Federal aid could provide up to $10 million for Sullivan’s jail project | Business

BLOUNTVILLE — Information released last week by the state could mean good news for landlords in Sullivan County regarding how the county will pay for a $13 million shortfall in building new jails.

Ultimately, it will be up to the Sullivan County commissioners to decide where to find that money, including whether to borrow the $13 million and raise the county’s property tax rate to pay off the debt.

However, county officials learned last week that $10 million in federal funds can be applied to reduce that shortfall to $3 million.

Sullivan County is set to receive $30 million in federal funding from the American Rescue Plan Act of 2021 (ARPA). He received half the money in 2021 and will receive the other half this year. Most, but not all, of the money is to be used for projects related in some way to COVID-19.

Local governments across the state and nation know that a certain amount of federal ARPA money will be considered “lost revenue” and could be used for non-COVID related needs.

On January 11, Tennessee Comptroller of the Treasury Jason E. Mumpower issued a memorandum to county mayors and chief financial officers and city mayors and chief financial officers throughout the state.

The subject: The federal government’s final rule for guidance on how ARPA money can be used.

Note: how much a local government can expect to consider “loss of revenue” money.

“One of the most impactful changes in the final rule is in the revenue loss category,” Mumpower wrote in part. “These guidelines provide that any government may elect to take a ‘Standard Benefit’ for revenue loss of up to $10 million, allowing governments to choose between the standard benefit or complete the full revenue loss calculation contained in the instructions. The significance of this change is that the loss of earnings category can be used for any “government service”. This is much less restrictive than some of the other allowed categories.

Sullivan County officials had estimated that the county could only use $6 million in the “loss of revenue” category.

The Sullivan County Finance Committee reviewed applications from county departments and local organizations for ARPA funds. The application process is considered complete. When the committee met last week, the demands totaled $81 million.

Most of that amount, however, is for utility projects — and since the start of the ARPA process, the federal government has announced that more money will come specifically for infrastructure projects.

If you remove all utility projects, Sullivan County’s ARPA funding requests total approximately $22.34 million. More than $2.5 million of that amount is for three requested projects that, if funded, must be paid for with lost revenue because they are unrelated to COVID.

These three demands are: $1 million for a new firing range for the Sullivan County Sheriff’s Office; $1 million for additional paving projects by the Sullivan County Highway Department; and nearly $521,000 to the Misty Waters Homeowner’s Association to help with home improvements, including plumbing and paving.

County Chief Financial Officer Larry Bailey urged finance committee members to consider using as much of the $10 million as possible to pay for the $13 million needed to finish paying for the jail project.

Spending the money is a multi-step process. If a local government spends money in a way that the federal government later declares to be outside the guidelines, that government will have to refund the money to the US Treasury.

The US Treasury has an online portal that the county and other governments will use to submit proposed projects for ARPA funding. Mumpower’s office had made available a state portal for local governments in Tennessee to submit their proposals first for initial review. This state portal is not yet open, but should be available soon.

Members of the Bailey and finance committee said any request to go ahead would first go to the state. If the state gives it a thumbs up, the Sullivan County Commission will be asked to vote on whether to include it in what will ultimately be submitted to the US Treasury for approval.

In 2020, the commission approved the issuance of $80 million in bond debt to cover the estimated cost of the new prison space. A bounty rebate from the bond company resulted in the county receiving $83 million.

Of those funds, the county has invested nearly $5.16 million in the project so far, leaving $77.84 million available on the initial bond issue.

When the bids opened last month, the lowest bid, from JA Street, was $88,401,000. Additional architectural and construction oversight, inspections, testing, furnishings and other costs bring the total needed to complete the project to $91.3 million, or $13.46 million more than the remaining $77.84 million from the original bond issue.

At a meeting called late last month, the commission narrowly approved the project’s continuation.

The contract between JA Street and Sullivan County for the jail project was signed on Friday.

The vote was 16 yes, four no, three absent and one abstention.

Those who voted “no” were: Joyce Crosswhite, Herschel Glover, Alisha Starnes and Doug Woods. Todd Broughton, who argued during the discussion to delay the entire project until building material prices drop, abstained. Judy Blalock, Colette George and Mark Hutton were absent.