County approves ‘notice of sale’ resolution for jail project, settlement with Kroger

By Steve Van Kooten

The Crawford County Board of Supervisors convened for a special board meeting on July 16 to approve a ‘notice of sale’ for the first round of bonds to finance the replacement jail. 

The county expects to break ground for the replacement jail on August 20.

“This is what we call a ‘heads up’ resolution,” Wisconsin Public Financial Professionals President Carol Wirth said. “Basically, it’s saying that now [the county is] going to move forward with a bond, and we are going to take steps so the county can actually access the funding.”

In June, the board approved the project’s initial resolution, which gave the county the authority to borrow the money necessary for the project. The ‘notice of sale’ resolution gets the county one step closer to obtaining the funds to pay for the jail’s costs.

The resolution outlines the rules of the bidding process, the documents that will be proffered to prospective bidders and the amount of bonds to be sold.

“This resolution is all about information: how we’re going to move forward and what we are going to do, but you are still not borrowing money,” said Wirth.

The county will conduct a competitive bidding process in which bids can be submitted either electronically or by phone. Bids will be taken on August 19 until 10:30 a.m. The next day, the board of supervisors will meet to approve the winning bidder. 

Upon board approval, Quarels & Brady — the county’s bond attorney — will prepare a resolution to “lock in” the interest rate. At that point, the county has officially borrowed money, according to Wirth.

For the bond issuance, the county is required by the Securities and Exchange Commission to disseminate information about the project and the county’s finances. County Clerk Robin Fisher will prepare an official notice of sale, and Wirth’s company will prepare an official statement.

Wirth called the official statement a “prospectus for the bidders.” A prospectus is a document that provides information to underwriters and investors about the county, the project, the general obligation notes issued for the money and the county’s debt service history, along with a copy of the county’s last financial audit.

“It would be very comparable to, if an individual made an investment, they would receive a prospectus,” said Wirth.

Underwriters will also receive the notice of sale, which will give them standardized rules for the bidding process.

In the initial resolution, the county had to garner approval from 75 percent of the supervisor roster (13 out of 17 members) to move forward, but the remaining resolutions do not have the same requirements.

“Both this resolution setting the same and the next resolution locking in the results can be adopted by a majority vote of those present,” Wirth said.

Mary Kuhn, Harrison Heilman, Wayne Jerrett, Craig Anderson and Gari Lorenz were absent for the July meeting. The 12 present supervisors unanimously approved the notice of sale resolution, which will issue $13 million in general obligation bonds for bidding in August.

The county expects to issue two more rounds of bonds in 2025 and 2026 to finance the jail project. The second round will be for $13 million, while the third will be for an amount to be determined later. That amount is currently projected to be $9 million. The total project guaranteed maximum price for the project is $35 million.

The closing date for the sale is set for September 9. 

Premiums

Once bidding opens for the project, underwriters will submit their bids. Wirth said they will be paying more than $100 for $100 worth of bonds, which will cause a premium.

Underwriters buy premium bonds for a number of reasons: the bonds can create a higher income stream, generate better returns, provide a regular cash flow and offer tax benefits and incentives for investors.

According to Wirth, the county is expected to receive approximately $487,000 in premiums from the first $13 million in general obligation notes. This number may change based on the bids the county receives.

The premium isn’t just free money for the county, though. The money has to be allocated to specific purposes, just like the money borrowed for the project.

“So, you’re going to get $13 million, and the underwriters are going to pay the expenses of issuance out of the premium,” said Wirth.

The expenses include fees from WFPF, Quarels & Brady and Moody’s investor service, among others. All of those fees total $85,300. Additionally, the winning underwriter’s fees will be deducted from that premium.

Wirth estimated the county will have approximately $193,000 left over after those fees are paid, and that remainder will go to the county. The amount of the remaining premium may change based on the results of the bid process.

“The only thing the county can do with that premium is put it into a debt service account and use it to abate the tax levy,” Wirth said. 

Opioids

The county approved a second resolution to accept a settlement between the county and The Kroger Company.

“There’s been an added defendant, if you will, to the opioid settlement that we’ve been involved in for the last couple of years. That’s the Kroger Company,” Mark Gilberts said.

Crawford County joined a lawsuit with other Wisconsin counties, which has resulted in settlements with drug manufacturers, distributors and retail companies like Walgreen’s and Walmart.

Gilberts added, “This is a step that says we approve and want to participate.”The terms of the settlement will require the county to spend the awarded money on opioid-focused treatments. Currently, the county has approved two projects: the prospective drop-in center in Prairie du Chien and an increase in substance abuse and counseling services for inmates in the county jail.

The Kroger Company is the nation’s largest grocery retailer, with 107 stores in Wisconsin, primarily in the southeast corner of the state.