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Monday, May 2, 2016

Ordinance passed to obtain loan to build jail.

Wednesday, November 14, 2012

Justice of the Peace Michael Barnett follows along as Judge Charles Willett reads a long and detailed ordinance outlining the terms of a $2.1 million dollar low interest USDA loan to be used to build a new Fulton County Jail. [Order this photo]
Nearly a year after Fulton County voters approved a plan to finance a new jail, Quorum Court has finally passed an ordinance authorizing the county to close on a USDA Rural Development loan to pay for most of the project.

"This is a special Quorum Court meeting tonight to pass Ordinance 2012-11," County Judge Charles Willett said as the Nov. 5 meeting began. "It's an ordinance authorizing issuance by the county of USDA R-D (Rural Development) sales and use tax capital improvement bonds."

For the next hour, Justices of the Peace followed along as Judge Willett and County Attorney Dwayne Plumlee read the 28 page ordinance, which JPs had not seen inadvance. The ordinance explains the federal agency has agreed to a maximum loan of $2.1 million dollars, which the county will pay back using 17-point-5 percent of its one-cent sales and use tax.

Judge Willett later explained to The News the actual amount of the loan is expected to be $1.7 million, since the county still has access to a $300,000 stimulus grant for the project.

It was Nov. 8, 2011 that Fulton County voters approved a plan to meet the monthly loan payment by using a portion of the existing sales tax, for the jail to be built at the old nursing home property on Main Street in Salem.

The vote cleared the way for an architectural firm to complete final drawings of the jail project, obtain USDA approval of the plans and seek bids on the project. While county officials hoped that construction would begin by the spring of 2012, months went by with no signs of progress.

Finally, in May, Judge Willett and Sheriff Buck Foley told JPs that the original architectural firm had failed to provide jail drawings that the USDA had been waiting for, and had stopped communicating with them. At the May meeting, JPs were introduced to SouthBuild, a company which specializes in designing and building rural jails. The company was hired to make some preliminary drawings and seek the permission of the USDA to handle the project. The company's architect was authorized to proceed with schematics of the jail.

In October, JPs were told that a complete jail construction plan and other required documents had been submitted to USDA's Rural Development office in Harrison, which had looked over the jail design documents, and was planning to take them to USDA architects in Little Rock for final approval.

The special Quorum Court meeting was called because USDA had approved the plans, without requesting changes which could have delayed the process further.

The ordinance to authorize the bond issue states the improvement bonds are "for the purpose of financing all or a portion of the cost of acquiring, construction, equipping and furnishing a new jail, a law enforcement complex, including a jail, sheriff's office, a courtroom, a community center, an administrative office relating to law enforcement... professional fees related to any of the foregoing, establishment of a debt service reserve (fund) and bond issuance costs."

The loan is locked in at four percent interest, although the actual rate could be lower if the USDA interest rate is lower than 4 percent at closing.

Loan payback will take place through monthly payments over a 39 year period. At four percent, the monthly payment will be $7,191 a month.

The ordinance states that, besides the monthly loan payment, the county is responsible for the expenses to operate and maintain the jail facility.

The ordinance also calls for the establishment of a Debt Service Reserve Fund, which would build a fund equal to one year's loan payments, to assure that payments would continue to be made, should sales tax income drop to the point the county had difficulty meeting the monthly payment.

According to Willett, while the reserve fund is part of the ordinance, it is not certain the fund will have to be created. The county's bond counsel is discussing that matter with the USDA.

After hearing the ordinance read, Justice of the Peace Marge Rogers questioned whether the ordinance had to be passed immediately, since the county was making a big commitment and JPs had not had the chance to review the ordinance in advance.

County Attorney Dwayne Plumlee said the ordinance did not have to be passed at the meeting but, "With all the delays we have had, (USDA) Rural Development is now wanting us to get it done, and is urging us to pass it as quickly as possible. We have to coordinate this with the bid process and the letting of the contracts that the architect is handling. If we get this thing bid, get it closed, they (contractors) ought to be in a position to start construction when the weather breaks in the spring."

After hearing in the ordinance that the county is using property as collateral on the loan, JP Cris Newberry asked,"If we borrow this money, what are we putting up if we can't handle the payments?"

Judge Willett said the county is pledging only 17.5 percent of sales tax receipts and the jail building and property, not other assets.

Another question from JPs was whether the jail can be built for the estimated $2.1 million dollars.

Attorney Plumlee replied that the county will know actual costs when the project is bid. If bids exceed the budgeted amount, the architect has designed the jail so that the project can be scaled back to keep the project within the allotted $2.1 million.

After questions were answered, the ordinance was passed as an "emergency," through three readings and votes.

The ordinance must now be advertised for comment for a 30 day period, after which the loan can be closed and the project can be put out for bids.

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