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Failed Wayne County jail still costs $1 million a month

Today the site is still a pile of steel and concrete — fenced and guarded — with construction costs of $151 million

By Eric D. Lawrence
Detroit Free Press

DETROIT — Two years after construction was halted because of ballooning expenses, the failed Wayne County jail project is still costing taxpayers more than $1 million a month.

The county broke ground on what was supposed to be a $300-million state-of-the-art jail in downtown Detroit four years ago. But today the site is still a pile of steel and concrete — fenced and guarded — with construction costs of $151 million.

And the tab for taxpayers only grows, with no end in sight.

The jail project costs Wayne County an average of $1.2 million every month. That’s quite a burden for a county struggling to corral a financial crisis that has prompted speculation about eventual state oversight or bankruptcy, a county that is struggling to correct a $52-million structural deficit and a pension system funded at only 44%.

How close is County Executive Warren Evans’ administration to making a decision on what to do with the jail project?

Not close, according to Lloyd Jackson, a spokesman for Evans.

“Due to the county’s financial state, anything done on the Gratiot jail will just add to the deficit. Once the deficit has been solved, the county can move forward with options on whether to finish the Gratiot site or renovate the three existing jails. As the county makes progress on its recovery plan, it will better be able to solve the jail issue,” Jackson said via e-mail.

The proposed recovery plan unveiled in April envisions $230 million in cuts over four years, including changes to pensions, health care, wages and other benefits, which union leadership calls draconian.

Still, the county has burned through much of the money that was borrowed to build the jail, and it spends $1.2 million each month from its general fund. Officials say $49 million is left from the $200 million in bonds the county issued for the unfinished project at Gratiot and St. Antoine overlooking I-375 in downtown Detroit. It’s a number that appeared to stun Wayne County Commissioner Abdul (Al) Haidous, D-Wayne, this month as commissioners discussed jail costs.

“Wow, we’re running out of the money, and we don’t have the jail,” Haidous said, adding that he needs help understanding what’s going on.

So just where is the money going?

The county spends an average of $54,610 each month on so-called service costs, including security ($10,849), sump pump maintenance ($12,852), and electricity to the site ($4,000).

Part of that total ($15,000) also pays for lease on storage space for 111 precast jail cells that are being stored on private property in River Rouge. The county even pays insurance each month ($4,652) in case work restarts at the Gratiot site, according to the county.

But the major expense is the $1.1 million the county pays each month in interest and principal payments toward the bonds.

There’s also concern that the county could be required to pay back the $3.9-million yearly federal tax subsidy it receives on the annual debt payment because of the type of bonds involved — Recovery Zone General Obligation bonds — if the jail is not built.

Regardless, the county is scheduled to continue payments on those bonds at 6.22% interest until December 2040.

But ending the bleeding is complicated.

Evans has suggested that finishing the jail at the Gratiot site might turn out to be the most cost-effective option, but as his spokesman indicated earlier, that decision will take time.

Earlier options have been sidelined. A proposal to instead create a justice complex at the former Mound Correctional Facility on Detroit’s east side was rejected because it was considered cost-prohibitive. And an offer to sell the Gratiot site — an offer of $20 million from billionaire businessman Dan Gilbert — was considered too low.

How county got here

After years of suggesting the current jail facilities were outdated, decrepit and overcrowded, the Wayne County Commission approved the jail project in late 2010. The board immediately turned control over to the five-member Wayne County Building Authority board, which oversees the county’s property holdings. Ground was broken for the new jail in September 2011 under the leadership of former sheriff and then-County Executive Robert Ficano.

The Building Authority board members, who are not paid, were appointed by Ficano.

But oversight soon began to unravel as one authority member never attended a meeting, according to meeting minutes, and another left the board in December 2011, leaving it to just three members.

On Feb. 9, 2012, Steven Collins, then-assistant corporation counsel for Wayne County, asked the three members to approve a resolution delegating much of their authority to the county’s then-Chief Financial Officer Carla Sledge.

Soon after, scandals enveloped the Ficano administration — unrelated to the jail project — involving alleged fraud, bribes and at least one generous severance payment to a former employee. An FBI probe resulted in the eventual indictment and conviction of some of Ficano’s appointees. Ficano was never charged with a crime.

Meanwhile, questions soon arose as to how much the new jail would end up costing taxpayers as cost overruns began to pile up. And, at the same time, many of the Building Authority’s monthly meetings where construction managers would give updates on the project’s progress were being canceled.

After construction managers said the jail could cost as much as $391 million — $91 million over budget — a 60-day halt in construction was ordered in June 2013, and construction was officially stopped two months later.

An audit ordered by the county concluded, among other things, that project manager AECOM was required to design the project within the initial $220-million guaranteed maximum price. But bids received for work on the project made it apparent that the $220 million would be exceeded. (The remaining $80 million was for furnishings and other costs associated with the jail).

Based on the contract, AECOM was to work with Walbridge, the construction manager of the project, to redesign or scale back elements to bring the cost in under $220 million. Hubbell, Roth & Clark, the firm that conducted the audit, said it did not find evidence that such efforts occurred. It also said $42.3 million in construction expenditures approved by project managers AECOM and Ghafari Associates were not approved by the Building Authority.

An internal audit, performed by former Auditor General Willie Mayo’s staff at the request of Wayne County Prosecutor Kym Worthy has not been released, something county commissioners and others have been challenging. Worthy has said the audit could be considered evidence in any criminal case resulting from the project. A judge ordered that the audit’s findings be kept secret.

In September, Sledge and Collins and former construction manager Anthony Parlovecchio were indicted in Wayne County on charges related to the jail project. All three are awaiting trial.

Forging ahead

Decrepit conditions at the jails have been well-documented.

A crumbling and uncleanable kitchen floor, drain fly larvae and “organic matter” in cramped inmate showers, nonfunctioning elevators and cooling problems in the summer are a few of the issues Wayne County Circuit Judge Timothy Kenny detailed in an opinion in January.

Those kinds of problems festered because preventive maintenance was effectively stopped in anticipation of the new jail opening in 2014 that would feature, among other things, a tunnel that would connect it to the Frank Murphy Hall of Justice.

With the new jail unfinished, county commissioners on Thursday approved up to $333,555 for a study of conditions at the three existing jail facilities and the Frank Murphy Hall of Justice. That expense was promptly met with criticism from union officials.

“What kind of world do we live in where county politicians take money from working people to spend on contractors to do another study on a jail system we already know is broken and sits unfinished in the middle of downtown Detroit,” Al Garrett, president of Michigan American Federation of State, County and Municipal Employees Council 25, said in statement issued to news media. “The county is just throwing more money away on studies where we already know the answers. One plus one will equal two every time. We don’t need to spend $300,000 to tell us the jails need to be upgraded when there is one that sits half built and rotting away in downtown Detroit,” said Garrett.

The study would direct contractor DLZ Michigan of Melvindale to “determine the remaining life of each building component” and set up a preventive maintenance schedule and cost estimates to extend the life of the facilities for five, 10 and 20 years, according to information provided to the commission.

Still looming is the internal audit of the failed jail project.

Officials like Commissioner Raymond Basham, D-Taylor, question how they can be expected to make appropriate decisions about the future of the jail without access to an audit completed in 2013 that has been under wraps because of a criminal investigation.

“There are a million questions and very few answers,” Basham said.