Boone County officials disagree on project’s financing

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Boone County officials have expressed a desire to expand the county jail, but a disagreement between the county commissioners and the county council on how to fund the project could cost the county millions of dollars, one commissioner said.

Don Lamb, the Boone County Council’s vice president, said after a July 13 council meeting that the Boone County Commissioners and the council agree the justice center project “needs to happen” but have “a big difference of opinion” regarding how to fund the project.

The proposed project’s parameters have not been set, but a jail feasibility study recommended the county jail expand beds to accommodate the county’s growing population, which includes Whitestown, one of the fastest-growing communities in the state. The study estimated the jail would need twice as many beds, Boone County Attorney Bob Clutter said. County officials also are considering an infirmary, men’s and women’s work release facilities, administrative offices for the morgue and the coroner’s office, increased space for Boone County Sheriff’s Office employees and the county’s dispatch center and relocating community corrections down to the jail complex as part of the expansion, Clutter said. Boone County Commissioner Jeff Wolf said the project would solve “other space needs within (the) county government other than just what’s happening at the jail.”

“A big portion of this project is the community corrections side of things,” Clutter said. “We want to put an emphasis on work release and training and rehabilitation so that those people who are in custody can come out with a better chance of not coming back. The real focus of the project is community corrections rehabilitation.”

The jail feasibility study predicted the cost of expanding the more than 30-year-old jail would be $55 million, but county commissioners said they want to spend less than that — between $40 million and $45 million, said Clutter, citing preliminary estimates the commissioners have reviewed. County officials won’t know the exact cost of the project until the design and scoping phase is completed.

“Part of that is, how do you fund the project?” Clutter said. “It’s going to be a $40 million to $45 million project. That’s a big chunk of money, and Boone County, of course, doesn’t have that laying around. So there are only a couple of feasible ways to finance that. One is through property taxes, which would be difficult. It would require a referendum under state law, and it would be a big increase in property taxes. That’s not an attractive option for anybody.”

Another option to fund the project is an increase in the county’s local income tax. In 2018, the General Assembly passed a law allowing a county’s governing fiscal body to implement a 0.02 percent increase in its local income tax to fund or maintain a county jail. Boone County’s local income tax is 1.5 percent. The council could levy the entire increase, making it 1.7 percent.

“That money can only be used for correctional purposes,” Clutter said of a possible increase in the county’s local income tax. “The interesting part of this is the county would have to issue bonds to pay for all of this, and we can only do that once the (local income tax increase) has been adopted.”

Wolfe said state law requires the tax increase be in place to sell a bond to fund the project and that the interest rate the county would pay on the bond would not be set until the county sells the bond. The commissioners expect the Federal Reserve to increase interest rates to combat inflation following large influxes of government spending to combat the COVID-19 pandemic, and Tom Santelli, president of the Boone County Commissioners, said a 2 percent interest rate increase could equate to as much as a $12 million additional cost for the county over the length of the bond. The county’s current net interest cost for bond payments is approximately 2 percent, Clutter said.

“You can’t turn on the radio or look at any news without hearing about inflation and interest rates going up,” Clutter said. “They have been historically low for the past several years, and everybody knows they’re going up. The difficult part is (predicting) when they’re going up. It appears they are going to be going up in the very near future.”

“That’s why we think time is of the essence,” Wolfe said. “To get in on these lower interest rates, we were trying to get this done.”

But some Boone County Council members have said they don’t want to approve a tax increase without knowing the scope or cost of the project.

“We don’t know what the final scope of the project is,” Lamb said. “From a council perspective, to put on a tax when we haven’t decided the scope of the project yet, that has been a hard bridge for us to cross. That’s part of it, too.”

Santelli said Elise Nieshalla, the council’s president, told him July 7 that an item to consider the project’s funding would not be on the council’s July 13 meeting agenda because not enough members would vote in favor of the local income tax increase. Santelli said the delay would likely cost taxpayers between $12 million and $15 million because of a predicted increase in interest rates.

“That’s why I believe this needed to stay on the agenda,” Santelli said. “It’s an open discussion where each council member gets to express their feelings in public, as well as the commissioners, and have a discussion.”

Commissioners have explored a build-operate-transfer project delivery method, a way of financing large infrastructure projects, but Lamb said “a lot of money” is needed to begin the process.

“We haven’t been able to agree on it,” Lamb said.

Part of the disagreement stems from whether the county can alternatively use a portion of the funds it will receive from the American Rescue Plan toward the project. Boone County is set to receive a little more than $6.5 million in American Rescue Plan funds this year and another $6.5 million next year, totaling $13,177,707. Lamb said the council is uncertain whether the funds can be used for the project, but the council is seeking clarification. However, Santelli said federal guidelines, as they are written, prevent counties from using the funds on capital projects, meaning the jail expansion would be exempted.


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