DATE: December 13, 2016
TO: Board of Supervisors
SUBMITTED BY: Margaret Mims, Sheriff-Coroner
SUBJECT: United States Marshals Service Agreement; and bond-financed Jail improvements and Juvenile Justice Campus
RECOMMENDED ACTION(S):
TITLE
1. Accept that the United States Marshals Service Intergovernmental Agreement 97-02-0015 effective June 15, 2010 has no expiration date; and
2. Accept report of federal detainee uses of Jail improvements and Juvenile Justice Campus (JJC) financed by County-sponsored tax exempt bonds.
REPORT
There is no additional Net County Cost associated with these actions. The County, through the Sheriff’s Office, and the United States Marshals Service (USMS) have had agreements to house federal detainees since 1984. On June 15, 2010, the Board approved a new Intergovernmental Agreement (IGA) that reimburses the Sheriff’s Office at a rate of $104.00 per day, per federal detainee; the IGA includes juveniles as well. The IGA was presented to the Board as a sixty (60) month agreement that would expire in 2015. However, after further research it was determined that, after sixty (60) months, that rate would continue, but if a rate adjustment is desired, the County shall submit a request for a rate adjustment to the USMS; and if that results in a new agreement, the new agreement would set the new rate. The Sheriff-Coroner is not recommending a request for rate increase at this time. The approval of the first recommended action will accept this updated report for the IGA. The USMS has continued to pay the Sheriff’s Office at the $104.00 reimbursement rate included in the IGA following the first 60-month period.
The County’s Jail was improved using portions of 2012 Lease Revenue Refunding Bond net proceeds and 2006 Tobacco Bond net proceeds. The JJC was partially bond-financed using most of the 2002 Tobacco Bond net proceeds, and portions of 2012 Lease Revenue Refunding Bond net proceeds and 2006 Tobacco Bond net proceeds. The approval of the second recommended action will accept a report on those bond financings, including approximate percentages of cumulative and expected “private business uses” related to those bonds.
ALTERNATIVE ACTION(S):
There is no viable alternative action.
FISCAL IMPACT:
There is no additional Net County Cost associated with these actions. For FY 2016-17 the Sheriff-Coroner’s Office budgeted $2,922,920 from the USMS for the housing of federal detainees. This amount is based on the current rate of $104.00 per day for an assumed minimum average daily population of 77 Federal prisoners for 365 days.
DISCUSSION:
Historically, local sheriffs have been reimbursed the cost of housing federal detainees in a local jail under Intergovernmental Agreements (IGA). In 2006, the Department of Justice Office of Federal Detention Trustee (OFDT) created a new automated network known as the Detention Services Network (DSNetwork). By November 2007, the USMS completely retired the old system and requested that sheriffs replace old IGA’s with new electronic Intergovernmental Agreements (eIGA) under the DSNetwork. The new system allows sheriffs to negotiate per diem rates based upon projected future jail operating costs.
The Sheriff’s Office and the USMS have had agreements to house federal detainees since 1984. Under the current agreement (IGA No. 97-02-0015), the Sheriff’s Office is reimbursed at a rate of $104.00 per day, per federal detainee. The Sheriff-Coroner is not recommending a request for a rate increase at this time.
The current agreement also provides a reimbursement of $37.00 per hour, per guard (2 guard minimum) for federal detainees seeking medical care from an outside medical facility. In addition, the current agreement provides reimbursement for the housing of juvenile federal detainees at the Juvenile Justice Campus (JJC), but the Probation Department does not anticipate receiving such detainees.
Tax-Exempt Bond Requirements; Private Business Use Limitations
This is a report of federal detainee uses of bond-financed properties.
The County’s Jail was improved using portions of net proceeds from the 2012 Lease Revenue Refunding Bonds [$22.5 million bond issue] and the 2006 Tobacco Bonds [$39 million bond issue]. The JJC was partially bond-financed using most of the net proceeds from the 2002 Tobacco Bonds [$92.9 million bond issue], and a portion of the net proceeds from the 2012 Lease Revenue Refunding Bonds; the JJC Central Plant was improved using some 2006 Tobacco Bond net proceeds.
