County hoping to partner with city to finance new jail

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By JEAN ORTIZ / Lincoln Journal Star

Lancaster County leaders may be looking to their city counterparts for help financing a new jail, but that won’t mean the city will put more money toward the complex than it has been.

County commissioners — who saw voters reject their top financing plan last week — have yet to lock in a decision, but leaned strongly toward the recommendation of financial advisers Thursday.

The plan has the city and county entering into a long-term lease with the Public Building Commission, which would issue the bonds for the $65 million, 664-bed jail project.

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It would mean redirecting the amount the city now pays to use the jail toward construction costs. Based on an average over the past five years, that would be about $1.45 million annually, said Scott Keene, vice president of Ameritas Investment Corp. But commissioners acknowledged that could change depending on the city’s use of the jail in the future.

“They should be indifferent to it as to the tax impact of this because they’re paying one way or the other,” he said.

The county would then need to devise a plan to make up that lost revenue for operations.

The plan would not jeopardize the city’s bond rating, nor its plans to finance a new arena, Keene said.

The two groups discussed the plan last year before the County Board decided to try to win voter approval.

If financed over 25 years, it would mean a property tax levy of 2.35 cents per $100 of valuation. That translates to about $35.25 annually for the owner of a $150,000 home to cover construction costs.

County budget projections also anticipate increased operations costs for the new jail, which could about double that.

Commissioner Larry Hudkins, who said previously he wanted to move quickly while interest rates are advantageous, said he’d like to see the levy in place by September.

Keene cautioned that could leave the county scrambling if the jail costs more than proposed because a firm project cost won’t be available until late in the year.

But waiting also brings risk, because the county wouldn’t have the money in hand by the time construction got under way early next year.

Hudkins said he doesn’t see the price tag changing.

“I look at it this way: We told (the architects) we’re going to spend $65 million for this jail so you build us what you can for that and you come in at that,” he said.

County leaders had wanted to use voter-approved bonds to be repaid over 26 years, saying that plan kept property tax increases manageable, protected the county’s bond rating and didn’t threaten funding for subdivisions like rural fire departments.

But 54 percent of voters rejected the plan, with some saying they preferred a shorter-term repayment and less money paid in interest over time.

Lancaster County Election Commissioner David Shively said Thursday he couldn’t yet estimate how much it cost the county to put the issue on the ballot, but should know in coming weeks.

The preferred plan now has the lowest interest rate — about 4.48 percent — among all remaining options. It’s so good, Keene said  the voter-approved bonds only carried a very minimal advantage.

County and city officials are due to meet June 3 for a monthly discussion of common issues. The County Board voted unanimously to send letters to City Council members to request everyone’s attendance. County officials also plan to brief Mayor Chris Beutler.

Keene, meanwhile, will return to the board next week with more detailed analysis of the plan, including what repayment scenarios over 15 and 20 years look like.

Architects began designing the jail in February and will have plans later this year. Construction at Southwest 40th and West O is expected to begin early next year.

County leaders say the new jail is needed to replace the one at 10th and J streets and a minimum-security complex in Air Park — both of which are overcrowded.

Reach Jean Ortiz at 473-7107 or jortiz@journalstar.com.