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Lafourche Parish may look to rededicate a portion of its annual property tax intake toward making bond payments on a new jail.
A financial advisor with Stephens Inc. told the Lafourche Parish new jail committee that if it rededicates 1 mill of property tax that currently goes to the parish’s libraries and combine it with a new quarter-cent sales tax, the resulting revenue would show a strong debt service commitment when the parish tries to secure a loan to finance a new jail.
“My goal was to come up with a minimum tax structure, part of it new and part of it rededicated, to be able to market this to bond companies,” said Ted Jones, vice president of the public finance department with Stephens.
Jones said estimations, based on today’s market and the parish’s tax projections, offer a proposed $3.9 annual collection, $3.17 million from the new sales tax and $733,980 from the rededicated mill.
Jones presented the committee three scenarios, 600 beds, 700 beds and 800 beds, and the estimated par amount of bonds, or construction down payment, associated with each size, ranging from $27.1 million to $36.1 million. Jones based the estimations on an average cost per bed of $40,600.
Over the course of 30-year bond payments, the parish would pay $54.3 million for 600 beds, $63.3 million for 700 beds and $72.3 million for 800 beds, according to Jones’ report.
Jones attached a disclaimer with his presentation that stressed that the cited costs, rates and estimates are based on the “best information currently available to us” as of April 20.
“It should be understood that by the time Lafourche Parish issues bonds to finance a new jail, the interest rate environment, as well as costs estimated as of today, could be different,” the disclaimer reads.
Committee Chairman Lindel Toups, who has consistently said the parish would have to place a sales tax measure on a ballot, suggested rededicating an extra mill from the library fund.
The parish’s library fund collects 5.4 property tax mills per year, which came out to almost $3 million in 2010, according to estimates made by committee member and parish Finance Director Ryan Friedlander.
“[The] Library [fund] collects more taxes proportionally than a lot of your other government components,” Jones said.
The North Lafourche Levee and Conservation District is considering a full-cent sales tax measure for the October ballot. Toups said the jail committee should approach NLLD about a partnership to split the penny between drainage and a jail.
“If they get ahead of us [in public support for the tax], we can forget about it,” Toups said.
Bond payments would be made through a sinking fund with revenue derived from dedicated and rededicated sources. Jones suggested writing tax calls in a manner that would first dedicate the revenue to the debt service with the leftover assigned to the “mandated costs” required to maintain a new jail.
Before the committee can seriously consider its financing options, it must determine the characteristics of the facility. Although some members of the committee have toured jails on an individual basis, it has yet to collectively visit other newly constructed Louisiana facilities.
Sheriff Craig Webre told the committee the parish should look to construct a new facility that could hold 750 to 850 inmates and be primed for future expansion. “I think the idea of adding on [to the current jail] would just re-enact this debate in five years,” Webre said.
The sheriff said the current population, 425 inmates, is “an artificially low number” attributable to the state of the current jail. Drug offenders and non-violent criminals are being released to leave beds open for more dangerous offenders, Webre said.
When a new facility is constructed, food, transportation, medical and guard costs will rise so much that “$32 million or $26 million pales in comparison” to what it would cost to maintain the jail for 30 years, the sheriff said.
By building in excess of the parish’s potential inmate population, the jail could become a “regional holding facility for pre-trial females,” Maj. Marty Dufrene, head of corrections at the Lafourche Parish Sheriff’s Office said.
Income derived from holding out-of-parish prisoners would be split between the parish and the sheriff’s office, pro-rated in proportion to the entities’ expenses, the sheriff said.
Ted Jones, vice president of the public finance department with Stephens Inc., advises the Lafourche Parish jail committee of its options pertaining to new and rededicated taxes that could be used in financing the construction of an updated jail. ERIC BESSON
