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County considers refinancing jail debt

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By Calen McKinney

County officials are again considering refinancing its loan to pay for the Taylor County Detention Center.

Last week, they took a step that will make the process move much quicker, should they decide to refinance the loan.

The loan on the detention center stands at nearly $14.7 million, with about $9.8 million being principle debt. The actual cost to build the jail, which opened its doors in 2008, was $11.8 million.

At last Tuesday's regular Taylor County Fiscal Court meeting, Michael George, a financial advisor who works with Kentucky Association of Counties, recommended magistrates start paperwork required to finance and complete the refinancing when they see interest rates fall to where county officials want them.

Magistrates first discussed refinancing in January. At that time, it was said the county could save about $300,000 a year by refinancing. As such, magistrates voted to research the possibility of refinancing the loan. Since then, County Treasurer Melissa Williams said, not much has happened.

Last Tuesday, George said the possibility to save money still exists. Refinancing typically takes between 60 to 80 days, he said. Within that time, interest rates can increase or decrease even further.

George said he recommends magistrates go ahead and start paperwork involved to shrink the refinancing timeframe to about four weeks.

In the past month, he said, interest rates have hovered between 2.5 and 3 percent. The rate on the county's 25-year loan at the jail stands at 4.875 percent.

In January, George said, the county could have saved about $300,000 a year. Now, he said, that could be only about $150,000.

The county currently pays $725,130 a year on jail debt. That includes a principal payment in August and interest payments in August and January.

George said the county must have its bonds until 2016, but can begin paperwork to refinance and wait to complete the steps when interest rates can save the county the most money.

He said Crittenden County officials approved paperwork in October but completed their refinancing last month.

Tommy Corbin made a motion to have first reading of an ordinance pertaining to the refinancing, which James Jones seconded.

Magistrate John Gaines asked if the county can include the cost of working with Perfection Group to update the county's equipment and make its buildings more energy efficient.

Taylor County Judge/Executive Eddie Rogers said the project with Perfection Group could cost $1.4 million.

George said that cost could be included in the refinancing, as a separate loan or combined with the jail debt.

Magistrate Matt Pendleton asked if the county will face a penalty to refinance before 2016. George said there could be a penalty, but he doesn't recommend refinancing until the county's savings more than absorb such a fee.

"I just don't want to go backwards," Pendleton said.

George said he and other financial advisors can tell magistrates about the risks and when it is a good time to move forward with refinancing.

Since it takes two readings for an ordinance to become law, and magistrates were only being asked to have first reading, George said, the ordinance can be amended before final adoption. Magistrates unanimously approved the first reading.

On Friday, Williams said she believes the county should wait until it can save as much as $725,000 by refinancing, the amount the county pays on the debt each year.

Monthly Jail Report

In his monthly report to magistrates, Taylor County Jailer Hack Marcum said, for the month of May, inmates housed at Taylor County Detention Center performed 2,464 hours of labor in the community. If paid minimum wage, the hours would equate to $17,864.

Inmates work with fire, street, housing, park, school and road department workers. A work crew picks up trash, mows and helps with recycling.

In May, the jail housed an average of 226 inmates each day, with 60 being Taylor County's inmates, who are non-revenue-generating customers. He said the county averaged 128 state inmates a day for the month of May.

In May, jail contracts with the state and Green, Cumberland and Jessamine counties produced $125,188.53 in revenue.

Marcum said some smaller jails are closing because of their age and inability to maintain a high number of inmates since so many have been released. As such, he said, he is talking to those jailers in hopes of contracting to house their county inmates. He said he has been told part of the prison in Marion County will close, with about 800 inmates to be scattered across the state.

Marcum said some jails that can house between 500 to 700 inmates aren't able to house at least 100 state inmates. His jail housed an average of 128 last month.

"We've actually been very blessed," he said.

Marcum said the inmates enjoy working in the community and learn skills by doing so. He said inmates also take pride in the jail's garden.

Pendleton said the inmates, if paid minimum wage, are providing about $200,000 in free labor to the community over a year's time.

"It saves a lot of tax dollars," Marcum said.

Jones said magistrates went into the process of opening a jail with fear. He said some communities are now burdened by their jails.

"We're not," he said.

After giving his report, magistrates gave Marcum the OK to purchase a new van for the jail at a cost of $30,107.

The current van has more than 200,000 miles on it, he said. Money to pay for the van will be taken out of reserve money in the jail fund.