Marion County court examines plan to repurpose sales tax and issue bonds for proposed $14M community center

At a Marion County Court meeting, local officials, bond counsel and consultants reviewed a proposal to build and operate a county community center funded by repurposing a half‑cent sales tax and adding a quarter‑cent sales tax for operations and maintenance, with the county issuing bonds to finance construction.

The proposal, presented by community advocates and finance advisers, would continue a structure similar to the county’s 2017 sales‑tax financing: use the half‑cent (which is near payoff) to support bond debt for construction and add a quarter‑cent to cover operation and maintenance costs. “Right now, based on a 25 year amortization, you would see it would be about $14,900,000,” Jason Holzbaum, senior vice president with Stevens Inc., told the court about preliminary financing estimates.

Why it matters: The plan would add new, county‑wide sales tax questions to the ballot and commit the county to long‑term debt and facility ownership. Counsel and finance advisers told the court that legal structure, ballot language and timing will determine how much flexibility the county has to allocate revenues and whether a nonprofit partner may run the facility under contract or lease.

What was proposed and discussed

Community advocates asked the court to put questions on the ballot to (1) issue bonds to build a community center and (2) levy a quarter‑cent sales tax for ongoing operation and maintenance (O&M). Presenters described the project as a mixed indoor recreation and wellness center with pools, an elevated walking track, meeting rooms and space that could accommodate a library if the court chose to include it in referendum language.

Finance advisers described the tax and revenue history that underpins the proposal: annual half‑cent sales‑tax collections used for prior projects were about $850,000 in 2019 and grew to roughly $1.2 million in 2024, in part because of internet‑sales tax changes, Jason Holzbaum said. That growth is why advisers estimate the bond package could support roughly $14.9 million on a 25‑year amortization, with faster payoff possible if sales‑tax receipts continue to rise.

Legal limits and ownership

County counsel told the court the Arkansas Constitution restricts direct county ownership interests in private entities and that the county cannot simply transfer public bond or sales tax proceeds to a nonprofit. “There’s a constitutional prohibition against a county having an interest in a private entity which includes non‑profits,” an attorney advising the court said, noting the county may instead own the building and either (a) contract with a nonprofit to operate it or (b) lease the facility to a nonprofit while the county holds the debt service obligation. The transcript referenced Article 12 of the Arkansas Constitution on that point.

Counsel and advisers emphasized that to use sales‑tax financed bonds the county generally must own the financed property; if the county issues bonds it would assume the liability on that debt. They cautioned the court about federal IRS rules that apply to tax‑exempt bond financing and about limits on how sales tax proceeds may be used (revenues must be used for voter‑approved purposes specified in ballot language).

Ballot timing and risk

Advisers reviewed election timing and deadlines: new ballot questions must meet statutory filing windows (discussed as roughly 70–90 days before the election) and changes in the election calendar may affect scheduling. They also warned of a common political and financial risk: if an O&M (permanent) tax passes but the bond measure to build the facility fails, the county could be left collecting an ongoing O&M tax for a facility that was not built unless a later referendum or repeal occurs.

Operational structure and oversight

Presenters suggested several models: the county builds and owns the facility and contracts for management with a 501(c)(3) or other operator; or the county would own and lease the building to a nonprofit operator. Counsel said sales tax revenue could pay for building operation and maintenance but could not be used to pay nonprofit employee salaries. Finance advisers described using a trustee bank to receive sales tax receipts and disburse debt service first, then pay remaining operational obligations according to the legal documents.

Timing and cost estimates

Architects and project managers present said a design and construction schedule could range widely depending on scope and inflation adjustments; advisers gave a typical timetable of about two years from bond passage to project completion for a facility of the scale presented, with site work and phased packages sometimes used to shorten parts of the schedule. Presenters said detailed design and competitive procurement would follow the court’s decision to place measures on the ballot.

Court action and next steps

The court did not approve any ordinance, bond or ballot language at the meeting. Several members urged more study and legal drafting. The judge and counsel recommended returning with proposed election ordinances, and a member asked that the court form a committee to evaluate the proposal further. One court member said the court should present ordinance language at the May meeting if the court wants to put any measure on the ballot.

Ending

No final commitments were made at the meeting. County officials directed staff and counsel to prepare ordinance language and suggested creating a committee for additional review before any formal vote to place bond or sales‑tax questions before voters.