Okeechobee County considers options for financing jail expansion

Posted 1/14/21

Expansion of the Okeechobee County Jail is estimated to cost $55 million. How will the county pay for it?

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Okeechobee County considers options for financing jail expansion


OKEECHOBEE – Expansion of the Okeechobee County Jail is estimated to cost $55 million. How will the county pay for it?

The county received no responses from the Solicitation for Bank Financing of the Jail Expansion and Sheriff’s Office Renovation which included a conversion from a construction loan to a conventional loan for $55 million. Seacoast National Bank indicated via email the size of the loan is larger than the bank can handle.
At their Jan. 14 meeting, the Okeechobee County Commission heard a presentation by Jeremy Niedfeldt of Public Financial Management (PFM). He said they would ask banks to offer structures based on the repayment period. He said the plan of finance will be determined by cost, timing and affordability level.
“If we send it to 80 financial institutions, five responses would be a good output for a project like this,” he explained.

“There is talk about doing a construction loan. There is talk about doing a full loan,” said Commissioner David Hazellief. He said interest rates will probably go up, so they might want to get the full loan now.
Niefeldt said some banks do not want to make a loan for a jail.

“We’re going to pledge a revenue source of some kind,” Hazellief said. “You can’t give a mortgage on a jail.”
Commissioner Bryant Culpepper said the safest way to go would be with a municipal bond.
Niedfelt said it depends on the investors. He said right now the bond market is very attractive.

“For a community of 40,000 people, the amount of money we are looking at is a lot of money,” said Culpepper. “Jan. 20 is a whole new world. We don’t know what is going to happen. That is very concerning to me. We don’t know what the future holds.”
Commissioner Kelly Owens said she has a number of concerns, including the overall amount of the loan.

“I am looking at our budget. I am looking at all of the constraints,” she said. “We have our known unknowns and then we have unknowns that we don’t even know about.” She noted the coronavirus has meant the county has lost revenue from sales tax and tourism, and added expenses for county overtime. She said she believes the commissioners need the help of someone like PFM to guide them through the process.
Culpepper asked about the life expectancy of the jail. The current jail is 35 years old. He asked, “Will the new jail need expansion by the time a 30 year loan is paid off?”

Hazellief balked at the $350,000 price tag for the services of PFM and the bond counsel.

Commission Chair Terry Burroughs suggested they should first determine how much money they are going to spend on the jail before deciding if they should engage the help of PFM.
Joseph Mrak of Securitecture said the design for the jail will be complete at the end of January. He said they have conducted four design meetings with the sheriff’s office. Some of those meetings lasted a full day or were held over more than one day.

“We have completed the survey and our engineering team is working on site design,” he said. The geotechnical survey and soil borings have been completed. He said they have also met with city code officials.
Basically half of the building will be demolished and half the building will be renovated, Mrak explained.

“This plan can accommodate future expansion for a very long time,” said Mrak. He said the design allows the addition of more housing pods.

The structure will include a total of 170,000 to 180,000 square feet, to be constructed into modular sections. He said the design is much more efficient than the current jail and sheriff’s office.

The design will double the space for the sheriff’s office. A storage building will be shared between the sheriff’s office and Fire/Rescue. Mrak said they proposed constructing the storage building first so they can move secure evidence storage as well as equipment into that building before demolishing some structures currently used for storage.

Each housing pod will include program and recreation space so inmates will not move from the pod for those activities.

He said the actual construction will cost about $47 million. The $55 million cost includes both the “hard” and the “soft” costs, he explained.

The facility design is beautiful, said Culpepper. “The problem I have is we have kids in school who never committed a crime. We have people in our community who have never committed a crime who would love to live in that facility.”

He said he questions how the county can spend $55 million of taxpayers’ hard-earned money when the county needs a new high school and people are worrying about losing their homes in a pandemic.
Mrak said 80% of the people in the jail have not been convicted of a crime yet.

“Your jail is falling apart,” he said. “It’s in need of replacement that meets the standards.”
There are some standards that must be met agreed Burroughs. “We may not like it, but we have to figure out how to deal with it.”

Owens said she toured the jail and understands there are multiple issues there.

“We cannot use ad valorem dollars to pay the debt,” she said. However, the county will have to pull from other revenue sources and will have to raise ad valorem taxes to cover the loss of that revenue. The county is already at 8 mills in ad valorem taxes. One mill equals $1 in taxes for every $1,000 of taxable property value. She said using other revenue sources to fund the jail project would likely mean the county will have to raise taxes to 9 mills.

“This is going to become a burden on the people in our community,” Owens said. “They can’t afford it and we can’t afford it.”

She suggested scaling back the project.

“If we go much over $30 million, we are putting ourselves in an extremely uncomfortable position,” she said. She suggested the architect meet with the team to determine what has to be prioritized in this project.
“We can’t afford $55 million,” she said.

Hazellief said they had a study group to review the options and this was the plan they determined was best.
“If you are going to do it, do it right,” he said.

“I am not in favor of running up to 9 mills (in taxes),” said Burroughs.

Burroughs said they have two weeks to think about the financing before they have the actual design finished. He said they should have the final numbers on the actual construction cost at that time.

In other business at their Jan. 14 meeting:

• Commissioners approved a change from residential single family (RSF) to heavy commercial (C-2) in zoning for a property of 4.3 acres at 2790 State Road 70 West. According to county staff, the property owner plans to request a special exception to display heavy equipment.

• Commissioners held a public hearing on a proposed amendment to the Land Development Regulations to reduce the nuisance height for weeds on developed lots from 20 to 12 inches. The amendment also clarifies that property owners are responsible for nuisance conditions on the right-of-way in front of their property. Commissioners voiced questions about the definition of a developed lot and asked the amendment go back to the Planning Board for clarification.

• Commissioners scheduled a public hearing for Feb. 11 at 9 a.m. to consider whether to abandon a portion of a street right-of-way in Brooklyn Park Subdivision. Brooklyn Park is a small, mostly undeveloped subdivision on the south side of State Road 70, east of Eagle Bay Drive. Most of the streets and alleys in Blocks 2 and 3 have already been abandoned, except for the South Magnolia Street right-of-way that divides property owned by the Hales family. The Hales are requesting this undeveloped right-of-way be abandoned.