$21 Million Sheriff’s Building Would Be Financed With 15-Year CenterState Bank Loan at 1.83% Interest – FlaglerLive.com

Flagler County commissioners on Monday will consider approving a $20 million loan from a commercial bank to finance the proposed Sheriffs Operations Center in Bunnell, significantly adding to the countys current debt load of $142 million and annual debt servicing of more than $11 million, records show.

Six banks responded to Flaglers Nov. 3 request for proposals to finance the loan. The countys financial adviser is recommending awarding the bid to CenterState Bank, whose Gary Lubi, a well-connected local banker and past president of the now defunct Chamber of Commerce, submitted that banks proposal: a 15-year loan at a fixed 1.83 percent interest, pending a closing on or before Dec. 18. Lubi has brokered various financing and re-financing arrangements with Palm Coast, the county and the school board over the years.

CenterStates was not the lowest bid. Capital One offered a 1.68 percent interest rate, one of J.P. Morgans four options was a rate equal to that of CenterState, and RaymondJames offered a 1.69 percent rate. Other bidders were KeyBank and Truist.

While CenterState did not offer the lowest fixed interest, Jay Glover, the countys financial adviser wrote in a memo to Jerry Cameron, the county administrator, their proposal includes an attractive draw down feature that will allow the County to draw funds down through June 30, 2022. This minimizes the interest cost in early years and gives the County flexibility on final draw if the full $20,000,000 is not needed to complete the project. When comparing the CenterState proposal to the lowest interest rate proposal (Capital One at 1.68%), there is a small present value benefit in debt service cost with the draw down feature.

The CenterState loan would bring principal and interest costs of the loan to $22.85 million.

Architects and the general contractor on the project unveiled plans for the 51,000 square foot building along the future Commerce Parkway, south of the Government Services Building complex, at a commission meeting on Monday. The county is the landlord for all constitutional officers, responsible for housing all their offices at the countys expense. The sheriffs Office vacated its operations center off State Road 100 in mid-2018 after employees became chronically sick from what was believed to be water intrusion and other issues that caused symptoms similar to sick building syndrome. The county had bought and renovated that building for $7 million less than three years before. The building was sold at a huge loss in July: the buyer paid $807,000 for it, an apparent difference of just $423,000 from the price the county paid for it in 2013, but that was before the nearly $6 million in renovations the county invested in the building. The county is still carrying that debt.

Contrary to Camerons claims to commissioners on Monday, the proposed loan for the new building will not be bonded and financed by the countys half-penny surtax that the commission approved in 2012: since the commission voted in the tax, foregoing a referendum, the commission does not have the authority to bond revenue or finance a loan from that particular tax. It will finance the bank loan through the countys portion of the states sales tax revenue.

The two taxes are often confused, as Cameron appeared to have been on Monday when a commissioner noted that the local surtax doesnt go on forever. It does if you say it does Cameron told the commissioner (the tax is not set to expire before 2032). Each tax generates about $2.9 million a year.

The small county surtax we enacted cannot be used to pay debt and cannot be used to repay this bank loan, County Attorney Al Hadeed confirmed. (Cameron himself appears to have ordered his public information office not to answer questions about his inaccurate statements on Monday. When asked what bond he was referring to on Monday, Julie Murphy, whos in charge of Camerons PR, wrote, This is not a public records request. The records, however, which were not provided by Murphy, clarify the picture, though it isnt clear why Cameron did not disclose the financial recommendations to commissioners on Monday: the countys financial adviser sent his memo on Dec. 1.)

The countys commission-approved half-penny surtax has paid or will pay for such things as the cottages at Princess Place Preserve, parking at Bings Landing, improvements at Bunnells Carver Gym and the long-planned, yet-to-be-built south branch library. Revenue from the half-penny share of the state sales tax, which may be bonded, paid for the jail expansion, the once and future sheriffs operations center, the GSB complex and will be used for a west-side fire station.

But in both cases, money spent on those projects means its money diverted from other needs. That will also be true of the financing of the sheriffs operations center, which will significantly narrow the countys ability to pay for other projects through that fund. It is difficult to conceive, for example, how the county would pay for both the operations center and a branch library. The countys available funds for unexpected projects or emergencies will also be further limited.

The loan amount for the proposed sheriffs building falls short of projected costs for the building, which on Monday were pegged at just under $21 million, when architectural and engineering fees and furniture costs are included, as they must be. The cost does not include an additional building for purchasing and logistics planned for the sheriffs grounds, and it does not include interest on the loan, all of which would push the cost well beyond $21 million.

Fortunately for the county, it has no legal debt limits.

The $142.5 million in debt the county is currently carrying was issued between 2004 and 2020. Not all of it is for general government services. For example, the nearly $10 million owed for the Plantation Bay sewer plant and water projects the commission approved this year and last are administered through a separate fund that only Plantation Bay utility ratepayers are responsible for. Thats also the case for the outstanding debt of $6.5 million from when the county acquired the plant in 2014. The airport and a Beverly Beach utility the county administers also have their own funds, outside of the general government stream.

In sum, the county currently owes $115 million through its general government funds, and $27 million through proprietary funds such as Plantation Bay and the airport. In general government, for example, the county took out a bond to build the GSB complex in 2005 and refinanced in 2015, leaving it with a still-outstanding debt of $52 million. The $33 million bond to build the courthouse in 2005 was not refinanced. The county still owes nearly $29 million on that building. (See the countys debts in detail here.)

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$21 Million Sheriff's Building Would Be Financed With 15-Year CenterState Bank Loan at 1.83% Interest - FlaglerLive.com