Dear Commissioners, July 30, 2014 | Eastern North Carolina Now

    Gentlemen,

    Earlier last year you began acting on a proposal to fund a new jail at the Beaufort County Co. The site of the project has since been moved to the Chocowinity Industrial Park. The project as it is now proposed is to have 176 inmate beds built around an expanded core-infrastructure capable of supporting the future addition of 174 beds. The financing was to be provided by the USDA on a 40 year, 3.5% project specific loan of $20,000,000 that would have been collateralized by the jail property. The yearly debt service on this loan would have been roughly $950,000. No referendum was required for any of this. Every effort has been made to keep this from being voted on by the people.

    Commissioner Klemm explained, in the Washington Daily News, that the county's current inmate capacity at the court house facility is 85 prisoners and that taxpayers are regularly sending 10 to 25 overflow inmates to Pitt County at a cost of $55 per day. He outlined a proposal to employ the added capacity, whereby, misdemeanant prisoners who are now transferred out of county and into the state prison system could be repatriated to Beaufort County along with a stipend of $40 per day paid by the Statewide Misdemeanant Confinement Program (SMCP).

    In July of 2014, the USDA rejected Beaufort County's request for funding.

    Mr. Klemm has confirmed that the county now intends to issue $20,000,000 of limited obligation municipal bonds to replace the USDA mortgage. These bonds are expected to be of a shorter maturity and a higher rate of interest than the USDA funding. This implies that the annual debt service on these bonds will be in the neighborhood of $1,500,000.

    If you are able to run the new jail at an average census of 140 prisoners (80% capacity), then you will be paying a fixed cost $30 per day in fixed financing costs per inmate ($1,500,000/(365*140)). Food per man per day now costs $10. This leaves you in a break-even situation on the SMPC reimbursement before you begin to pay for the jail's guards, ancillary staff, maintenance, lights, heat, air conditioning, etc.

    For the sake of argument imagine that all of the above variable and semi-variable costs, other than food, can be contained at $15 per day per inmate. Then our cost of incarceration including both fixed and variable costs is $55 per day (Financing: $30; Food: $10; Other; $15). This is not any better than the price we are now paying to Pitt County to accept our over flow and represents a $15 per day loss on every inmate we repatriate from the SMCP under Mr. Klemm's proposal. The more of Mr. Klemm's inmate transfers you accept, the worse the problem becomes. Even at full capacity the proposal's business plan runs a deeper cash flow deficit than exporting misdemeanants, as we do now, and shipping over flow to Pitt County, as we do now.

    This is plan is ridiculous. You got the site wrong, you came up with a business plan that hemorrhages red ink, and you have now mangled the financing so badly that the county's cash flow is slammed by an additional $500,000 in debt service. This is just Phase I of the grand plan. You want to do twice as much?

    Please stop! Stop before you do the county irreparable harm.

    Regards,

     Warren Smith
      Beaufort County, NC

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