Legislature(2001 - 2002)
03/27/2001 03:37 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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HB 76-NEW FACILITIES FOR API CHAIR DYSON announced that the committee would hear testimony on SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 76, "An Act authorizing the commissioner of health and social services to provide for the design and construction of psychiatric treatment facilities to replace the facilities of the Alaska Psychiatric Institute." Number 0138 REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature, came forth as sponsor of HB 76. He explained that the proposed committee substitute (CS) for SSHB 76, Version L [22-LS0349\L, Utermohle, 3/16/01], merges parts of the governor's HB 130 with the prior version of SSHB 76. One major change is that [Version L] has a general obligation (GO) bond instead of the certificates of participation (COPs). Version L retains language concerning the various state and local entities and the requirements for a forensic unit for the Department of Corrections. He stated that he also has proposed Amendment L.1, which deletes the GO bonds and inserts the COPs. The API (Alaska Psychiatric Institute) amounts have been conformed to the governor's bill; however, the drafter omitted any amount for a larger forensic unit. He suggested that it would be simpler to leave the numbers alone and let the House Finance Committee deal with it. He added that this bill would divide the GO bonds in the amount of approximately $58,750,000. Number 0287 REPRESENTATIVE JOULE made a motion to adopt the proposed committee substitute (CS) for SSHB 76, version 22-LS0349\L, Utermohle, 3/16/01, as a work draft. There being no objection, Version L was before the committee. CHAIR DYSON asked Representative Rokeberg if he wanted to adopt Amendment L.1. REPRESENTATIVE ROKEBERG stated that he didn't want to, but it is up to the committee. He explained that the difference is between GO bonds or COPs. REPRESENTATIVE JOULE asked what the difference is between GO bonds and COPs. REPRESENTATIVE ROKEBERG responded that GO bonds would go to the public in the next general election and would have to be voted on by the citizens of Alaska. Certificates of participation are financed similarly, but they come out of the income stream of the general fund within the appropriate department. The COPs are appropriated by the legislature without the will of the people. Number 0488 REPRESENTATIVE COGHILL remarked that this is a policy call, not only on GO bonds, but also as a matter of timing. He said this has been drawn out for some time; therefore, a COP would expedite the work. He made a motion to adopt Amendment L.1, [22-LS0349,\L.1, Utermohle], which read: Page 1, line 1: Delete "general obligation bonds" Insert "certificates of participation" Page 1, line 3, following "Institute;": Insert "giving notice of and approving the entry into and the issuance of certificates of participation in a lease-purchase agreement for demolition of all or part of the existing facility known as the Alaska Psychiatric Institute and construction of a new facility to be known as the Alaska Psychiatric Institute;" Page 2, line 5: Delete "general obligation bonds authorized by" Insert "certificates of participation to be issued by the state bond committee under sec. 5 of" Page 2, line 15: Delete "general obligation bonds authorized by" Insert "certificates of participation to be issued by the state bond committee under sec. 5 of" Page 2, line 29, through page 4, line 28: Delete all material and insert: "* Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to read: DELEGATION OF AUTHORITY FOR LEASE-PURCHASE AGREEMENT. The Department of Health and Social Services is delegated the Department of Administration's authority under AS 36.30.085 to enter into a lease-purchase agreement for a new facility to be known as the Alaska Psychiatric Institute. * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to read: LEASE-PURCHASE PAYMENTS. The lease payments owed under a lease-purchase agreement executed under sec. 3 of this Act are subject to annual appropriation by the legislature. * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to read: NOTICE OF ENTRY INTO AND FINANCING OF LEASE-PURCHASE AGREEMENT. (a) Subject to annual appropriation, the Department of Health and Social Services is authorized to enter into a lease-purchase agreement for a facility to be known as the Alaska Psychiatric Institute. (b) The state bond committee is authorized to provide for the issuance of certificates of participation in one or more series in the aggregate principal amount of $36,550,000 for the construction of a facility to be known as the Alaska Psychiatric Institute, with the remaining balance of the construction costs, in the amount of $22,200,000, to be paid from other money as described in sec. 1 of this Act. The estimated total cost of construction of, acquisition of, and equipping the project is $58,750,000. The estimated annual amount of rental obligations under the lease-purchase agreement