Floyd County OKs LEC project bids with extra funding sources, expected cost cuts

By Bob Steenson, bsteenson@charlescitypress.com

Floyd County supervisors voted Monday to accept bids on a law enforcement center project and updates to the county courthouse that had come in several million dollars above estimated costs.

They plan to make the project work by trimming some expenses and adding additional funding.

The bids, opened Sept. 5, had come in $4.6 million above the amount the county has to spend from proceeds of a $13.5 million general obligation bond sale that voters had approved spending in May 2018.

The plan approved Monday would be to cut about $400,000 from the project mostly through changes in materials, add about $2.5 million from the county general fund reserves, add about $400,000 in funding from other sources, and sell the bonds that have not yet been sold with a premium of up to $1.3 million.

After more than two hours of discussion during a special meeting, the scope of the project remained much as it was bid:

• The county property tax levy will remain at the $1.08 or $1.09 per $1,000 assessed valuation rate increase that voters were told when they approved the project.
• The new law enforcement center (LEC) to be built next to the courthouse will have a county jail with 32 beds and new sheriff’s offices as originally planned.
• The project will include updates to the courthouse including new windows and a new heating and ventilation system, a fire-suppression sprinkler system and other changes that were promised to county residents.
• The project will include an entryway between the courthouse and the LEC that will have new handicapped-accessible restrooms for each floor of the courthouse and likely two new elevators, one for the public and one for jail detainee transport.

Supervisors have been working since they opened the over-budget bids to come up with ways to cut costs and find extra funding. Options discussed have even included cutting most of the planned updates to the courthouse.

Monday morning, the supervisors met with representatives of their construction manager, The Samuels Group; their design and architecture team, Prochaska & Associates; and their bond underwriter, Northland Securities, in a kind of “all options on the table” special session.

Jeff Heil, of Northland Securities, started the discussion with some good news.

Because interest rates have dropped since the bonding referendum was approved almost a year and a half ago, bonds have become more attractive to buyers to buy with a premium above the face amount.

The county sold about $6 million worth of bonds last fiscal year, but the remaining $7.49 million could actually result in more than $8.5 million in total funds going toward construction, while still keeping the property tax increase at the $1.08 or $1.09 per thousands that voters approved.

Heil said the remaining bonds could be sold in a way to raise even more money, but it could require coupons and some other financial means that could increase the property tax impact, or could require setting dates that would take advantage of expected increases in the county’s total valuation to keep the rate constant.

County Auditor Gloria Carr presented information on the county’s general fund.

She said the balance jumped up when the county sold the old county farm property for the ethanol plant years ago, and that money has never been spent.

“On June 30, we had nearly $3.9 million in our general fund balance,” Carr said. “I was asked what my thoughts were on what I’d be comfortable with in using that, and I kind of would not want you to exceed (spending) $2.5 million of those funds.”

Carr said that would leave enough reserves for the county to be able to pay its bills while waiting for new property tax revenue to come in, but supervisors would have to be careful during budgeting time.

“I think you are going to have to hold the hard line on budget increases,” Carr told supervisors, if they spend $2.5 million from the reserves.

Sid Samuels, president and owner of The Samuels Group, said he has been working with the bidders on the project and he has come up with more than $400,000 in potential savings through switching materials, especially going from precast wall panels to masonry.

Samuels also talked about around $400,000 that the supervisors had identified earlier in potential addition funds.

That includes $200,000 in interest earned on the bonds, about $120,000 from County Social Services to relocate county mental health offices to the courthouse, $50,000 from the Floyd County Communications Board and/or Floyd County 911 Service Board to help relocate the dispatch center from City Hall to the LEC, and $20,000 in a MidAmerican Energy incentive.

Samuels said if you add the $2.5 million from the general fund, $800,000 in cost cuts and addition funding sources, plus $1.3 million in premiums on the sale of the remaining bonds, that equals the $4.6 million additional needed to approve the bids.

Supervisors had discussed options such as putting individual wall-mounted air conditioners into the courthouse to replace the current 58 window-mounted units, instead of installing a new ducted heating and cooling system in the courthouse; reducing the number of cells in the jail; going from two new elevators to one; redesigning and rebidding; and other options.

Supervisor Doug Kamm, who owns an excavation company, said going through a major redesign and coming back in the spring to rebid a package with fewer jail beds, say 24 instead of the planned 32, could end up costing as much as it saved.
Supervisor Linda Tjaden said she was concerned about reducing the number of beds.
“We went through the studies that showed we need 32 beds,” she said. “I don’t want to reduce that, then in 10 years we’re short.”
Sheriff Jeff Crooks said the number of beds and separate units are needed for classification purposes, such as keeping men apart from women, juveniles from adults, etc.
“Some of the things with our old facility at this moment, we are able to get away with a few things here and there with regards to the classification,” Crooks said, because the state jail inspector makes allowances for the age of the facility.

“As soon as they put up the new facility we will not get away with any of that. We will be strictly Chapter 50 Code and (the jail inspector) will enforce that to us,” Crooks said.

“I’m not a proponent of taking things out of the project,” Samuels said. “If we’re looking at saving eight cells we’re chasing our tails.”

Near the end of the meeting, Samuels presented his list of potential savings and additional funding that could make up the $4.6 million that the project is short.

He said the project right now is a month behind where they wanted to be.

If the board approves the bids as presented, that would allow work to begin on moving dirt and getting the site ready and allow some things like electrical equipment that takes a while to come in to be ordered, Samuels said.

“We’ll get the grade up to where it needs to be. We’ll dig the footing foundations out. We’re going to pour them,” he said, citing the action that can take place this fall.

Approving the bids as presented “gets all the scope back into the project,” Samuels said, and he can continue to work with the bidders to cut the costs that have been identified and look for more.

Supervisor Roy Schwickerath said, “I want to make sure that we meet what the citizens expected their costs would be. If it stays at the $1.08, we’ve met that. I don’t have a problem seeing us spend some of our carryover budget. … The courthouse is a good use of that.”

Schwickerath moved and Tjaden seconded a motion to accept the low bids as presented, and authorize Samuels to work with the bidders with a minimum $400,000 target on reductions.

The vote passed 3-0.