Commissioners Debate, Concur on Interim Financing Operations Center

Hinsdale County Commissioners hashed out details on interim funding for the county’s $4.3-million Operations Center project during an at-times heated two-and-a-half-hour workshop and meeting on Friday afternoon, April 4.
During the process of Friday’s workshop — which was attended by county staff including County Administrator Sandy Hines and Finance Officer Lynn McNitt, together with remote Zoom attendance by representatives from two Denver-based financial firms —it was revealed that $2 million in Federal Emergency Management Agency (FEMA) funding toward the project, which had been on hold, is now confirmed and available to the county.
McNitt said that FEMA funds awarded in 2025 remain under review but that a saving point for Hinsdale County is that the Congressional-Directed FEMA funds were awarded in 2024.
The pace at which the FEMA funds will be doled out remains an unknown, although both County Administrator Hines and Finance Officer McNitt stated that paperwork has already been filled out for a preliminary advance payment which would include a $19,775 reimbursement to county billed by general contractor Building by Design for preliminary technology and related contractor costs.
McNitt said it is uncertain whether payments to the county from the FEMA grant will be monthly or quarterly.
With affirmation from County Attorney Michael O’Loughlin who stated “it’s your meeting,” Commissioners Kristie Borchers, Greg Levine, and Robert Hurd asked Finance Officer Lynn McNitt for an update on funds owed to the county by the State of Colorado as part of the All Hazards Team Program.
The lack of reimbursement to date is proving a sticking point to several of the commissioners owing to the fact $500,000 in All Hazards Team
Vol. 48, No. 2 Friday, April 11, 2025 Lake City, Hinsdale County, Colorado 81235 U.S.P.S. No. 436-630
75¢reimbursement represents half of the $1-million which the county is pledging toward the Operations Center construction.
Asked for an up-to-date accounting, McNitt told the county board that, all told, All Hazards Team reimbursements owed to the county by the State of Colorado now exceed $3.6-million.
County Attorney O’Loughlin, by Zoom connection, reassured the commissioners, telling them he “remains optimistic” that a resolution with the State will be reached — potentially as early as next week when a representative from the Colorado Attorney General’s Office belatedly confers with him — and that the money will be repaid. Failing that, O’Loughlin stated “they can’t just not pay it back; if they don’t, we go to court.”
Lack of the All Hazard Team reimbursement payment in hand remains a major sticking point, an exasperated Commissioner Hurd telling Borchers and Levine, “when is the frick’in State going to pay us our money?”
Hurd likened non-payment to date of what is owed to the county as a major “fear” and is the primary reason for his hesitation in proceeding with Operation Center construction.
On a similarly cautious note, Commissioner Levine said he has “no confidence in the state at present” in terms of repayment and, in worst case scenario, of not repayment assurances, ultimately “I will not back this project.” An even worse case scenario as alluded to by Levine, would be entering into a lease-purchase agreement for interim funding “and then something else happens, I can’t see tackling two giant issues at once… it’s very, very difficult.”
[NOTE: since the April 4 meeting and at the county board’s Wednesday meeting this week, it is now announced that the reimbursed All-Hazard funds are now on schedule for payment, the first check — $862,572.59 — expected Monday next week.]
As a brief recap of the project, the 6,409-square foot facility combining sheriff’s dept., emergency operations, and county administration will be funded through the $2-million Congressionally-Directed FEMA grant, $1-million from Colorado Department of Local Affairs which is guaranteed, and $1-million from Hinsdale County (comprised $300,000 from the county’s sale of the Wee Care property to the school district, $500,000 through the All Hazard Team reimbursement, and $226,000 interest earned on investments).

In addition to an array of funding which has been lined up for actual construction of the Operations Center, other funds have been competitively awarded to the county for actual construction of the Operations Center, other funds have been competitively awarded to the county for electric wiring totaling $256,500 from the state’s energy office, and a JAG (Justice Assistance Grant) through Colorado Division of Criminal Justice which will furnish and technologically equip the sheriff’s dept. portion of the new structure.
Costs to date on the project and already paid by the county, as enumerated by Commissioner Borchers, total $192,900 and include $28,000 for demolition of the old shop building on the site north of the courthouse where construction will take place, $9,800 in attorney’s fees, and $116,000 architectural work paid to the county’s architectural firm on the project, Reynolds Ash & Associates.
Following a request for bid, Building by Design was selected as general contractor for the project in February at a negotiated price of $4,398,173.
In her compilation of the project, board chair Kristie Borchers reminded fellow board members, staff and public at the meeting that the concept of an Operations Center is not exactly new: discussions on the need for a new facility have been bantered about for decades. Referring to crowded and substandard office and meeting conditions in the existing Coursey Annex, she said, “it’s an embarrassing facility… I want to be the board that solves this.”
“Now is the time to do it,” said Borchers, “if we don’t pull the trigger and get it done, it will never get done.”
Plans for what was then referred to as a Justice Center combining county and sheriff’s dept. offices with a new county courtroom date back as least as far as 2009 when a DOLA-funded small space assessment resulted in plans for a two-story $7-million building which included basement archival storage. That project, however, languished and proceeded no further. The current plan calling for a reduced-size, 6,409-s.f. single-story complex costing $4-million was revived starting in 2021.
Borchers recalled a comment by Commissioner Levine last year when overages were anticipated on the four-mile chip and seal project on County Road 30 to Lake San Cristobal. Comparing the chip and seal project to the impending County Operation building, Borchers said she agrees with Levine’s sentiment, “these are things we should be spending county taxpayer money on.”
Countering views with suggestions to halt the process or at least slow it down came from two members of the audience, both Lake City businessmen, who attended Friday’s meeting.
