Legislature(1997 - 1998)

03/18/1998 09:20 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HOUSE BILL NO. 53                                                             
                                                                               
"An Act relating to the authority of the Department of                         
Corrections to contract for facilities for the                                 
confinement and care of prisoners, and annulling a                             
regulation of the Department of Corrections that limits                        
the purposes for which an agreement with a private                             
agency may be entered into; authorizing an agreement by                        
which the Department of Corrections may, for the                               
benefit of the state, enter into one lease of, or                              
similar agreement to use, space within a correctional                          
facility that is operated by a private contractor, and                         
setting conditions on the operation of the correctional                        
facility affected by the lease or use agreement; and                           
giving notice of and approving a lease-purchase                                
agreement or similar use-purchase agreement for the                            
design, construction, and operation of a correctional                          
facility, and setting conditions and limitations on the                        
facility's design, construction, and operation."                               
                                                                               
                                                                               
 CS FOR HOUSE BILL NO. 53(RLS)(title am)                                       
                                                                               
"An Act expressing legislative intent without the force                        
of law concerning correctional facility space and the                          
Cleary v. Smith case; adding, as a general power of                            
municipalities, the power to provide for, and enter                            
into agreements concerning the confinement and care of                         
prisoners; relating to authorizing the Department of                           
Corrections to enter into agreements to lease                                  
facilities for the confinement and care of prisoners                           
with the City of Delta Junction and with the                                   
Municipality of Anchorage; and providing for an                                
effective date."                                                               
                                                                               
Representative Elder Mulder was invited to join the                            
committee.  He read his sponsor statement into the record.                     
He said this bill would accomplish three things.  First, in                    
the intent section, it gave the Court express Legislative                      
intent that they would work with the Commissioner of                           
Corrections to relieve overcrowding conditions.  Second, the                   
department would be authorized to contract with the                            
communities of Delta Junction/Ft. Greely re-use authority                      
for the conversion of Ft. Greely to a private prison.                          
Third, the Commissioner of Corrections would be authorized                     
to contract with the Municipality of Anchorage for the                         
replacement of the Sixth Avenue Jail.  Representative Mulder                   
noted several good reasons for this bill, including:  jobs                     
for Alaskans, inmates would be held in Alaska and there were                   
no other reasonable proposals on the table at this time.  He                   
specifically noted that by the end of FY '99, Alaska would                     
have over 850 inmates being held in a private prison in                        
Arizona, costing the State well in excess of $14 - $15                         
million.  That kind of expenditure could be utilized to help                   
fund Alaska payroll to pay for Alaskans.                                       
                                                                               
(Tape malfunction at this point.)                                              
                                                                               
Representative Mulder told the committee that this bill                        
would go along way to ensure the security of the future of                     
Delta Junction and providing for a healthy re-use of the                       
facility and an expansion of the economy in Delta Junction.                    
                                                                               
                                                                               
Margaret Pugh, Commissioner, Department of Corrections was                     
invited to join the committee.  She introduced Margot Knuth,                   
Assistant Attorney General, Department of Law.  Ms. Knuth                      
said that creation of beds would not solve the overcrowding                    
in Alaska.  (Further tape malfunction.)  She noted that the                    
Bethel jail had been grossly overcrowded for years and that                    
in general, overcrowding in Alaska was at an intolerable                       
level.  She drew the committee's attention to several other                    
proposals that could be considered regarding the                               
overcrowding issues, such as expansion of the Palmer                           
facility and ownership of the facility at Delta Junction.                      
She noted that the re-use proposal would be helpful to Delta                   
Junction.  However, with reference to the expansion of the                     
Palmer facility, there would be little to no transportation                    
costs to keep the inmates in-State.  However, all issues                       
must be clarified including the cost effectiveness of the                      
facility in Delta Junction and if services could be provided                   
reasonably elsewhere in the State.  She explained a small                      
technical issue with the title of the bill.  In response to                    
a question from Senator Adams regarding BRAC law she said                      
she could not explain it but would contact Department of                       
Community and Regional Affairs for him.                                        
                                                                               
Senator Donley asked about the title change.  Ms. Knuth said                   
it was necessary because Delta Junction was a second class                     
borough and Fort Greely was outside the city boundary.  With                   
regards to sections two and three of the bill extra                            
territorial powers applied and if not included in the title                    
it would create a technical problem.  Senator Donley said he                   
did not see any existing conflict, however.  Ms. Knuth said                    
that a second-class city did not have the power to house                       
criminals, and therefore without the title change the                          
sections would not be effective.                                               
                                                                               
(Tape #82, Side A switched to Side B at approximately 11:40                    
a.m.)                                                                          
                                                                               
Senator Donley felt it was inclusive in the title where it                     
was provided in the title where it said "...enter into                         
agreements to lease facilities for the confinement and                         
care...".  This could give notice they were included and was                   
all that was required.  Ms. Knuth further stated that if the                   
title were amended it would probably avoid litigation at                       
some further point.  This was a preventative suggestion.                       
                                                                               
