DALLAS – An infrastructure crisis that includes an unresolved, unfinished jail construction project represents one of the bigger challenges Wayne County, Michigan must tackle to remain fiscally healthy, county executive Warren Evans said.
In his annual State of the County address Tuesday night, Evans lauded the hard work that led to the county's exit from state oversight five months ago and has resulted in operating surpluses for two consecutive years. This year the county expects a surplus of more than $44 million, bringing a two-year accumulated unassigned surplus to more than $80 million.
Evans cautioned that challenges remain to keep the county, which has its seat in Detroit, on fiscal track. "We're fiscally healthier than we've been in a long time and I'm committed to continuing to make the tough decisions that will make us, and then keep us, financially strong," Evans said.
The partially built Gratiot Jail in downtown Detroit is the most visible example of the infrastructure crisis the county faces, Evans said.
He said the county must also tackle many other facilities that require immediate attention and improvement such as finding a new home for juvenile court, a new building to offer services and conduct county government, and building a campus by 2020 for the County's Circuit Court.
The county halted construction of the Gratiot jail in 2013 after having spent $157 million.
As the county works to resume the project, it provided a design build request for proposal to Walsh Construction on Feb 10. The plan remains for Walsh to complete its response by May to the county's RFP to finish the jail at the Gratiot site. However Evans said he is keeping the county's options open for the jail site after the backers of a Major League Soccer expansion bid proposed a site swap.
The broad strokes of the proposed deal involve a county contribution of $300 million and a transfer of the existing jail parcels, including the Gratiot site, to Dan Gilbert's Rock Ventures. In return, the county would get three new buildings – a jail, a juvenile detention facility and a new criminal courthouse.
Four years ago, Gilbert offered the County $50 million for the partially-built jail on Gratiot and adjacent County land.
Evans said that the Rock Ventures proposal gives the county another viable jail option, "rather than putting all our eggs in one basket."
"Assessing both options does not delay a final solution, so we decided the prudent course was to vet both options," said Evans. "We will soon have, what we believe to be, the best solution for our criminal justice challenges." Evans however said that the county was closer to building on Gratiot than at the new site, and that Rock Ventures has a lot of work to do to meet the county's timetable.
In either case the county plans to issue bonds to finance the project, said county spokesman James Martinez.
Evans said in his address that bonding is only possible now because of Wayne's fiscal improvements and rating upgrades. Although the county remains in junk territory it has moved closer to investment grade.
"Improving our bond ratings will save millions in future borrowing costs," said Evans. "Two years ago this county would have had difficulty borrowing money to buy a used car. We are now in a position to borrow up to $300 million to solve our jail and facilities problems. "
Moody's Investors Service rates Wayne County Ba1. Fitch Ratings and S&P Global Ratings both rate the county BB-plus.
Another remaining strain is posed by the county's unfunded liabilities. The county reduced its unfunded pension liabilities from $817 million to $636 million. Likewise, the county's other post-employment benefits liabilities, which were reduced from $1.3 billion to $462 million under the recovery plan, still remain unfunded. Evans said the County plan to contribute about $10 million above the required annual payment this year.
"When I took office, however, Wayne County's pension system was only 45% funded," Evans said. "Today it is at 54% and trending upward. I'm not going to even think about getting comfortable until our pensions are more than 80% funded, which is more in line with industry standards."
Evans also said that Wayne, as well other Michigan counties, continues to deal with strained state funding under Michigan's broken system of local government financing. Today, Wayne County operates with about 70 percent of the revenue it had less than a decade ago. "The chronic disinvestment in local units of government throughout the state has made it difficult for many communities to fund a range of basic services," said Evans.
The state formally granted Wayne County's request for release from oversight last October. The county entered the consent agreement in August 2015 as it struggled with growing red ink.
