Supervisors OK new jail
After 33 months of staff work, the new jail for Mohave County was approved by the Board of Supervisors Tuesday. Supervisor Buster Johnson was the only supervisor to vote against the project.
The new jail will hold 688 male, female and juvenile prisoners, County Finance Director John Timko said.
The county will be able to expand the facility in the future to handle more prisoners.
The building is expected to cost the county around $74 million. Around $25.5 million will be paid up front with funds from the county's quarter-cent sales tax. The remaining $48.5 million will be financed through a lease-to-own agreement with the builder/developer of the facility, FaulknerUSA.
Faulkner will sell Beneficial Investment Certificates to cover the upfront cost of the building. The certificates are sold to investors, who are essentially purchasing part of Faulkner's lease agreement with the county.
The county will pay back the certificates by using sales tax revenue.
Both Standard & Poor's and Moody's have given the county a good rating on the certificates, Timko said. Standard & Poor gave the county an A rating, and Moody's an A-.
The highest rating a certificate can receive is AAA.
Timko expects the interest rates to fluctuate between 3 and 4 percent over the 12-year life of the certificates, if the certificates are insured to an AAA rating. Rates could be slightly higher or lower depending on the market when the certificates go on sale.
The county will start to put the certificates up for sale in the next two to three weeks, he said.
Supervisor Johnson asked several questions about the financing and ultimate cost of the jail.
He questioned a statement in the contract which said the price of the certificates was not to exceed $80 million.
Timko said he did not believe the certificates would exceed $80 million even with interest.
The first-year payment on the building would be around $5.11 million, and by year 12 the payment would be up to $5.23 million, Timko said, well within the county's current revenue projections for the sales tax.
Johnson also expressed concern that the county would outgrow the facility in less than five years, especially if the state decides to send more prisoners back to the counties. The county might have a better deal partnering with a private prison company, he said. The company could build the prison and charge a per diem rate to the county and other communities to house prisoners.
After so many years, the county would have purchased the building through its agreement with the company.
The upside to such an agreement would be that the county would not have to foot the upfront bill to build the jail and it would not have to staff the jail. This could save the county money, which could be used to build a new courthouse.
County Manager Ron Walker said he didn't know of any company that would give a jail away for free.
The Board then moved to approve the new jail.