County Looks to Sell $69M in Bonds for Three Projects

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

July 15, 2022

County Supervisors have approved doing a bond sale to pay for three costly capital improvements projects, and potentially pay for other needed projects in the future.

On June 7, Supervisors were asked to approve setting up a bond financing scheme to pay for a new Probation Department headquarters in San Luis Obispo; a new combined dispatch center for the Sheriff’s Department and Cal Fire/County Fire; and for repairs needed to reopen the Cayucos Vet’s Hall.

According to the item’s staff report by Auditor-Controller-Treasurer-Tax Collector-Public Administrator (ACTTCPA), James Hamilton, the County anticipates those three projects would need $59.1 million to $69.5 million in general obligation bonds.

The bond financing scheme is officially called, “The Facilities Financing Plan,” and would be a way for the County to get the projects done without having to wait for outside funding to materialize.

In the report, the new Probation Department HQ is estimated at $30M to $35M; the dispatch center at $25M to $30M; and the Cayucos Vet’s Hall at $3.5M. 

The Probation Department offices, which are now located in a circe-1940s building on Johnson Avenue in SLO, was approved in that June 7 meeting to seek bids for a design-build delivery of the project. 

With design-build, the same company is chosen to design and build the project, instead of the usual delivery method of “bid-design, bid-construction,” which would seek the lowest bidder in each phase of a project.

With design-build delivery, the theory is that it cuts down on time, and change orders caused by misunderstandings of plans and specs inherent with having two different companies doing the job.

It should be noted that the costs of these projects won’t be known until bids are awarded and even then the final cost won’t really be known until the jobs are completed and all the bills paid. 

The County would seek to sell the total amount in lease revenue bonds and draw from that well of cash as each project develops.

If any of the projects is ultimately not approved by Supervisors to move forward, that amount would be reduced from the total. Also, the interest rates on the bonds won’t be set until they are actually sold through the SLO County Financing Authority. 

How lease revenue bonds work is that the Financing Authority sells the bonds and in essence borrows the money to pay for the projects and the County then leases the facilities back, paying both interest and principle over 25 years.

The debt is backed by and repaid out of the County General Fund and Hamilton’s report pegs debt service for $59.1M-$69.2M in bonds at $3.9M-$4.6M a year, which he said, is within the normal range for public debt, i.e. below 5% of the General Fund Budget.

With the Vet’s Hall project, the County allocated $571,600 to get the project through the bidding phase including a $50,000 temporary loan from the “Tax Reduction Reserve Fund.”

The project also received a $1.9 million grant from Prop. 68, the “Cultural, Community and Natural Resource Grant Program;” and also got a $300,000 grant from the Coastal Conservancy. The community is also raising money to assist, as it did with the rebuilding of the Cayucos Pier.

Supervisors last November approved an interim loan from the Tax Reduction Reserve Fund to get the project rolling, anticipating that this bond sale would repay that loan. The Vet’s Hall was declared structurally unsafe and has been closed for over 5 years.

The Probation Department Office project was already approved to go out for bids, after an initial phase last year identified three qualified bidders who submitted information in anticipation of an RFP being issued, which it was in June. 

A contract is expected to be awarded in the coming months and the project to start before the end of this year.

The new dispatch center would bring the Sheriff’s and Cal Fire/County Fire dispatchers under one roof, which is intended to be more efficient and save money.

Currently, Cal Fire/County Fire dispatches all fire and ambulance emergency calls for all of the unincorporated towns, plus several local incorporated cities. 

The fire dispatching is done out of the Cal Fire HQ on Hwy 1 in SLO, and the Sheriff’s dispatch is located in the County Office of Emergency Services Building on Kansas Avenue.

If that project gets built, both dispatch units would work out of the same new building on Kansas Avenue. Several years ago, that site was turned into a communications hub for the media in the event of natural disasters by the County OES. 

The County is also looking at some future projects that could be bond financed as well, including new Health Agency facilities on Johnson Avenue; a new combined office for County Parks and Recreation, the Ag Commissioner and a U.C. Coop office at El Chorro Regional Park; and redevelopment of a former cae dealership on Monterey Street in SLO that has been used by various County Offices for years. 

Estimated cost for the Health Agency’s new facilities is $30M; $25.3M for the Parks & Rec-Ag Commissioner’s Offices; and $60.5M to rehab the old car dealership.

The actual amounts of bonds to be sold for each project would be determined when bids are in and construction contracts awarded, so the numbers here could be a higher or lower than anticipated.

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