
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, November 4, 1995                   TAG: 9511060033
SECTION: CURRENT                    PAGE: NRV-3   EDITION: NEW RIVER VALLEY 
SOURCE: PAUL DELLINGER STAFF WRITER
DATELINE: RADFORD                                LENGTH: Medium

SOME JAIL FUNDS DEPEND ON U.S. BUDGET

Some of the funding to be sought for a proposed $20 million regional jail will have to wait until Congress and the White House work out their budget differences.

The New River Regional Jail Authority wants to borrow as much as possible from Rural Economic Community Development, formerly the Farmers Home Administration, with its lower interest rates and other advantages.

Travis Jackson, regional RECD director, said agency representatives are assuming some sort of federal budget compromise will be worked out by January. Only then would money become available for RECD lending.

Half the cost of jail construction, which would serve Radford and counties of Grayson, Pulaski and Giles, is to be paid by the state. It is one of the last regional jail projects in the state to qualify for the 50 percent funding.

But that still leaves about $12 million, with the estimated cost of land and other nonconstruction expenses, that the localities will have to borrow.

Jackson said RECD would not have enough funding to make a single loan that large. But RECD would guarantee up to 80 percent of loans obtained from other lenders for the balance of the local cost, he said. That should be an incentive for the lenders in the three counties and city to offer attractive rates.

RECD's loan guarantee program would back 80 percent of commercial loans with the full faith and credit of the federal government, he said.

For whatever direct RECD loan is obtained, he said, the interest rate is likely to be 5 percent to 51/4 percent with a maximum repayment time of 40 years and no penalty for prepayment. It also offers a three-year deferment on principal payments, which would allow the authority to make only interest payments until the jail was complete and generating income.

The present schedule calls for plans and specifications to be ready by mid-1996 and construction complete in 1999. But Jackson warned of delays from such processes as environmental and other reviews of the site, and said the authority should begin the process of securing loans quickly.

"If you are interested in pursuing this, we have to start the dialog now. We have to start the application process," he said.

A definite site will also have to be pinpointed. The group voted to give Chairman Bob Lloyd the authority to negotiate an option on property which is satisfactory for the project.

by CNB