Jail committee recommends bond proposal
County Board expected to act Wednesday
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HOUGHTON - After much discussion and review of data, the Houghton County Jail Committee unanimously passed a motion Thursday for a recommendation of a bond proposal to fund a new county jail. The recommendation will be up to Houghton County Board of Commissioners to consider at its August 5 special meeting. The recommendation was for a 1.26 millage on a 30-year bond.
The recommendation was based on three Rough Order of Magnitude (ROM) reports for the jail project which were discussed at the Houghton County Jail Committee meeting Thursday, with a focus on project costs.
The three ROMs were received by the committee after the July 15 Industry Day public meeting. They were submitted by Bradway Enterprises, of Houghton; Granger Contracting Company, of Lansing; and Miron Construction Company, of Marquette. The ROMs range from $25 to $28 million.
The committee focused on arriving at a project cost for the recommendation of a bond issuance, discussing the higher number of $28 million to account for variability and potential cost overruns.
"The $28 million will leave you room once you get some firm numbers," Todd LaRoux, committee member and county building inspector, said. "You're going to want a contingency, and there's typically a cost overrun. You're going to run into things."
There is the base bid on what is provided based on the engineer drawing, LaRoux said. With a lower ROM does the county have "wiggle room," or will the county need to reduce the square footage somewhat in order to stay within the budget?
The concerns raised over potential contingencies led the committee to select the higher estimate of $28 million, which is a $4 million cost reduction over the initial Abonmarche Byce report. The reduction represents a 12.5% budget decrease, which drops the necessary taxpayer funding from the previously rejected 1.60 mills down to a leaner 1.26 mills ($1.26 per $1,000 of taxable value).
Discussion then questioned a preference for a 20-year bond request, or a 30-year proposal. Faith Morrison, committee co-chair, said on a 20-year bond, the millage would be set at 1.51, while a 30-year bond would reduce that to 1.26.
"A 1.26 millage means less taxes per year, but 1.51 mills means 10 (less) years paying," said Morrison, "and we all know from having borrowing money, a lot more goes into interest costs."
Board Chair Tom Tikkanen said in the case of larger projects, such as the jail project, 30-year bond requests are more common.
"It's quickly recognized that instead of a 1.6 millage request, we're down to 1.26 for 30 years," he said. "That's pretty significant."
Tikkanen said that a 1.26 millage at 30 years makes it more affordable for people.
Jason Baker, committee member, said at 1.26, based on a taxable value of $100,000 equates to $126 per year, for a 30-year bond.
Since the committee was formed, its objective has been to find ways to reduce the $32 million cost suggested by Abonmarche Byce Consultants, a Kalamazoo-based architectural design and engineering firm. A 1.60 millage request for the $32 million was rejected by voters last August.