Thurston County plans to raise up to $52 million through a bond issue to finance its plan to remodel a reorganized courthouse campus.
The Board of County Commissioners voted 2-1 on Tuesday to approve a bond resolution for the acquisition of property and remodeling of various county buildings.
With this money, the county can fund its plan to turn its aging campus into a renovated law and justice center to meet its urgent space needs. The county pivoted to this plan in 2021, about a year after it retracted plans to build a new, $250 million courthouse center in downtown Olympia.
As part of this plan, the county separately signed a seven-year lease in mid-2021 for the Atrium, a building at 3000 Pacific Avenue that will house general government offices.
Tenant improvements at the Atrium have been underway this year and are expected to cost around $10 million. On Tuesday, the board also approved a $2 million contract with Gordon Products Inc, also known as Creative Office, to purchase furniture, fixtures and equipment for the Atrium.
The bond resolution authorizes Assistance County Manager Robin Campbell to approve the final terms of the sale of the limited tax general obligation bonds. The county set it up this way so it can meet its interest rate and payment schedule without reconvening the board, according to county documents.
"It's the normal practice of Thurston County to delegate authority to the assistant county manager to issue bonds at a time that is most advantageous to the county," Campbell said.
Campbell said the maximum interest rate for the bond cannot exceed 5.5% and it should reach final maturity by the end of 2047. A bond sale is expected to start in mid-August and close by the end of that month, per county documents.
"For at least the last 40 years, this is the type of bond that Thurston County has issued," Campbell said. "And it is a normal practice of counties in the state of Washington, if not across the nation, to issue limited general obligation bonds under a councilmanic action."
The county plans to make payments on the bond with revenue from its real estate excise tax (REET), which is levied on property sales. If the county does not have enough such funds, Campbell said it could then repay the bond using its general fund.
There were 12,717 real estate transactions in Thurston County in 2021, Campbell said. This generated just over $5 million. She added the county has collected $2 million through May this year, but most of this revenue is typically generated from July to September.
"Very few transactions generate a lot of REET money," she said. "Our forecasted revenue this year is just over $5 million. We forecasted a little less than last year... We are on pace to achieve that revenue."
Commissioners Carolina Mejia and Tye Menser voted in favor of the Atrium contract and bond resolution. In keeping with his past opposition to both projects, Commissioner Gary Edwards voted against both items after his motion to remove them from the agenda failed.
Edwards said he felt skeptical of the plans and cast doubt on the legality of the county's actions. Rather than let the board decide, he said he wanted to the public to vote on the matter.
"It's a mediocre plan at best," Edwards said. "We just need to let the voters know what the plan and is and make sure it's good."
He also predicted a recession would befall the nation and impact the county's financials, particularly the money it generates through the sales tax and the real estate excise tax.
"We can see a recession coming," Edwards said. "I don't think it's a very good time to depend on REET. When we will recover from that, I'm not exactly sure."
Additionally, Edwards said he felt it was unfair for the county to use REET funds gathered in unincorporated Thurston County to fund acquisitions and remodeling in Olympia.
Commissioner Tye Menser, a lawyer, said he felt confident in the advice from the county's internal and external legal counsel, indicating there was no legal issue with the county's actions.
Menser also disputed Edwards assertion that using a REET fund would be unfair to unincorporated residents. He said the fund is meant to be used on facilities and the county is obligated to provide county offices within the county seat, in this case Olympia.
"There's really no way that you would not have that connection between the real estate transactions and at least expenditure of some of them on facilities within the county seat because that's state law," Menser said. "So, it's really not an argument that I think has any merit whatsoever."
During an earlier Tuesday morning meeting, Menser challenged Edwards' stance on having the voters decide the county's plans. He pointed out Edwards previously opposed the ballot proposition to fund a plan to build a new courthouse campus in downtown Olympia.
"You want your plan," Menser said. "If you get your plan then put it before the voters. If it's the majority of the board's plan, you don't want that to go before the voters."
In response, Edwards said he didn't support the previous ballot proposition because he didn't believe the plan being put before the voters was good enough.
Menser said the county doesn't need to ask the voters to approve the new plan because it doesn't require a tax increase.
"This plan is completely scaled back, living within out financial means, not asking the voters for a tax increase," Menser said. "And that's what we're elected to do is to make the decisions to carry out the plans to meet our statutory requirement to provide facilities for the county."