Legislature(1995 - 1996)

02/20/1996 01:36 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HOUSE BILL NO. 428                                                           
       "An Act giving notice of and approving a lease-purchase                 
       agreement   for  construction   and   operation  of   a                 
       correctional facility  in the Third  Judicial District,                 
       and   setting   conditions  and   limitations   on  the                 
       facility's construction and operation."                                 
  Co-Chair Hanley noted  that HB  428 would be  assigned to  a                 
  Representative  Mulder  observed  that   the  Department  of                 
  Corrections'  budget has  grown  by over  600  percent.   He                 
  stressed that the intent of HB 428 is to come to  grips with                 
  the spiraling cost of corrections.  He noted that HB 428 was                 
  influenced  by  hearings  held  during   the  interim.    He                 
  explained that the legislation allows, but does not mandate,                 
  the Department  of Corrections  to contract  with a  private                 
  contractor  to  construct  and operate  up  to  a  1,000 bed                 
  facility.   The total  cost would  be up  to $100.0  million                 
  dollars.   He  observed that  private  contractors projected                 
  that a 1,000 bed facility could  be built for $60.0 to $75.0                 
  million dollars.   He maintained  that savings derived  from                 
  the  private  sector stem  from  the fact  that  the private                 
  sector  does  not have  to contend  with  all the  rules and                 
  inefficiencies of the public system.                                         
  Representative   Mulder   addressed   misconceptions.     He                 
  clarified   that  the  legislation   does  not  require  the                 
  construction  of  1,000 beds.    The legislation  allows the                 
  commissioner to authorize construction of  up to 1,000 beds.                 
  He noted  that $100.0  million dollars  is the  upward limit                 
  that  can be  spent.   He  added that  the safety  record of                 
  privately operated facilities is roughly comparable to state                 
  operated facilities.  He  asserted that the new prison  will                 
  relieve overcrowding.   He observed  that the State  is over                 
  capacity by 100 -250 prisoners  per day.  He noted that  the                 
  State  is  being   fined  $300  hundred  dollars   for  each                 
  institution each day that the facility is over capacity.  He                 
  maintained that the legislation will allow the new prison to                 
  take pretrial prisoners.                                                     
  Representative  Mulder  acknowledged that  the  new facility                 
  will have  associated operating costs.  He observed that the                 
  State currently spends $6.0 million  dollars in the state of                 
  Arizona to house  Alaskan prisoners.   He stressed that  the                 
  bill will not take jobs away  from Alaskans.  The bill calls                 
  for  a project labor  agreement for the  construction of the                 
  facility that will maximize Alaskan hire and employment.  He                 
  emphasized that  Alaskan  Native  corporations  and  Alaskan                 
  private   businesses   have   expressed  interest   in   the                 
  legislation.    He  maintained that  HB  428  represents new                 
  economic opportunities for Alaskan businesses.   He observed                 
  that corrections is a growth industry.   He pointed out that                 
  as long as  the State  continues to pass  get-tough-on-crime                 
  legislation   the   State   will   be   incarcerating   more                 
  individuals.  He noted  that the State is projected  to need                 
  962 new beds by the year 2002.                                               
  Representative Mulder noted that the  facility will be built                 
  some where in the  Third Judicial District.  He  stated that                 
  the facility will not be built at the location of the Alaska                 
  Village in Anchorage.                                                        
  Representative Mulder summarized  that HB  428 represents  a                 
  win/win  situation.    He maintained  that  HB  428 relieves                 
  overcrowding, brings  prisoners  back to  Alaska, saves  the                 
  State money, and provides jobs for Alaskans.                                 
  Representative  Brown  stated that  she  shares many  of the                 
  goals expressed by  the Subcommittee Chairman.   In response                 
  to a question by Representative Brown, Representative Mulder                 
  emphasized that he has  no personal tie to  the legislation.                 
  He  noted  that  several  Native  corporations  and  private                 
  businesses have expressed  interest in the legislation.   He                 
  could not provide  details of plans  by the private  sector.                 
  He stated that no  particular site has been identified.   He                 
  observed concerns by the Mayor of Anchorage.  He pointed out                 
  that  arrests in  Anchorage  have  more  than doubled.    He                 
  emphasized that the Commissioner has latitude in selecting a                 
  Representative Brown expressed concern with the overall cost                 
  of the legislation.   She questioned if  operating costs and                 
  land purchase  are included  in the  total construction  and                 
  related  costs  as  contained  on  page  3,  line  9.    She                 
  emphasized  the   need  to   compare  "apples   to  apples."                 
