Borough sells prison bonds, pleased with lower rate

PALMER — After pulling out of the market earlier this month, the Mat-Su Borough managed to sell its prison bonds this week.

“I was not predicting [a sale] before the new year, especially this week, the week of Christmas,” borough Finance Director Tammy Clayton said.

Clayton and other borough officials went out of state the first week of December to sell $240 million worth of bonds. The money will go to build the Goose Creek Correctional Center. The borough plans to build the 1,536-bed prison in the Point MacKenzie area and eventually sell it to the state.

Clayton said on that first run, interest rates were so bad the borough couldn’t sell its bonds.

“It was 6.35 [percent] the first week,” she said. And the second week, “it went even higher.”

Clayton said at the time the plan was to wait, monitor the market and jump in when the time was right.

With Christmas looming, Clayton said she wasn’t expecting anything.

“It’s historically a very slow week,” she said, with a lot of bond-buyers closing up their books. Typically, she said, things pick back up with the new year.

But the market surprised borough officials. On Monday, she said, a situation arose where, “At 9:30 there’s an opportunity. We either jump now or we don’t jump at all.”

The borough jumped.

The interest rate the borough got was 5.88 percent. Clayton said the borough was not allowed to exceed $17.817 million in debt on the project that that interest rate puts it under that figure.

“Obviously, it’s not as good as rates were a year ago, but it’s far better than rates were when we pulled out of the sale,” she said.

The borough could not have accepted interest rates as high as the 6.35 percent offered at the start of the month. Other offers, she said, were also non-starters.

“We got offered to buy the whole deal if they could have 7,” she said.

The project to build the prison, Clayton said, is still on track, with the borough planning to start moving dirt this coming summer. The borough has already selected a contractor, Neeser Construction, which had agreed to hold its bids until the end of January if the borough needed that extra time.

The plan, borough officials have said, is to build the prison then lease it to the state. The cost of building the facility will be repaid over the course of 25 years, with the state ending up with the deed to the property.

The facility will be located at the corner of Alsop and Point MacKenzie roads, nine miles from the Port MacKenzie dock. Borough officials estimate the construction project will generate 600 to 700 jobs and the prison, once opened, will have a staff of about 350.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.