A new Muskegon County Jail and Juvenile Transition Center could be financed through operational savings, instead of a millage.
Thursday afternoon, the county’s financial advisors from FirstSouthwest presented to the Jail and Juvenile Transition Center Committee (JJTCC) their proposed plan to finance the new jail and Juvenile Transition Center.
The county currently has $144 million in outstanding debt, with the highest component being the wastewater system debt, which is paid by user fees as opposed to tax dollars and does not come out of the county’s general fund. The county’s debt capacity, the amount of debt the county can repay in a timely manner, is currently $330 million, according to the financial advisors.
The group from FirstSouthWest stated that the county is currently in a good financial position, being rated close to the top by both Moody’s and Standard and Poor’s financial ratings systems. Muskegon County is either in line or above the surrounding counties with regards to its financial ratings and has a higher rating than the State of Michigan.
The new jail will be financed with approximately $7 million that has been put aside for this project; staffing changes, which will include an elimination of 6-15 positions; and changes in insurance. Each of these changes will allow the county to pay off the money that will be bonded.
The staffing changes will save the county roughly $500,000 to $1.1 million and the changes in insurance will reduce the county expenditures by about $800,000.
Joseph Mrak, senior vice president of RQAW, part of the engineering team the county hired, told the committee that this is the perfect time to do a project like this.
“We are now in a perfect storm,” Mrak said regarding the record-low interest rates. “If you can afford to do all the alternates, I would recommend you do it.”
A new Jail and Juvenile Transition Center will cost the county between $23.5-$37 million depending on which plan the county chooses. The base bid would include building a new jail next to the current facility and renovating Craig School for the Juvenile Transition Center. The jail would include 480 beds, but could be expanded up to 582 beds. The Juvenile Transition Center would have 16 beds of detention and 16 beds for treatment, which could also be expanded if need be.
Heath Kaplan, county finance and management services director, would recommend a 25-year amortization on the bonds, which he described as the “sweet spot” for bonds.
Larry Spataro, vice-mayor of the City of Muskegon, stood in front of the board and stated the city would not support any plan that vacates a city street and that the city would also not re-zone the area of Craig School.
“We have final authority on that,” Spataro said. He also stated that closing down Pine Street would hurt the businesses there.
Spataro suggested using the Mona Shores Administration Building, located on the corner of McCracken Street and Norton Avenue, for the Juvenile Transition Center since the district has been trying to sell the building for $1.
Other audience members expressed their disagreement with the placement of the Juvenile Transition Center in Craig School as well as the amount of outstanding debt the county currently has.
If the schedule goes the way it is planned, the new jail and Juvenile Transition Center would open in June 2015.
While this is a final recommendation for the option for a new jail and Juvenile Transition Center, Muskegon County Sheriff Dean Roesler, who is also chair of the JJTCC, said that no decision has been made, and there is still a lot of discussion to be held. The committee will meet with the Nelson Neighborhood Association on Jan. 16, 2013 to discuss its ideas regarding using Craig School as a new Juvenile Transition Center.