Woodbury County plans to rely on $15.6 million in federal COVID-19 relief to build a $65 million jail complex near Sioux City.
The project has been in the works since 2016, and county voters passed a $50 million dollar bond referendum last year to cover the costs of the new complex. But then the price tag shot up – a result of pandemic-related inflation on building materials.
The supervisors voted unanimously on June 8, 2021, to use federal pandemic relief money on the higher-priced project.
“If that wasn’t coming, I don’t know what we would be doing,” said Woodbury County Supervisor Matthew Ung at a June 1, 2021 meeting.
The American Rescue Plan Act is a $1.9 trillion federal aid package passed in March to provide direct relief to Americans affected by the pandemic and to bolster the U.S. economy. Could a county use grants through that plan to build an 110,000-square-foot regional jail project?
The answer, so far, is maybe, according to state leaders and a national expert IowaWatch interviewed for this story. If the answer is no, taxpayers could be on the hook for the $15.6 million.
Dennis Butler, Woodbury County’s finance director, said he was working with Governor Kim Reynolds’ policy advisor, Joel Anderson, to use the funding. IowaWatch reached out by email to Pat Garrett, Reynolds’ communications director.
“We are helping all counties,” he said in an emailed response, adding, “We are walking local governments through ARP through our own outreach.”
Several counties took to Twitter stating their boards have had no outreach from the governor’s office at all.
Jon Green, newly elected Johnson County supervisor, said the county attorney is doing “most of the heavy lifting,” when it comes to ARPA compliance telling IowaWatch he was “hopeful non-state entities like the National Association of Counties will help.”
Unlike Woodbury County being guided through the process by the governor’s office, Webster County hired a part-time worker to focus solely on ARPA compliance. Supervisor Niki Conrad said, “ARPA is a lot to navigate through and the guidance changes daily.”
Garrett sent IowaWatch a direct message on Twitter noting that any county in Iowathat needs help can reach out to the governor’s office directly at 515-281-5211 and ask to speak with Mr. Anderson or; 515-452-2932.
Guidance is shifting: July 16 deadline to respond
Woodbury tapped ARPA funds because it has lower reserve funds compared to other counties, according to board leaders at the June 8 meeting.
“We have until July 16 to make the case to the federal government,” Butler said in an interview. July 16 is the U.S. Treasury deadline for feedback from local governments and the public.
Iowa is in line to receive over $4 billion of the Biden administration’s ARPA funding programs for states — a bill Reynolds opposed. (Iowa Rep. Randy Feenstra who represents Woodbury County voted against the COVID relief package, as did Rep. Ashley Hinson and Rep. Mariannette Miller-Meeks, all Republicans. Rep. Cindy Axne, a Democrat, was the only member of Iowa’s congressional delegation to vote in favor of the American Rescue Plan.) IowaWatch contacted Feentra’s office and did not receive a response.
The U.S. Treasury issued broad guidance to states, counties and cities for use of ARPA funds. According to experts IowaWatch interviewed, the Treasury will claw back funds if misappropriated in error or by design. The Brookings Institute recently released its review of the Treasury’s guidance on allowable uses of COVID-19 relief funds noting “it came with teeth.” This includes any money that will directly or indirectly offset a reduction in tax revenue.
Reynolds hinted at this possibility speaking at an event in Ames where she signed a major tax cut bill. Part of that bill is phasing out state property tax backfill. She told the Iowa Capital Dispatch,“This is a time when the cities and the counties are receiving a lot of federal funds from the (American Rescue Plan), so they have an opportunity to utilize them as they’re phasing out the backfill.”
“Phasing out the backfill is not a tax cut so not sure how the ARPA provision applies. We also don’t support that ARPA provision,” said Garrett by email.
It is unclear if the Treasury would consider Reynolds ending the backfill a tax cut. Some counties may be confused by her comment if they can use their direct funds for phasing out the backfill or not, a tax expert said.
Iowa Attorney General Tom Miller filed a lawsuit challenging ARPA tax cut restrictions at the request of Reynolds as required by state law.
IowaWatch contacted Lynn Hicks, chief of staff for the attorney general, for comment. Hicks did not return the call by press time.
Butler told IowaWatch if the county can’t use ARPA funds, the backup plan would be to tap into leftover funds from the Coronavirus Aid, Relief, and Economic Security Act (CARES), a separate $2.2 trillion relief package passed in March 2020. Butler said he is working with Reynolds’ staff to identify funding from the state that could be used as an alternative as well.
Oklahoma tries to use relief money, returns it
Using federal COVID relief funding has run into trouble in other states. Oklahoma transferred $40 million from CARES relief funds to one troubled jail in Oklahoma County. After public outcry and legal concerns the funds transfer could violate Treasury regulations, the jail oversight board returned over half the $40 million keeping $15 million. Alabama is currently debating whether or not the state can use ARPA funds to rebuild state prisons.
