Philosophy, Costs Complicate Debate on L.A. County Jail Replacement

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LOS ANGELES — Despite widespread agreement that Los Angeles County's main jail is obsolete, there is far less consensus about what to do about it, though any answer is likely to be expensive.

Philosophical debates about whether to build more cells versus creating programs that tackle recidivism and theoretically lessen the need for more beds complicate the decision making.

Despite agreement a new men's central jail is needed in the nation's most populous county, only a narrow 3-2 majority of the county's Board of Supervisors approved plans to move forward with a $1.7 billion replacement facility.

Cost and philosophy were cited by the two supervisors lodging "no" votes on the proposal for a modern replacement facility.

County supervisors also share a fiscal conservatism stemming from a financial crisis the county experienced in the early 1990s.

The cost containment measures enacted in the aftermath of the fiscal problems of the 1990s resulted in an easier path through the recent recession for Los Angeles County than other California municipalities, according to Los Angeles County Supervisor Zev Yaroslavsky, who was first elected to the board in 1994. Rating agencies cited county supervisors' ongoing cost containment efforts in good times and bad when they bumped up the county's general obligation bond ratings in 2013.

For Yaroslavsky, who was one of the 'no' votes on the proposal, cost was a concern.

Calling it the "Cadillac" jail replacement proposal, he said it adds no new jail cells — and might in fact result in fewer.

Yaroslavsky, a Democrat, estimated a $2 billion construction project would need more than $1 billion in long-term bonds, meaning $100 million in additional debt service annually for the county.

Glenn Byers, the county's assistant treasurer and tax collector, said it is too early in the process to discuss specific estimates. The supervisors just approved the option on May 5, and the speed of the approval took the county's finance team by surprise, Byers said.

The supervisors approved a broad plan, and the specific details could change as it moves through the design phase and into pre-construction, Byers said.

"We don't even have a design on which to base cost estimates," Byers said. "It is too early to have a basic ballpark number."

He pointed out that one supervisor estimated the cost at $2 billion, while another said it would cost $1.7 billion.

"The general consensus is that it will not cost $1.7 billion, it will be less," Byers said.

Changes can be made to the design up until concrete is poured which could not only change the price up or down, but also allow for design features that incorporate programs aimed at preventing recidivism, Byers said.

Byers said it could take at least two years before construction could begin.

"It is a multi-year project," Byers said. "The earliest we would need to sell bonds would be 2016-17."

As is customary for massive construction projects, he said, the county would likely issue commercial paper first.

Gov. Jerry Brown's inclusion of $500 million in the state budget for realignment between state prisons and county jails could also help, he said.

"I don't know how much, or if we would qualify for state funding given the state hasn't set requirements on the funding yet," Byers said. "Hopefully, we will qualify for some of that."

Supervisor Gloria Molina voted 'yes' to moving ahead with the new jail plan, because the existing structure is outdated and has resulted in multiple human rights lawsuits, according to Roxanne Marquez, a spokeswoman for Molina's office. Not to mention the many excessive force charges brought against the sheriff's department, she said.

"It was built in the 1950s under very different standards," Marquez said. "There are cell blocks that you have to walk up and down to patrol. Newer ones are designed with a circular format, so no matter where the sheriff's deputy is, he or she can see into any cell."

Safety has been a major issue in the men's central jail and a new facility will address that issue, she said.

Yaroslavsky doesn't dispute that a new men's jail is needed. He merely wants a less expensive alternative and one that embraces programs that combat recidivism, he said.

"The cheaper alternative that kept getting pushed was treatment centers for inmates with mental health issues," Marquez said. "That is something we support, but no matter what scenario we move forward with, in every scenario there our plans for a new men's central jail."

If takes two years to move dirt on plans for a new jail, the proposal could change dramatically, because of coming turnover on the Board of Supervisors.

Both Molina and Yaroslavsky term out in December, so new supervisors will be selected in November's election to replace them.

"There are going to be new dynamics and new personalities," Byers said.

The upside to the county's fiscal conservatism is that it received ratings upgrades from rating agencies in 2013.

Those ratings were affirmed at Aa2, AA and AA-minus from Moody's Investors Service, Standard & Poor's and Fitch Ratings respectively before the county priced its $900 million 2014-15 tax revenue anticipation notes a few weeks ago.

The county also received MIG1, SP-1-plus and F1-plus short-term ratings ahead of the sale.

"The ratings upgrade might have given us five to 10 basis points," Byers said. "I wouldn't know how much we would save on the jail bonds until we got to market."

Credit spreads are really suppressed right now, Byers said.

"In doing the equipment bonds we priced a few weeks ago — it only goes out four years — but in years past, we achieved 30 basis points to MMD. We are only four five basis points over MMD this time."

The Los Angeles County Capital Asset Leasing Corporation lease-revenue bonds priced competitively June 17. The long 2018 maturity yielded 1.05%. Citi won the bid.

"I just think it's a lack of supply and big demand for short-term paper — and investors are looking anywhere for some yields," Byers said.

Because it could be several years before long-term bonds are issued, it is hard to gauge where the market will be then and how much the county will be rewarded for its solid bond ratings, Byers said.

"They approved the concept of a plan," he said. "So now, they will develop a plan. It will be debated, and then the design process will begin."

Construction would follow a few years out from that.

As for Yaroslavsky, he plans to introduce a pilot program in the San Fernando Valley that would divert people who committed crimes related to their mental illness to community programs.

"It is not only less expensive, but there are better outcomes," Yaroslavsky said.

As for the new men's jail, he said if the cost were reduced to $1.3 billion, it could reduce annual debt service by $30 million or $40 million annually.

"We need serious analysis to look at ways we can reduce the scale of the jail, create programs to combat recidivism, which would mean better outcomes."

If his pilot program works it could be scaled up, and if it doesn't it could be scrapped, he said.

"The course we have been on for the past 20 years has not produced good results," Yaroslavsky said. "The definition of insanity is to do the same thing over and over expecting different results."

County supervisors are scheduled to take up the issue again in August.

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