TO: Board of Supervisors
FROM: Ryan J. Alsop, County Executive Officer
REPORT BY: Becky Craig, Assistant County Executive Officer
SUBJECT: Pay-off Re-Entry Facility Lease with State
RECOMMENDATION
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Adopt a Resolution authorizing the execution of a Termination Agreement and related documents; and provide payment to defease the County’s portion of the State lease for the Re-Entry Facility. (Fiscal Impact: $16 million; Capital Improvement Projects Fund; Budgeted; Discretionary)
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BACKGROUND
The County authorized agreements with the Board of State Community Corrections (“BSCC”) in 2013 to provide a portion of construction funding for the Re-Entry Facility. The State Public Works Board (“SPWB”) issued leasehold revenue bonds in 2020 and 2023 reimbursing the County $13,474,000 of the total $17 million project cost. Per the enacting legislation, SB 1022, the facility is restricted to operate as a level four detention facility. With COVID and wildfires, the County was granted temporary waivers to use the facility for alternate purposes and subsequently for winter shelter. Once the County was prepared to occupy the facility in 2022, the population of 10-15 eligible inmates didn’t warrant the expense of operating a 72-bed facility. The State has granted a temporary waiver since September 2023 for the County to use the facility as an Intensive Navigation Center operated by the Probation Department.
The Board of Supervisors directed staff to initiate discussion with BSCC and SPWB to permanently repurpose the facility; however, the State cannot authorize an alternate use because the issued leasehold revenue bonds include covenants restricting the facility’s use. Pay-off (or “defeasance”) of the County’s portion of the bonds and termination of the lease are an option to affect the County’s interest. The State Department of Finance (“DOF”) used consultants to prepare the necessary pay-off documents and recommended our request to SPWB on August 9, 2024. The SPWB voted 5-0 in the affirmative.
The DOF provided a preliminary pay-off estimate totaling $15-$17 million to prepare the recommended budget. The amount covers principal, interest, and fees to reverse the lease. Upon closure of the transaction, the facility will have no restrictions and may be used for any County-directed purpose. Staff recommends the County permanently locate Probation programming to the site due to its proximity to the Replacement Jail. This outcome was anticipated when the Facilities Master Plan was prepared last year, and Probation’s space needs were excluded from the final recommendation. Next steps will include hiring an architect to design tenant improvements and bid documents. A preliminary project budget is estimated at $5 million.
Requested Actions:
1. Receive presentation
2. Adopt Resolution
Procedural Requirements:
1. Staff report
2. Public comment
4. Motion, second, discuss, and vote
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
Yes |
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Where is it budgeted? |
Capital Improvement Project 25005 |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Repurpose facility from Detention to Navigation and Rehabilitation |
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Is the general fund affected? |
No |
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Future fiscal impact: |
Tenant Improvements will be needed for Probation’s relocation and operations. A separate project will be presented. |
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Consequences if not approved: |
Another location will be leased or constructed for the Probation Department. |
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Additional Information |
Click or tap here to enter text. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.