Late last year Reynolds announced she had to return $21 million in CARES funds Iowa was using to pay for a human resources computer system after it was determined the expenditure wasn’t allowed under Treasury guidance. The Legislature acted to cover the cost.
U.S. Treasury guidelines for ARPA differ from those of the CARES Act but if a government or private entity misspends the money they will have to repay it.
In March 2021, the Sioux City Journal reported construction costs were predicted to be increasing around $7 million or $8 million. However, Supervisor Keith Radig told the Journal an unnamed Iowa state representative told him Woodbury County could receive up to $20 million in federal COVID relief funds.
Two months later Woodbury County received $10 million. Coronavirus relief funds are delivered from the federal government in two tranches, the first was in May 2021 and the second would come approximately 12 months later. The additional $5 million approved by the board to be used is borrowing from funds not yet received.
By contrast three Siouxland area health centers that provide direct services to the community received $9 million in COVID funds. That includes infrastructure upgrades to increase the capacity of the county public health department. Funds from Siouxland District Health were moved to the general fund earlier this year by the board to meet Iowa’s March 15 budget filing deadline.
While ARPA money recipients have broad latitude as to how they use the federal funds, there are guardrails. According to interim rules from the U.S. Treasury ARPA funds should be used to support public health expenditures, address negative economic harms to workers, households, small businesses and the public sector, provide premium pay to essential workers, and replace lost public sector revenue – but all with the caveat losses must be a result of the COVID public health emergency.
The final category is for a county to invest in public works projects to improve access to drinking water, improve waste and stormwater infrastructure, and expand access to broadband while creating infrastructure-related jobs within the community.
The new jail contracts have gone to out-of-state companies. Butler told IowaWatch the project will create local jobs with 80 percent of subcontractors from the area. The board released a partial list June 18.
Union leader questions timing
This is an issue for the county’s unions, which were instrumental in getting the initial $50 million referendum passed.
“Obviously from the very beginning of the jail project we have been super supportive and still are,” said Felicia Hilton, political director of the North Central States Regional Council of Carpenters. “We worked to educate our members to speak in favor of and champion the need for the facility and for the local jobs it would bring.”
“The supervisors should be good stewards of the taxpayer’s money making sure jobs are local,” Hilton said. They will be reviewing the subcontractor list released last week she said, “to make sure they have verified payrolls union or non-union.”
Hilton said the trades are sympathetic to the supervisors because they understand material costs have jumped since COVID-19. But they question the timing. Earlier this month at a public meeting they asked the supervisors to hold off and rebid the project as prices start to ease.
“If the project will require two-thirds of the ARPA money allotted to the county,” she said, “it might not be the right time to build it.”
Hilton said she expects this to become a national issue for all the building trade unions. The outlay of ARPA funds directly to counties and cities could be a boon to local job markets. While current guidance strongly recommends hiring locally to keep money in the community, there is no mandate.
Old jail built in 1980s
Woodbury County plans to replace a jail built in 1987 for 90 inmates and that now has big mechanical issues, county records say. Two additions kept it working. The Board of Supervisors asked city and county law enforcement agencies – known as the Law Enforcement Authority (LEA) to develop a plan and budget for a new prison complex that would also serve as home base to their officers.
The LEA enlisted the help of Goldberg Group Architects from St. Joseph, Missouri – a firm specializing in large-scale detention center and jail consolidations around the country. The result, according to county records, was a proposal for a $50 million, 110,000-square-foot complex that would almost double jail capacity from 225 to 480 inmates, house four courtrooms and an office for the county attorney.
“The COVID money is not designed to replace an old jail,” said Supervisor Rocky DeWitt during a heated public meeting.
The board went ahead with supervisors saying they felt they didn’t have much choice.
DeWitt reasoned COVID funding to the new jail complex would benefit the federal government saying the Woodbury County Law Enforcement Center “would probably have the most people [federal inmates]” acting as a de facto regional detention facility for the Federal Bureau of Prisons and ICE.
Butler said the county is working on a contract to take on more federal prisoners as a revenue generator.
“One hundred to 150 beds could be used for federal inmates,” Butler said, which could bring in several million dollars a year to offset the bond-related tax increase.
Per Butler, the county could be paid around $75 per day per inmate by the federal government to house prisoners and contracting to hold Immigration and Customs Enforcement prisoners pays even more. But, he noted, the county hasn’t made a decision whether to work with ICE or not.
No matter if the COVID funds are used or not, new taxes were part of the $50 million bond. A county analysis projects a $21 to $36 increase per year depending on residential property valuation with the rate declining over time. Farmers will see a 34- to 59-cent per acre increase.
The first reporting deadline is August 31, 2021, when counties must detail expenditures from the time ARPA dollars were received through July 31, 2021.
The plan to use ARPA funds is a gamble, supervisors, union leaders and citizens said at public meetings.
“It is baffling to me that we are even considering using COVID relief funds for this,” said Gene Boykin, a real estate investor from Sioux City, at the June 8 meeting.
Andy Kopsa is a freelance writer and native Iowan who occasionally reports and writes for IowaWatch.