Legislature(1997 - 1998)
03/12/1997 01:00 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 150 - LEASE-PURCHASE SPRING CREEK CORRECTIONAL Number 0010 CHAIRMAN GREEN announced the first item on the agenda, HB 150, "An Act giving notice of and approving a lease-purchase agreement with the City of Seward for the construction and operation of an addition to the Spring Creek Correctional Center, and setting conditions and limitations on the facility's construction and operation." Number 0070 REPRESENTATIVE GARY DAVIS, Sponsor of HB 150, said this bill authorizes a lease purchase between the state and the city of Seward which will expand the Spring Creek Correctional Facility. This facility is the only maximum security prison in the state of Alaska and was designed with this expansion in mind. With the conditions of the prison system; the overcrowding, the contracting to send prisoners to Arizona and other legislation in front of the committee about the prison system, there is no question about the need to support additional prison space in the state. It is his understanding that this expansion does not create any competition with any private proposals, as there are no private proposals which address maximum security. There are probably some prisoners classified as close, who are in Spring Creek and possibly in other facilities. It was his understanding that HB 150 was not a competitive proposal. REPRESENTATIVE DAVIS estimated a $25 million cost for the expansion. The Department of Corrections (DOC) provided higher numbers, this is a negotiable item. There have been cost estimates put together by companies with whom the city of Seward feels comfortable. Number 0320 REPRESENTATIVE ERIC CROFT asked how many additional beds this expansion would provide. REPRESENTATIVE DAVIS answered that it would be 250 beds. REPRESENTATIVE CROFT asked if the community was supportive of having this facility. REPRESENTATIVE DAVIS said the city was supportive of this expansion. He referred to attempts to build prisons and half-way houses in various communities with little success because of the lack of community support or community antagonism. REPRESENTATIVE CROFT stated the cost for this expansion was a cost of around $100,000 per bed, a figure that is lower than some of the costs he has seen. He asked why that cost was so competitive. REPRESENTATIVE DAVIS referred that question to the witnesses from Seward. Number 0486 LOUIS BENCARDINO, Mayor, City of Seward, referred to a packet of information located in the committee file. In the packet was a resolution passed by the city council of Seward in favor of this project, the vote was unanimous. The council and the community were very supportive of this project. No one has complained about not wanting this expansion. The current facility is located across the bay, in back of the mountains and he felt that this was one of the reasons why people were in favor of the expansion. The prison is located in an industrial area. They felt, that in the future, this facility could be more aggressive in having projects for the prisoners. More could be done to keep those prisoners busy. MR. BENCARDINO said there is a good working relationship with the prison guards and other members of the community. There was concern about whether or not there would be additional room if more guards came to live in Seward, but he said this was not a problem. There are several subdivisions, some of which have just begun to house these people. There is a fair sized subdivision right in the middle of Seward which the city is willing to help put together to make it available. Thirty homes are on the market in Seward around the $100,000 to $130,000 price range. MR. BENCARDINO stated that the city of Seward could meet the market if this facility is expanded. Prison employees have and are currently working on planning and zoning committees. He thought the DOC has placed more emphasis on hiring locally. There was a problem when people from other parts of the state took jobs in Seward with the intention that they could be transferred after a year. When this didn't happen, some employees became unhappy. When the prison was opened, Anchorage went through a big slump and so some of these employees couldn't sell their house, they couldn't move without a loss. Currently 70 percent of the employees live in Seward. Modifications could be made to help with this issue. This facility can be built without overruns because Seward wants it to be built. Number 0798 RON GARZINI, City Manager, City of Seward, discussed the differences in the building techniques and where the money would come from for the expansion. In 1984, the city was a conduit financier. The city entered into a lease with the state of Alaska, Department of Administration, for a certain number of beds which were authorized by the legislature. The city went forward with the financing, but part of this financing was a transfer of responsibility agreement with the state Department of Transportation and Public Facilities (DOT/PF). The city received