Smith County progresses on courthouse project

Published 11:51 am Friday, August 18, 2023

Plans for the new Smith County courthouse remain on schedule, with the expectation to sell the bond at Tuesday’s commissioners court meeting.

Commissioners heard a presentation at their Aug. 8 meeting on upcoming bond sales from Steven Adams of Specialized Public Finance Inc.

“Primarily, we’re here today to let you know we’ve been moving forward,” Adams said. “We’ve been working with the auditor, the [county] judge and all other vendors and bond counsel to get to this point.”

Smith County has voter-authorized bonds from two bond referendums – one from November 2021 for road improvements and one from November 2022 to fund the new courthouse and parking garage.

County Judge Neal Franklin said the county asks the public to vote on pursuing projects such as the courthouse and parking garage project, and if the majority of the public votes yes, a bond is passed.

A bond represents a loan made by an investor to a borrower to finance capital projects. The county must sell them to banks, mutual funds or other entities to get the money, Franklin explained. These groups lend money to the bond issuer by purchasing municipal bonds in exchange for regular interest payments.

In November 2022, ballots showed 40,120 people, or 53.73 percent, voted for the issuance of $160 million in bonds for the new courthouse and $19 million for the associated parking structure. There were 34,552 people, or 46.27 percent, who voted against the bond, according to county results.

In June, the county issued the $19 million bond to fund the parking garage project with 3.9% interest. In addition, over the next few years, the county plans to use $11 million in cash to fund road improvements.

There were eight bids on the parking garage project.

“That goes to show you that Smith County is in a good financial position, and we’ve been that way for many years,” Franklin said. “So we’re a safe bet when they’re going out and spending that kind of money.”

An agenda item for Tuesday’s weekly commissioners court meeting, the county is now considering issuing the $160 million in bonds to fund the courthouse project. The county is estimating about 4% interest on this project.

“We can do this within a total interest and sinking tax rate of 8 cents, and a lot of that’s because of your growth,” Adams told commissioners at the Aug. 8 meeting.

Entities levy the interest and sinking tax rate to pay for any bond debt that may have been issued.

Smith County received the fiscal year 2024 certified taxable assessed valuation, with a projected growth rate of 15.7% from the prior year. Specialized Public Finance estimates the interest and sinking tax rate, including the parking garage bonds and the proposed courthouse bonds, to be 8 cents.

The tax assessment is a value assigned to real estate by the local taxing entities that are then used to calculate how much the owner pays in property taxes.

An appraisal district in each county sets the value of property each year. A chief appraiser is the chief administrator and operates the appraisal office.

The Smith County Appraisal District is not part of the Smith County government.

This projection includes current interest rates plus a 25-basis point cushion for future movements until the actual interest rate is set.

Adams said there may be fewer bids on the courthouse because the issuance is larger. One reason is banks that cannot participate due to noncompliance with Senate Bills 13 and 19 regarding firearms or fossil fuels.

Currently, banks that can’t bid on municipal bonds are J.P Morgan, Bank of America, CitiBank and other household names.

“We’ll still have quality bidders,” Franklin said. “We may not have as many because of different things, but we’ll have plenty of interest.”

Selling bonds affects taxpayers because the tax rate will increase by 1.7 cents, as well as the addition of a new courthouse and parking garage to be used for many years.

County business revolves around the judicial system, but it’s evident that people care because they voted for the bond, Franklin said.

Nearly everyone has to do business at the courthouse at some point, whether it’s jury duty or seeking a marriage license. It will also put all court-related departments under one roof.

Franklin said this makes a difference in the community and will make a difference downtown.

“It gives us a chance to move forward with this project instead of waiting and trying to save in our coffers,” Franklin said. “We needed to begin this process for a lot of years.”

Over the past 20 years, numerous studies have been conducted to assess the needs of the courthouse and the judiciary and offer suggestions on possible solutions. All studies reached the same conclusion, which was a new courthouse and parking garage were needed to accommodate the growth, logistic and security needs of the county’s judicial system, according to the county. After much research, planning, community meetings, citizen input surveys and more, the courthouse and parking garage bond proposal made its way to the ballot and was approved by voters.

The current Smith County Courthouse has been in use for 64 years. Construction is expected to begin this October, with the parking garage to be built first. The new courthouse will be built after the parking garage is completed. Courthouse business will continue as usual in the current structure until construction on the new courthouse is complete.