is $3,700,000. The estimated total lease payments for the full term of the lease-purchase agreement is $55,000,000. In this subsection, "cost of construction" includes demolition of all or part of the existing facility known as the Alaska Psychiatric Institute, credit enhancement and underwriting expenses, rating agency fees, bond counsel fees, financial advisor fees, printing fees, trustee fees, advertising fees, capitalized interest, and interest earnings used for lease payments. (c) Under terms approved by the Department of Health and Social Services, upon the payment of all principal and interest payments under the certificates of participation, title to the new facility known as Alaska Psychiatric Institute shall vest in the State of Alaska. (d) The state bond committee may contract for credit enhancement, underwriting, credit ratings, bond counsel, financial advisor, printing, advertising, and trustee services that the committee considers necessary in financing the project described in this section. * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to read: NOTICE AND APPROVAL OF AGREEMENT. Section 5 of this Act constitutes the notice and approval required by AS 36.30.085." Renumber the following bill sections accordingly. REPRESENTATIVE STEVENS objected and stated that he thinks it is a cleaner way of doing things if it is sent out as a GO bond and the public can vote on the issues. REPRESENTATIVE CISSNA remarked that she would like to hear from one of the representatives from the administration to address this. CHAIR DYSON said he is interested in knowing how long this would delay the start of the project. Number 0600 NEIL SLOTNICK, Deputy Commissioner, Office of the Commissioner, Department of Revenue, came forth and stated that there would probably be a two-year delay in the project [with the use of GO bonds]. He added that the difference between the two is that a GO bond involves a pledge of the full faith and credit of the state, whereas the COPs are just selling shares of the facility. The full faith and credit of the state does not back the project when there is a COP. He added that it has been this body's tradition, in the past couple of years, to fund individual projects such as this one through the COP mechanism. There is a listing in an Alaska public debt booklet of all of the projects that have been funded by COPs, including the Seward Student [Service] Center, the Seward courthouse, the Wildwood Correctional Center, the Palmer courthouse, the Court Plaza Building, the Anchorage Times building, the Soldotna Maintenance Facility, the Fairbanks courthouse, the Palmer Airport Fire Facility, the Anchorage Health Lab, the Spring Creek Correctional Center refunding, and the Anchorage jail. REPRESENTATIVE CISSNA asked if there is a difference in savings between the two. MR. SLOTNICK answered that because the GO bond is backed by the full faith and credit of the state, there is going to be a little bit of a lower interest rate cost for the state, which is about .0012 percent. He said he thinks there are other costs associated with a GO such as election and educational costs. Number 0829 JERRY WATKINS, Engineer/Architect, Construction & Operations, Department of Transportation & Public Facilities, came forth and stated that private sector cost estimators have recently told him that the inflation index is expected to go up as the construction industry "heats" up in Alaska. He said he has been told that two years from now the annual rate of inflation may be 5 to 7 percent, depending on what major projects come out. REPRESENTATIVE CISSNA asked what this would cost. MR. WATKINS answered that the budget that has been fostered is $58 million. REPRESENTATIVE STEVENS stated that he supposes a disadvantage of going with a GO instead of a COP is that the public may vote against it. MR. WATKINS said that is possible. CHAIR DYSON remarked that he understands that the effort to replace API has been going on for over a dozen years. REPRESENTATIVE STEVENS asked why [the legislature] didn't get its act together before to get this on the ballot. Number 0934 RANDALL BURNS, Director, Alaska Psychiatric Institute, Division of Mental Health & Developmental Disabilities, Department of Health & Social Services (DHSS), came forth and stated that the legislature did appropriate funds for this purpose. Beginning in 1990, $1 million [was appropriated] for planning and design work, and $2.8 million [was appropriated] for construction. He stated that [API] is seeking additional funding because that may be the only option to complete the project. REPRESENTATIVE STEVENS remarked that he has no objection to the project; however, he said, he thinks there is a possibility of circumventing the will of the people by waiting till the last minute, until there is no time, and using COPs since they are the faster way to do it. He stated that he would speak up for going to the vote of the people for something of this magnitude. Number 1020 RUSS WEBB, Deputy Commissioner, Office of the Commissioner, Department of Health & Social Services, came