the money, previously appropriated by the legislature, did the financing, accumulated a pot of money and then transferred the responsibility back to DOT/PF. He expressed frustration at being criticized for the construction project when, as far as he was concerned, the city did not have the project for more than ten seconds. Their role was a signature in order to receive the money, and a signature for transferring the responsibilities. MR. GARZINI stated that the project was designed by an engineering firm headquartered and operated out of Bellevue, Washington. The project was built a foot and a half too low, when it rains the ground gets wet and there is a standing sheet water. If this facility is expanded, it will be elevated at least a foot and a half. He expressed frustration at some of the problems he had when working with state agencies. He was able to get some assistance from Governor Sheffield, who set up a liaison who was responsible for coordinating all the factors of the project. It was initiated by DOT/PF, upon review by the DOC. Once the documents were signed, the trustees released the money to pay the contractors. He said his sole role was to oversee that the budget was maintained. MR. GARZINI explained that the city of Seward would like a single point of contact. He suggested doing a true lease, as if the state were leasing from the private sector. He said, instead of reverting it back to DOT/PF to build, he would rather provide for DOT/PF oversight on the job, provide for DOC oversight, provide for a review from the Department of Revenue (DOR) which they want in the lease document. If the DOR wanted to hire the underwriter to raise the money, he questioned who would care. The only thing he wanted to do was to have the city's financial advisor provide advice to the council on whether or not it is a good deal for the city. MR. GARZINI said, in terms of DOT/PF oversight, they should be able to review the design, make sure that what the state is getting is appropriate and even co-sign the money being released. He did not think that DOT/PF needed to be in charge of the project. In discussions with Commissioner Perkins, he did not seem opposed to this suggestion. MR. GARZINI went to a private contractor, the contractors who are building another project in Seward, who are credible. They quoted an estimate for $20 million for 200 beds, which he totaled to $25 million for 250 beds. Fortunately, Spring Creek was supposed to be doubled in size. The price is good, but there are probably a few other costs in response to concerns about the kitchen capacity. If the legislature allows this project to happen, a bigger budget could be created but suggested that a tight control be maintained on what costs will be allowed. The city will administer the project with DOT/PF and the DOC. MR. GARZINI did not feel this was a high tech building. He presented the figure of $26.7 million. The one mistake he made was that there was capitalized interest during construction. The city borrows the money and has to start making payments before it is occupied. An estimate has been given on that cost. If the city borrows $25 million, there would be $23,480,000 available, by their best estimate, for construction. It would give the state approximately 230 beds. As you go forward with the finance committee and look at the number of beds you want, the city feels that it could be done for about a $100,000 a bed if there are no variations from the plan of just providing bed space. If the state wants to put money into the infrastructure; improve the gym or kitchen, a limit needs to be stated and then the city would administer it. MR. GARZINI said there is a degree of risk to the city, but he was willing to build it in such a way that the city council would accept the risk. The city would design it, get financing, bid the project, get a qualified contractor to give a firm bid and then the city would close the financing. He wouldn't close the financing or even seek to close the financing until the bid was in hand, against an approved design and an assessment of risk. If the assessment stated there was minimal risk, the contract would be awarded. This is how it was handled last time. There was a contingency built in for changes, should they occur. He did not see a great deal of risk if this project is done right. Number 1230 CHAIRMAN GREEN asked if this expansion would be a mirror image to what is there. MR. GARZINI referred to the packet of information with a picture of the existing Spring Creek Correctional Facility. They are proposing an expansion of the remaining bedroom units. CHAIRMAN GREEN asked if 250 beds was the upper limit. He wondered if 300 beds could be built for $30 million. MR. GARZINI said this question could be worked out between the city and the DOC. Spring Creek was built with 750 beds in mind; 375 beds were originally built and there are currently 450 beds in the existing facility. The upper rows of the facility are double bunked. This expansion talks about single bedroom units costing