Special Judge Heather Welch heard closing arguments Friday in the Indiana Tax Court case challenging Allen County commissioners’ plan to use the historic Allen County Courthouse as collateral for a construction bond for the new Allen County Jail, the perceived solution to the federal court’s order to remedy unconstitutional conditions at the current downtown facility.

A federal judge found that conditions at the current Allen County Jail in downtown Fort Wayne – including overcrowding and outdated infrastructure – were unconstitutional and ordered the Allen County government to address the problems.

Allen County Commissioners subsequently decided that building a new $300 million facility was the best long-term solution to these unconstitutional conditions.

This plan required the Allen County Council to raise local income taxes to finance construction. The construction costs also required a guarantee from the construction company, which the county could only obtain with developed land as collateral. The commission decided to use the historic Allen County Courthouse as collateral.

The Indiana Department of Local Government Finance has approved the plan, and the county council has also given its approval, apparently putting construction on the fast track.

However, the Allen County Residents Against the Jail sued the Allen County Commissioners, the Building Corporation and the Indiana Department of Local Government Finance to prevent them from using the Allen County Courthouse as collateral and leasing it back to the county.

During oral arguments Friday, the group’s attorney, James Fenton, argued that the central issue in the case is whether the county government can collect income taxes while leasing the courthouse. He argued they can only collect new property taxes, not local income taxes like the one Allen County Council passed last year.

Commission attorney Mark Crandley said the crux of the case is the authority given to commissioners to lease. He said they need a petition with 50 or more taxpayer signatures and a government resolution deeming the lease necessary. Crandley said the county has 90 such signatures and the Allen County Council has passed a resolution affirming the need for the lease plan.

There was also controversy over how the taxes were decided. Fenton said his clients could have voted for a referendum on the new taxes. Cranley said: “If you are doing a project that is the result of a court decision, you don’t need a referendum.”

The activist group claimed that the leasing plan would cause them harm.

Crandley said the leasing plan was an attempt to save money and avoid collecting higher taxes, which is why he questioned the legality of the damages claim.

This lawsuit has delayed the start of construction on the new Allen County Jail by months.

Judge Welch said she intends to rule on the case by September 9 or some other time in September.