GREENFIELD — One of the country’s largest ratings agencies recently assigned Hancock County the highest possible credit rating as local officials pursue a revenue bond to help finance a new county jail.
Hancock County received a AAA rating from Fitch Ratings, an agency based in New York and London, after a group of county leaders met with creditors earlier this month. The rating means the county could get a lower interest rate and save money on part of the jail’s financing, the county’s financial consultant said.
In order to build a bigger county jail, estimated at 440 beds, the Hancock County Council last month voted to increase the local income tax rate from 1.74% to 1.94%, a change that will take effect Oct. 1. The county also plans to issue a revenue bond — a municipal bond that finances income-producing projects — to get funds sooner. Proceeds from the tax increase will be used to pay off the loan.
County councilmen Jim Shelby and Bill Bolander; Hancock Economic Development Council executive director Randy Sorrell; the county’s financial consultant, Greg Guerrettaz, and a member of his staff traveled to Chicago a few weeks ago to meet with Fitch Ratings and S&P Global Ratings representatives to discuss the revenue bond rating. S&P gave the county an AA+ rating, one step lower than AAA.
The AAA rating, Guerrettaz said, shows investors that the county is very likely to pay its debts, and it could create more competition among investors, potentially giving the county a lower interest rate for the bond. Charlie Joyce, an associate with FSG Corp., where Guerrettaz serves as president, said the firm estimates the county could save, conservatively, $250,000 over the life of the bond.
In a document from Fitch Ratings, the agency said Hancock County’s rating is “based on the county’s solid revenue growth prospects, ample control over expenditures, low long-term liability burden and sizable reserve cushion.” The agency also said the county council has “significant control over local income tax rates” and that “management has worked to bolster financial flexibility and build available reserves … positioning it to preserve solid gap-closing capacity through future cyclical downturns.”
Guerrettaz said the county has worked well to manage its finances “very, very intensely.” Shelby said he gives kudos to department heads for working hard.
“The taxpayers should know you aren’t just granted this type of credit rating without working on it and without really managing your finances,” Guerrettaz added.
Scott Benkie, county attorney, said the county is waiting on appraisals before issuing the bond.
Next week, subcontractors will submit bids to Garmong Construction Services, the construction manager for the jail. Once the bids are received, Garmong will disclose the project’s guaranteed maximum price, said John Jessup, president of the Hancock County Board of Commissioners. The commissioners received an initial price tag late last month, but the cost was higher than expected. Jessup said waiting until bids come in could lower the final guaranteed maximum price.
Construction on the 440-bed jail, planned on 20 acres of county-owned land north of U.S. 40 between County Roads 400E and 500E, might start as soon as the fall and finish in spring 2021, Jessup said.
The first signs of construction on the property could start within the month or so, Jessup said, as crews break ground on a nearly mile-long access road between U.S. 40 and the future jail.
The county received a $1.49 million bid for the road in July. That bid was deemed high. Gary Pool, Hancock County engineer, worked to lower the bid of Calumet Civil Contractors, Inc., of Whitestown, and removed added incidentals, Jessup said. The final bid, which the commissioners agreed to late last month, lowered the cost to $889,000. The county council appropriated $900,000 for the road from the motor vehicle highway fund.
