Dear Commissioners, July 17, 2014 | Eastern North Carolina Now

    Commissioners,

    Several years ago the county was refused USDA financing for a justice center at the Minute Man site because the project's sponsors could not demonstrate sufficient community support for the proposal.

    The lesson that should have been learned was that the USDA's guideline in Article 3811 "requires evidence of significant community support for all Community Facilities loans and grants."

    Having had a prior experience with this very Article 3811, how could you in clear conscience, have spent millions of dollars in initial costs for the Chocowinity Jail while pretending to have adequate financing readily available from the USDA? Frankly, you did not have enough support to put the issue on the ballot never mind convince the USDA to fund it.

    On Thursday, July 17, 2014, the Washington Daily News reported that the USDA has refused to fund a new jail planned for the Chocowinity Industrial Park, and that the commissioners will seek alternate funding for the project. The story mentions that commissioners now propose using limited obligation bonds and/or bank lending to replace the foolishly hoped for financing that was recently denied to the project by the USDA.

    In just how much contempt do the jail's four sponsors hold the taxpayers?

    Before you foolishly run up anymore spending or debt for this effort, please understand that any underwriting of the limited obligation bonds in question will require that the underwriter conduct an investigation of the circumstances surrounding the project that the bonds will be pledged to fund. This investigation will be disclosed to potential investors in a prospectus. One of the material facts necessarily included in that prospectus will be the USDA's recent refusal to finance the project due to the lack of support the jail proposal has among Beaufort County taxpayers, sitting commissioners, candidates for the offices of commissioner and sheriff, and community organizations such as the NAACP.

    In light of the earlier pledges and assurances made by opponents of the jail project before the USDA's representatives, it is hard to imagine a scenario in which these bonds could be sold to the public with any certainty that they would not be defaulted upon. It is even more difficult to imagine any investor or fiduciary who would find it worthwhile to entangle themselves in the problems this project faces over its wide spread disapproval within the community.

    Give this some thought:

    1) Project sponsors were wrong in thinking they could build the jail at the Washington Industrial Park, so it had to be punted down to Chocowinity,

    2) Mr. Klemm's business plan overlooks that the fees collected for taking custody of transfer prisoners will be spent in providing care and custody for those inmates,

    3) The proposal's sponsors lack the nerve to put the proposal up for a vote of the electorate, yet

    4) Those same sponsors were just too naïve to realize that the USDA would still be bound by the mandate explicitly stated in Article 3811,

    5) Consequently, a major government funded lender has refused to become involved in the project.

    Did I mention the coalition of interests who have pledged to sink the project at the first chance they get? This will leave the bond holders as the proud owners of nothing much at all and all of it in the middle of an empty industrial park whose limited potential has been destroyed by a half built jail.

    Exactly what class of investor will be willing to invest in a project that is this ill planned, contentious and laughably uncertain of successfully honoring its covenants? In plain English, no rational investor will trust you with a dime.

   •  Quit wasting our money! Do something useful.

   •  Give it to Belhaven!

   •  Clean up the tornado debris!

   •  Cut taxes!

    Regards,

     Warren Smith
      Beaufort County, NC

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