County goes to market for jail cash

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A shaky bond market offers La Crosse County a risky but rewarding shot at $19.5 million to pay for a jail expansion project, according to County Administrator Steve O’Malley.

“For the last few months, the (national municipal bond market) has been so volatile,” he said. “But since Jan. 1, it’s clear the market has recovered somewhat, and we could take advantage of lower interest rates.

“There’s no guarantee, but it looks like the time to go to the market is right now.”

O’Malley will share with the La Crosse County Board on Thursday his plan for the $19.5 million left to be paid on the $29.5 million La Crosse County Law Enforcement Center expansion project. He said he wants to invest that balance in a 20-year bond next month.
While some board members welcome a reduced interest rate on the project’s debt, their enthusiasm is tempered by memories of a dangerous bond market.

“I don’t think it hurts to explore what’s happening, but it’s not something we each feel comfortable with,” said Vicki Burke, a county supervisor and chairwoman of the county’s Law Enforcement Center Construction Committee. “This is the kind of thing you want to know is a secure investment.”

When the County Board approved the project last year, supervisors agreed to a $10 million state loan to cover initial construction costs at the Law Enforcement Center.

O’Malley said it is unlikely the state will loan the county any more money for the project, which will increase the jail’s capacity by 108 beds and include room for future expansion.

Eau Claire-based Market & Johnson Inc. is the project’s construction manager.

Originally, the county planned to wait until later in the year to discuss financing the $19.5 million because the construction cost is not due in one lump sum, O’Malley said. But, he said, the city of La Crosse this week cashed in on a 2.9 percent interest rate on a 10-year bond.

That, O’Malley said, led him to push for an earlier discussion about payments.

“I don’t think we’ll get (the 2.9 percent) rate, because this project’s a lot bigger,” he said.

“But we might be able to get something comparable.”

As tempting as the plan might be, board members still see it as a gamble. Burke cited the market’s recent volatility as a disadvantage.

“Money is very tight for the county, and I think that’s going to be the case for a few years,” she said. “We can’t predict the future. It’s very difficult out there, and this is a serious situation.”

But County Supervisor Tom Rauk said while it’s good to air concerns, the county should not squander an opportunity.

“The issue with the remaining money was always going to be: When’s the right time to invest?” he said. “If (O’Malley) says it’s starting to look attractive right now, well, we left it in his hands. He’s been pretty damn sincere about this, and we’re anxious to reduce costs.”