The Vigo County Council Monday unanimously approved $8.7 million from local income taxes to reduce borrowing and interest costs to start construction of a new county jail.
Included in the appropriation is $4.7 million — with all but $100,000 coming from a 0.25 percent local income tax special purpose tax — to establish a debt service fund.
Herschel Frierson, with Indianapolis-based accounting firm Crowe LLP, in an email told county attorney Michael Wright that the company had received two bids that sought assurances a debt service reserve fund was fully funded at a bond sale closing. The funds within the debt service reserve fund would be released after the new jail is completed, projected in December 2021.
Wright told the council the fund amounts to slightly over one year's payment, estimated to be $4.5 million. The money would cover a bond payment should there be an unforeseen downturn in income tax collections.
Wright said the coverage is only until the new jail is constructed. Once constructed, an insurance policy would then cover that one-year payment in the event of a downturn.
Wright said the insurer was not willing to provide that coverage until the new jail was in use. Once the jail is occupied by the Vigo County Sheriff's Office, the money would then be released back to county control.
Also included in the total appropriation is a $4 million payment from cash on hand from income taxes collected since October 2018.
That money will come from from a 0.20 percent local income tax correctional and rehabilitation facilities tax. This tax will also pay $100,000 toward the bond debt service reserve fund.
Crowe LLP estimates the use of cash on hand for construction of the jail — with actual construction cost at $56.27 million, plus costs such as building a new roadway to the jail, site and dirt work, jail fixtures, furniture and equipment increasing the final cost to about $67 million — would save the county $970,000 in interest costs.
Councilman Mike Morris, who made a motion to approved the funds, said, "This is the reason we passed these (income) taxes to accomplish this goal."
County Auditor Jim Bramble told the Tribune-Star the county has more than $8 million in the two funds, with more than $3.8 million in the correctional rehabilitation fund for construction of the jail and more than $4.2 million in its special purpose fund. Those funds will continue to collect money through income taxes, Bramble said.
After the meeting, Tim Berry, director of Crowe's government group of performance consulting, said bonds for the jail project will be sold Thursday with a bond sale closing on Dec. 19.
In other business, the council approved $60,000 for the Vigo County Prosecutor's Office, of which $20,000 is for investigations; $25,000 for community grants to alcohol and drug recovery service providers; and $15,000 for new protective vests for police and the prosecutor's office. The money will pay for five vests, each which cost $3,000.