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KELLY JAMISON which he considered “not very accurate.” Said Graham: “Honestly, if the only information I had was what I’ve read in the newspapers, I’d feel the same.” Had N-Group and Pricor attempted to market the project on their own, they would likely have been dismissed as one of the many private prison companies that propose converting everything from motels to abandoned military base into detention facilities. Instead, they shrewdly leased the services of former governor Mark White to speak for them, and wined and dined their way into the favor of county officials during a memorable weekend of May 1989 in Dallas. White’s law firm, Keck, Mahin & Cate, was the underwriter’s counsel for the bond sale. After meeting select county officials in Austin, N-Group representatives flew the group to Dallas, where they stayed at the ritzy Fairmont Hotel and frequented a Drexel Burnham Lambert hospitality suite set up for them. According to the newspaper The Bond Buyer, during the course of the weekend workshop, they ate at the famous Morton’s steakhouse, talked to White, and visited the offices of Drexel Burnham and Hutchison, Boyle, Brooks, & Fisher, whose senior partner, Ray Hutchison \(husband of state bond counsel. San Saba Co -Linty attorney David Williams, said that White’s influence over the county representatives was uncanny. “Once they got up to Dallas and met at the Fairmont Hotel, the project was a done deal,” said Williams. “There was so much reverence for the man’s [White’s] political position that no questions were asked.” One county whose officers did ask questions was dropped from the project. According to the San Angelo Standard-Times, Kimble county Judge Wilbur R. Dunk and Junction Mayor Luke Hagood said they were interested in N-Group’s ideas, but when they requested additiOnal information to present to their citizens, N-Group quit returning their phone calls. The county commissioners who went along with N-Group’s proposal followed it down to the last detail. On July 6, 1989, all six counties set up Jail Facilities Financing Corporations, and each appointed three.members with “no experience in the acquisition, construction, equipping, or operation of criminal detention facilities,” according to the official bond statements, which’ were nearly identical for each county. Corporation members range froin funeral director to grocer to haberdasher. The corporations sold about $12 million a piece in tax-exempt bonds that would mature in 20 years at a 9.75 percent interest rate high risk, high yield. \(To put this amount in perspective, some of the counties involved’ work with an annual budstatements stressed that the developments “invol ye” a substantial degree of risk and should be purchased by sophisticated investors only.” Throughout the prospectus, Drexel Burnham emphasized the following disclaimer in big, bold letters: “The county is in no way ‘obligated, nor does it currently in tend to levy any taxes in order Tto pay any lease payments.” HILE REVIEWING the preliminary statements of these bonds, Jim Thomassen, an assistant state attorney general, raised questions about whether the project would ever be completed, according to records obtained through the attorney general’s office. Demand for the jails hinged on a feasibility study that he considered “somewhat superficial, with the conclusions not well supported,” according to an August 21, 1989 letter to Brent Bailey of Keck, Mahin & Cate. The study, conducted by Southwest Econometrics, predicted phenomenal success in all six counties, regardless of the counties’ assets and debts or whether their population rose or fell. In identically worded statements, the study concluded in all six cases that “the current demand for prison bed space in Texas is so great that it should assure that all six 500-bed detention centers being developed for Texas counties by N-Group will achieve a 95 percent occupancy level within one year.” To remain economically viable, each jail would have to maintain an 80 percent occupancy rate at $42 per day per prisoner. Satisfied that counties would not be held accountable for the jails’ debt, Thomassen eventually approved the conduit financing, but stated in his letter to the bond counsel on September 7, 1989, “We do not think it will be easy to meet these criteria. It may not be possible at all. Please consider this before embarking on such a financing.” According to The Bond Buyer, which reported NGroup’s financial activities at length in an April 3 article, “municipal analysts have increasingly made attempts to hold issuers responsible for defaults by such conduit-financed projects.” Nobody can be certain about what might happen if the venture defaults until it does. S N-GROUP officials struggle to find inmates to fill 3,000 beds, the issue of liability becomes more timely. County officials say they were told the jailS would house out-ofstate prisoners in addition to Texas’ surplus prisoner population. In 1989, Tulia city manager Marshall Shelton, a member of the Swisher County jail corporation, told the Amarillo Globe News their county had commitments from corrections officials in New York, California, and Alaska. San Saba A THE TEXAS OBSERVER 5