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Thursday, May 5, 2016

County exploring financing options for new jail

Friday, April 2, 2010

The Fulton County Jail Committee met with representatives of the USDA Rural Development on Monday, March 22 to discuss the county's financing options for the proposed new jail. Also in attendance were members of the Quorum Court, Public Facilities Board, City Council, White River Planning and Development, architects Herman and Doug Lee and local law enforcement represented by Salem Police Chief Al Roork and Fulton County Sheriff Walter Dillinger.

"We're here to explore ways that we can finance our jail," said County Judge Charles Willett. "We're in a situation where we have an ultimatum, and we need to proceed on to build a new jail or get ours closed down. That's where we're at."

Architect Herman Lee told the assembled group that the plans and specs for the new jail are about halfway complete on the $1.4 million project. "We have most of the working drawings with the exception of the mechanical and electrical."

According to the USDA's Community Facilities Director, Johnny James, the county would have to be able to show they could secure a USDA loan with some kind of bond.

"What we need, because Fulton County is a public body, and Fulton County is requesting the loan, then as security for the loan we would need to have a sales tax bond or a property tax bond," said James.

Judge Willett responded that the county has a sales tax bond in place that is currently going into the county general fund.

"We have a sales tax that was passed in 1989 that is not earmarked for any certain financial situation," said Willett. "Right now 60 percent of it goes to county roads and 40 percent of it goes to the county general fund."

County Attorney Dewayne Plumlee remarked that it would take an ordinance passed by the Quorum Court, or a vote by the people, or perhaps even both to earmark those funds for the jail project.

Linda Cantrell with Rural Development suggested the county consider passing a short term sales tax. "It's going to be short term, and it won't be one that will go on forever and ever," said Cantrell. "The problem you run into to, is that you're going to need money for maintenance and operating expenses. In Carroll County, we had a sales tax that lasted 10 years, and our jail is paid off."

Judge Willett stressed that the county would prefer to use existing funds, without having to levy a new tax.

"We want to try to use what we've got without any additional taxes," said Willett. "What we've talked about is we have $35,000 a year that's in our budget for housing inmates at different facilities, and then the public facilities board would pay the difference for us from a building lease they have to cover the $61,000 yearly loan payment."

Van Thomas with the White River Planning and Development board then addressed the group with an idea for financing.

"My organization is a state designated entity and a 501C3, and at the last legislative session, we were designated as bond-eligible if a city so deems us to be," said Thomas. "Could we be the owner, and lease the county the facility? Can we borrow the money for them and make that step?"

James admitted it was a possibility and said they would have to confer with the USDA's legal counsel on it.

"The law that was passed says that the city can designate us as a bonding authority," said Thomas. "I don't know if that will cause an issue, since it says city instead of county. Will the city work with us on this?"

Judge Willett responded that he couldn't speak for the city. "We do have one city councilman and the police chief here, but the mayor isn't here today, so I don't know," said Willett.

Chief Roork felt that the importance of the project being so paramount, that the city would be willing to at least consider the idea. "I'm sure that if that's the case, the city would do everything it could," said Roork.

The group then discussed how a potential lease would be structured, pointing out that the city would have to deed the property that the new jail is to be built on, while keeping ownership of the actual nursing home building in order to utilize grant funds to remodel the interior of it.

"What we are proposing, is to build the jail behind the nursing home and connect it via a walkway, to utilize the existing commercial laundry and kitchen facilities that are in place and functional in the nursing home," said architect Doug Lee. "That way we wouldn't be duplicating those facilities, which has kept the price tag down.

Discussion then turned to the search for grant money to renovate the existing building. "We have put in for a grant from two different places to try to get money to put in a courtroom facility and different offices out there," said Willett.

Quorum Court member Jack Haney then asked about a timeline for securing the USDA loan.

"We need to have something working and in place by the first of August, because since it's going to be over a million dollars, it will need to go to Washington D.C. for approval," said Cantrell. "If we can get this through on our funds, and if we use the stimulus money, at this point you could be eligible for up to $200,000 in grant money. If we stick to regular funding instead of stimulus funding, it would be between $50,000 and $100,000 for the county."

County Attorney Dewayne Plumlee then summed up the situation facing the group. "We have two options: Number one is the proposal White River has made," said Plumlee. "If that's not going to work, then we fall back and see if we can get the voters or the governing body to reallocate the sales tax for a sufficient amount to debt service and reserves and maintenance, and see if that will work. Now, if we can't do that, then we're going to probably have to farm out our prisoners, because I don't see us having many options."

The group agreed that farming out prisoners would prove extremely costly for the county.

"That's costly, when you start farming out prisoners," said Cantrell. "I don't think the average citizen understands the cost of that a day. It can be a huge burden."

Sheriff Dillinger agreed. "Here lately, we've been housing more than actually we have room for," said Dillinger. "We have some down in Melbourne too. Izard County charges us $45 a day per prisoner down there."

Cantrell then suggested that the USDA legal counsel should meet with Thomas, Plumlee and a bonding agent along with the Rural Development Program Director, Ricky Carter, to see if the funding plan would pass legal muster. "We can't start the application until we know who the applicant is going to be," said Cantrell. "That's our next step. Will it be the county, is it going to be White River, is it going to be the public facilities board? That's why they need to go to Little Rock and see which way they want to proceed. This will be a learning process for all of us."

The conversation thenturned to how the county will pay to operate the new jail.

"I suspect that if there is a legal avenue where we could do this, then the second step would be to make sure that we have our numbers correct up here and that we can operate, maintain and support this thing over the life of it," said Thomas. "Their money is the best, because they offer longer terms and no pre-payment penalties, and the cost of doing a loan with them is a fraction of what someone in the private sector would be."

Judge Willett remarked that the Quorum Court would be examining the numbers issue and see exactly what funding will be needed to operate the jail, based on the analysis given by Jail Standards representative, Randy Rankin.

"Whoever is in charge of the numbers needs to keep working on the operational and maintenance costs," said Plumlee. "We know basically what our debt service and reserves are going to come out to be, since we have a $1.4 million project, and then we need to go see if plan A is going to be feasible, and if not, then we go with plan B. We need to be ready, so once we know which way we're going, we can get on it."

Attorney Jim Short suggested communicating with the cities of Melbourne and Ash Flat regarding their experiences with building a new jail facility, and any hidden costs they might have encountered. "I don't want to do this and then not be able to run it once we have it," said Short. "You'll have electricity, maintenance, food, personnel, repairs. That's a lot of expense that you're looking at."

All agreed that the necessary parties should move forward with seeing if the White River financial solution was feasible, while the Quorum Court members were tasked with examining the county's financial ability to operate and maintain the jail.

"We will do whatever the county wants to do," said Cantrell. "However they want to work it is how we'll go forward."

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