The fallout from Gainesville’s purchase of the old Hall County jail in 2012, and the subsequent exodus of the Corrections Corp. of America the following year, has left the city treading water on the debt payments it owes.
Of the $7.2 million purchase price, the city’s debt on the jail currently stands at $6.945 million.
In approving the 2015 fiscal year budget Tuesday night, city officials agreed to spend about $594,000 on this debt. The city’s total debt entering the new fiscal year, which also includes payments owed on the Frances Meadows Aquatic Center and downtown parking deck, is $19.9 million.
“The income from CCA offsets that,” Mayor Danny Dunagan said. “We are not having to take any money out of the taxpayers’ pocket to pay for that note this year and next year.”
CCA’s upfront rent payments will help the city cover annual debt costs on the jail through the 2015 calendar year. But this also means the money cannot be used to fund other city services.
Moreover, City Manager Kip Padgett has said upkeep of the jail costs between $120,000 and $150,000 annually.
Unless another business occupies the jail, the debt could fall on the backs of city taxpayers come 2016, a prospect no one in local government cares to consider.
In an executive summary outlining the budget, Padgett wrote, “With the departure of CCA, the city must replace the revenue stream in order to make debt obligation payments for the property. Afterwards, the city will have to identify other funding sources to cover this gap.”
Councilman George Wangemann was the only council member to vote against the city’s purchase of the jail. He said he would not support tax increases to cover this debt.
“So I have concerns about paying that debt down unless we get another tenant to take over the jail,” Wangemann said. “That’s the goal.”
Padgett told The Times officials have been negotiating since February with two private companies that provide jail services.
He would not elaborate nor specify a timeline for hatching a deal.
“We’ll just have to see,” Dunagan said.