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HomeMy WebLinkAboutJefferson County Debt Policy and Allowances_2026-04-27Jefferson County Treasurer Summary of Debt Policy Allowances April 27, 2026 Chart reflects Debt Policy Adopted 7/25/2017 and revised 10/22/2019, 1/28/2020 and 10/27/2020. Topic Debt Policy Language Limitations, Duration Notes Purpose For Borrowing The County shall issue long-term debt solely for the purpose of design, acquisition and construction of capital projects, and acquisition of other capital items, as defined in the Capital Improvement Plan. The County shall issue debt with an average life less than or equal to the useful life of the assets being financed. In no case will the term of any financing exceed the life of the asset being financed. Unless otherwise stated in law, the final maturity of the debt shall be no longer than 40 years (RCW 39.46.110). If we want to expand the Department of Emergency Management facility at 81 Elkins Rd, Port Hadlock, we would need to add it to our Capital Improvement Plan. Debt By Type Allowed Unlimited Tax General Obligation Debt Unlimited Tax General Obligation Debt is backed by the full faith and credit of the County and is secured by general fund revenues and voted excess tax levies collected by the County. Unlimited Tax General Obligation Debt is payable from excess tax levies and is subject to voter approval. Any proposition for UTGO debt must be approved by 60% of the voters casting a vote and the total number of ballots cast must be at least equal to 40% of the total number of voters voting in the last general county or state election (chapter 39.40 RCW). Total GO debt (including limited and unlimited tax) is subject to a statutory debt limitation of 2.5% of the County's assessed value (chapter 39.36.020 RCW). Limited Tax General Obligation Debt Limited Tax General Obligation Debt is secured by regular tax levies and revenues, and includes all types of obligations whether lease-purchase, financing contracts, loans, bonds or other payment obligations. Rental leases are not considered debt, but financing leases are. Any financing of the County completed through the LOCAL Program (discussed below) will constitute general obligation debt. Limited Tax General Obligation Debt LTGO debt is subject to a statutory debt limitation of 1.5% of the County's assessed value (chapter 39.36.020 RCW). The target amount of limited tax debt outstanding will not exceed 40% of the statutory debt limitation (subject to an affordability analysis of the county’s current expense fund) unless required for unique capital improvement projects, circumstances, or to meet an emergency requirement caused by natural disaster, legal judgment or similar unplanned events. Jefferson County 2026 Assessed Value $10,220,933,831 = $153 million statutory debt limitation Existing debt issues for Tri- Area and JeffCom are LTGO. • LTGO REFG 2016B - Tri Area • LTGO Refg 2016B E911 • LTGOR 2016 E911 Jefferson County Debt Policy and Allowances Page 2 of 5 Topic Debt Policy Language Limitations, Duration Notes Revenue Bonds Revenue Bonds - The County is authorized to sell Revenue Bonds by County Commissioners’ resolution, in accordance with Section 3.16 of the County Code. Debt service coverage, reserve levels and other covenants associated with the issuance of revenue bonds will be determined on a case by case basis in consultation with the County's financial advisor (if any) and/or underwriter with the goal of providing sufficient protection to the County and bond market acceptance. Revenue Obligations There are no legal limits to the amount of revenue bonds the County can issue, but there are practical limits to the County's ability to repay obligations (chapter 36.67.570 RCW). Revenue bonds are generally subject to certain tests and requirements, including (1) establishment and maintenance of a debt service reserve fund (generally equal to average annual debt service), (2) rates and charges must provide net revenue after payment of operating expenses equal to a multiple of a minimum 1.25 times the debt service requirement, recognizing that from time to time the multiple may need to be higher than 1.25 times depending on the type and purpose of the enterprise and debt. Additional covenants and pledges must be made for the benefit of bondholders. The County will not incur Revenue obligations without first ensuring the ability of an enterprise system to consistently meet any pledges and covenants customarily required by investors in such obligations, during the term of the obligation. Grant Anticipation Note (GAN) is an example of one. The line of credit is backed by the grant revenue we receive on a reimbursable basis, and use of funds is specific to the Sewer project grants. This one used private placement after a competitive sale with a Underwriter/Placement Agent. ~~~~~~~~~ Sales Tax Revenue Bond could be an option for JeffCom similar to existing agreement where Communication Sales Tax receipts are used to pay debt service. Debt issuance cost is likely more than using the state LOCAL program. Jefferson County Debt Policy and Allowances Page 3 of 5 Topic Debt Policy Language Limitations, Duration Notes Special Assessment Bond Special Assessment Bonds -The County is authorized to sell assessment-backed obligations, based on the formation of special districts such as road improvement districts (RIDs) and local improvement districts (LIDs) the formation of which is detailed under chapter 36.88 RCW, subject to the approval of the County Commissioners. Assessment-backed Obligations The benefiting property owners are charged an assessment based upon a formula developed to fairly reflect the benefit received by each property owner in the assessment district. In the event of annexation of property from the County, the property owners will still be responsible for payment of assessments. There are detailed statutes for the formation of assessment