forth and stated that it is important to understand that it is not $2.8 million but $22.8 million that had already been appropriated by the legislature to solve this problem some years back. He said the only issue that remains has not been the will of the body but the amount of money. He clarified that [DHSS] has tried several different solutions to live within the appropriation; however, they have failed. REPRESENTATIVE STEVENS asked Representative Rokeberg if his position is that it doesn't make much difference whether [the committee decides] on GO bonds or COPs because this will eventually go to the House Finance Committee, where the decision will be made. REPRESENTATIVE ROKEBERG responded that that is a relatively fair assessment. As the bill "travels," people become more aware of it. He stated that there is adequate money in hand to do the preliminary design and various construction activities before selling the GO bonds, which would have to be approved by the public. REPRESENTATIVE STEVENS withdrew his objection. Number 1200 CHAIR DYSON announced that there being no further objection Amendment L.1 was adopted. He asked Representative Rokeberg if he wanted to move Amendment L.2. REPRESENTATIVE ROKEBERG responded that he doesn't like Amendment L.2. He stated that one of the reasons he brought this legislation forward was to expose to the public the need for adequate facilities within the Department of Corrections for those prisoners who need mental health treatment. Currently, there are 140 beds scattered throughout the system, and there are two specific areas - the Mike Module and the Michelle Module - in the Anchorage area. He said he thinks it is necessary to consolidate and upgrade the quality of these particular facilities. He added that in the bill the forensic unit could be defined as the evaluation unit currently within the API facilities. The evaluation aspects of these, he said, are [significant] to the role and the mission of the institute. REPRESENTATIVE JOULE asked if someone could talk about the issues of having a correctional [facility] in this part of town, and whether or not there would be problems. Number 1310 MR. BURNS responded that [DHSS] does not want to downplay the needs of mental health patients. [Department of Health & Social Services] believes that attaching the 70-bed correctional unit, on the same grounds as API will make it very difficult to get approval again from the Municipality of Anchorage. He stated that having spent a year and a half dealing with the Airport Heights Community Council and their objection to the 10 beds that are not correctional and are in [DHSS] custody, [DHSS] believes that the local residents would object to the adding of 70 beds in the midst of an educational and health area. REPRESENTATIVE JOULE asked, if this language were retained in the current bill, whether it would cause further delay from another angle of the project. MR. BURNS answered yes. He added that there isn't any additional funding in the current bill for those beds. REPRESENTATIVE JOULE asked if 70 beds are going to meet the need of housing these specific individuals. MR. BURNS replied that the Department of Corrections has indicated to Representative Rokeberg that 70 beds would meet the need; it doubles the size of the hospital that is currently being planned. Number 1482 REPRESENTATIVE COGHILL made a motion to adopt Amendment L.2 [22- LS0349\L.s, Utermohle, 3/26.01], which stated: Page 2, lines 21 - 25: Delete "The replacement facility must include a forensic psychiatric unit to be operated by the Department of Corrections that is separate from other elements of the facility. In this section, "forensic psychiatric unit" means a facility for the assessment, treatment, custody, and confinement of mentally abnormal criminal offenders." Page 2, line 25: Delete "the Department of Corrections," CHAIR DYSON objected. Number 1520 MARGOT KNUTH, Assistant Attorney General, Office of the Commissioner - Juneau, Department of Corrections, came forth and stated that Representative Rokeberg has identified the genuine need that the Department of Corrections has for a mental health unit. She said 70 beds would be the right number. Currently, space in several different facilities is being used such as the Cook Inlet [pre-trial facility], for men, and Hiland Mountain [correctional center], for women. She remarked that the Department of Corrections has several urgent needs, this being one of them. CHAIR DYSON asked if it is better to have the psychiatric evaluation unit as part of an existing prison or an existing mental health facility. MS. KNUTH responded that it ought to be part of a mental health facility. For the inmates that would be in this unit, the mental health model is a better model than the correctional model. She added that there is no doubt that there would be a security component to it, which would be a correctional setting. MR. BURNS clarified that psychiatric evaluations of persons charged with a crime do occur at API. Number 1676 REPRESENTATIVE COGHILL asked Ms. Knuth, if this doesn't