Bond-financed Jail improvements include the following:
Bond issue Project_________________________
2012 Lease Revenue Ref. Bonds Energy saving projects
2006 Tobacco Bonds Courthouse/South Annex Jail garage
North Annex/Main Jail shower floors
Main Jail enrouter and door operators
Main Jail pre-booking waiting area
West Annex Jail
2002 Tobacco Bonds West Annex Jail & Jail Central Plant
State and local agency tax-exempt bonds are governed by federal income tax laws, which include strict limits on the amount of “private business uses” of projects that they finance, measured by gross bond proceeds used. Typically, “private business uses” occur when the bond issuer, here the County, grants a special legal entitlement to “nongovernmental” entities; those entitlements commonly include the right to lease, own, or, in some cases, control or manage tax-exempt bond-financed properties. A “nongovernmental” entity generally is a business, a nonprofit entity, or the federal government.
Generally, not more than 10% of the proceeds of a tax-exempt bond issue may be used for a “private business use” that is related to the County’s governmental operations of the bond financed property. That limitation is reduced to 5% for “private business use” that is unrelated (or “disproportionate”) to the County’s governmental operations. “Private business use” is measured cumulatively and tracked separately for each bond issue. If a “private business use” exists for County property that is financed or refinanced with the proceeds of a number of different bond issues, private business use is measured and counted against each affected bond issue (i.e., the 10% (or the 5%) limitation depending on the type of “private business use”).
The County’s agreements with the USMS create differing amounts of “private business use” related to the County’s operations that affect the 2012 Lease Revenue Refunding Bonds, the 2006 Tobacco Bonds, and the 2002 Tobacco Bonds. The County’s calculations for such uses are based on the actual average and future (about 3.6%) estimated average monthly federal detainee Jail population compared to the total Jail detainee population.
Although the current IGA would allow the JJC to receive federal juvenile detainees, the Probation Department reports that it does not anticipate receiving federal juvenile detainees, and has only received one federal detainee for one day in the last 10 years. Therefore, no such “private business use” by such federal juvenile detainees is measurable for these bonds at this time.
Various agreements between the County and third parties, including the USMS, have resulted, presently result, or are expected to result, in the following approximate, cumulative weighted average percentages of “private business use” for each of these bond issues (as measured over the entire term to final maturity):
2012 Lease Revenue Refunding Bonds: 1.7%
2006 Tobacco Bonds: 1.0%
2002 Tobacco Bonds: 2.5%
Some “private business uses” of the property financed and refinanced with these bonds is unrelated to the County’s governmental operations. Therefore, the lower 5% limitation needs to be used for each of these tax-exempt bond issues.
All of the presently estimated percentages, stated above, are subject to change depending on several variables, such as: future events differ from assumptions such as changes in the federal detainee population; changes in the federal income tax laws or IRS interpretations; County decisions on the use, disposition, refinancing, or early pay off of these bond-financed properties; or any future State or federal agreements with the County, that might include tax-exempt bond financing and impose restrictions on the County relating to some or all County bond-financed properties.
The County has a “post-issuance” compliance policy for County-sponsored tax-exempt bonds. Under that policy, the County Auditor-Controller/Treasurer-Tax Collector or his or her designee is the “bond compliance officer” who monitors the County-sponsored tax-exempt bonds, including “private business uses” of the proceeds of those bonds. The County Auditor-Controller/Treasurer-Tax Collector’s Office prepared the “private business use” calculations, referenced above, in consultation with County Counsel, who in in turn consulted with Hawkins, Delafield & Wood LLP, the County’s bond counsel.
This report was not submitted to the Board at an earlier date because of the time required for the County Auditor-Controller/Treasurer-Tax Collector’s staff to review several historical records and construct complex calculations needed for the foregoing estimated “private business use” amounts.
REFERENCE MATERIAL:
BAI Addendum A, June 15, 2010
CAO ANALYST:
Jeannie Z. Figueroa