the County
Commission within its 75 mill levy authority for up to and including two mills for a period not
exceed twelve years for the addition to the County Courthouse. The current (2008) mill levy
for the county is 61.00 mills, or 14.00 mills below its current authority. This process and
manner of financing is different from and supersedes that provided in North Dakota Century
Code 11-11-16, 11-11-18 and 21-03-07.
• When we issued bonds in 2010 for the construction, we had to pass an additional
ordinance for the issuance of bonds once the size of the issue was known.
Sales Tax Financing
• Again using the HRC we now have a ½% sales tax for building a Flood
Diversion in Cass County and for other flood control projects. In the
vote for the sales tax, we tried to give ourselves enough latitude to
borrow and pay debt as we needed.
• Shall Article 9 of the Home Rule Charter of the County of Cass be amended to
authorize collection of a one-half of one percent (1/2%) sales, use, and gross
receipts tax as outlined in Resolution #2010-26 for a period of up to twenty
consecutive years from and after April, 2011, to be used for the engineering,
land purchase, construction, and maintenance of a Red River Diversion and
other flood control measures or the payment of special assessments for a Red
River Diversion and other flood control measures as authorized by the Cass
County Commission, all as provided in the Notice of Proposed Home rule
charter Amendment as published in THE FORUM on the 30th day of August
2010.
Sales Tax Financing
• Using this new authority, we have issued $50 million in sales tax
revenue bonds to finance the ongoing activities of the Diversion
Authority.
County Financing
• What I hope you get from this presentation is there are a variety of
ways to finance projects.
• When it was necessary we went to the public for authorization.
• We tried to be efficient in our financing of building projects—as you can
imagine, we saved a lot of money by paying cash for the jail.
• We tried to plan ahead. For instance when we did the addition to the
Courthouse, we put aside $6 million for the project and only had to finance
$8.9 million of the $15 million project.
• The other thing I hope you get from this presentation is that a Home
Rule Charter gives you some more flexibility in your financing.