Continuing its borrowing spree, Benton County announced Friday, Aug. 5 it would take out an $8 million loan for a new District Attorney’s Office as part of its $50 million new courthouse.
Both items are part of the proposed justice complex planned for North Corvallis near HP Inc. And both items will no longer be part of a bond measure eyed for the March 2023 primary ballot that would pay for the massive project.
Called the Community Safety and Justice Campus, it envisions a new correctional facility, sheriff’s office (with parole and probation office) and emergency operations center, along with the courthouse and D.A.s Office.
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The vote to place the D.A.'s Office in the new courthouse was unanimous. The money the county will borrow to build the combo courthouse-D.A.'s Office doubles the county's current debt load.
At the meeting, District Attorney John Haroldson said he appreciated the board's vision "to promote a criminal justice infrastructure that can serve our community into the future.”
The various funding elements
The new courthouse was recently dropped from a possible spring 2023 bond measure of up to $100 million for what the county calls the Justice System Improvement Program. Previously promoted as part of the program, the new courthouse will instead be funded through borrowing and a 50% state matching grant.
The matching funds do not include the costs associated with new facilities for the DA’s office, according to a news release, which states the courthouse design process will begin in fall with an opening scheduled for 2025. Benton County Public Works is managing the project.
In all, the county will borrow $33 million for the courthouse and D.A.’s Office. The overall project is now calculated to cost more than $167 million.
The county has secured $7.2 million for the crisis center, $1.3 million for the emergency operations center, and $22 million for the courthouse, according to Chief Financial Officer Rick Crager.
Another $3 million for the courthouse was expected but isn’t yet in hand. Crager hopes the Legislature will approve an adjustment to the state matching grant which fell short of expectations.
Here's how much each justice program component is expected to cost:
- Correction facility, $60 million.
- Courthouse, $50 million.
- Sheriff’s Office, $34 million.
- Emergency Operations Center, $8.1 million
- District Attorney’s office, $8 million
- Crisis center (downtown Corvallis), $7.2 million.
During the special meeting Friday, Nick Kurth noted the literal “seismic challenges” faced by the historic courthouse in downtown Corvallis. Kurth is managing the justice improvement program and he said from a safety standpoint, the sooner courthouse staff can be relocated the better.
Since 1985, there have been 11 assessments on the courthouse, some of which led to alarming findings, but no substantial steps have been taken to reinforce the building, Haroldson said in a previous interview.
How to borrow $33 million
While there are different approaches for the borrowing, Crager said in an interview, the best interest rate is likely through issuing tax-exempt bonds to be paid back with general fund money over 30 years, the same approach used for other county borrowing.
In terms of borrowing capacity, Crager estimates the $33 million will still leave the county’s general fund balance in a “best practices range.” He said interest rates could rise but added bond market rates have come down, and if the trend continues, it could mean even more borrowing capacity.
“I think that’s the level of borrowing we can afford based on what we have outstanding right now,” he said, noting he’s left more of a cushion than would be typical in case of unexpected expenses.
On top of a bond, the county is chasing all available resources — state, federal and existing funds — to revamp its local justice system, Crager said. Also present for the interview, Kurth said the cost estimates could change when the county’s consultant submits final figures to guide bond discussions.
“And then, of course, when you get into design and construction, those numbers can change again,” Kurth said. “These numbers are conservative, but not overly conservative. We’re trying to avoid a situation where we make decisions and find out costs are substantially higher than expected.”
Another potential variable is the cost of the land on which the justice campus would be built. Benton County has offered $5.4 million for the land and may employ eminent domain, a court process that allows governments to take private property for public purposes, if the offer is refused.
While the land acquisition price could climb, Crager said he feels confident in the $5.8 million he has secured for the purchase.
Perhaps the biggest obstacle on the horizon is rising inflation. Kurth said the county’s consultant is using the best cost estimating professional on the West Coast. While the costs might increase, Kurth said it’s also possible they could drop given the conservative stance.
“He came and presented to the executive committee, and we asked him to provide his last 10 jobs, his estimate against the actual costs of the projects,” Kurth said. “He was within 1-2%, so he’s very good at what he does.”
The county also has around $33 million in outstanding long-term debt ($25 million principal, $7 million anticipated interest), according to Crager, who said around $13 million be paid off by 2028, when all the justice improvements should be complete. Another $6.3 million should be retired in 2033, and $13.6 million has a 2045 end date.
The outstanding debt relates to pension obligation bonds, remodeling the Public Works facility and Health Services Department, acquiring and working on the Kalapuya Building, and constructing the Lincoln Health Clinic.
The county is planning for several community engagement opportunities this fall before the board decides the final details of the bond.
Cody Mann covers Benton County and the cities of Corvallis and Philomath. He can be contacted at 541-812-6113 or Cody.Mann@lee.net. Follow him on Twitter via @News_Mann_.