Moffat County commissioners unanimously approved on Wednesday morning a more than $3.5 million refinancing plan for the money-losing Public Safety Center Fund in a move that could be compared to paying for Visa charges with a MasterCard.
The new certificate of participation on the Jail Fund refinances about $2.6 million of the Moffat County Public Safety Center's $12.1 million taken out in loans.
Without refinancing, commissioners said they wouldn't have enough to make a $282,278 payment on the loan due next month and still have enough left over to cover other county costs, such as payroll.
"We'll be further behind if we don't refinance than if we do," said Commissioner Darryl Steele, about the decision to borrow more money. "It doesn't look like we have a choice. We were just going to get hammered."
According to county cash flow figures, if revenues from the Public Safety Center continue to come in under budget and without the refinancing move, the fund will be more than $6.6 million in the red by 2023.
However, while the refinancing will buy commissioners more time to handle expenses at first, the increasing costs of interest could greatly bulk up the bottom line if extra dollars on top of future payments aren't included.
Before refinancing, the county had an $18.7 million debt, including interest, left to pay on the loan up until 2025. With the latest refinancing, the county owes an adjusted $21.1 million.
It will cost $125,000 to implement the plan over the five-year period.
The immediate effects of refinancing means the county's 2005 payment may be reduced to about $700,000 instead of the formerly expected $910,000.
But down the line, those payments are expected to reach more than $1 million a year by 2011. To reduce interest rates, future commissioners would have to add dollars onto those payments. It's a situation that commissioners say they can handle if jail revenues
"The important thing to remember here is that if the (jail) builds up, that will give us more money to make more payments," said Commissioner Marianna Raftopoulos.
According to former county budgets, jail revenues are under budget because of less-than-expected work release inmates and shortages on other inmates who bring in federal dollars.
Lone audience member Stan Hathhorn disagreed that the $3.5 million refinancing move was the county's best possible option.
"It's really disconcerting," he said.
Hathhorn said the county could meet the Nov. 15 payment by borrowing from the loan's 10 percent reserve, providing it was replenished within about a year. That option wouldn't cause the county to default on its loan, he said.
Commissioners said they felt the refinancing decision was a way to be "proactive."
It may or may not ward off the possibility of the board asking for a mill levy increase in 2004. If passed, commissioners pointed out, levy increases wouldn't go into effect until the 2005 budget. And money is needed now.
"We're trying to do everything we can to restructure so we don't have to go for an increase," Raftopoulos said. "I'm not saying we're not going to get there."
About the refinancing, Raftopoulos said, "This is critical because it helps free us up so we're not running in the red."
Amy Hatten can be reached at 824-7031 or firstname.lastname@example.org.