Missoula County on Tuesday agreed to issue the first series of open space bonds to generate around $4.5 million in revenue, which it plans to expend within the next three years.
Voters in 2018 approved the $15 million bond to protect open space, restore lands and improve public access. It was the first open space bond approved by voters since 2006, which raised $10 million but leveraged nearly $40 million.
Now, it’s time to put the new round of revenue to work, though playing the market is key.
“Generally, I’d like to take the entire $15 million to the open primary market with an underwriter and sell it,” said Andrew Czorny, the county’s chief financial officer. “That’s our absolute lowest cost in capital. But we have to have a reasonable expectation that we’d expend those funds within a three-year period.”
Czorny said Missoula’s open space organizations didn’t think it was possible to expend the entire $15 million within the three-year timeline. Instead, the county opted to issue the first series of bonds to raise $4.5 million – an amount that could be expended within the timeline.
The county has committed to spending $1.5 million and the city $3 million over the next three years.
“I thought about doing a taxable issuance, which would have gotten us away from that limitation” Czorny said. “The interest rate just didn’t make sense, so we threw that away.”
Czorny said the county negotiated a deal with First Security Bank at 2.7% interest with no call feature that would have restricted the county from paying the debt off early.
The bank agreed to purchase the bond and the money will be issued by May 19.
“At the end of the three years, I fully intend on refunding this, the larger amount, so I can hit the primary markets and get that lower cost in capital without extending the overall maturity of the issuance,” Czorny said.
The 2006 Open Space Bond financed more than $10 million in work. The county was able to use some of that revenue as matching funds to leverage nearly $40 million from federal programs, such as the federal Land and Water Conservation Fund.
Revenue from the new bond could do the same and will create new trails on Mount Dean Stone, protect farm land and improve access to the Clark Fork River, among other things.
“This is a clean and simple approach and meets our spending goals in a way that that going to the primary market for the entire total wouldn’t,” said Commissioner Josh Slotnick. “We wouldn’t be able to do that many projects in three years.”