[Editor's Note: This article and the others in this multi-part series are possible thanks to Sandra Michaud recording it for the author.]

By Mary Alice Murphy

At the special meeting on July 30, 2018, Grant County Commission Chairman Billy Billings introduced the next item on the agenda by saying he had requested it be there for discussion.

"It's a discussion on the essential air service and our decision to go with Advanced Air," Billings said. "I've been getting questions and making responses to the U.S. Department of Transportation. My understanding is that, although the department has made decisions on other locations, they still haven't made a decision on our airport. I will meet with the Deputy Assistant Secretary of the DOT. When I put it on our agenda, I didn't know if other commissioners had seen the communications from Boutique Air to the DOT. He's putting out information that is not correct. I responded to the DOT and have been back and forth with them. I was at the Boutique presentation. His communication led some to believe that commissioners had no chance to be present."

Commissioner Gabriel Ramos said he would like "to see the County Manager (Charlene Webb) put out a letter to Boutique to answer the DOT questions and what led us to choose the other applicant."

"The Boutique CEO Shawn Simpson brought up that he had never heard a discussion on a change of schedule," Billings said. "My memory tells me it was discussed with him. It seemed he wasn't willing to change."

"Maybe he should have put effort into talking to us," Ramos said.

Billings said he felt it was unfair that Simpson had a list of customers and he was choosing which customers to communicate with.

"I responded to at least 30," Billings said. "When I responded, I heard both sides."

Commissioner Harry Browne said he felt there were "failings on our part. I was unable to attend the Boutique one, and I didn't see all the commissioners at the Advanced Air one."

Billings said Advanced Air had several meetings the same afternoon, "so as to accommodate all of us."

"My question is why Advanced Air had several meetings and Boutique had only one," Browne said. "It baffles me why Boutique would expect an invitation to attend our public meeting. I would like to know why he didn't know about the open meeting."

Webb said that Priscilla Lucero of the Southwest Council of Governments has been the point of contact for essential air service applicants and set up the meetings. "What we did was post a possible quorum attending the different sessions. Simpson was invited to the Commission meeting, but unfortunately not everyone could be there. It was for applicants, public, officials, citizens, commissioners. Boutique got the same invitation as Advanced Air."

"If Boutique had appeared at our public meeting, then he would have heard what all could say," Browne said. "There is no harm in an excess of invitations."

"Advanced Air asked if his attendance was required at our meeting," Billings said. "I said it wasn't required, but he chose to attend."

Commissioner Alicia Edwards said she appreciated that it's not a bad idea to have a lot of invitations. "But it's a competitive process. The proposers should do due diligence and be in the front of decision makers."

Browne asked when the county expected the final decision.

"We don't know," Billings said. "I think it should be any day."

The next discussion centered on the proposed issuance of general obligation bonds.

"I have given you three different drafts of the resolution," Webb said. "The first one is for $6 million, with one being $4 million for roads and $2 million for buildings; one for $8 million divided $4 million each for roads and buildings; and the third comprising three questions with $4 million for roads, $2 million for buildings and $2 million for Gila Regional Medical Center remodeling or additions."

Lalleh Dayeny of Hilltop Securities was on hand to talk about the issuance of the bonds.

Commissioner Alicia Edwards moved to approve the original resolution, with $4 million for roads and $2 million for buildings. "I am assuming if I do that, and it is seconded, we can have discussion. It seems to be the hospital is not interested in participating."

Ramos said he believes the hospital wants to prove itself, "not that they don't need the money. I think we should help them by considering a question for $2 million for the hospital."

Webb said the statute says that bonds can be issued only for capital improvements, "not, for instance, on repairs or maintenance. Remodeling would include only a complete replacement of a roof or the whole HVAC system. Yes, we want to be able to help the hospital, but if they are not prepared to spend the money in a timely manner, it can't be issued. Taffy (Arias, GRMC CEO) said they have to be prepared before being able to afford a complete new roof or HVAC system."

Edwards withdrew her motion.

