Des Moines' financial woes have been mostly the concern of city officials and residents.

However, after one of the nation's two leading credit agencies downgraded the city's limited tax general obligation rating to Baaa1, Des Moines' budget situation has affected the agreement to site a misdemeanor jail to Des Moines.

With a little tweaking of the interlocal agreement between the seven cities that make up the South Correctional Entity (SCORE), all the cities should be paying the same amount as previously agreed.

Each of the seven cities--Des Moines, Burien, SeaTac, Tukwila, Auburn, Federal Way and Renton-- agreed to pay its allocable portion of debt service due on bonds issued to build the $80.5 million jail.

As part of the bond process, the nation's two leading credit agencies reviewed the financial conditions of the cities. Moody's downgraded Des Moines' rating. The rating is still considered "investment grade" but is lower than the six other cities. Officials said Moody's agreed to use a blended rating to determine the bonds' interest rate.

However, Standard and Poor's, the other credit agency, has indicated it would use a "weakest link" methodology.

Standard and Poor's has not issued its report on Des Moines, but SCORE officials do not expect a favorable review, based on Moody's decision.

Using the "weakest link" method, the increase could add between $500,000 to $850,000 annually to the cities' debt service obligation.

SCORE officials pondered several options and came up with an ingenious alternative designed to save the cities at least a half-million dollars a year.

Although the jail will be located in Des Moines, it will not be considered an "owner city" like its six partners.

Instead, it will be a "host city" with no legal obligation to repay its 5 percent share of the debt on the bonds.

Des Moines must still pay its share of maintenance and operation costs.

Des Moines' 5 percent share will be divided up with Auburn and Renton taking 2 percent each and Federal Way, 1 percent. However, Des Moines will enter into a separate interlocal agreement with the three cities to pay them a "host city fee" that equals the 5 percent of Des Moines' debt.

SeaTac lawmakers unanimously approved the interlocal agreement amendment on Sept. 8. Councils of all seven cities must pass the amendment.

"This (amendment) has all the benefits with none of the liabilities," Deputy Mayor Gene Fisher said. "Jail costs are skyrocketing. If we need some maneuvering, that's OK."

Fisher's observation was underscored later in the SeaTac meeting when finance director Mike McCarty reported that the city's municipal court spent 95 percent of its yearly allocation between January and July because of increased incarceration rates.

"The good news is we are getting the bad guys off the streets, but the bad news is we have to pay more for jail costs," McCarty said,

The council approved an additional $250,000 for the remainder of the year.

Pointing to the new jail, Fisher declared, "We see the light at the end of the tunnel. I would hate to say that we are appropriating more money and don't have a solution to the problem."

A general contractor for the 668-inmate jail at South 208th Street and 18th Avenue South in Des Moines will be selected by November, according to Renton jail manager Penny Bartley.

The jail is set to open in July 2011.