Take the following actions regarding the Adult Rehabilitation Center (ARC) Project: (1) Receive information from the County Executive Officer regarding non-project one-time costs, ongoing operational costs, and potential revenue sources and provide direction to staff; (2)  adopt two resolutions which relate to funding, identification of County officers, authority to act,  and delegation of authority to execute documents (including retroactive) concerning the County’s efforts to construct the ARC; and (3) adopt a resolution which approves updated 30-year estimated operating costs and proposed staffing plan for the ARC.

A plan has been in process to construct a new Adult Rehabilitation Center (ARC) at 2415 Breslauer Way in Redding utilizing SB1022 funding.  The County Executive Officer (CEO) will provide an update on the associated costs. Adopting the proposed resolutions would indicate that the Board supports moving forward with the project.

On November 14, 2014 the State Public Works Board (SPWB) approved and established the County’s SB1022 ARC Project making it eligible for State financing and on June 9, 2015 the Board of Supervisors directed staff to provide preliminary plan submittals for a 64-bed ARC to the Board of State and Community Corrections (BSCC) for approval by the SPWB. The SPWB approved Shasta’s preliminary plans on November 18, 2015. Resolution No. 2013-110 identifies signature authority, appointees, and a land value for the ARC, all of which need to be updated.  The signing authority, including for retroactive documents, now includes the County Executive Officer (CEO); the Project Financial Officer is updated; and the land value is updated to $360,800 for 3.28 acres.  Using only 3.28 acres for the lease-revenue bond “encumbered” area allows County the most flexibility for development around the ARC site without advanced permission required from the State. Resolution No. 2013-112 was submitted to the State with Shasta’s SB1022 application, but due to changes in the Project Delivery and Construction Agreement (PDCA) form and requested signature authority changes, the resolution language needs to be revised.  Two resolutions include duplicate signing authority language as each resolution is for a different State purpose. The PDCA has already been signed by the CEO and State; however, the PDCA Exhibits, such as the Ground Lease, are pending State notification of document finalization. The 30-year estimated staffing and operating costs have been updated to include an additional ten positions (as discussed with the Board of Supervisors in June 2015), the recently approved California Forensic Medical Group agreement (for inmate medical services), and other increased estimates.

The Board of Supervisors may decline to approve or suggest changes to the resolutions. This is an established statewide process with minimum language flexibility. 

County Counsel approved the resolutions as to form. Public Works, Sheriff’s Office, and County Administrative Office staff have been collaborating on the ARC project.  The potential sources of revenue for the non-project one-time and ongoing operating costs were discussed with the Auditor-Controller.  The Auditor-Controller recommends that the Board of Supervisors table the ARC project at this time.  There is no source of discretionary revenue to pay the annual operating costs.  Moving forward would require staff reductions not only in the General Fund departments but also in law enforcement – deputies, prosecutors and public defenders.

The State financing for the $20 million SB 1022 grant is a lease-revenue bond financing program.  Shasta’s Juvenile Rehabilitation Facility was financed in the same manner.  The BSCC will make the bond payments.  If BSCC defaults, the County may step in and make the payments. Alternatively, BSCC may take possession of the ARC facility and “encumbered” area. The County would still own the land.  BSCC would control the ARC for the remaining life of the bonds.  The ARC would eventually revert to the County as-is after the bonds are fully paid/retired.  As an example, Shasta’s Juvenile Rehabilitation Facility has a bond life of approximately eighteen years.  County’s ARC project cash match is $2.5 million ($2 million Property Tax Recovery Teeter Program funds and $500,000 Accumulated Capital Outlay funds pursuant to Board of Supervisors action on October 15, 2013).  County’s commitment is binding and irrevocable upon commencement of State funding and the County is contractually obligated to complete the project even if State funding is curtailed.  The State will reimburse the County for eligible expenses up to $20 million.  State payments will not begin until construction commences (estimated April 2017). County will be contractually required to staff, operate, and maintain the ARC no later than 90 days after project completion, estimated to be June 2018.  In addition to costs included in the ARC construction project budget, one-time costs for the ARC to “open the doors” have been identified and estimated by Sheriff staff and reviewed by the County Administrative Office.  One-time purchases/services such as bedding, inmate clothing, mattresses, forklift, food/laundry transport vehicles, additional staff safety equipment, transition planning, office supplies, custodial supplies, additional food purchase, fuel/fueling diesel generator, kitchen/laundry equipment, moving costs, are currently estimated at $1.1 million.  A current estimate of $2.3 million is for recruiting/hiring/training/equipping staff prior to “Opening Day.”  The estimated net annual operating costs (estimated operating costs minus current Jail food/laundry and Work Release Program costs) for Fiscal Year 2019-20 is $3.9 million. There is not an identified funding source for the aforementioned non-project one-time purchases/services or net annual operating costs. During the earlier portion of the project process, it was anticipated that funding support could come from a combination of Proposition 172 Reserves, General Purpose Public Safety Fund, 2011 AB 109 Realignment (if approved by the Community Corrections Partnership Executive Committee), and/or other funds as identified by staff. However, those resources are remaining flat and may even decrease over the next decade due to state and federal changes.  There is General Fund impact associated with the recommendation as there are costs associated with proceeding with the project.