about $100,000. The DOC could always add more beds, provided that they didn't get into Cleary problems. He said this is a dialogue that should occur between the legislature and the DOC, with eventual discussions with the city of Seward if they become the agent to build this expansion. CHAIRMAN GREEN asked how long this project would take. MR. GARZINI said he would like the legislature to think about putting a timetable in HB 150. One of the things that happened during the initial construction was that when the Administration said to move on this, the project got done. The executive branch and the city can move quickly if there is a timetable. He added that these are dollars which could stay in the state. CHAIRMAN GREEN asked if there had been discussions with Commissioner Pugh. In earlier testimony, she said there is an ideal size for a facility and that once you got beyond it problems with the inmates are created. He asked if the expansion would create the sort of problems she suggested. Number 1386 MR. GARZINI deferred the question to the commissioner. He said, in terms of the community, a 750 bed facility was not a problem. Completing Spring Creek Correctional Facility was an issue that was favored by the city of Seward. Number 1422 REPRESENTATIVE JEANNETTE JAMES referred to the fact that only one- third of the facility had been built and looking at the picture she did not see how another wing could be built. MR. GARZINI said one picture shows the site plan, and another picture shows what has been built. The prison site acreage is exceedingly large. REPRESENTATIVE JAMES asked if the reason for the small unit price was because it was an expansion, not construction of a total facility. MR. GARZINI confirmed this. He said there was a gymnasium, counseling areas, administrative quarters, fencing, parking, heating systems, etc., which would be cost factors if you were starting from scratch. The sewer treatment plant was built oversized; it was designed for 1,600 people. The water tank was put on the other side of the facility, above it, so an additional water infrastructure wouldn't be needed. The power facilities were right there. Renovations might need to be done, but the bedroom units are all that the city feels would be essential. Number 1530 CHAIRMAN GREEN said the cost is half of what another estimate was. The thought was that the city was either bidding low, thinking low or else these ancillary facilities would cost another $100,000 a bed. MR. GARZINI answered, in a nutshell, that he gave the contractor the detailed bid documents. The contractor gave them back the price, for maximum security bedroom units. This expansion could be built cheaper, but not for maximum security prisoners. As long as you don't build a lot of infrastructure or load up with a lot of overhead, the city was prepared to only charge for his time and the city engineer's time to put this together. CHAIRMAN GREEN compared this bid with other indications which were quite a bit higher; those other facility estimates were for a stand alone facility. MR. GARZINI said a new, stand alone facility would have to pay for water, sewer, access, recreational facilities, et cetera. CHAIRMAN GREEN asked if those additional things would total another $100,000. Would it be $200,000 for a stand alone facility or would it be a different figure. MR. GARZINI said he did not price anything outside the existing facility. He did accept the fact that there might need to be some changes. Number 1635 REPRESENTATIVE CON BUNDE alluded to the sheet water problem. He asked if this area was the best place to build. MR. GARZINI answered that if this is a concern of the legislature, he would provide a registered hydrologist statement that the site was secure and safe, prior to getting financing. There are two problems with the water. The first is the sheet water, the facility was built too low and the second one is the Fourth of July Creek. As city manager, he is obligated to secure the creek because of the shipyard and the dock which employees about 200 employees in the fish processing industry. In discussions with the city engineer, the amount of money needed to secure the creek would be $400,000. This money would prepare a complete mining plan, clean the creek out and rip rap it, build finger dikes to train the river back. The creek needs to be dealt with. REPRESENTATIVE BUNDE suggested that $400,000 would just begin the environmental impact statement. MR. GARZINI explained that there are no fish in the creek. REPRESENTATIVE BUNDE asked, if the factors remained the same, how many additional state employees would be employed by the expansion. MR. GARZINI clarified that the state is exporting close to 250 inmates, who are being incarcerated down south. He did not view the operating costs for these beds as a great new increment because the state is already paying it. There will be some state employees involved and referred to information presented by the DOC. The cost might be greater than shipping them outside the state, but it shouldn't be