Rates favorable for bonds to pay for Crawford County jail

by The City Wire staff (info@thecitywire.com) 4 views 

Bonds that will pay for construction of the new Crawford County jail were issued Monday (Aug. 18), with rates coming in lower than expected saving the county about $50,000, according to County Judge John Hall.

Speaking shortly after the bonds were sold Monday afternoon, Hall said the county's ability to secure an A+ rating allowed interest rates to be lower than expected.

"The bond market fluctuates daily," he said. "We had a prospectus as far as anticipated rates as of last Friday and it came in (lower than expected). I think it was five basis points down from Friday to Monday. So the sale of the bonds was better, the cost of the bonds was better than what was anticipated.”

The total proceeds the county will receive from the bond sale is $21.91 million at a 2.23% true interest cost over the life of the bond.

Kevin Faught of Stephens Investments in Little Rock handled the bond issuance for Crawford County and said based on anticipated sales tax revenues from the half cent approved by voters in May for construction of the jail and a quarter cent approved for law enforcement operations, the bonds should be able to repaid in as little as eight years assuming revenues stay flat. Should revenues improve, he said the bonds could be repaid even faster.

The half cent sales tax for jail construction is to sunset in 10 years while the quarter cent for law enforcement, which can also be used for debt repayment while the jail is under construction, will be a permanent sales tax.

In an ordinance that included an emergency clause, approved by the Crawford County Quorum Court Monday, it is stated that U.S. Bank in North Little Rock will be the trustee of the bond proceeds which will be used to pay vendors involved with the jail project. In short, it means the money will never be directly touched by the Quorum Court or county judge.

Should the Quorum Court decide to begin using the quarter cent portion of the proceeds for law enforcement operations before construction of the jail is complete versus debt repayment, the trustee will remit those proceeds to the county. Faught said closing on the bonds will take place Sept. 24. Beginning the next day, Hall said the county could begin expending money for jail construction including purchase of land on U.S. Highway 64 just east of the Van Buren city limits.

Already, the county has been accruing expenses that will need to be reimbursed from the bonds issued Monday he said.

"As we speak, the architects are designing the facility to go on the property that we're looking at. We've done the topography across there, we've core drilled it. We know the soils and environmental impact. So we know that we don't have a deal breaker (regarding the property). We're moving forward on a daily basis to continue to get all of our ducks in a row. Once we get the money, then we can move quite quickly to move forward and folks can see the actual start of construction.”

Per Internal Revenue Service policies regarding municipal and county bonding for capital improvements, Hall said at least 5% of the bond money must be spent within the first six months it is available.

For that reason, he said groundbreaking and construction on the jail should take place sometime in October or November.

"The timeline is to break ground and then have 18 months to build it. All this money has to be spent within 30 months or three years. This has to be completed in a three year period. That's the rules of the game. From Sept. 25th, it has to be done in three years.”

But any movement on the jail could be slowed by action of the Quorum Court's budget committee Monday, which voted 4-9 against Hall's request to hire a deputy county administrator to oversee construction of the jail at an annual salary of more than $35,000.

Justice of the Peace Carrie Jernigan, along with Justice James Lane, questioned the hiring of the position which would come with full benefits, including retirement. Hall said it was necessary to have someone on the jail project full time and he and others currently on staff did not have the ability to devote themselves to the project on a full time basis.

In other business, the Quorum Court's budget committee tabled a motion to allocate an additional $60,000 for the Crawford County Election Commission. The commission had previously notified the court that it would run out of money before the November general election without additional funding.

Committee Chair Mary Jan Blount indicated the committee would request a breakdown of expenditures prior to a full review of the election commission's request. Election Commissioner Bill Taylor indicated that the commission could stay afloat through the September school board elections but indicated it would have to receive funding prior to November.

When the Quorum Court approved its budget for this year, a line item was added for anticipated revenues from state election reimbursements that essentially placed those funds in the general fund instead of appropriating them to the election commission, Taylor said.

No date was given for when the budget committee could review the election commission's request.