A consultant who wants to help Pike County officials figure out the best way to pay for a new jail said his firm may be able to structure the inevitable debt that will come with it so that a tax increase won’t be needed.
Jason Thomas of Municipal Advisers of Mississippi wasn’t making any promises in an interview last week with the Enterprise-Journal, but he noted that the firm has been able to accomplish that in the past with other local governments.
But there’s a big caveat, he noted: “That may affect the amount they can borrow, sure.”
Supervisors have warned that a new jail, estimated to cost upwards of $30 million, is expected to come with a significant millage increase that could come as soon as next year.
“We can structure the debt and give them a borrowing amount that wouldn’t require a millage increase,” he said, noting the debt could be repaid through general fund revenues instead of debt services.
Thomas and other members of his firm told supervisors last week that they could either finance construction though a general obligation bond or have a nonprofit build the jail and enter into a lease-purchase agreement.
He also corrected an article last week that stated his firm’s compensation would be about 2% of the overall cost of the project. That figure is the “cost of issuance” and incudes compensation for other professionals involved in the bond issue, including bond attorneys. trustees and others. Underwriting fees for the bond would be about another 1.25% to 1.5%, he said.
While there may be the potential of avoiding a tax increase to pay for the project, Thomas also noted that levying mills for a bond issue helps make the county more marketable when seeking financing, since bond buyers know money has been dedicated to repay it.
“Everybody is extremely debt averse, but you have these capital project needs that aren’t going to go away,” Thomas said. “What everybody needs to be focused on is overall millage,” not just what’s been dedicated to a specific project.
Supervisors met with Municipal Advisers of Mississippi last week, and county officials said another firm wants to pitch similar services. The one that’s hired will take a deep dive into county finances and come up with the a recommendation on whether a bond issue or a lease-purchase agreement is the best way to pay for the jail.
Supervisors are expected quickly to act on that recommendation.
A bond issue can be forced to a vote if 20% of electors sign a petition opposing it. If it goes to a vote, the issue would need a two-thirds majority to pass.
