In a 4-0 vote, with Supervisor Robert Rivas absent, the San Benito County Board of Supervisors on Feb. 16 passed a resolution to award a $58,000 contract to Vanir Construction Management, Inc., to implement cost containment mechanisms in relation to a $5 million expansion of the county jail. The resolution also granted Ray Espinosa, county administrative officer, the authority to make changes to the contract if necessary.
Ted Baraan, San Benito County chief probation officer and legislative chairman for the Community Corrections Partnership (CCP) executive committee, told the board that because the state no longer incarcerates low-level offenders and now moves them to local jails, there was a need to mitigate the financial impact on the county. He said the county was given a stipend to help in the mitigation that would provide a savings to the state.
“I’ve said it before publicly, they never give us what we actually need,” Baraan said, adding that CCP would be meeting Feb. 17 to discuss funding for the jail project. “I intend to propose that in the event the Board of Supervisors takes out a loan for $5 million, CCP commit to funding $250,000 of the annual allocation towards that loan.”
Supervisor Anthony Botelho asked Baraan if he felt CCP would allocate the $250,000 a year, not including interest, for 20 years. Baraan told him it was his understanding the money would be spent to service the loan. Joe Paul Gonzalez, county clerk-auditor-recorder, said there may be several options in paying off the loan. In one, he said, the county could use internal financing, at no interest, which could be paid back by CCP or through some other source.
“Ultimately, the General Fund contribution would be kind of a bridge loan to get this project done and to show the financing capability of the county to the state,” Gonzalez said. “That’s what the state needs to see, an actual account where the monies are held.”
He asked the board to direct him to provide financial certification.
“The board said, ‘before you do that we want to see options,’” Gonzalez reminded them. “I believe, at this time, the most advantageous option to make this project viable is that the board commit its financial resources to make this project happen."
Espinosa reminded the board that they had discussed the possibility of a bond, but the rate would be $375,000. Supervisor Jaime De La Cruz asked Baraan if he was correct in understanding that CCP had agreed to repay the loan over 20 years. Baraan said that decision would be made the next day at the CCP meeting. De La Cruz said the board’s decision would be placed on the next supervisor meeting, Feb. 21. Supervisor Mark Medina asked where the $5 million would come from. Baraan said it would come out of a reserve account. When Medina asked Baraan if he understood correctly that the $250,000 would pay off the loan. Baraan clarified that the fund balance won’t change. Medina asked if there was any risk that CCP might default on its payments.
“Ultimately, the board controls all funds that come to the county,” Baraan answered. “It’s possible, for example if legislation were to come out in 10 years and the governor says, ‘you’ve had enough of this money,’ and they change the realignment.”
De La Cruz asked if Assembly Bill 109 (AB109 Public Safety Realignment) guaranteed payments. Baraan said it was only guaranteeing a funding stream, but not the amount. De La Cruz said, as he understood it, AB109 only guaranteed a minimum payment of $1, so the county could, theoretically, one day receive a check for just that amount. He wondered about CCP groups around the state that were forecasting capital projects, which would become burdens to their community's General Funds if they did not receive payments. Baraan told him that Senate Bill 90 (SB90) protected the county because it requires that any unfunded mandates passed down from the state to local governments be claimable as costs to the state.
Botelho commented that the county has dragged its feet for years concerning the jail expansion because of revenue issues and the recession. He said everyone knew the county would have to pay up front for construction costs with the hope of being reimbursed by the state. He said there was also a question about how to operate the jail. The bigger the jail becomes, he noted, the more expensive it is to operate. He wondered if the county might consider the option of a reduction in size to 60 beds, instead of increasing the square footage to accommodate 72 beds.
Espinosa said Baraan wasn’t the person to answer that question and told the board he had invited Bob Fletcher, vice president of business development for Vanir, to address their concerns about the project. He told the board that Vanir had built the jail, juvenile hall and other county buildings, so there was a long-standing, positive relationship with the company.
