Jail Deal Still Hung Up on Financing

San Diego City Council members Monday authorized leasing city-owned land on Otay Mesa to the county for construction of a 200-bed misdemeanor detention facility, but the city has yet to settle the nettlesome question of how to pay for the much-needed jail.

The city had hoped to win a low-cost loan or a grant from Gov. George Deukmejian. But, so far, the only offer from Sacramento is an 8% loan that “would cost more than what we can get” elsewhere, said City Manager John Witt. “It just doesn’t make sense to borrow at 8%,” Witt said.

As proposed, the $12-million loan would pay for construction and operating costs of the jail that would house people who have been arrested for, but not yet arraigned on, misdemeanor charges. The lease authorization was needed because the jail, which would be built and operated by Florida-based Wackenhut Corp., eventually would be turned into a county-owned jail.

Mayor Maureen O’Connor, who in early April announced that a state loan would be available, argued Monday that the state should drop its demand for interest payments because “that money belongs to the taxpayers.” Borrowing from the state at an 8% interest rate “makes no sense,” O’Connor said.

But O’Connor’s stance clashes with a decision by State Department of Finance Director Jesse Huff, according to David Takashima, an aide in Assemblyman Steve Peace’s office. Peace (D-Chula Vista) had agreed to carry legislation in Sacramento that would authorize the loan.

That legislation is on hold because Huff maintains that Deukemejian “can’t loan money at zero interest,” Takashima said. “Clearly the governor’s position is that it’s going to be a loan, not a grant, because a grant would be a gift of state money to the city of San Diego,” Takashima said.

Peace and other members of the San Diego delegation in Sacramento are waiting for the city to decide if it will seek a loan at 8% or lower, Takashima said.

Although the possibility of grant or a state loan at an acceptable interest rate seems bleak, the council intends to move ahead with construction of the jail, Witt said. The council will incorporate funding of the jail while deliberating the city budget for the upcoming fiscal year.

The impasse with the state also raises the question of what the city should fund with borrowed money, said Councilman Ron Roberts. While borrowing is appropriate to cover capital costs associated with the new building, Roberts said, he questioned the use of borrowed money for operating costs that should be included in the city budget.

The council Monday authorized the city manager to execute a ground lease with the county for 10 years at $1 a year.