Bonds…revenue bonds

In the first four months of 2019 the Arkansas legislature passed over 1,000 new laws. Amid the flurry of committee meetings and heated debates between lawmakers, a bill amending revenue bonds doesn’t get much attention. This particular bill was passed on April 2, 2019 and signed into law by Governor Hutchinson three days later. Once signed into law the bill became known as Act 703 which is about to get its first test run in Pope County. Beginning February 17, the Pope County electorate will cast their vote on a bond initiative that will authorize the quorum court to undertake future capital improvement projects through casino revenue bonds. This is a complex initiative that has taken a winding road to the ballot. To make it easier to understand, let’s break this issue down into two parts- the bond and the projects.

The Projects
Voters will be asked to consider five proposed projects individually. The Criminal Justice Complex will be first on the ballot and is a top priority for the county. This $58.8 million project will encompass a 400-bed detention facility, two circuit courtrooms, and facilities for the office of emergency management, 911, and the Pope County Coroner. Next is the $8.4 million bond to finance the construction of a new Russellville Branch of the Pope County Library. The third project is a $2.1 million Wellness Improvement Bond that will include a gymnasium with an indoor walking track annex to the Pope County Senior Activity Center. Fourth is a Public Safety Improvement Bond that would include a Russellville Fire Department sub-station, related equipment, and police vehicles for the Russellville Police Department. The bond amount for public safety improvements would be a maximum of $3.57 million. The fifth bond to consider is for $7.35 million to fund the construction of a multi-purpose event center at the Pope County Fairgrounds. If all projects are approved the total price tag comes in at $80.22 million.

The Bond
Typically revenue bonds are repaid through the project they are funding. For example, a bond may be undertaken to extend sewer service to residential customers who would then pay a higher cost for their sewer service until the bond has been settled. Act 703 makes a change to this rule by allowing the four Arkansas counties with licensed casinos to secure revenue bonds that would be repaid with gaming revenue, rather than through traditional tax revenue streams. It is important to note that bonds can only be used for capital improvement projects (CIP) which may include new construction, facility upgrades, land acquisition, equipment purchases, and a host of other expenses focused on the development of infrastructure of a public nature. Certain expenses cannot be included in the CIP budget, requiring payment through other revenue streams. The excluded costs are generally thought of as the day-to-day operating expenses. Payroll, utilities, and supplies are all excluded from CIP budgets.

Casino gaming revenue for Pope County is expected to come in at approximately $4.375 million per year once operations are in full swing. The Legends Casino property currently sits just outside city limits in an unincorporated part of the county, meaning that all gaming revenue would be issued to the county government. If the property is annexed into Russellville city limits prior to bonding, approximately $3 million of the expected gaming revenue would be directed to the city, with the remaining funding going to Pope County. The proposed bond would allow Pope County government to promise up to 100% of their portion of gaming revenue to repay bond debt. Keep in mind that a bond would not be issued until the casino has been open and operational for at least six months. Voter approval of a project also does not guarantee that it will actually be undertaken. Approval merely gives government officials the authority to take out a loan in the future if they believe it is appropriate at that time.

The idea of a casino coming to our community has been the most controversial issue in recent memory. The question for voters is no longer do you want a casino. That question has been settled. Now we have to decide if we’re ready to decide how to spend the next 20 years of revenue before the casino has opened.l