much greater. The capital costs are being kept down, for the most part you would only have to add guards. The infrastructure is there physically and administratively. The number 250 was picked because it was the number of inmates being sent down to the Lower 48. Number 1795 REPRESENTATIVE NORMAN ROKEBERG referred to cost estimates from the DOC for the operations. He calculated that given this bill and the fiscal note from the Department of Corrections it would cost $112 a day to house a prisoner. MR. GARZINI said this amount seemed high. REPRESENTATIVE ROKEBERG said he took the numbers out of the bill packet; $7.483 million to operate it and $2.702 million for the debt service which is the maximum on the bill itself. He referred to a letter by the superintendent of Spring Creek Correctional Facility about his feeling that operating the facility could cost, on a per day basis, $52 dollars. MR. GARZINI had the finance director take the $20 million estimate to construct which the contractor, Strand-Hunt, gave the city and added it to the estimated cost by the superintendent of Spring Creek. The superintendent talked about the cost of the new increment, which is different than the numbers to which Representative Rokeberg referred. The numbers Representative Rokeberg took used the total facility and the total cost and blended them into a number. The new increment might be a few dollars different, it would take the cost per bed capital, the number of prisoners, and the new increment of guards which adds up to a $50 to $60 price. He said the increment of addition is probably $60 per bed per day. Blending these costs into the hundred that you are paying now should be less than $112. He was attacking the price of the exported prisoners which he thought was $80 a bed per day. REPRESENTATIVE ROKEBERG stated that when it costs $10.185 million a year to operate the new increment, that is what it costs. An argument could be made that Alaska is exporting jobs; even with the $59 a day, adjusted up to $62 a day for the Arizona Correction Corporation of America (ACCA) contract. Number 1965 MR. GARZINI said the $2.7 million covered against the 250 new prisoners with the staff increment, as described, combined to a $60 rate. If you blend this cost into the total facility, you get a higher number. The number of beds that was attempted was the number of exported prisoners. The city believed that they could come very close to the exported price with this expansion. He said it was hard for him to imagine that a $7 million operating increment was needed to serve 250 new prisoners. CHAIRMAN GREEN said he was going to stop this discussion because there was not any substantiated figures from the person who devised the fiscal note. This figure might be a projection from what they are spending now. REPRESENTATIVE ROKEBERG suggested that Mr. Garzini needed an opportunity to look at the fiscal note. JOAN BENNETT-SCHRADER, Representative, Coalition of Labor Union Workers-Mt. Redoubt Alaska Chapter, had a couple of questions. She referred to Section 1 and said it mentions the construction and operation of a correctional facility. This would mean an expansion at Spring Creek. The first question was; what does the city of Seward operate in the facility or how does the city put the operations out to bid. The second question was; if operations are put out to bid, if the city of Seward would privatize. The third question was; should the city privatize, where is the hold harmless clause for the state of Alaska. MS. BENNETT-SCHRADER said there did not seem to be any mention in the list of limitations on how the operations would be governed. Aside from that concern, she believed the communities were fully in support of an addition to the existing prison. Number 2103 REPRESENTATIVE DAVIS said the intent is to expand the Spring Creek facility and its operations as it is currently operated. The intent is a state run prison, no privatization. As soon as the addition is built, the state would control and operate the facility under lease. Number 2127 FORREST BROWNE, Debt Manager, Treasury Division, Department of Revenue, said there is some confusion on lease financing. The division looks at any lease, such as the one proposed, as state debt. The DOR is always going to look at minimizing state debt. He suggested that the bill, essentially, did not specify who would be the nominal issuer of the state debt. The city of Seward is specified in HB 150. The division thinks this would give the state bond committee maximum flexibility to get the most cost effective financing possible. MR. BROWNE said typically, if the city is specified and the state is required to use that structure, there are not the advantages of scale. The state can't package this financing with other financing which might occur at the same time this financing is going through. The national financial markets respond well to relatively large packages. Frankly, some of the lease financing which is being looked at are small, so the per unit cost of issuance becomes very, very