Sufficient sales tax revenue will more than cover bond payments
The good news was the maximum estimated cost of the proposed county jail facility is $300,000 less than originally proposed.
Bond consultant David Artebury of George K. Baum Company of Kansas City, told Marion County Commission Friday morning that he had been looking at a final number of $8,955,000 but determined $8,650,000 was a more accurate number, which were based on bond underwriting fees and the latest cost estimates from architect Tony Rangle of Law Kingdon Inc. of Wichita.
The commission, architect, and bond consultant went through the proposed jail costs, line by line, to make sure all costs were included or estimated as much as possible.
Rangle, via telephone, asked if the county wanted to have an estimating service as a separate service from a construction manager which would provide some of the benefits of a construction manager at a reduced cost.
The estimated cost of a construction manager is $550,528. If an estimator is used instead, it could save the county some money. However, a construction manager would guarantee that the construction costs would be no more than the original bids. If costs exceed those numbers, the construction manager would pay the difference.
Commissioner Randy Dallke said he had heard positive comments from USD 408 regarding the construction management process for two large school construction projects.
The site acquisition cost of $80,000 was based on a price provided by the City of Marion.
Dallke asked Rangle about an additional cost for gas service. Rangle said additional costs could come from the contingency line item and maybe the gas company would provide the service for free. Dallke responded that the gas company has a standing fee for service.
“Acquisition fees are to get services to the site. Site development is for the fees to get the services across the property,” Rangle said.
Building costs are conceptual numbers and a conceptual size, and does include the 911 dispatch center.
Parking can be flexible, Rangle said, with the number being too high or too low but the county has a unit price of $1,800 per stall. The price per stall includes site lighting and an asphalt parking lot.
Furniture, fixtures, and equipment (FFE) costs are based on a traditional facility of this type and would be non-detentional furniture.
Items like steel bunk beds, special toilets, cameras, and cuff benches are included in the building costs.
The signage line item of $8,000 includes office, handicapped parking, and all other signs, indoors and outdoors.
Rangle explained that a large portion of the general construction estimate of $80,000, would be used for testing services.
“When a combination of materials are brought in, like pre-cast panels, masonry, steel fabrication, and decking for the roof, you have to be sure there is a third party involved to test the materials,” Rangle said.
The contingency dollar amount was based on six percent of the construction or hard costs.
Communications system cost do not include outgoing dispatch towers. It does include communication between phones and computers but not for dispatching.
Dallke asked if construction management was not approved, would the entire $550,528 be removed from the proposed budget? Rangle responded it could but it also provides a cushion.
Artebury said bond underwriting fees would be $171,948 or two percent of the hard costs.
He recommended that the county use bond insurance but if it is found the insurance is not necessary, the issuance cost would be cut in half.
Sales tax revenue can only pay to retire the bond. It cannot be used for additional officers and the increased costs of operating a larger facility. However, there is an anticipated surplus of revenue for renting out bed space and that revenue can be used to offset additional expenses.
Costs associated with the dispatch/communications center might be covered by grants.
The ballot question
After much discussion and contemplation, the commission decided to include the equipment and relocation costs associated with 911/communications system in the question that will be on the Nov. 4 ballot.
If the bond issue passes, implementation of the sales tax will be April 1, 2009, or as soon after that date as possible.
If voters vote “yes” to the bond issue, they are agreeing to a one percent sales tax, construction of a new jail and communications facility, and the issuance of bonds to pay for the facility.
Approximately $960,000 per year should be generated from sales tax for the bond issue with $708,000 per year being used for bond payments. That excess could be used to pay for additional employees and utilities.
Artebury said if the county only collected 75 percent of the sales tax currently being collected, it still would have sufficient funds to pay the bonds.
The bond would be set for 20 years with an early payoff date of five to seven years predicted.
When the bond is paid, the additional county sales tax will end per state statute.
Could the bond question be shorter than originally presented? Artebury said that was a legal question and would check with a bond attorney. Rangle said he would send the question on the Sumner County ballot a few years ago for that county’s new jail facility of which Law Kingdon Inc. was the architect.
The commission will approve a resolution with the final bond question at Monday’s meeting. A resolution will be published in the county’s official newspaper.
When Rangle was told that there was a petition going around in opposition of the location of the jail facility, he said that could be problematic.
The commission also needs to decide whether to spend more than $500,000 for construction management.
Rangle agreed to meet with the commission Tuesday afternoon.