Consultant says new jail fundable under multiple scenarios but near‑term cash gap likely

A consultant advising Owen County presented updated financing scenarios for a proposed new jail, telling county leaders that both a 104‑bed and a 112‑bed facility appear fundable under current income‑tax projections but that timing and legislative risks mean the county must plan for near‑term cash gaps.

Jeff, the county’s financial advisor, said the state’s legislative changes have pushed implementation of the new local income tax back so that meaningful cash flow to the county will begin in 2029. He told the council that audited state receipts for 2024 rose about 4.3% versus 2023 and that the county’s income‑tax base is growing — a factor that improves projections but does not eliminate short‑term timing problems.

The most immediate numbers presented: Jeff estimated annual debt service of about $2.52 million for a 104‑bed option and roughly $2.65 million for a 112‑bed option. He said the county’s current correctional‑facility income tax generates about $1.1 million a year and that under the revised distribution formula the county could expect an additional yield that, when combined with other revenues and reserves, may cover the projected debt service.

Jeff also described statutory flexibility: the county currently levies a 2.5% income tax but the statutes as written would allow up to 2.9%, and there is a newly available 0.4% countywide allocation for fire and EMS that could be tapped to help operations. He cautioned that the legislature may alter formulas again in future sessions, which would change net revenue available to the county.

County officials pressed Jeff about near‑term cash flow — bond payments would begin in 2027 and 2028 before the increased income tax receipts begin in 2029. Jeff said the county could use about $4 million held in correctional‑facility reserves to buy down the bond size and could also consider proceeds from sale of the existing jail property to cover shortfalls; he stressed bond counsel typically accepts cash‑flow models showing reasonable expectation of income‑tax coverage while preserving property tax as a backstop for bondholders if income is insufficient in future years.

The consultant gave council members two gross project figures he had seen in underwriting: roughly $37.4 million for the smaller (104‑bed) scheme and about $38.5 million for the larger (112‑bed) plan. He said the building corporation approach — commonly used where projects exceed general‑obligation limits — would hold title during indebtedness and lease the facility back, a standard mechanism to access revenue streams beyond GO‑bond caps.

The county asked about appraisals and related studies; staff said courthouse valuations and other assessments are expected to be completed by the July committee deadline. Jeff said he would return next month with follow‑up and that, on balance, he would recommend proceeding when the county decides which capacity (104 or 112 beds) it wants to finance.

What happens next: officials left the discussion with action items to review the underwriting assumptions, finalize appraisals and environmental studies for the proposed site, and continue the jail‑committee work before final bonding decisions. No formal bond sale or ordinance was adopted at the meeting.