00                           SENATE BILL NO. 2012                                                                         
01 "An Act expressing legislative intent regarding privately operated correctional facility                                
02 space and services; relating to the development and financing of privately operated                                     
03 correctional facility space and services; authorizing the Department of Corrections to                                  
04 enter into an agreement for the confinement and care of prisoners in privately operated                                 
05 correctional facility space in the City of Whittier; giving notice of and approving the                                 
06 entry into and the issuance of certificates of participation for the upgrade, expansion,                                
07 and replacement of a certain correctional facility in the City of Bethel; giving notice of                              
08 and approving the entry into lease-financing agreements for that project; and providing                                 
09 for an effective date."                                                                                                 
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
11    * Section 1.  The uncodified law of the State of Alaska is amended by adding a new section                         

01 to read:                                                                                                                
02       LEGISLATIVE INTENT.  It is the intent of the legislature in secs. 2 and 3 of this Act                             
03 to secure additional correctional facility space and services through a privately operated                              
04 correctional facility in Alaska.  The legislature expects the Department of Corrections to                              
05 contract with the City of Whittier for privately operated correctional facility space and                               
06 services similar to those currently acquired for medium-security Alaska prisoners in a                                  
07 privately operated prison outside the state.  The legislature anticipates a privately operated                          
08 correctional facility will bring competitive management styles and operations to Alaska.  The                           
09 legislature expects that the initial per diem cost at a privately operated facility (excluding                          
10 costs related to major medical, prescription medication, and transportation of prisoners and                            
11 other services excluded in contracts for Alaska prisoner care and custody in privately operated                         
12 facilities outside the state but including the capital costs for construction of the facility,                          
13 including debt service) will be 18 - 20 percent less than the current average per diem rate for                         
14 all state facilities as reported to the federal government for reimbursement purposes and                               
15 should be approximately $89 to $91 in current dollars.                                                                  
16    * Sec. 2.  The uncodified law of the State of Alaska is amended by adding a new section to                         
17 read:                                                                                                                   
18       AUTHORIZATION TO CONTRACT FOR CORRECTIONAL FACILITY SPACE                                                         
19 AND SERVICES WITH THIRD-PARTY CONTRACTOR OPERATION.  (a)  The                                                           
20 Department of Corrections is authorized to enter into an agreement with the City of Whittier                            
21 for the purpose of acquiring correctional facility space and services for a minimum of 25                               
22 years for persons who are committed to the custody of the commissioner of corrections.                                  
23       (b)  The agreement entered into under this section is predicated on and must provide                              
24 for an agreement between the City of Whittier and one or more private third-party contractors                           
25 under which private, for profit or nonprofit third-party contractors construct and operate the                          
26 facility by providing for custody, care, and discipline services for persons committed to the                           
27 custody of the commissioner of corrections under authority of state law.  In the agreement                              
28 with the City of Whittier, the commissioner of corrections shall require that the city procure                          
29 one or more private third-party operators through a competitive procurement process.  The                               
30 procurement requirements of this subsection are satisfied if the City of Whittier in exercising                         
31 its powers under AS 29.35.010(15) for procurement of land, design, construction, and                                    

01 operation of a facility, follows its municipal ordinances and resolutions and procurement                               
02 procedures.                                                                                                             
03       (c)  The authorization given by (a) of this section is subject to the following                                   
04 conditions:                                                                                                             
05            (1)  the agreement must cover a minimum of 1,000 prison beds, and, subject to                                
06 (2) of this subsection, the payments by the Department of Corrections must be sufficient to                             
07 cover:                                                                                                                  
08                 (A)  a capital component consisting of the cost for the development and                                 
09       constructions of the facility, including all debt service; and                                                    
10                 (B)  an operating component consisting of the operating costs based on                                  
11       per diem operating charges for a minimum of 1,000 prison beds; for a period of five                               
12       years from initial operation of the facility the operating component must include a                               
13       reasonable adjustment for costs not incurred until full occupancy;                                                
14            (2)  the agreement must provide that the obligation of the Department of                                     
15 Corrections to make payments under the agreement is subject to annual appropriations of                                 
16 funds by the legislature;                                                                                               
17            (3)  the agreement must contain terms providing that the commissioner of                                     
18 corrections may direct the City of Whittier, after notice and reasonable opportunity to cure, to                        
19 terminate its contract with a private third-party contractor operating the facility in accordance                       
20 with the provisions of (b) of this section, and to procure a replacement third-party contractor,                        
21 if the commissioner finds that the private third-party contractor has failed to provide or cause                        
22 to be provided the degree of custody, care, and discipline required by terms of the agreement                           
23 and that the private third-party contractor has been given notice and reasonable opportunity to                         
24 cure as provided in the third-party contractor's agreement with the City of Whittier;                                   
25            (4)  the authority of the commissioner of corrections to enter into the                                      
26 agreement is subject to the condition that the contract between the city and the operator                               
27 requires the operator to provide culturally relevant counseling services to incarcerated Alaska                         
28 Natives.                                                                                                                
29       (d)  Nothing in secs. 2 and 3 of this Act  is intended to prevent the City of Whittier                            
30 from issuing bonds as permitted for municipalities under state law, including AS 29.47.390,                             
31 to finance the construction of the facility.  The bonds may be secured by and payable from                              