Jeff Guthmiller of Lake City Auto referenced his multi-decade local business experience, stating there was “absolutely no way” he would proceed with a multi-million dollar project if his business was owed several million dollars. Guthmiller countered that even with grant money now in hand, the county should slow down the construction project until owed money was repaid and when perhaps interest rates will lower.
Guthmiller said county reserve accounts have been drawn down and “if one bad thing happens, we’re broke.”
Michael Murphy of Murphy Real Estate countered with another proposal, Murphy suggesting to the board that rather than seeking interim funding with upwards of $400,000 in long-term interest and related costs, the county should instead seek funding Referring to the county’s Coursey Annex, Murphy told commissioners, “I understand we have a crappy building but I also understand $400,000 is a lot of money.”
Commissioner Levine said he concurred with Murphy’s concerns, “I struggle every day with this building [the Operations Center] and this project; it’s gotten bigger than I ever anticipated.” Levine said that grant funding is essential if the Operation Center is ever going to built and expressed his concerns that grant funding now in place will be likely be lost if there is an indefinite hold on construction.
Commissioners countered that delay in seeking voter approval might jeopardize existing grant funding and further, there is no assurance that a bond election would actually pass.
Murphy countered that a no vote would tell the county that the Operations Building is not a necessity, adding “personally, I don’t agree with not funding this ourselves.” Murphy also added his concern that if the county proceeds with interest-bearing interim funding, there is no contingency for cost overrides which he termed “inevitable.”
Although intense discussion between the three commissioners on the future of the Operation Center was a key element in Friday afternoon’s workshop — Commissioner Levine at one point exclaiming, “I am so glad we had this meeting” — a significant portion of the workshop centered on the proverbial nuts and bolts of interim financing.
In addition to the three commissioners and county staff, virtual invited attendees by Zoom included representatives of three Denver-based financial firms, Kutak Rock and Piper Sandler & Co., which had been asked to rank the most advantageous bids from financial institutions seeking to provide the interim partial financial backing on the Operations Center construction.
According to Tom Peltz of Kutak Rock, interim construction funding based on a specific interest rate and term of years for payback is routinely used to pay for major building projects by counties, municipalities and schools.
Rather than face the potential of costly delays due to timing of grant fund disbursement, financial firms provide the up-front money for major projects based issuing costs ranging about $71,000 and with a specific 10-year payback schedule covering both principal of up to $1,285,000 plus interest.
Neighboring counties which have contracted for similar interim funding on big construction projects include neighboring Gunnison County and, further afield, Larimer, Grand, Routt, Jefferson, Morgan, El Paso, Elbert, and Adams Counties.
At the county’s request, both Kutak Rock, represented at Friday’s meeting by Peltz, and Piper Sandler & Co, represented Friday on Zoom by Nate Eckloff and Andrew Ma, sought interim funding bids from upward of 30 financial institutions, six of whom responded with formal bids.
Out of six bidders, the two top contenders were Zions Bank (Vectra) with 4.90 percent and Flagstar Bank, 4.20 percent. Piper Sandler’s Nate Eckloff told Commissioners that either bid — Zions or Flagstar — “is good… we’re agnostic as to which of the two bids is better.”
Zions’ total interest on $1,285,000 interim funding would amount to $596,214 if the loan continued full term to 2035. Based on a $1,285,000 loan extending through 2035, first year payback principal ($365,000) and interest ($222,950) from December 1, 2025, through December 1, 2026, would amount to $587,950.
The interest rates quoted in the bids are good through April 23, prompting Levine to note, “we have three weeks to figure this out.”
Although commissioners immediately zeroed in on the best interest rates, of equal importance to the board was whether an early payoff between now and 2035 — potentially as early as late 2027 — would be allowed without penalty. This latter consideration put Zions/Vectra, even with slightly higher interest rate, in the lead since Zions allows payoff at any time, whereas Flagstar is set on a 2035 payoff and allows only one partial paydown between December, 2026, and December, 2027.
Issuance cost for up to $1,285,000 interim construction financing were roughly equivalent, $71,500 for Zions/Vectra and $70,000 Flagstar, and under terms of the financing agreement, both lending institutions would be the actual owners of the building, leasing to the county until the loan was paid off.
Following protracted discussion and comments already reported from the audience, the workshop ended at 3:52 and special meeting of the county board began 3:54. It was at this point that Commissioner Hurd made a motion — apparently based solely on the lower interest rate — to negotiate further with Flagstar Bank for the interim funding. Hurd’s motion, however, failed for lack of a second from either Levine or Borchers. Commissioner Levine then made a motion to formally consider the Zions/Vectra interim funding bid and this was seconded by Commissioner Hurd and received a unanimous concensus with Commissioner Borchers also voting yes.
In making the motion, Levine stated that interest charged by Zions/Vectra would amount to roughly $8,000 per year but, most important, he liked the “flexibility” of being able to pay off the loan at any time.
In making the second and ultimately voting in favor, Commissioner Hurd continued to express reservations, specifically in terms of uncertainties of when or in worst case scenario if, the county’s All Hazards Team reimbursement would occur. Zions/Vectra’s allowance for payoff at any time was termed “very desirable” by Hurd.
Asked for her opinion, county Finance Officer Lynn McNitt said she concurred with Zions based on the early payoff at any time and said that in her opinion, the slightly higher interest rate, “is not that big of a deal.”
Whether the county will proceed with a formal contract with the Zions/Vectra Bank will be decided at a special meeting of Hinsdale County Commissioners which is scheduled Wednesday, April 23. At the April 23 meeting, three documents will be considered in relation to Zions/Vectra interim funding: a resolution, site lease, and lease purchase agreement.