El Paso County to receive $110 million for bond projects this week
El Paso County is set to receive this week roughly $110 million for several projects including the Tornillo border crossing, the expansion of the El Paso County Jail annex and the purchase of new county vehicles.
The money is part of the 2012 El Paso County Certificates of Obligation Bonds which will be finalized on Wednesday.
The bond issuance will cost the average homeowner $23 a year for a $115,000 home, according to the bond issuing company.
“Nobody likes to raise taxes,” said County Judge Veronica Escobar, “but it was badly needed.”
According to Mark Valenzuela, the vice president of George K. Baum & Company which was selected to underwrite the bonds for the County, the County received a deal unprecedented in comparison to previous bond projects in El Paso County.
Due to the market conditions, and El Paso County’s strong fiscal rating, some companies overpaid for bonds in order to receive a higher interest rate.
As a result, the County is on the hook for repaying just under $99 million instead of the entire $110 million it will receive. At the back end of the deal it amounts to a $2.2 million savings according to an associate from George K. Baum & Company.
The company also cuts costs by deciding not to insure the bonds.
Typically bonds are insured to guarantee a high credit rating which results in better deals when selling the bonds which bring the millions of dollars into the County.
In this case, he said the County holds such a high credit ranking they chose not to do so which allowed them to cuts costs by 28-percent compared to El Paso County’s 2007 bonds. Commissioner Dan Haggerty, who didn’t agree with issuing the bonds, admitted the process went smoothly.
“They negotiated a very, very good contract,” said Haggerty, adding that he still thought $110 million was too much, too soon.
The bonds can be refinanced in nine years. The plan, as it stands now, requires the county to payback the bonds over 20 years.
By 2032, if the county does not refinance, they will have paid $158 million to receive $110 million on Wednesday.