Supervisor Jerry Muenzer wanted to take Botelho’s suggestion of downsizing the jail a step further.
“When you take $15 million and divide it by 60 beds it’s $250,000 a bed,” he said. “Multiply that by another 12 beds, that’s $3 million. By reducing it back to 60 beds, we could be potentially be saving $3 million.”
Supervisor Mark Medina asked if the 12 extra beds would be leveraged somehow, since there will be no additional jail personnel. If not, he wanted to know if there would be an increase in operational expenses. Fletcher said the first thing his company considered was reducing the scope of the jail. He said they determined that was not possible. Muenzer wondered why it could not be decreased. Fletcher responded that if changes were to be made it should have happened at the beginning of the project and it was not possible now.
“The only other option is to walk away from the project,” Muenzer said.
Gonzalez told Muenzer the original jail cells had two bunks per cell. He said the 72 bunk concept came about from having 12 bunks in a minimum-security dormitory. He said this saves more than going with 60 beds. Supervisor Jaime De La Cruz asked if the board had approved the 12-bed design. Gonzalez said the resolution to change the design was approved three years ago.
“It was going to help with operations; it was going to help with flexibility; it was going to help with construction costs,” Gonzalez said, “and give us more beds.”
Fletcher said Vanir came up with a proposal for the project as the county was preparing to solicit bids, based on what county staff had told them. Botelho asked him if he agreed that it was too late to consider downsizing the jail.
“Operationally, it’s a little cheaper to run,” Botelho interjected. “You don’t need another correction officer in the ratio of prisoners to officers. Maybe we should be considering that.”
“At this point, it’s going to be pretty hard to do without spending a significant amount of time to determine where we can save cost and cut square footages,” Fletcher answered. “There should have been an operational program statement, as well as an operational cost analysis of what this jail would cost, and it would have to be brought to the board for approval. That would answer your question about operational cost. It’s usually a 30-year operational cost analysis just to make sure what you’re getting and what you’re budgeting for operationally is what you’re going to get, based on the design.”
Fletcher said the estimate, based on the market and region, will help the renovation stay within budget. He said the county is at the point in the process where it should be going out to bid for contractors. Gonzalez added that to change the design from cells to dormitories would make it possible to add more bunks without increasing the number of officers. He agreed with Fletcher that increasing square footage would be costly at this point.
Muenzer said he understood if the county were to step back and restudy the project there was no guarantee of any cost savings. Botelho said he saw the funding process involving CCP as, “Lending money to a relative.” He went on to say he thought the county should continue to move forward with “Our eyes open and I want to suggest to our board and staff that we have meetings from now on to be kept abreast of, at least at a committee level, where we stand regarding money.”
Botelho said it was his understanding that the ratio between the number of corrections officers and inmates had to be maintained. He was told that in looking at the redesign, a couple million dollars could be shaved off the budget simply by changing the configuration approved by the state to add more beds in the same amount of space.
He cautioned both county staff and Fletcher that the board would not look favorably on any more cost overruns regarding the jail. He was told he would be more likely to receive that assurance once the county saw what the bids on the project were.
At its Feb. 21 board meeting, Baraan reported that CCP had held its meeting and agreed to pay $250,000 annually against the $5 million loan. With that hurdle out of the way, Espinosa asked the board to have Gonzalez send a letter of intent to move forward with the jail expansion project.
“My understanding is we’re going to loan the money to ourselves at zero interest,” Muenzer said. “If that does not work out for some reason and we have to go out and pay for a bond, the financing of it would be on the county.” Espinoza explained a bond’s annual payback, which would include interest, would be $375,000. “Again, it’s our money and we’re not receiving any interest on that,” he said.
Botelho was still as skeptical as he had been at the retreat. “We have a long track record of projects like this going over budget,” he said. “It’s a scary proposition.” Even with his trepidation, Botelho joined the other supervisors in voting to pass the resolution to have Gonzalez write the letter of intent to provide assurance to the state regarding funding.