high. MR. BROWNE said, secondly, the city would plan to hire a financial advisor in this transaction. The state has a financial advisor, the state has bond counsel and oftentimes the city would want to have their own counsel. In effect there is a doubling up of financing expenses. Those are some suggestions the DOR would make if flexibility was given through the state bond committee in the final structure of this debt, which would minimize the interest cost of debt and the cost of issuance in the future. MR. BROWNE said, currently, this facility has about $31 million of debt. Several weeks ago, when interest rates dipped, the division was in the process of starting a refinancing. The DOR is constantly in touch with the national financial markets. When rates come down, the DOR sees an opportunity to refinance, it has been able to do this over the years without legislative approval as long as the operating cost can be reduced. MR. BROWNE recommended that the possibility of refinancing be linked with the new financing, so that if the DOR goes to market they wouldn't be limited to seeking financing for $25 million. The DOR might be able to combine financing and go to market for $56 million which would allow them to appeal to a broader market of national investment bankers who would bid on this financing. It would also allow one set cost of issuance. These suggestions could accomplish the goals of HB 150 and yet give DOR the flexibility to minimize future costs over the next 18 years. Number 2261 CHAIRMAN GREEN said, by combining this through the state and reducing the total package, it might be more beneficial than for the city to seek financing from some other institution. MR. BROWNE answered that it could be to the state's benefit if a reference is made in the bill to the possibility that we might have to refinance. It gives DOR the ability to refinance one package. CHAIRMAN GREEN said if the city is going to seek financing other than through the state, then an analysis would have to be made to figure out where it works most advantageously. MR. BROWNE did not believe the city of Seward was seeking financing outside of the state. This financing would be done based on the state's credit, so, in a sense it is state debt. The DOR is suggesting that if the legislature is not tied to doing it specifically with the city of Seward, the DOR may package the financing with the approved facility in Palmer at the airport. It might be possible to combine these facilities together if the timing is right. The DOR wouldn't slow down the progress, but it would give them more flexibility. Flexibility can result in lower financing cost. CHAIRMAN GREEN said he was not aware that they would not be able to finance. Number 2320 REPRESENTATIVE JAMES referred to the city's experience on the construction of the original facility when they had no actual control over the project, yet the city has been blamed for some of the things that have gone wrong with the facility. If this expansion happens and the bonding would be done through the DOR, she asked what kind of a guarantee would the city have that there would be sufficient control over the construction of the facility to avoid future blame. MR. BROWNE said the DOR is only interested in the financing part of this expansion. It doesn't matter to them whether the city had the construction contract, it went through DOT/PF or a third party private vendor. Because the DOR is signing the lease they would like to be the ones who go to the bond rating services, the underwriter, put it together and then have the ability either to package it with other financing, and to refinance it without having to get a city council resolution. Sometimes in the financial markets, the ability to move quickly can save a considerable amount of money. This is the only aspect of the bill that DOR is interested in, so it should not impact who would be the construction supervisor. Number 2386 REPRESENTATIVE ROKEBERG asked if the due convenience of the existing obligation allowed a separate type of financing for any potential expansion. He asked if it was possible for the city of Seward to finance the expansion without taking into account the existing obligation. MR. BROWNE answered that it might be possible, but you would have to legally define the area. To the extent that they share common offices, gymnasiums, or rest areas would be complicated if they were to have two separate financing agreements. This is another reason why DOR felt having the flexibility to package the financing, do the refinancing as well as the new financing might simplify the legal complications having to do with creating a security interest for the bond holders, separate from the security interest of those who bought the bonds eight years ago in the original financing. REPRESENTATIVE ROKEBERG asked about that particular serial, what are the coupon rates and the longest maturities and how much does DOR think they could save on a refinancing. MR. BROWNE said DOR has about nine years to go on the previous financing. The