Supervisors review funding options during special meeting, approve May 5 bond referendum election

by Bob Beach

The Allamakee County Board of Supervisors met Friday, March 6 with members of the Allamakee County Public Safety Center Committee to review a report prepared by Hacker, Nelson and Company regarding funding options for the construction of a new jail and public safety center. The report, prepared at the request of the Board of Supervisors, reviews four options - selling bonds, selling the County Farm, pledging the rent from the County Farm to pay down the debt, and using unassigned funds from the County's General Fund.
Assuming a project cost of $4.9 million and an interest rate of 3.25%, the report states that annual payments on the bonds over a 20-year period would be approximately $337,000.
The report also estimates that the County Farm could be sold for approximately $1.4 million, which could be used to reduce the bond amount to $3.5 million; thus, reducing annual payments on the bond to about $241,000. However, the report points out that the County Farm generates roughly four percent of its value annually, which is greater than the estimated borrowing cost of 3.25%, and would only generate one-time funds for the project. In other words, borrowing the money for the public safety center would be cheaper over 20 years and the County would still own the farm.
The report also found that pledging the rent from the County Farm to payments on the bond for the public safety center would have no real impact because currently those rent payments go into the County's General Fund. If that revenue were taken out of the General Fund, other revenues (higher tax levies) would be necessary to replace those funds. "This option is changing the use of revenue, not an additional source of revenue," the report states.
Finally, the report found that a maximum of $490,000 of the County's unassigned fund balance could be used towards the project cost. "This one-time option would make 1.5 years' debt payment on the $4.9 million borrowing," the report states. "Or, it would lower the borrowing to $4.4 million, resulting in annual payments of about $303,000 over 20 years at 3.25%"
Board of Supervisors Chairman Larry Schellhammer said that he had been working under the assumption that $4.9 million would not be enough to fully fund the project and that costs over that amount would need to be paid from the General Fund, adding that he doesn't believe that anyone wants to raise the $4.9 million figure that was put before voters in last November's election.
Allamakee County Sheriff Clark Mellick said that, since November, construction costs had increased by 20% and current conceptual estimates of the project cost reflect that. He added that changes in the design could be made to reduce costs but cautioned against cutting too much and ending up with a jail that would be obsolete in 35 years.
Supervisor Dennis Koenig said that people he had talked to weren't overly concerned about the dollar figure. "What happens if we go with $4.9 million and we didn't ask for enough money to get the job done right? It's a big project and we're assuming folks would say no if we go for a higher figure," he said.
Chairman Schellhammer pointed out that the Board still has not heard a firm estimate on the cost of demolishing the old Makee Manor building, but that ultimately that cost would need to be included in the amount borrowed for the project.
Supervisor Dan Byrnes said that it would help if the new jail could be built adjacent to the Makee Manor building to give time for the demolition, noting that it could take two years to get the building down and out of the way.
Sheriff Mellick reminded the Board that the current jail's first audit under the federal Prison Rape Elimination Act would be conducted this year and it will not pass. He said that failing that audit would not necessarily mean that the jail would be shut down immediately, but it would increase the County's risk of civil liability.
While some members of the Public Safety Center Committee expressed concern that a bond amount higher than $4.9 million would not be approved by the required 60% of voters, others argued that it wouldn't make sense to bond for less than the estimated project cost.

REGULAR SESSION
The Board of Supervisors resumed its public safety center discussion during its regular meeting Monday, March 9 and considered the Public Safety Center Committee's recommendation to hold a bond referendum election May 5. The Board agreed to schedule the election but has not yet determined what amount voters will be asked to approve. The Board plans to meet with John Hanson of Midwest Construction Consultants this Wednesday, March 11 and then meet with the Public Safety Center Committee Thursday, March 12 before making that decision. Allamakee County Auditor Denise Beyer said that once the Board determines the bond amount, Bob Jostens, the County's bond attorney, will draft a resolution for the Board's approval during its regular meeting Monday, March 16, ahead of the March 20 deadline required for the May 5 election date.
The Board also held a public hearing during Monday's regular session regarding the County's proposed budget for fiscal year 2016, which includes a 15-cent increase in the General Supplemental Levy and a decrease of over 10 cents in the Mental Health and Developmental Disabilities Levy for an overall increase of 5.7 cents per $1,000 of valuation. Hearing no comments from the public, the Board approved the budget and certified the taxes for the coming fiscal year.
The County's budget includes increases in pay for County employees, both elected and unelected. The Board reduced the Compensation Board's recommended salary increases for elected officials by 25%, resulting in a $2,850 raise for the County Attorney, $1,875 for the Auditor, Recorder and Treasurer, $2,325 for the Sheriff and $1,125 for the Board of Supervisors. Other department heads and non-union employees will get a three-percent pay raise (with the exception of Veterans Affairs employees, who will receive the 11% increase approved by the Board last week). Allamakee County Engineer Brian Ridenour and Sheriff Mellick reported that the unions representing Secondary Roads and Sheriff's Department employees have tentatively agreed to three-year contracts that both include three-percent pay raises.
The Board also met with Neil Schraeder of Hacker, Nelson and Company, who reviewed the results of the audit of the County's books for fiscal year 2014. He reported that County business was conducted according to standards and that the County is in good financial shape. Schraeder also reviewed the report on financing options for the new public safety center, summarizing the four options and findings presented above.
Ridenour presented the Board with plans for three upcoming Secondary Roads projects: a cattle pass bridge replacement on Columbus Road near Lansing, a box culvert replacement on Dry Hollow Road near Waterville and a bridge deck replacement and widening project for the bridge over Williams Creek on Williams Road near Postville. The Board approved the plans and set March 30 at 10 a.m. as the date and time for the opening of bids on the projects.
In other business, the Board voted to allow Allamakee County Economic Development employees to be added to the County's health insurance group at their expense, if requested. The Board also approved a resolution to add Case Management to its agreement with County Social Services.
Allamakee County Auditor Denise Beyer reminded the Board that April is County Government month and that events will be held at the Allamakee County Courthouse in Waukon April 9, including a tour for eighth grade students, displays by various departments and an open house for the general public.