After Vote, Arkansas County Set to Break Out Jail Bonds

DALLAS — Garland County, Ark., will build a new jail in Hot Springs with proceeds from $42 million of sales tax bonds going to market next week.

The negotiated sale set for Monday will occur barely a month after voters approved a 1% increase in the county sales tax rate to support the bonds.

The proposals to raise the sales tax by 0.625% to support the jail bonds and by 0.375% for operations of the facility were approved by 64% of those voting at the Oct. 11 special election.

The measures prevailed in 40 of the county’s 42 voting precincts.

Garland County currently levies a 0.5% sales tax for operations in addition to the state’s 6% tax. When the two new increases go into effect, the county rate will be 1.5%.

The tax hike supporting the bonds for construction will go into effect April 1, and will expire when the final bonds are retired in 2018.

The sales tax dedicated to support of the jail bonds is expected to generate $10 million a year, while the maximum annual debt service is estimated at $8 million.

Sales tax collections in Garland County have grown by 2.5% a year over the past five years.

The bonds are rated A1 by Moody’s Investors Service. Garland County currently has no outstanding rated debt.

Stephens Inc. is the underwriter. Friday, Eldredge & Clark LLP is bond counsel.

Carey Smith, senior vice president at Stephens, said the county of 96,000 residents has outgrown its current jail.

“This is a great opportunity for the county to borrow money while short-term bonds are at a very low rate,” Smith said. “They are ready to get the proceeds and build a jail.”

The facility was built in 1983 to accommodate 88 inmates, but the sheriff’s department said the population often exceeds 200 prisoners a day.

The new jail will be built on a 54-acre site.  It will hold 476 prisoners.

Garland County Judge Rick Davis said after the election that the jail project would move forward quickly.

“It’s something we really need and we aren’t going to waste any time moving forward,” he said.

Davis said the county hopes to sign an architectural contract by mid-December.

Construction of the new jail should be under way by summer 2012 with completion by 2015, according to the judge.

The operations portion of the tax increase is permanent. It is expected to bring in $8 million a year.

The operational tax won’t go into effect until April 2013. The current jail costs about $2.6 million a year to operate, but expenses at the larger facility are estimated at $5.6 million a year.

Garland County voters in 2008 rejected a 0.5% sales tax increase dedicated to a new jail and other law enforcement needs. The measure failed with 3,441 opposed and 673 in favor.

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Arkansas
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