For the Cleveland County Justice Authority, the hard work is over.
In 2008, Cleveland County voters approved a quarter penny sales tax increase to pay off the bonds that built the $31 million project. Bond money also was used to pay for equipment and furniture for the jail.
“We were able to legally use bond money to buy the first year of supplies as well,” Cleveland County Commissioner Rod Cleveland said.
Supplies mean everything from uniforms to toilet paper.
Despite that, costs by professional estimators set the project cost higher than the actual costs, and the county has taken heated criticism for the bond overage.
“Construction jobs in our region were few and far between,” Cleveland said. “They bid it, for their labor and overhead, very, very slim, and we were the beneficiaries of that.”
The letter from the IRS noted the difference between amount bonded and the cost of the project.
“Because the IRS has the ability to use hindsight in its review, it can determine at any time that more bonds were issued than were necessary for any given project,” Dillingham said. “In this case, the final cost of the jail was less than estimated. The IRS did not find that the costs projected by professional cost estimators were incorrect or that the Authority’s reliance on professional estimates was misplaced or in any way improper.”
County officials have used the surplus funds to pay down the bond’s principal.
“We’re able to pay it off early because we applied the excess money to the principal,” Cleveland said.
The IRS letter also recommended a minor bond yield calculation change.
“In the future the county will take the yield calculation to six decimal places rather than the four used previously,” Dillingham said. “Despite the economic recession of 2008-2009, the Authority invested the bonds at the most attractive rates available, yet the rates were historically low. Accordingly, the difference between the decimal calculations made no difference, and the IRS found no wrongdoing.”