San Mateo Sells Bonds as California Must Boost Jail Space
San Mateo County, nestled between San Francisco and Silicon Valley, is selling about $187 million in lease-revenue bonds this week for a new jail as California eases prison crowding by holding some inmates in local lockups.
The county is building a 576-bed facility with the ability to house an additional 256 inmates if needed on about five acres in Redwood City, Rebecca Rosenblatt, a spokeswoman for the sheriff’s department, said by e-mail.
“The jail project is a high essential-use project that will be required for years to come,” said Jim Saco, the county’s budget director, in an e-mail.
Saco said the county has “very low debt levels compared to other counties” and gives investors a chance to diversify their holdings. The county has $303 million in outstanding lease-revenue bonds, according to deal documents.
Moody’s Investors Service ranks the new securities Aa2, two steps lower than the county’s AAA, saying the locality has an “exceptionally large and stable tax base.” The community is home to major employers such as Roche Holding AG’s Genentech unit and to residents working in San Francisco and Silicon Valley, said Standard & Poor’s, which grades the new obligations AA+.
California is under a federal court order to lower the population of its prisons after the U.S. Supreme Court upheld a ruling that inmate health care was so bad it amounted to cruel and unusual punishment.
To lower the prison population, Governor Jerry Brown in 2011 won court approval to shift felons convicted of nonviolent, low-level crimes to county jails.
Debt from California issuers is earning 5.6 percent this year, outpacing the 4.9 percent return of the $3.7 trillion muni market, according to S&P Dow Jones Indices.
San Mateo County joins issuers offering $4 billion this week, down from $5.7 billion last week.
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