Prosecutor O’Malley calls on Cuyahoga County to investigate billion dollar debt as it prepares to fund $ 500 million jail

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CLEVELAND, Ohio – Cuyahoga County District Attorney Michael O’Malley is calling for an independent review of the county’s finances to determine if he can afford a new jail – a project expected to be among the costliest in the history of the county at an estimated price of $ 500 million.

O’Malley, who is a member of the steering committee that has met for two years to develop the first prison plans, wants County Council and County Executive Armond Budish to take a deep dive into the current indebtedness , the potential funding for the prison and whether construction is expected to be delayed until 2027, when about half of the county’s existing debt will be paid off.

O’Malley said his concerns stemmed from a recent Plain Dealer / cleveland.com article detailing the county’s $ 1.26 billion unpaid debt – a figure that forced the county to repay an average of $ 105 million per year, or about a fifth. annual expenses of the general fund.

“I hope this article has got those whose job it is to keep the county fiscal health going – I hope it gets them to dig deeper into this issue, to make sure we’re on a solid footing when we go from the front with a prison, ”O’Malley said.

County executive Armond Budish has not said how the county could pay for a jail, and the county council, at least publicly, has yet to ask for answers.

During a two-hour committee hearing this week in which Council got a first look at prison plans, no member asked for details on funding.

And yet, with few publicly available funding details, the county council is set to approve an $ 8 million contract with engineering firm HOK on Tuesday to begin drawing up plans.

So where is the fundraising plan, and what exactly are O’Malley’s budget concerns? Here are some answers.

O’Malley says …

O’Malley said the county could still make preliminary plans for a jail. But he said the council and the executive, over the next year, should deepen the county’s existing debt and its ability to pay for such a project.

“I’m not saying stop this process,” O’Malley said. “I’m saying that as we move forward, the people responsible for finance need to make sure they are fully informed about what this means for our county government and the services we provide.”

He said part of the financial analysis should take into account the county’s long-term ability to pay for its “core functions,” such as child and family services, inmate care and repair of roads and bridges.

“It seems like a lot of the focus isn’t on these main tasks,” O’Malley said. “The focus lately has been on things like hotels, convention centers, baseball stadiums and arenas. For me, you take care of the main functions first, and if you have [money] left to take care of the side stuff, so great.

Indeed, much of the current debt comes from the county-funded convention and world centers, the downtown Hilton hotel, and the 2017 renovation of the basketball arena. (The Progressive Field Indian Lease is in effect in 2023, so it’s likely the county will soon consider public funding for this facility as well.)

O’Malley wants the review to be independent because Budish’s stance on debt appears to have changed over the years. Budish, in 2015, said the county had little capacity to incur new debt for a decade or more, mainly due to decisions made by former executive Ed FitzGerald and county commissioners, who issued debts for projects like the convention and world centers. .

Yet now Budish says the county can borrow $ 1 billion or more.

” What is the truth ? O’Malley said. “I think we need to bring in someone who can give us a real measure.”

Budish says …

To this day, Budish said the county was able to fund a new prison and would not raise taxes to have it built. He also said a fundraising plan would be made public before the ground was opened.

But the Budish administration did not respond to many questions this week posed by cleveland.com about the county’s plan to pay a jail, including whether it would consider an independent review of the county’s finances.

Instead, a county spokeswoman reiterated that the 12-member steering committee – made up of county and city officials involved in the justice system – had already decided that a new prison needed to be built because the current is ‘inadequate’.

She also issued the following statement:

“The county administration is working on a financing plan with its staff and financial advisor. While a plan has yet to be finalized, it is clear the county has both the capacity and the capacity to fund a new prison. When it is finished, we will discuss it publicly… The administration will work closely with the board to finalize the financing plan, and the board will ultimately make the final decision.

The actual costs of a new prison “will depend in part on the work of the architect” that the county council will consider hiring at its meeting on Tuesday, the spokesperson said.

Council says …

Board Chairman Pernel Jones Jr. acknowledged that the Board did not question the fundraising plan during the committee hearing this week. But, Jones said, there’s no doubt the county needs a new jail, so the county will find a way to pay for it.

“We have to find a suitable, acceptable and financially feasible way,” Jones said. “There are definite problems in the prison that need to be resolved. No matter how big the challenge, we must rise to the occasion and rise to it. “

City Councilor Jack Schron likened the finance issue to the proverbial “chicken and egg”. It would certainly seem important to define a financing plan before spending millions on an architect. But hiring HOK to start designing the jail will help the county come up with a final price – which is needed to sort out the funding, Schron said.

Public Safety Chairman Michael Gallagher and Finance Committee Chairman Dale Miller made the same point.

Miller said he would have preferred to have a plan in place before going ahead with an architect. And if the project was optional, he would have insisted on those details from the start. But a new prison is a necessity, he said.

“Yeah, I don’t like it, but… sometimes it’s better to start and move certain things forward so that the completion date doesn’t drag on and on into the future,” Miller said. “If we wait until the financing plan is fully in place before we start, it will only delay the project and cost more.

Public Security President Michael Gallagher believes that a fundraising plan should have been drawn up a long time ago. Gallagher said he privately pushed Budish to implement such a plan for more than two years. But Gallagher said the county needed a new jail as soon as possible, and the absence a financing plan, while not ideal, should not delay the hiring of an architect.

“It’s not like we have the time. We don’t. We are under fire, ”said Gallagher. “I anticipate the [Budish] the administration feels the same, and they will have a plan for us after the rush. Then we can make sure it makes sense.

Gallagher and Miller also noted that the council has long been watching the county’s finances with a new jail in mind. As an example, they referred to a 40-minute finance committee hearing in February on the county’s debt and the ability to pay for a new jail (or other large and impending expenses, like a renovation of Progressive Field. )

As for hiring an outside consultant to look at the county’s finances, Miller said the county already has one: Bob Franz, of Stifel. Franz, in the February hearing, said the county could legally accumulate at least $ 1 billion in additional debt, but it would still have to figure out how to pay off that debt.

Lawyer Jeff Appelbaum, the county’s point of contact on the project, recently told cleveland.com that a financing plan must be in place by the time the county is ready to finalize a “guaranteed maximum price” with a builder. . If the schedule goes as planned, it would be about a year away.



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