The new Warren County Jail will cost $74 million and will be paid off over the course of 30 years.

Warren County Board of Supervisors and District 5 Supervisor Kelle Barfield said the jail is being financed by a Certificate of Participation (COP). Similar to a municipal bond, Barfield said the county creates an offering. Then investors sign up for those certificates, funding the project.

“The favorability of the rates depends on your credit rating and other factors,” Barfield said. “In our case, we worked very hard to have a favorable analysis as much as possible prior to the COP offering. In addition, we are the first county to have bond insurance in the state for this type of project.”

According to investopedia.com, a COP is “a type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Certificates of participation are, therefore, secured by lease revenues…

“A lease-financing agreement is used by a municipality or local government to acquire real property. Under the agreement, the local government makes regular payments over the annually renewable contract for the acquisition and use of the property. A lease-financing contract is typically made available in the form of a certificate of participation.

“A municipal government will typically issue muni bonds from which the proceeds from the bond investors will be used to undergo a project. The certificate of participation is an alternative to municipal bonds in which an investor buys a share in the improvements or infrastructure the government entity intends to fund.

The authority usually uses the proceeds from a COP to construct a facility that is leased to the municipality, releasing the municipality from restrictions on the amount of debt that they can incur. The COP contrasts with a bond, in which the investor loans the government or municipality money in order to make these improvements.”

The organization that ensured the county’s offering is Build America Mutual (BAM). According to Barfield, BAM ensured the offering because of Warren County’s favorable financial standing.

Yearly payments will total about $5 million. The first payment was made in September.

The next fiscal year budget will not include millage rate increases despite the new project, Barfield added.

“We’re working now very hard to be able to sustain that because there are another 29 payments that have to be made over the next 29 years. And the way that we are able to sustain those payments without raising individual millage is to increase property values or have additional property owners come into Warren County. And that’s why issues like home builders building more and affordable homes, quality of life, all of those things become very important. The quality of our public education – all those things factor together so that when people, for example, work in Warren County, they want to live in Warren County. Or if they’re working somewhere else, they want to move to Warren County.”