Tuesday, December 21, 2010

Court Leaves $240K In Jail Fees Uncollected - Defers Decision

McLennan County defers decision on mass of fees owed for use of empty downtown jail

Waco - Eyeball to eyeball with a CEC (Civigenics) corporate officer, McLennan County Commissioners blinked - and left $240,000 in uncollected license fees owed for use of the Courthouse Annex jail uncollected today.

The money is owed for the empty jail's use under a contract the corporation re-negotiated and amended in order to take the prisoners housed there in the 326-bed jail next door to the courthouse and transfer them to the new 816-bed facility on Highway 6.

The Court took that tack in order to satisfy the debt service fee for the first year of operation by priming the pump and moving prisoners from a separately contracted facility to the new jail.

They deferred a decision on how to handle future collections after listening to a presentation by Peter Argeropulos, Marlborugh, Massachusetts-based Sr. Vice President of the New Jersey contractor for which they built the 816-bed Jack Harwell Detention Center at a finance cost of $49.9 million in revenue bonds issued without voter approval. Such financing schemes are used for economic development under state law.

So far, Mr. Argeropulos explained, the project has yet to break even, or to generate any revenue because clients of the private service have yet to make payments for prisoners boarded since the facility opened in June.

“We are awaiting $480,000 in receivables on invoices from October,” he told the Court. He assured Commissioners they will be paid within 45 to 60 days. “We are in arrears for October.”

The way the revenue bond financing scheme is structured, he explained, all money collected is first paid to the bond trustee, U.S. Bank and Trust Co., which then satisfies debt service payments to bond holders, and pays lease payments to the County before disbursing any profits to the contractor.

Mr. Ageropulos recommended extending the amendment which allows the compensation to the County for removing the prisoners and placing them in the new Jack Harwell Detention Center for another 6-month period, which will end in April. Payments amount to $40,000 per month.

Many alternative prospects are awaiting approval from other authorities, he explained. The U.S. Bureau of Prisons is awaiting approval to use the Jack Harwell privately operated jail for housing federal prisoners at a fixed rate up to 90 percent of its occupancy, a contractual obligation that requires paying staff a minimum of $14.90 per hour. “We are in the competititve price range for that RFP (request for proposal),” he told the Court.

It's a different story competing for Harris County inmates, he explained, because Louisiana private contractors offer the same service for $23 to $32 per day. The competitive difference is because the state has no commission on jail standards, he said. Though Texas inmates are housed in Louisiana, “Standards do not extend across state lines.”

The contract rate of $45 per day in McLennan County is a fixed cost of doing business, he explained.

A similar interlocal agreement is in place with Dallas County, but in that case, the Sheriff has a cap of 7,500 prisoners which may not be exceeded. That means unless Dallas has in excess of that many to house, there are no Dallas prisoners to board at $45 per day.

California inmates are difficult to obtain because of various requirements, but doing business with that state is a strong possibility because the courts have ordered California corrections officials to limit the number of inmates at 45,000 due to overcrowded conditions. On appeal by the state, the California Supreme Court upheld the decision.

Texas Department of Criminal Justice officials are under “considerable pressure” to reduce the number of prisoners housed in its system.

“It's an unusual situation,” he concluded. “The situation is not what we'd like it to be at this time; we do have some prospects in mind.”

Commissioner Lester Gibson called for compromise, a notion which Joe Mashek slapped down immediately, saying, “I've already compromised.”

He proposed holding the payments for the next 6 months in abeyance and let the payments accumulate. Would Mr. Ageropulos accept that solution?

The answer was no. He added that “We're going to continue to stand committed.” He is looking for a more palatable solution to present to the board of the corporation.

“But you owe us money now,” said Commissioenr Joe Mashek. “You owe us $240,000.

Mr. Gibson tried again, saying “You have to compromise.”

“We've already compromised,” said Mr. Mashek. He wouldn't budge.

“We have a compromise of a compromise, but we also have a dilemma,” Mr. Gibson said.

“It's costing us almost a half million dollars to do that. That's what he's asking us to do,” Mr. Mashek chimed in. “I already did that. It was $60,000 per month. We brought it down to $40,000.

Commissioner Kelly Snell tried his hand. “I want to see from your office what you plan to do if this doesn't work.”

At that point, Mr. Ageropulos waved the contract, saying “Well, we have a contract...We will revert to the original contract.”

Ostensibly, that would involve moving prisoners back to the downtown jail and boarding them there at $45 per day, including a $2 per head license fee.

Bond attorney Herb Bristow, asked for an opinion, recommended the choice of either a 6 month amendment to extend the present arrangement, or outright abatement, or an automatic reinstatement in 90 days if conditions don't ease.

The motion to put the decision off for a week passed unanimously.

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