Editor,

 

The new jail’s failure to secure long term USDA financing will turn its poor planning and flawed business strategy into a series of negative cash flows that will plague county budgets for decades.

The jail’s construction was initially targeted for the Washington Industrial Park, but the industrial park’s other owners were not consulted before hand and vetoed the location immediately after it was announced.  So, the site has been unceremoniously kicked down Highway 17 to Chocowinity.

The proposal is for a two-phase project.  The first phase will be 176 beds costing $18,000,000 with some add-ons running to $20,000,000.  Until recently, this was to have been funded by a 40 year, 3.5% mortgage loan from the USDA carrying an annual debt service of $950,000; but, not surprisingly, it fell through.  The county is now exploring a shorter maturity, limited obligation bond with a debt service of $1,500,000.

Notice that the county’s cash flow is being squeezed for an additional $500,000 in yearly debt service, in order to provide commissioners a backdoor to financing the jail that bypasses the need to seek voter approval.

Forecasts of the project’s revenue potential carelessly fail to consider the accompanying expenses. The business plan, outlined by Commissioner Al Klemm, is intended to enable the sheriff to hold all county prisoners at our own facility, and to eliminate sending 10 to 25 over-flow inmates to Pitt County at a cost of $55/inmate/day.   The plan will also enable us to repatriate 40 inmates to Beaufort County from the Statewide Misdemeanant Confinement Program at a reimbursement rate of $40/inmate/day.  However, using an average prisoner population of 140 inmates (80% capacity), our new $1,500,000 debt service amounts to $30/inmate/day, food is $10/inmate/day, and if all other costs, i.e., guards, ancillary staff, utilities, maintenance, allowance for liability, etc., amount to just $15/inmate/day, then we have saved no money on retaining the over-flow prisoners we previously sent to Pitt County and will be losing $15/inmate/day on all the misdemeanant transfers we repatriate to Beaufort County.

If you play with the numbers, you’ll realize the plan has tar at both ends of the stick.   As occupancy rates increase, more misdemeanant repatriations are added to the mix and operating results get steadily worse.  On the other hand, if occupancy falls, then the debt service per inmate rises.  Beaufort County will have spent $20,000,000 and realized no net savings on prisoners transferred out, while producing a locked-in loss of $5,475/year on every misdemeanant prisoner we accept.  In essence, we will be buying at $55 and selling at $40.  How smart is that?

Remember, this is just Phase I.  While the rest of America is legalizing marijuana and reducing drug sentencing, our project’s sponsors want to follow with Phase II and another 174 beds.

The jail’s planning has been both helter-skelter and incompetent: the location is second choice, the size is ridiculous and the financing is unworkable.  What started out as ill conceived has now become senseless.  Its sponsors need to eat some crow and start over.

 

 

Regards,

Warren Smith

Beaufort County, NC