HOT SPRINGS — It is becoming unlikely that a proposed sales tax to fund a new Garland County Detention Center will be on the Nov. 2 general election ballot, county Criminal Justice Coordinating Committee Chairman Bud West said.
“I would say probably not,” West said. “We’ll probably need to make up our minds on that one by July.”
The Criminal Justice Coordinating Committee meets every two weeks to determine how to fix the county’s jail problems, which include persistent inmate overcrowding.
“We’re still in the early stages,” West said. “The first stage is a needs assessment. That’s been accomplished. The next stage is pre-planning of the detention center.”
A representative of the Morgan Keegan & Co. financial services company addressed the committee at its last meeting on Thursday about financing a new jail by selling bonds to investors.
West said Arkansas’ usury law, which limits the amount of interest that can be paid to bond investors, currently precludes Garland County from issuing bonds to finance a new detention center.
“It’s going to be very difficult right now because of the interest rates,” West said. “They’re very low. They’re not appealing. We can only finance it up to six years right now.”
When counties sell bonds, the bond buyer is essentially investing in the county project funded by the bond. Counties use the investors’ money to pay for the project at hand and then repay the investors with interest over a period of years. West said the Arkansas usury law limits interest paid on bonds to 2 percentage points above the prime interest rate.
“It won’t work right now,” West said. “We can’t get the kind of financing that we would need right now.”
West said the Arkansas Interest Rate Limit Question, also known as Issue No. 2, House Joint Resolution 1004, that will appear on the Nov. 2 general election ballot could enable Garland County to “extend out maybe 20 years or so” on building a new jail with bond financing. West said the committee would “probably like to wait and see if this initiative to raise the interest rates for bonds passes.”
“If it does, then that determines the amount of sales tax we’ll ask and then go from there,” West said.
“The Morgan Keegan people, who are quite familiar with financing and coming up with bond issues for county jails, do not recommend that you have it on a general election ballot, that you have an election on its own, a standalone election,” West said. “We’ll talk about that some more and get some more input on that as far as the best way to go.”
West said that if Issue No. 2 does not pass in November, Garland County might consider building a new jail in stages.
West said some might ask why the county does not use bank financing to build a new jail.
“There’s limitations on that,” West said. “Counties can only obligate up to five years on bank financing. You have five years one way and six ways another way.”
West said that even with a sales tax increase earmarked to build a new jail, the county would have to secure additional funding for a new jail’s maintenance and operations.
“You’re going to need some longer term financing to build what you need to build,” West said. “If you can’t get it spread out over 15 or 20 years, then you have to ask for more sales tax at one time, maybe a three-quarters tax or a one cent sales tax.
“If you ask for three-quarters of a cent to build a jail, half of that three-quarters goes for the building fund, the other half for the staffing, which is very important,” West said.
Meanwhile, West said a proposal to convert the vacant Auto Parts & Bearings building on Ouachita Avenue into a minimum security jail to house inmates charged or convicted of lesser crimes - such as driving under the influence and hot checks - is “out of the picture 100 percent.”
“That was only a temporary measure probably until we could get something else built,” West said. “We were asked to look at that, we did, it’s behind us.”
West said the consensus among the committee and jail officials is that the Garland County Detention Center complex “probably all needs to be together” rather than separating parts of the complex as the Auto Parts & Bearings proposal would have done.
“The nonviolent and the violent offenders probably need to be real close to each other,” West said.
In a related matter, West lauded a group of Quapaw/ Prospect Historic District residents who questioned transforming the Auto Parts & Bearings building for their participating in the process of remedying the county’s jail woes.
“We really appreciated the community influence and them coming to our meetings
Arkansas, Pages 12 on 06/28/2010