New county jail clears hurdle on way to opening
KINGMAN - The new Mohave County Adult Detention Facility is nearing completion and received a Certificate of Occupancy from the city of Kingman, according to county officials.
The certificate was received on Aug. 19. The facility will be completed in November, a year behind the original completion date.
The $72 million, design-build, lease-to-own facility encompasses 266,000 square feet and is made up of more than 800 precast concrete panels, which form the floors and exterior walls. The facility consists of a six-floor adult complex, a separate two-floor juvenile complex, and three single-story buildings for booking, processing, food, medical, dental, laundry, video visitation, video arraignment and administration. It will open with an initial detention bed count of 688 beds, with all infrastructure elements complete and in position for future rapid expansion to 848 and then to 1,100 beds.
The jail facility contains several Leadership in Environmental and Energy Design-equivalent features to help protect the local environment and reduce energy costs. The County Administration Building and several other county buildings have the same designation.
A nonprofit entity, the Mohave Correctional Facility Finance Corporation, was formed to facilitate the development. A 12-year lease agreement was executed by the Board for the use of the facility by the Mohave County Sheriff's Office. The lease was assigned to a trustee who issued Certificates of Participation (COPs) to secure financing for the project. During the 12-year lease term, Mohave County is simply the 'tenant' in the facility. Ownership of the jail facility will be assumed by Mohave County after the lease expires and all COP payments have been made.
The national economic downturn worked to the county's benefit in the financing of the new jail project. The initial financing proposal was for 15 years. On behalf of the Mohave County Jail Finance Corporation, Hutchison, Shockey Erley & Co. was going to sell about $55,540,000 in COPs to fund the project. Staff worked with them to scale that back to close to $46 million partly because of what staff saved in the value engineering process and partly from some things staff negotiated with the financing team.
When the Federal Reserve started cutting interest rates, it had a tremendous impact on short-term yield interest rates by bringing them significantly lower. The longer-term rates, including 15-year COPs, were still up over 5 percent. The county went to a 12-year term, which cut the rates and three years of interest from the bill. By doing that, it saved the county close to $6 million in payback costs. The bonds have been insured up to AAA, which provides a wider bond purchase and the best possible payback costs on the facility.
This form of financing offers the opportunity for tax-free bond investment. The county doesn't incur any debt. There is no debt on the balance sheet. What it adds is a lease obligation. The county makes its lease payments and, at the end of the 12 years, the facility will be paid for.
One recent newspaper article pointed out that the county has been paying lease payments since 2008 on a facility that isn't in use yet. By paying down the debt since day one, Mohave County has saved money. Had the county not started paying immediately, interest would have compounded on an unpaid principal and the cost would have been millions more.
The design-build-financing method utilized by Mohave County is the same as the state of Arizona and other counties have used on several large construction projects. The county used a similar process to build the County Administration Building.