Cleveland County won't be penalized by IRS for jail bonds

A report issued by the Internal Revenue Service shows that Cleveland County issued too many bonds to pay for its new jail in Norman, but chalked the error up to a bad economy at the time the project went out to bid.
by Andrew Knittle Modified: April 25, 2013 at 10:20 pm •  Published: April 26, 2013

A report issued by the Internal Revenue Service shows that the Cleveland County Justice Authority issued too many bonds to pay for its new jail in Norman, but chalked the error up to a bad economy at the time the project went out to bid.

The report also reveals that the Cleveland County Justice Authority unintentionally misrepresented how much the bonds would pay off for investors. But again, a bad economy and puny interest rates allowed the county to escape any IRS penalties.

The new jail, known formally as the F. DeWayne Beggs Detention Center, opened in February 2012 and more than tripled inmate capacity for Cleveland County. The state-of-the-art facility cost $36 million to build due to the economic collapse in late 2008.

The county issued bonds totaling $52 million to fund the project and was in the process of paying the money back when the IRS announced that it would perform what was described as “a routine audit” by Cleveland County Assistant District Attorney Carol Dillingham.

Cleveland County residents in 2008 approved a quarter-cent tax to fund repayment of the bond, and the money has been flowing in since then, oftentimes exceeding projections.

Dillingham described the IRS report in a positive manner, saying the federal agency essentially gave the justice authority a “clean bill of health” as far as its bonds are concerned.

“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 a statement.

“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.”

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by Andrew Knittle
Investigative Reporter
Andrew Knittle has covered state water issues, tribal concerns and major criminal proceedings during his career as an Oklahoma journalist. He has won reporting awards from the state's Associated Press bureau and prides himself on finding a real...
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