County pays off courts building bonds
The county is debt-free after making the final payment last month on the $3.84 million bond issue that financed the construction of the Garland County Courts Building at 607 Ouachita Ave.
“As of today, Garland County has no debt,” County Judge Darryl Mahoney told the quorum court Finance Committee Monday night. “No bond on the road. No bond on the building.”
The $11,965 the county treasurer paid the bond trustee on April 15 retired the outstanding $1.62 million principal the county refinanced in 2015. The county paid $1.66 million in principal and interest, according to information from the treasurer’s office, with the annual debt service ranging from $209,176 during the last full year of the obligation to $251,981 in 2015.
The 2002 ordinance that authorized the revenue bonds pledged fines and court costs to the repayment of the debt and required the county to establish a special fund for the revenue. According to county budget books, the fund collects about $850,000 a year.
Not all of it serviced the debt, as the bond ordinance allowed the county to use the special fund’s surplus for “any lawful purpose.” The county transferred the surplus to the general fund and used it for its share of court expenses. An ordinance the Finance Committee advanced Monday closed the special fund and redirected all of its revenue to the general fund.
Mahoney told the committee fines and court costs that secured the debt will fund district court operations. Another ordinance advanced Monday night established
a new five-year operating agreement with the city of Hot Springs but retained the funding formula from the 2002 agreement.
The building houses both divisions of district court and Division 2 of circuit court. The county is responsible for circuit court expenses. Per statute, cities and counties share district court expenses. The county pays three-fourths of the courts building’s operational costs, and the city pays the balance.
“We’re fortunate that we’re getting it paid off now,” Mahoney said of the revenue bonds the county issued in 2002. “It looks like times are going to be a little different. It may be a good time to have some money.”
He’s hopeful rising interest rates will benefit the reserve fund the county seeded with the sale of the Ouachita Memorial Hospital in the 1980s. Interest income from the OMH fund helped offset a drop in collections of the county’s 0.50% sales tax during the Great Recession.
According to information provided to the quorum court, the fund had a $6.9 million balance at the end of March. Mahoney said it’s drawing a small fraction of the interest that accrued to it more than a decade ago.
“OMH was drawing 7%,” he told the committee. “If we had the option to draw 7%, it could be a huge part of our anticipated revenue. Instead, we’re drawing 0.007%.”
In February, the county retired the $54.7 million bond issue it floated for road improvements, which included the county’s $30 million contribution to the King Expressway extension scheduled to open later this year. December collections of the 0.625% countywide sales tax securing the debt retired the bonds more than a year ahead of the amortization schedule Stephens Inc. provided when it underwrote the bond sale in 2016.
Unlike the security for the courts building bonds, all of the sales tax collections were pledged to the repayment of the road bonds.