  Representative  Mulder noted  that the Subcommittee  has not                 
  received a plan by the Administration.                                       
  Representative Mulder  noted  that the  Commissioner of  the                 
  Department  of Corrections  recommends the  deletion of  the                 
  requirement that contract facilities abide by court  orders.                 
  The restriction  on housing male maximum  security prisoners                 
  will be removed  at the  request of the  Commissioner.   The                 
  Department  felt  that this  provision  was confusing.   The                 
  removal of this  provision will  allow the Commissioner  the                 
  full range of options  for housing inmates at  the facility.                 
  In addition,  the facility  accreditation provision  will be                 
  removed at the request  of the Commissioner.  He  noted that                 
  design cost will  be included in  the cost of  construction.                 
  Operating costs will not be included.                                        
  Representative Mulder reiterated his belief that the private                 
  sector can built  the facility cheaper  than the State.   He                 
  observed that the Department of Corrections estimated that a                 
  400 bed facility would cost $104.0 million dollars.  Private                 
  contractors have indicated that the  facility could be build                 
  for approximately $65.0  million dollars.  He  observed that                 
  operating costs will be part of the private bid process.  If                 
  the Department feels it can operate  the facility at a lower                 
  cost the  Commissioner does not need to  accept the bid.  He                 
  observed that it  would be prudent  to construct the RFP  to                 
  state that  if none  of the  bids meet  the requirements  in                 
  terms of cost savings no bid will be accepted.                               
  In  response  to   a  question   by  Representative   Brown,                 
  Representative Mulder reiterated  that maximum security male                 
  prisoners are being excluded to  allow the Commissioner more                 
  flexibility.   He  noted that  Spring Creek  is the  State's                 
  primary maximum prison facility.                                             
  Representative Navarre  pointed out  that  a prohibition  on                 
  housing  maximum  security   prisoners  could  restrict  the                 
  housing  of  pretrial prisoners.    Removal of  the language                 
  would allow the housing of pretrial  prisoners.  He asked if                 
  the   facility  would   displace   current  facility   beds.                 
  Representative Mulder stated  that the  new facility is  not                 
  projected  to  displace  any current  state  employees.   He                 
  observed  that  the Mayor  of  Anchorage is  considering the                 
  closure  of  the 6th  Avenue  facility.   He  estimated that                 
  employees  of  the  6th Avenue  facility  could  be absorbed                 
  within the current system.                                                   
  Representative Brown  asked the  estimated operating  costs.                 
  She observed  that the annual  operating cost of  the Spring                 
  Creek facility is $14.0 million dollars.   She asked how the                 
  operating costs would be provided for in the State's budget.                 
  Representative Mulder  emphasized that  the  State is  being                 
  fined for being  overcrowded.  Representative Brown  pointed                 
  out  that  the  fine  is  returning  to  the  General  Fund.                 
  Representative Mulder observed that options for  adding beds                 
  include,  additional  prisoners   being  sent  to   Arizona,                 
  construction  of   additional   beds   in   existing   state                 
  facilities, or  the  construction of  a new  facility.   All                 
  three options have  associated costs.  He  acknowledged that                 
  sending prisoners  out-of-state represents the  lowest cost.                 
  He  emphasized  that it  is  good  public policy  to  employ                 
  Representative Brown  asked the estimated  per day operating                 
  cost per prisoner.  Representative Mulder noted that private                 
  contractors have given rough estimates of $55 to $69 dollars                 
  a  day.   He estimated  that  bids would  be  less than  the                 
  current state average.  He noted that public employee groups                 
  can form cooperatives to bid on the contract.                                
  Representative Mulder  noted that the  legislation allows  a                 
  lease purchase  option.  The  facility could also  remain in                 
  the ownership of  the private  entity.  He  stressed that  a                 
  private  entity  would  pay  property tax.    Representative                 
  Navarre estimated that the private owner would roll property                 
  costs into the contract bid.                                                 
  Co-Chair Hanley assigned HB 428 to a subcommittee consisting                 
  of Representative Mulder as  Chair and Representatives Kelly                 
  and Navarre.                                                                 
  Co-Chair Hanley noted that the  legislation does not require                 
  that  a  facility be  built by  a  private enterprise.   The                 
  Commissioner  could   request   capital   funds   from   the                 

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