Why officials will consider using Oklahoma County buildings as collateral for a $30M bond issue

Oklahoma County officials on Wednesday will consider using their own buildings as collateral to secure $30 million in bond money to be used for the new county jail and other capital projects.

Commissioners on Wednesday will consider approving a resolution in their roles as trustees of the Oklahoma County Public Buildings Authority that would, if approved, authorize the Oklahoma Industries Authority to issue the revenue bonds.

Once issued, the debt would be retired using revenues collected through fees various county departments and other tenants pay for spaces occupied inside of county building authority-owned properties.

Those include the Oklahoma County Election Board, the Investors Capital Building (on the east end of Oklahoma County's office annex north of the courthouse), the sheriff's office (the Krowse Building) and its two parking garages.

Wednesday's consideration of the proposed bond comes just a week after officials voted to use parking fees to help pay the county's monthly bills through the end of the year. One commissioner called that transfer of funds "normal business."

Asked Tuesday if the proposed bonds could be tied to financial instability for the county, County Treasurer Butch Freeman said, "Absolutely not." Commissioner Brian Maughan, however, likened the move to "maxing out our credit card."

The county already is paying off $9.2 million of revenue bonds the industries authority issued on the public building authority's behalf in 2020.

More: Oklahoma County officials 'extremely worried' as they try to find site for new jail

The 2020 bond issue, which received a high rating of Aa1, refinanced older revenue bonds the county issued through the public buildings authority to build its parking garages downtown. An Aa1 bond rating generally means the bond has a very high credit quality with a low risk of default.

Officials said $6.79 million remains outstanding on that debt.

Like the older debt, the new debt, if approved, only would be a direct burden to property owners in the county if the public buildings authority defaulted on paying it off.

How would Oklahoma County use the revenue once it becomes available?

Generally, the $30 million could be used to finance certain capital improvements benefitting Oklahoma County and its residents, the public buildings authority's meeting agenda item states.

The attached resolution states the county "desires to finance" capital improvements benefitting the county and its residents, including (but not limited to) "campus security, courthouse and annex renovations, improvements to leasehold properties of the Public Buildings Authority, juvenile justice center improvements, property acquisition, and new county jail construction."

Trustee Carrie Blumert brought the bond issue proposal up for consideration.

Blumert said priority projects include security-related improvements to the county's downtown campus, upgrades to the original county courthouse's roof, its HVAC system and a courtyard on its east side, plus security-related improvements (lighting and surveillance-related) to its parking garages.

As for how much of that $30 million might be used to help build the jail, Blumert said that's a topic for discussion at a future date.

"What the public may not know is that the money that we get in our general fund really doesn't cover enough to fund our everyday county services, plus needed major capital improvements," Blumert said.

More: Oklahoma County won't pull from new jail fund to cover expenses, instead uses parking money

"These bonds won't affect taxpayers, and it gives the county money to invest in some upgrades at a lot of our buildings, specifically our downtown campus," where a confrontation between members of rival gangs led to a shooting in one of the county's garages.

"We had been discussing these needs long before that incident occurred, but it reminded us we needed to invest" in the garages' security, she said.

Other funds likely would be used to provide spaces for new judges, Blumert said.

"We need courtrooms for them."

Blumert said the proposed bond issue is about creating a better environment for the county's constituents.

"We recognize the courthouse campus is there for the public's use. When folks come to the courthouse, they should feel safe, and I will support this bond issue because I believe we should make it as safe as possible."

Does the proposed bond issue signal financial problems within Oklahoma County?

When asked Tuesday if the bond issues signify any financial problems within the county, Freeman said, "Absolutely not."

Freeman said the county received an AA+ rating from bond advisers on the first $45 million of general obligation bonds its sold in order to acquire land and to build the new county jail.

"We are the healthiest financially I have seen in the 20 years I have been here," Freeman said.

Unlike those general obligation bonds, which are being retired through assessments on property owners' taxes, the $30 million the public buildings authority seeks to sell are more like credit card debt, said Maughan.

While Oklahoma County has done the same type of deal before to build its downtown garages, Maughan said Tuesday he won't support the proposal.

"What we are being asked to do is to leverage our equity on those public building authority-owned buildings," Maughan said Tuesday. "We are maxing out our credit card, our only lifeline if we were to need financial help to meet some kind of emergency, or to get us over the finish line with the county jail."

Maughan said he has worked since joining the commission to get the county's government debt free.

"If we do this, we won't have any debt capacity left."

This article originally appeared on Oklahoman: Oklahoma County officials to consider $30M bond to fund jail