go forward, whether the Department of Corrections has any other plans. MS. KNUTH responded that [the Department of Corrections] does not have active plans for a separate facility for this population. She said this would be something focused on in the next 18 months. REPRESENTATIVE COGHILL remarked that what Representative Rokeberg is offering may be the only thing "in our time of history that's going to hit the proposal." Number 1750 MR. WEBB explained to the committee the difference in the two populations. He said there are no sentenced, convicted prisoners currently in API. The population being discussed [in HB 76] would all be adult, sentenced, convicted prisoners. He added that this really discusses providing a correctional program that is operated as a separate correctional program, not as part of the hospital that would provide mental health care. MR. BURNS stated that [API] does receive, on occasion, an inmate whose illness is such that he or she requires hospital-level care. MR. WEBB stated that one of the key issues that prevented the purchase of Charter North Hospital was this particular issue. He said there is no question in his mind that this will arise with stringent objections from the community. He added that another issue, which will be addressed by advocates of the mentally ill, has to do with the stigma attached to persons with mental illness. Number 1924 SAM DICKEY, Coalition for Alaska Psychiatric Institute, came forth and stated: We have made it our mission over the last several months to gather broad community support for the prompter placement of API. This problem has gone on for an awful long time, and we would like to see something done about it. We have adopted as our motto, "The communities are continually faced with great opportunities; they're brilliantly disguised as insoluble problems." We see this as a great opportunity at a lot of different perspectives. MR. DICKEY stated that from his experience there would be a delay with the inclusion of the Department of Corrections' language. He said he was the person who initially wrote the resolution - by the Airport Heights Community Council - in favor of API moving into the neighborhood. However, a year and a half later, when people started objecting to the location of the facilities, [Airport Heights Community Council] started to rethink. One of the issues, he said, is not only the appearance of the correctional [facility] but the correctional unit that is there already. MR. DICKEY, in response to Representative Stevens' question on whether or not the GO bonds would circumvent the will of the people, stated, "From experience, I've seen the will of the people kind of circumvent the will of the state to get this project done." CHAIR DYSON asked if there is a neighborhood in Southcentral [Alaska] that would like to have the corrections population. MR. DICKEY responded that nobody wants the corrections population next door. Number 2216 JEROME SELBY, Regional Director, Providence Health Systems in Alaska, testified via teleconference. He stated that [Providence Health Systems in Alaska] supports the adoption of the amendment. He added that [Providence Health Systems in Alaska] sees the purpose of API and the purpose of a correctional facility as being significantly different. If they are incorporated together, the nature of the facility is changed as well as the perception of what occurs in those two facilities. Alaska Psychiatric Institute is there with the idea that people will get healthy and back into society, which is different from the concept that may be going on with a psychiatric unit in a corrections facility. He added that there is not enough money in the bill to finance both. In conclusion, he stated that if these two facilities are combined, the requirements for the correctional facility and the containment of prisoners are going to drive the construction costs up. Number 2255 ELAINE PRATT, Coalition for Alaska Psychiatric Institute, testified via teleconference in support of using certificates of participation. She stated that it is her understanding that the replacement for API has been ongoing for 18 years. With regard to financing, she said, she is aware of the two options for funding - GO bonds or COPs. TAPE 01-36, SIDE B MS. PRATT explained that COPs have many strengths; they can be issued by the state and the city. Financing can be provided for up to 100 percent of the assets or, in this case, a facility. She stated that they are helpful tools for easing cash flow restrictions. In other states, COPs have been used to fund projects such as correctional facilities. She said: I strongly urge that certificates of participation be used to fund the necessary and appropriate replacement of API. The staff and patients have waited 18 years for a new asbestos-free facility. I'm not an economist, ladies and gentlemen, but I have owned my own company in Anchorage since 1981. Like most business people, I have used lease-purchase to enhance my business while maintaining a healthy cash flow. The same business principle applies to