districts and assessing property, which contain specific timeframes for notice and conducting public hearings (chapter 36.88 RCW). The County will form road improvement districts (RIDs) or local improvement districts (LIDs) upon petition of benefiting property owners, unless the County Commissioners determine to establish the districts by resolution. The County Administrator and County Treasurer shall be provided with enough detail to determine the size, timing and characteristics of the project and any contribution the County is providing to the cost of the improvements. No assessment district in which there is undeveloped land, land owned by governmental entities, land designated as "open space," or a concentration of ownership in a few property owners, will be formed without review by the County's financial advisor or underwriter, and bond counsel. Local Option Capital Asset Lending (LOCAL) Local Option Capital Asset Lending (LOCAL) Program Debt - The County is authorized to enter into a financing contract with the Office of the State Treasurer under chapter 39.94 RCW, subject to the approval of the County Commissioners. The LOCAL Program debt limitations are the same as for general obligations debt. LOCAL can be an option for interlocal agencies to use one of the underlying agencies to perform a borrowing on their behalf in the right circumstances. OST would contact their legal counsel and review all docs of the interlocal agency and those with levying ability. This is an option for JeffCom’s proposal being discussed 4/27/2026. Jefferson County Debt Policy and Allowances Page 4 of 5 Topic Debt Policy Language Limitations, Duration Notes Lease Purchase, Certificates of Participation (COPS), or Other Financing Contracts Lease Purchase, Certificates of Participation (COPS), or Other Financing Contracts - The County is authorized to enter into capital leases subject to the approval of the County Commissioners. These represent general obligations of the County. Other financing contracts include property acquired subject to real estate contract. Lease Purchase or Other Financing Contracts debt limitations are the same as for general obligations debt. Short Term Debt Short Term Debt - The County shall use Short Term Debt (obligations of less than 1 year) to provide interim financing for capital projects (in conjunction with the development of a long term financing plan) and to provide necessary liquidity. To manage Jefferson County's cash flow, the County Treasurer may make loans with a term of twelve months or less to any Jefferson County fund from another fund. The County Treasurer may make loans from any Jefferson County fund from another fund with a term of greater than twelve months with County Commissioners’ approval. Short Term Obligations Unless otherwise justified, the County operates on a pay-as-you-go basis for operating expenses. The Treasurer is, however, authorized to issue short- term debt in order to manage the County's cash flow circumstances. The issuance of short-term debt may also be warranted if timing or other similar circumstances occur on a long-term debt issue. In no case will notes or other obligations be entered into for the purpose of funding operating deficits without prior development and review of a long term deficit funding plan. The use of short term financing shall be evaluated by the County Treasurer and compared with the cost of internal financing or interfund loans. All interfund loan resolutions will be reviewed by the County Treasurer to ensure that the appropriate "reimbursement" language is included, the correct fund numbers are used, and to develop the appropriate debt repayment schedule. Jefferson County Debt Policy and Allowances Page 5 of 5 Topic Debt Policy Language Limitations, Duration Notes Capital Improvement Plan The County Administrator and the County Central Services Director may attend Finance Committee meetings and provide advice to the Finance Committee. The County Administrator may designate the Central Services Director or other qualified personnel as his designee to complete the functions detailed in this policy on behalf of the County Administrator. The County Administrator shall make a recommendation to the Board of County Commissioners on all requests for action on financing based on requests from elected officials or department heads or in accordance with the County's Capital Improvement Plan (CIP). The County Administrator shall recommend if long-term debt should be issued and if so, will recommend a debt repayment term that is less than or equal to the expected useful life of the facility/project. The Administrator will recommend the amount of net proceeds required and whether the debt will be voted general obligation bonds or limited tax general obligation bonds. See Section IV for additional types of debt. The County shall develop a Capital Improvement Plan (CIP) that lists the capital projects and needs of the County for a five year period, to be reviewed and updated biennially. The plan shall include a description of each project or need identified, the projected cost and timing of the project, and preliminary sources of funds identified for payment of the project. Prior to seeking financing for new capital projects the County shall ensure existing debt service obligations and county operations are sufficiently funded. In addition, the County should ensure that existing capital assets are well maintained and preserved. Finally the County should acquire new assets based on the greatest need and only when it has the capacity to service new debt and to maintain the new assets. Priorities shall be established based upon (1) the need for the project, in order to provide required County services, (2) availability of funding or debt repayment source, and (3) availability of staff to carry out the project in the time frames specified. The County Administrator shall coordinate the biennial update of the CIP.