Sioux City Jail Almost 40% More Expensive Than Voters Agreed To

The new Woodbury County Law Enforcement Center in Sioux City is still being built, but it’s already running into problems.

The biggest one might be the price tag. Ernie Colt, a representative with the North Central States Regional Council of Carpenters (NCSRCC), said it’s already “the most expensive jail in the Midwest.”

That’s because the initial cost estimate has gone up by nearly 40%—most of that in change orders, or changes to the initial estimate’s cost after construction begins.

Woodbury County Supervisor Matthew Ung said that increase was unavoidable: “It’s the cost of doing business during supply disruptions and COVID shutdowns.”

But if costs keep going up through Sept. 14, when it’s due to be completed, Colt said the facility “could be the most expensive jail in the United States, here in Woodbury County.”

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From $50 million to $58 million

In March 2020, Woodbury County voters approved a $50 million bond to build a new jail. The new facility would house 448 people,  and include courtrooms, the sheriff’s office, and the county attorney’s office.

About 57% of voters approved the bond referendum, which normally would not pass the 60% threshold needed.

But the county took advantage of a loophole in state law that allowed it to form an advisory board, the three-person Woodbury County Law Enforcement Center (LEC) Authority, which then needed only a simple majority of “yes” votes to proceed.

Estimated at that time to cost $50.3 million, a fair amount of residents already were expressing concerns with the high cost.

“It’s a jail, not a 5-star resort,” one commenter wrote. “How can it possibly cost this much?”

But even that cost estimate was lower than contractors ended up bidding in June 2021, as prices for construction materials rose significantly.

Two companies ended up bidding on the project at around $8 million more than estimated: Hausmann Construction, out of Norfolk, Nebraska, bid $58 million, while W.A. Klinger Construction of Sioux City (which NCSRCC backed) bid just $600,000 more than Hausmann—a 1% price difference.

However, Iowa law stipulates municipalities must accept the lowest bid or re-bid the project in most instances.

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Ung said they were told by vendors that material prices would likely rise even higher, as would interest rates.

“We were assured … that if we waited even a few weeks, the prices we were quoted were not going to be good, and precast jail cells would go up substantially,” he said. “And it would be a waiting process of a month or two or more to rebid.”

So Woodbury County accepted Hausmann’s bid over the objections of locals worried about an out-of-state contractor. Colt also worried about a contractor that had never built a jail before.

“They should have thrown the bids out and started over,” Colt said. “But they pressed on.”

Before it even began, the new jail’s cost was increased by 16%. And it would get more expensive.

The Woodbury County Jail facility under construction on May 30, 2023. Photo courtesy Ernie Colt.

From $58 million to $68 million

County supervisors approved using $10 million in federal American Rescue Plan Act (ARPA) dollars to cover the excess amount.

ARPA funds were intended to be broad and the US Treasury Department has said building or expanding jails is within ARPA guidelines. Still, there has been pushback from civil rights groups, including in Iowa, who say the funds were intended to invest in communities hit hard by COVID-19. Local residents also protested using ARPA funds.

But Hausmann quickly ran through that amount, too.

The initial $10 million “refers to the standard allowance for government use,” Ung said, noting that meant the county “can simply expense that amount on government services.” The county has also applied for “additional millions” in ARPA funding through various categories where allowed, such as the facility’s HVAC system under a fund meant to mitigate COVID.

Change orders were “just rolling through” county meetings, Colt said. A change order is when a contractor needs more money or time for a project. Sometimes, that’s because materials ended up higher than estimated, or a project needed to be changed.

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But some of the change orders Hausmann asked for wouldn’t have been necessary if the company had been more responsible in bidding, said Felicia Hilton, political director at NCSRCC.

“Although I don’t know all of the circumstances behind the change orders Hausmann asked for, I question if some of them wouldn’t have been necessary if the company had been more responsible in bidding,” she said.

In one example, she pointed to Hausmann’s initial bid to use asphalt for a paving job rather than more durable (and expensive) concrete, and then later use a change order to put concrete in, instead.

“How are these happening? How was this not part of the bid?” Hilton asked.

By May 2022, the jail’s cost was up to $68 million, a 36% increase over its initial estimate.

“It’s like they’ve got a free bankroll to go through, without any of the public having any kind of input on what they’re using the money for,” Colt said. “And it just keeps adding up.”

The Woodbury County Jail facility under construction on May 30, 2023. Photo courtesy Ernie Colt.

Still adding up

By February of this year, the price of the facility had risen by another million, with months to go before its mid-September deadline.

The $50 million jail is now $69 million, Ung said—a nearly 40% increase.

It didn’t have to be this way, Colt and Hilton said. Both were previously working closely with the county on the build, encouraging them to use a vetting questionnaire to weed out unscrupulous contractors while still adhering to Iowa’s “lowest responsible bidder” law.

The 26-question document, which Colt shared with Starting Line, asks questions about whether a contractor has violated any regulations, is currently in compliance with regulations, and is willing to transparently provide information with the city or county it’s doing business with.

“That gave the LEC Authority the ability to actually vet the contractors that bid on the project,” Colt said.

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But they say once they started pushing back, the LEC Authority allegedly told them it was “too detailed” and “not fair” to the general contractor to be subject to oversight, Colt said.

Ung said he could only speak to the financials of the project, as the LEC Authority is responsible for overseeing the work. Multiple messages sent to LEC Authority Chair Ron Wieck were not returned.

The questionnaire is a good starting point, said Hilton. But she noted having someone on staff at the city or county level who has a background in construction is also a good way to avoid unnecessary cost overruns.

Hilton pointed to six entire walls falling down due to high winds and improper bolting as one issue that didn’t have to happen.

The incident report from six walls falling down due to wind and improper bolting in October of 2022, per the Woodbury County LEC Authority meeting packet.

“That’s not a small mistake,” said Hilton. “They completely screwed that up.”

Ung said the fallen walls were covered by insurance and did not require additional funding from the county.

But Colt and Hilton remain frustrated by the way the project has been overseen and the extra money spent.

“You used $15.5 million of ARPA funding on it and you’re continuing to spend. And we’re saying, who’s accountable for that?” said Hilton.

by Amie Rivers
6/06/23

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