"Basically, what you're considering is increasing from $6 million to $8, $9 or $10 million," Dayeny said. "You've been talking about doing two issuances of $3 million each in 2018 and 2019. I did research for how much you could afford without raising taxes. If you go out to 20 years to repay it, you could go up to $12 million. After discussions with Ms. Webb, we have chosen to look more conservatively at $8 million or $10 million in two issuances. For $10 million, it would be for $5 million in 2019 and $5 million in 2020. That still leaves you some capacity to go out for more debt. If you choose to repay it in 15 years, it maxxes you out, and any additional debt would increase taxes."

The next set would be for $8 million, with two sequential issuances of $4 million each. "If you went out for 20 years to repay it, you would still have capacity for extra debt. If you paid it off in 13 years, additional debt would raise taxes. The $6 million issue has no change from the previous meeting."

Billings said he would prefer the $6 million, which is the county manager's recommendation.

Commissioner Brett Kasten asked how much taxes would go down if no bond was issued.

"For the debt service, a full mil decrease would lower taxes by $33 for a $100,000 house," Dayeny said.

Edwards said she would like to go for $8 million for 20 years. "If we can pay it off in 15 years without penalty. If we do 20 years, we have a cushion, but can we pay it in 15 years without penalty?"

Dayeny said it depends on the rates. "If you want to pay it off in under 10 years, yes, you will have a penalty. But you could accumulate the extra in a fund and pay it down at one time."

County Community Planner and Economic Developer Michael "Mischa" Larisch said he had the intent to give the commissioners the ICIP (Infrastructure Capital Improvement Plan) at the meeting, but it was not quite complete.

"I do have some estimates," Larisch said. "For the Silver Street Complex roof, the estimate is $166,000. For this building, the Grant County Administration Center, the lowest bid for a roof is $393,000, but it would increase if they find problems with the decking. Widening school bus routes will cost about $800,000 to $880,000 per mile without planning and design. On county roads that need engineering and planning, it will cost $1.02 million per mile."

Browne asked if the per mile cost changes if the department does more miles.

"This estimate is based on most jobs we've done," Larisch said. "They bring the cost down dependent on Road Department availability. Earl (Moore, Road Superintendent) wants to discuss specific roads. For instance, three miles of Little Walnut road with bike path, dependent on rights-of-way, he told me would cost $2.7 million just for that project. It would be putting a lot of eggs in the basket. We have to determine if we have the rights-of-way. If not, we would have to get them, which costs more. It may not be possible."

Moore said: "It still needs to be done."

Browne asked if it wouldn't require cooperation from Silver City.

"It's just from the county line to the picnic area," Larisch said. "The city knows it has right-of-way issues. And I don't know that it's a priority for them. It's past Trail Ridge to the picnic area. Another project we've talked about is airport runway construction, which would cost $22 million. Tyrone townsite ADA compliance with sidewalks would cost $919,264. The Administration Center parking lot, $232,000. The Grant County Trails master plan, $100,000, and a fire department in Hachita, $620,000."

Webb said: "Let's talk about what we have identified for the $4 million for roads and $2 million for buildings."

"With the $6 million," Larisch said, "we could consider a couple of more facilities, such as the Community Center in Gila for $350,000; a new well for the Cliff Fairgrounds for $50,000; a courthouse roof for $285,000; the Fair facility bleachers for $100,000; and equipment for the Road Department, including a roller and dump truck $376,000."

Dayeny said maybe the county can fund the solar project.

"The energy audit for Phase two of the solar would be $2.3 million to $2.4 million," Larisch said.

Browne said he thought the $4 million each would be better and give the county the option of then financing the solar project.

"One of the reason, the project cost was reduced is because the company was looking at directly generated energy savings," Dayeny said. "But in your case, a lot is tied to the roof reconstruction, which doesn't generate direct energy savings. It impacted the ability of the project to pay for itself over time. They identified $1.8 million worth that do pay for themselves over 23-25 years."

Browne said the company proposed putting the panels on the Administration Center roof, but it would need reconstruction first. "If you include the cost of the roof in an energy project, it made the energy project not pay for itself?"

"Correct," Dayeny said.

"To my thought, that is not the way to look at it," Browne said. "Because we need to replace the roof anyway, that is the cost to maintain. It's the additional cost of panels that needs to pay for itself."

Dayeny said the way the state looks at these energy projects, it needs to be a positive cash flow on an annual basis, based on the installed cost of all improvements, based on the amortized costs over the life of the project. "The state considers all components of the improvements and installation. They all have to provide a positive cash flow in order to permit it. It makes the numbers not work."