rates, about three weeks ago, were about 62 basis points, that is .6 percent per year over the market rate at that time three weeks ago. He did a present value calculation which included the extra cost of issuance of issuing another $31 million and paying off the old bond holders with the net savings to the state at approximately $1.1 million. This figure changes from time to time. He added that, in his example, he could not have moved quickly because there would have been another municipality involved. If the future structure is the one DOR is proposing where the state controls the financing, then when DOR sees an opportunity sometime down the road when interest rates dip they might be able to maximize those savings. TAPE 97-37, SIDE B Number 0000 REPRESENTATIVE BRIAN PORTER asked if DOR could provide language. MR. BROWNE said they would come up with language and then work with the sponsor regarding that language. They tried, on each line, to indicate what their counsel suggested would be the minor changes which would facilitate the financing at the best cost. Number 0021 REPRESENTATIVE ETHAN BERKOWITZ referred to the comment by Mr. Browne about the beneficial results of state control in terms of the bond rating and asked him to explain this a little more. MR. BROWNE provided an example, last week the housing finance authority received a triple A rating from Standard and Poor's. Very few people know that this was a result of careful discussions, analysis and projections given to those bond rating services by a combination of the state and that particular agency. If the DOR is careless and if they delegate to other people, the responsibility which he felt the state has, to represent its financial condition to the financial community, the state runs the risk that their condition is not conveyed in the most positive manner. This would be an additional reason why the DOR would like the state to be involved. Because it is state debt, the state is paying the bills and would suffer the consequences. In this proposed language change, this debt would be considered as all other state debt. When the state is in talking to the bond rating services or when investment bankers come to Juneau, the DOR would talk to them about this project as well as others that are going; General Obligations (GO) bonds, other lease financing, international airport, housing authority, Alaska Industrial Development and Export Authority (AIDEA), and so forth. This expansion project would become a part of the state's overall debt management program which they are trying to do on a professional basis to minimize the cost. Number 0096 REPRESENTATIVE BERKOWITZ said, as he understood it, the impact here is a $25 million obligation. He asked if it was subsumed within the state obligation whether it would be minimal overall. Whereas if Seward or some other entity would do it then there could be major consequences. Number 0115 MR. BROWNE said DOR is not saying that Seward could not do this financing efficiently, they certainly could do it. The DOR is saying that if they had the flexibility, either to do it through Seward or through some other nominal issuer, combine it with the refinancing or perhaps combine this one with other financing that DOR would be doing around the same time, these things might result in some efficiencies. They did not suggest that Seward couldn't do this particular financing fairly efficiently. He referred to the physical segregation of the security interest, there has to be legal definition. He felt this could be troublesome to the extent that you had some common areas that both groups of bond holders would want to have a security interest in. It could be done in the manner proposed, but DOR feels they have a better way of doing it which in the long run could save the state considerable money and could give them future flexibility. Number 0163 REPRESENTATIVE BERKOWITZ asked if Seward were to issue the bond itself, would it impact the state bond rating. MR. BROWNE said Seward would issue the bonds only through the state's credit, which would affect the state's bond rating. It would be part of the state's overall debt capacity, it would get into the ratios and the formulas. The city of Seward would not have a national credit rating to issue these bonds on their own. In a sense it is state debt even though it is referred to as a lease. The word lease is a bit of a misnomer. It was a developed technique so that states don't have to go to the voters to get approval to incur debt. From a constitutional standpoint it is not considered debt, but most people in the business, who work with this every day, consider it debt as a practical matter in terms of the bond rating, debt capacity and those sort of things. Number 0222 MARGOT KNUTH, Assistant Attorney General, Central Office, Criminal Division, Department of Law, said she is working with the Department of Corrections on some of their expansion initiatives. Alaska has expansion needs in several areas and in different custody levels. The most urgent