01 revenues of the facility, including those described in (c) of this section.  Revenues of the                            
02 facility are not revenues of the City of Whittier for purposes of AS 29.47.390.                                         
03    * Sec. 3.  The uncodified law of the State of Alaska is amended by adding a new section to                         
04 read:                                                                                                                   
05       APPLICABILITY.  The provisions of AS 33.30.031(a) do not apply to an agreement                                    
06 for correctional facility space and services in accordance with the provisions of sec. 2 of this                        
07 Act.  This applicability section does not affect the authority of the commissioner of                                   
08 corrections to designate the correctional facility to which a prisoner is assigned.                                     
09    * Sec. 4.  The uncodified law of the State of Alaska is amended by adding a new section to                         
10 read:                                                                                                                   
11       NOTICE OF THE ISSUANCE OF CERTIFICATES OF PARTICIPATION  AND                                                      
12 OTHER FINANCING.  (a)  Subject to annual appropriation, the Department of                                               
13 Administration is authorized to enter into a lease-financing agreement for the project                                  
14 described in (e) of this section.                                                                                       
15       (b)  The state bond committee is authorized to provide for the issuance of certificates                           
16 of participation in one or more series in the aggregate principal amount of $17,895,000, plus                           
17 costs of required reserves and costs of issuance, to pay for the costs of upgrade and expansion                         
18 and other costs of financing the project described in (e) of this section.  The estimated total                         
19 cost of construction, acquisition, and equipping the project is $19,000,000, which shall be                             
20 paid from the proceeds of the certificates of participation issued under this section.  The                             
21 estimated aggregate annual amount of rental obligations under the lease-financing agreements                            
22 is $1,700,000.  The total payments for the full term of the certificates of participation are                           
23 estimated to be $25,500,000.  In this subsection, "cost of construction" includes credit                                
24 enhancement and underwriting expenses, rating agency fees, bond counsel fees, financial                                 
25 advisor fees, printing fees, trustee fees, advertising fees, capitalized interest, interest earnings                    
26 used for lease payments, and other costs of issuance, and costs of required reserves.                                   
27       (c)  The state bond committee may contract for credit enhancement, underwriting,                                  
28 credit ratings, bond counsel, financial advisor, printing, advertising fees, and trustee services                       
29 that the committee considers necessary in financing the project described in (e) of this section.                     
30       (d)  The lease payments owed under a lease-financing agreement executed under this                                
31 section are subject to annual appropriation by the legislature.  The legislature intends that                           

01 money from the general fund will be sufficient to make all lease payments; however, if that                             
02 source of money is insufficient to make the payments, the payments shall be made from any                               
03 other valid source, subject to appropriation.                                                                           
04       (e)  The project that may be financed as provided for in this section and the estimated                           
05 construction and other costs of financing the project, are as follows: expansion of the Yukon-                          
06 Kuskokwim Correctional Center in Bethel by up to 96 new beds at costs not to exceed                                     
07            (1)  $183,300 a bed;                                                                                         
08            (2)  $17,593,700 in capital costs; and                                                                       
09            (3)  $5,682,000 in increased operating expenditures.                                                         
10       (f)  This section constitutes the notice and approval of the project required by                                  
11 AS 36.30.085.                                                                                                           
12    * Sec. 5.  Sections 1 - 3, ch. 32, SLA 2001, are repealed.                                                         
13    * Sec. 6.  The uncodified law of the State of Alaska is amended by adding a new section to                         
14 read:                                                                                                                   
15       OBLIGATION OF COMMISSIONER OF CORRECTIONS.  The commissioner of                                                   
16 corrections shall promptly notify the revisor of statutes that construction has begun on the                            
17 private prison approved in secs. 1 - 3 of this Act.                                                                     
18    * Sec. 7.  Sections 1 - 3, 5, and 6 of this Act take effect July 1, 2002.                                          
19    * Sec. 8.  Section 4 of this Act takes effect the day after the day that the revisor of statutes is                
20 notified by the commissioner of corrections under sec. 6 of this Act.