Back to planning stage for new jail
High bids force officials to rethink project
Bids for the new Isabella County Jail and offices for the Isabella County Sheriff’s Office came back much higher than county officials had hoped, and now the project is headed back to the planning stages to figure out how to make it happen.
County officials had hoped that bids for the combined jail and sheriff’s office would come back at approximately $40 million but instead came back higher than $60 million, County Administrator Nicole Frost told county commissioners at their meeting last week.
It’s a combination of lots of things going on in the world right now, she said Tuesday, including the rising cost of construction materials, inflation, global supply chain issues and labor.
It has the county looking for the spot where revenue and expenditures match, she said. That means looking for ways to increase the first while cutting the second.
The management team for the project, which includes county officials, Clark Construction Co. and Integrated Architecture — the jail project’s project manager and architectural firm, respectively — already squeezed some spending.
They’d also hoped that excluding $2 million in demolition for the current jail would bring in lower bids, but it didn’t help quite enough, she said. The idea was to tear down the current jail and replace it with an entrance to the underground tunnel connecting the current jail to the courthouse. Terms of the $46 million United States Department of Agriculture rural develop
ment loan the county secured at the end of March — locking in a 2.125 percent interest rate — preclude use of that money in Mt. Pleasant.
The county’s current plan to pay off the loan is a combination of general fund expenditures and federal COVID relief money.
After crunching numbers earlier this year, county officials decided they could afford to pay off the 40year loan with approximately $27 million from the general fund, with another $8 coming from COVID relief. County officials expressed confidence that they could live with a jail project of $35 million, leaving the remaining $11 million in USDA loans on the table.
They still hope that this can serve as the centerpiece of the financing side. They could also seek additional dollars from local partners and perhaps even private donations, Frost said.
One unlikely option is taking a bond request before voters, she said.
“It is still not our intention to go to voters with this project,” she said.
One piece of that side got clearer last week when Peter Preston, the county’s equalization director, informed commissioners that wind turbines in the county will generate $1 million in revenue for this fiscal year. That is two-thirds of the county’s overall projected increase in 2022 property tax revenue of $1.5 million, Preston told commissioners.
County officials were relieved by the amount, which was a smidge higher than what they expected, Frost said. It isn’t enough that it solved the county’s money problems, but it is also not less than what they projected.
What it does is solidifies the amount of revenue the county can expect annually from its two wind farms. That includes a 36-turbine farm in Coe Township that came online a couple of years ago, and the 136-turbine farm that came online in north-central Isabella County in 2021.
The turbines, owned by DTE, will get taxed at full value this year for the first time and before a steep drop takes place in value due to depreciation. Based on a depreciation schedule, the turbines are expected to fall in value to 80 percent next year before taking either 5- or 10- percent declines for 10 years before bottoming out at 30 percent.
By year 10, the county is projected to receive approximately $700,000 annually in tax revenue from the turbines.
Another option involves addressing another major expense the county will carry for the next five years: unfunded pension liabilities, Frost said. The county’s long-term financial projection see required contributions to cover pension liabilities continuing for five years at a high level before falling to approximately half.
The county could dip into its savings to accelerate that decline by paying down the liability early, freeing up additional cash to pay for the jail.
Another option is to split the jail from the sheriff’s office and move only one to the Union Township property the county purchased late last year.
It that happens, building a new jail is the more likely option.
The current jail — built in the early 50s — is falling into disrepair. During last week’s cold snap, a heating unit on the roof exploded, requiring the use of a temporary propane heater to provide warmth to four cells, Frost said. The cost to rent the temporary unit was less than $15,000, but it could have been substantially higher.
County officials have for years been concerned that the jail’s infrastructure could fail is a major way, leaving it unfit for human occupation.
In addition, state law requires that elected county officials — the sheriff included — maintain a primary office in the county seat, which is Mt. Pleasant. The jail can reside outside the county seat, but not the sheriff.