larger, more cumbersome projects such as API. REPRESENTATIVE ROKEBERG remarked that Amendment L.2 is absolutely unnecessary. He said that it doesn't indicate anything more or less than the existing component within API, because there is no definition about what the scope of the facility is. It states, a "replacement facility must include a forensic psychiatric unit to be operated by the Department of Corrections". He suggested that "Department of Corrections" could be removed, since other than the Department of Corrections reference, there is nothing that is different from what presently happens there. By adopting the amendment, he said, the evaluation unit may be removed. He added that the freestanding 70-bed facility is estimated to be in the $22- million range. CHAIR DYSON asked where in the bill Representative Rokeberg wants to strike "Department of Corrections". REPRESENTATIVE ROKEBERG responded that "to be operated by the Department of Corrections" could be deleted on page 2, line 22. Number 2010 REPRESENTATIVE COGHILL stated that he agrees the debate needs to be up, and he thinks the House Finance Committee should examine it since other alternatives will have to be discussed. He withdrew his motion to adopt Amendment L.2. He made a motion to adopt a conceptual amendment to delete on page 2, line 22, "to be operated by the Department of Corrections". REPRESENTATIVE CISSNA objected. She stated that she is concerned whether there is any language that will not fit into the conceptual amendment [on page 2], lines 23-25. REPRESENTATIVE COGHILL responded that he thinks the point that Representative Rokeberg is making is that the discussion needs to be up. The Department of [Health] & Social Services, instead of the Department of Corrections, would then operate it specifically for criminal offenders. Number 1872 MR. BURNS stated that there would be no difficulty if the language were to reflect that the facility must include a forensic psychiatric unit that is separate from the other elements of the facility, since that's currently true. However, a forensic psychiatric unit is defined for a mentally abnormal criminal offender. In general, he said, those people are in the custody of the Department of Corrections and not in the custody of DHSS. He suggested that the definition could be left broad enough to say "a forensic psychiatric unit", and then the next sentence could be deleted. He added that if the goal is for API to continue having a unit that provides a service for the courts, then this could be a compromise. REPRESENTATIVE ROKEBERG asked Mr. Burns if the current unit does not assess or treat responsibly for the custody and confinement of these offenders. MR. BURNS responded that the majority of the clients [at API] have not been adjudicated as criminal offenders. For the most part, persons are sent to API to determine competency regarding whether or not they can stand trial. If they are found incompetent to stand trial, they continued to be treated and are not adjudicated. He added that, occasionally, [API] does receive a correctional transfer who is an offender, but is so ill he or she needs hospital-level care; however, that is not the primary purpose of that unit. REPRESENTATIVE ROKEBERG remarked that he maintains his position that this issue should get further public debate. Number 1757 REPRESENTATIVE WILSON stated that "forensic psychiatric unit" is defined in this section [on page 2, line 22] as a facility for the assessment, treatment, custody, and confinement. She asked if "custody and confinement" could be deleted. REPRESENTATIVE ROKEBERG responded that people in that facility are in custody and are confined. REPRESENTATIVE JOULE asked if "to be operated by the Department of Corrections" is deleted, who would operate it. REPRESENTATIVE ROKEBERG responded that it would be operated under [DHSS]. REPRESENTATIVE COGHILL remarked that the design and construction would still be in cooperation with the Department of Corrections. REPRESENTATIVE CISSNA removed her objection. Number 1580 CHAIR DYSON announced that [there being no further objection], conceptual Amendment 3 was adopted. REPRESENTATIVE STEVENS stated that he is concerned about whether there is enough money to do both [of the projects]. REPRESENTATIVE ROKEBERG answered, "Don't worry about the language." REPRESENTATIVE STEVENS asked if there is an estimate of how much money the bill entails. REPRESENTATIVE ROKEBERG replied that the Department of Corrections has said that a smaller area would be about $22 million. CHAIR DYSON asked if the fiscal note should be adjusted. REPRESENTATIVE ROKEBERG remarked that it could be, but he doesn't want to use up any more of the committee's time. Number 1468 REPRESENTATIVE COGHILL made a motion to move the CS for SSHB 76, version 22-LS0349\L, Utermohle, 3/16/01, as amended from committee with individual recommendations and attached fiscal note. There being no objection, CSSSHB 76(HES) moved from the House Health, Education and Social Services Standing Committee.
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