Starke County Council Considers Jail Bond Refinancing

Starke County Council members are reviewing four options in an effort to save money on the 2013 Starke County Justice Center bond 2013 repayment.

The county currently pays $1,070,000 annually on the $14 million bonds that financed the Starke County Justice Center construction project.

Todd Samuelson from Baker Tilly explained that the council could approve an early redemption feature to refinance with a lower interest rate and pay off the bonds in 2032, or 18 months early, with a savings of nearly $9,000.

“There is a technique that can be done where a new set of bonds would be issued in advance of that call date,” stated Samuelson.  “The proceeds of that bond issue would be invested or put into an escrow account and then the holders of those bonds would be paid off at that time.” 

The new bonds would be sold at a taxable rate rather than a non-taxable rate.

Other options include issuing new bonds to refinance or pay off the old bond and reduce the annual payment to save $20,000 annually, lift the debt service reserve with cash and fund with an insurance policy for $38,000 with a savings of $110,000 with the current interest levels, and refinance bonds but generate $1.2 million in cash to be used for facility updates at the jail.

With any change, it’s recommended that the cash reserve be placed with a surety insurance policy.

The council agreed to move forward to move the legal process forward to get the process started and make a formal decision in a future meeting as interest rates may be favorable in a few months.