"Originally, for the solar, we did not take into account the cost of roof replacement," Larisch said. "That was determined when we were inspecting the roof. They wanted to install panels, but it would be a $2 million cost to the county, because the energy savings wouldn't pay for the project. Jason (Lockett, facilities manager) said we couldn't place solar panels on the roof the way it exists and then take the solar off to replace the roof. We didn't take the roof into consideration. The company did take the roof into consideration for the Silver Street Complex, but then took it off, because we said it was not a viable option to put it on and take it off for roof replacement. So, they are trying to rework the project to analyze it."

Browne said in reworking the project, "I hope you're looking at doing both projects at the same time as opposed to fixing the roof and then coming back with the solar."

"Yes, if we can absorb the costs and do it all at the same time," Larisch said.

"If we have an estimate for replacing the roof and putting on solar at the same time, are you saying the Energy, Minerals and Natural Resources can't look at the energy if you have to include the roof?" Browne asked Dayeny.

Dayeny said if it’s a single project of putting the roof on and putting on solar at the same time, "it will not amortize over 25 years with savings. EMNRD does allow them to be done separately."

Larisch said phase 1 would be doing the roof. "We can do phase 2 internally, and don't need EMNRD."

Billings reiterated that he was most comfortable with $6 million. "I would like to hear why $6 million."

"Going out with $6 million, gives the public reassurance we can do with their tax dollars what we say we will do and are not overextending ourselves," Webb said.

Edwards asked if going for $8 million has to be for 20 years.

"It can be paid off in 13 years, but you cannot add any debt without raising taxes," Dayeny said.

Billings said Gila Regional made it clear that after a year or so of improving their finances, it might be ready for extra money.

"I would be able to look a person in the eye and say: 'It will cost you another $50 to help the hospital,'" Browne said.

"Except Gila Regional has made it clear they want to follow their long-term strategic plan," Billings said. "They plan to be self-sufficient."

Browne said he was not proposing $2 million for the hospital, but "I would like $8 million to include other items on the ICIP, including trails."

Edwards asked if the county goes out for $6 million in two issuances and wishes it had gone out for the $8 million, would it be possible to add the $2 million to the second issuance.

Dayeny said it would require going back to the voters, whereas with the $6 million, it can be approved once, but the funding become available in two issuances.

Browne said he felt voters get saturated with bond issues and "I think a single one for $8 million would be better."

On interest rates, Dayeny said Hilltop is figuring 4.3 percent, which gives a cushion. "It's below that now. I'm seeing conflicting economic data and strong inflationary indicators. It has put short-term pressure on rates. A flat yield curve turns into an inverted yield curve that historically leads to recessions. If you move into an inverted yield curve and are going for 20 years, it will still be beneficial to you."

"If you go out for the full $8 million, you don't have to issue the funding at one time," Dayeny said. "Indicators are still looking at a rising rate environment with the Federal Reserve saying it will raise rates at least twice more this year. It all depends on market indicators. My advice is to lock in the rate now."

To a request for gravel road costs by Edwards, Larisch reported about $125,000 a mile. "If you look at all roads and levels of service, it would cost us about $17 million per year."

Billings agreed he and the people would like to see more roads fixed.

Browne moved to go with $8 million, with $4 million for roads and $4 million for buildings. "I think for 20 years to lock in the rate."

Billings asked what "would be the con to not lock in rates."

"It would be this Commission locking in rates for the next Commission," Dayeny said.

To a question, Webb said the decision is not a management decision.

Treasurer Steve Armendariz asked if there were a possibility that the state would say the debt service would lower the millage rate for 13 years or 20 years.

"You wouldn't be facing that until 2023 to 2024," Dayeny said.

"Could we retire the 2014 bond and replace it with the new series?" Browne asked.

Dayeny said by the time the bond issue passes or not, "you would be in the fourth quarter, and the rate could be a different market environment. I would not lock in the rate today. If you go with 20 years now, you can amend it later before the bond goes to market."

Browne's motion failed 2-3with the two in favor being Browne and Edwards. A second motion by Kasten for 13 years payoff was approved.

The final article in the series will address final fiscal year 2018 adjustments and adjustments to the FY 2019 budget.

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