Cass County Building Projects

Cass County Building Projects


• Cass County has had a few building projects, most with some debt being issued • 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!


• 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


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.


• 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.”


• 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.”


• 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.

Documents

Cass County Building Projects