need is medium security beds. To that extent the Spring Creek project, although definitely on the list for expansion, was further down the state's list of priorities. The community of Seward's enthusiasm for the project has brought this project up to the point where it is a part of the discussion of the state's whole plan. MS. KNUTH did not think it was realistic to expect to bring back anyone from Arizona with this expansion because Alaska is so far behind in prison construction that new people would be put in those beds. This expansion could slow the export of prisoners to Arizona. The state is about 260 prisoners a year behind in space. Of that number, 60 prisoners are appropriate for halfway houses, community correctional centers and 200 of that number are appropriate for hard beds. MS. KNUTH said there needs to be a discussion about what needs to be done to get another 250 prisoners to Spring Creek. The state feels that more needs to be done to the infrastructure than the city of Seward is contemplating. Initially the facility was built for a population of 250, or less than 250 prisoners, with the thought of doubling that number. The infrastructure was built for approximately 500 prisoners. The doubling of the number happened through double bunking, so there is not the structure for the additional beds. The land is vacant, but the additional prisoners are already there. The facility is overcapacity. MS. KNUTH said there are some things which do not need to be built, but some things would need to be expanded such as the kitchen facilities. Discussions would determine what things need to be expanded. If this prison expansion is part of a package of bringing more prison beds to Alaska, the DOC is interested in the issue and in participating in conversations about it. Number 0376 CHAIRMAN GREEN suggested that some of those overcrowded prisoners could transfer over. If it is a higher security prison, transfers could be made so that other prisoners could go to less secure prisons. MS. KNUTH said this was correct. REPRESENTATIVE ROKEBERG asked if there was a prison expansion plan in the state. He asked if there was anything in writing. MS. KNUTH brought a chart and an abridged version of the plan. Number 0444 REPRESENTATIVE JAMES referred to the problems in other communities and asked if there was any other community that has an existing facility and has come forward and asked for an expansion. MS. KNUTH said yes, there are several including Palmer. Palmer is where the state would get the most beds for the dollars because their infrastructure is underutilized now and was built specifically for an expansion. In Bethel, the Yukon-Kuskokwim facility wants and needs expansion. MatSu pretrial is another facility where the community is interested in having this happen. She said the Fairbanks facility needs an expansion, but that community has not come forward in the same way that other communities have, which makes it lower on the list. Highland Mountain is another one which is high on the state's list, but that community specifically does not want a greater number of prisoners. There are different levels of enthusiasm and non-reception throughout the state. REPRESENTATIVE JAMES mentioned that she never brought up Anchorage. Number 0550 MS. KNUTH answered that the municipality feels there is a need to replace the Sixth Avenue jail. REPRESENTATIVE ROKEBERG said the needs for facilities are the number one priority in the state and asked that the committee not feel that the neighborhood concern which has been expressed is an areawide or a citywide concern in Anchorage. CHAIRMAN GREEN took issue that it was jail versus prison, not just geographic. REPRESENTATIVE ROKEBERG agreed with the distinction, but it does not say that Anchorage is against having a facility. Number 0600 REPRESENTATIVE ERIC CROFT asked if the price for Arizona included inmate health. MS. KNUTH said the price does not include health care. One of the ways to get a low cost figure is by having a very select population of prisoners which is what we are exporting to Arizona. The prisoners who go to Arizona are the cheapest prisoners that we have the state; they don't have major medical problems, they don't have psychological or social disruption problems, they don't have special needs for programs. These prisoners are the absolute bare bone need group of prisoners. The $62 a day figure does not include the medical costs and some of the other costs the state incurs. The actual figure, when those are included, is in the $80 a day range. REPRESENTATIVE CROFT referred to the approximate $7.5 million fiscal note, with $2.5 million of it designated for inmate programs, inmate health care and other indirect costs. He asked if the Arizona figure would take out this amount. MS. KNUTH clarified that she was not in the best position to answer that question. REPRESENTATIVE CROFT asked if she could find out what the predicted operating life was of this facility. MS. KNUTH said she would.
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