The rest of the boondoggle | Arkansas Blog

Friday, June 27, 2008

The rest of the boondoggle

Posted By on Fri, Jun 27, 2008 at 4:23 PM

Boondoggle? You know the words "Pulaski County government" are about to follow, don't you?

Remember a fine story by the Arkansas Democrat-Gazette's Mark Minton last year? The county floated a $43 million bond issue, announced in 2002 by County Judge Buddy Villines with great fanfare, to help poor people buy houses. A whopping total of six got houses before the program was shut down, having spent $2.1 million. The only people really helped by this were bond daddies and bond lawyers.

The IRS wasn't happy. This type of program was abused all over the country and investigations were begun.

It's now just about over here. The County Public Facilities Board (which seems to exist in large part to provide tax-exempt bond finance for white-flight private schools) will consider a proposed settlement of the housing bond dispute Monday. You can read it here.

The county gets off fairly easily in the deal negotiated with the IRS. Though the IRS asserts that rules were broken (something the county doesn't admit), the bonds that were sold won't be deemed as taxable for those who received interest before the bonds were called in 2007. The county board will have to pay a $60,000 penalty to the feds. The money will come from bond funds, not from county general revenue. There have, of course, been additional legal fees incurred in working this matter out.


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