Co-chair Sharp said he could only continue the hearing on                      
this matter until noon and did want to hear from the Delta                     
contingent that had travelled to Juneau to give testimony.                     
Further hearings on this bill could not be before 27 March.                    
In response to Senator Donley, Co-chair Sharp said the bill                    
would not be moved today.  Co-chair Pearce had several                         
questions she wanted to ask and he wanted to give everyone a                   
chance to testify on this bill who wanted to.  After short                     
discussion with Senator Donley regarding rescheduling of                       
this matter, Co-chair Sharp said he would try to work it in                    
earlier, including Saturday or Sunday hearings.  He then                       
invited the Delta contingent to join the committee.                            
                                                                               
Glen Wright, Mayor of Delta Junction testified before the                      
committee.  He said this bill would help the community help                    
itself by bringing about three hundred jobs and allowing a                     
quality of life for the area.                                                  
                                                                               
Doris Fales, Delta Junction Coalition testified before the                     
committee.  She said this bill would help create jobs.  She                    
said the Coalition had worked with the community in order to                   
promote economic growth.                                                       
                                                                               
Ray Woodruff, Executive Director, Delta Junction Coalition                     
testified before the committee.  He told the committee that                    
turning the post into a prison was one of the first and only                   
major proposals received.  Letters were written to                             
approximately 118 Federal and State agencies asking for any                    
interest in Ft. Greely.  No interest or answer was received                    
from them.  The Army also went through the same procedure,                     
receiving no interest.  The community had an interest,                         
however and brought the matter to a vote.  He said the vote                    
on this proposal brought out the most voters in two years.                     
The majority of the community supported the bill.                              
                                                                               
Co. Dave Anderson, Post Commander, Ft. Greely testified                        
before the committee.  He described the BRAC process and                       
realignment program as currently planned for the committee.                    
He noted that the Army had supported the community of Delta                    
Junction and its re-use efforts.  These efforts included the                   
surplusing of approximately 1-1/2 million square feet of                       
facilities on the installation and 18 hundred acres                            
property.  The Army would retain all training areas and                        
ranges for continuing training and testing missions in                         
Alaska as used by the Army and Air Force throughout the                        
year.  The approved realignment plan was to reduce fifty                       
percent of employees in FY 2000 and fifty percent in FY                        
2001.  Re-use of the facility would negate all requirements                    
for demolition of the property currently programmed at                         
approximately $48 million.  He voiced his concern with the                     
process, including taking care of the employees of Ft.                         
Greely during the transition.                                                  
                                                                               
Senator Phillips asked about the city election in mid-                         
January.  Mr. Woodruff said the election was conducted as                      
close to a complete election as possible.  It was an opinion                   
poll and no one was turned away who was a registered voter                     
or had registered to vote.  This was conducted on an area-                     
wide basis rather than just the City.  Senator Phillips                        
asked if it was a special election.  Mr. Woodruff indicated                    
that it was not an official, special election.                                 
                                                                               
Senator Adams asked for an explanation of the BRAC law.  It                    
was his understanding the Governor set up the coalition to                     
finding re-use of the facility.  He also asked for an                          
explanation on the conveyance organization agreement which                     
had to take place and asked where it was in the process with                   
the Governor.                                                                  
                                                                               
Mr. Woodruff said a letter had been provided the Governor                      
requesting the final stages of the process be implemented                      
through the LRA.  It has not been responded to as of yet and                   
the Department of Community and Regional Affairs has been                      
contacted.  He noted for the committee that this was a                         
change in the way the Federal government did business.   It                    
only went into effect last year, and they became aware of it                   
sometime in December last year.                                                
                                                                               
Senator Adams asked that if there is no signature on the                       
conveyance what would happen?  Colonel Anderson said he did                    
not fully understand the question.  Senator Adams further                      
explained that due to costs, what would happen if the                          
Governor did not sign the conveyance.  Colonel Anderson said                   
the local Re-use Authority had been recognized by both the                     
Governor and the Federal government.  Ft. Greely reservation                   
qualifies for rural economic development conveyance with no                    
cost to a community.  He felt this was the main drive since                    
the property could be obtained at no cost by the local Re-                     
use Authority.                                                                 
                                                                               
Senator Torgerson asked if this was for a particular plan.                     
His understanding was that Delta would take ownership of the                   
facility.  Colonel Anderson concurred.  Senator Torgerson                      
voiced further concern that the Governor may not sign the                      
conveyance if he found that prison beds could be supplied                      
cheaper at another location.  Colonel Anderson said if that                    
happened the facility would be open for bid again or                           
demolition.                                                                    
                                                                               
In further response to Senator Torgerson's question                            
regarding an agreement, Mr. Wright explained that the only                     
agreement made was between the Re-use Authority and all                        
this.  The City does not enter into any agreement until the                    
bill is passed and the Governor signs it.  The City will                       
work with the Department of Corrections.  Senator Torgerson                    
said it was his understanding there were provisions in the                     
bill that said it should be competitively bid, however, it                     
looked like that had been ignored and an agreement signed                      
anyway.  Mr. Woodruff explained the lease document that was                    
worked out.  This was in order to get started on the lease                     
request.  There was no intention to shortcut any provision                     
of AS 36.30.  He said even by pushing everything hard it                       
would take approximately fourteen months to complete the                       
project.  Therefore, a lease document was signed.  However                     
it would not be valid if the Legislature did not pass the                      
bill, the Governor did not sign it, if the Department of                       
Corrections refused to get a contract with Delta Junction,                     
or if Delta Junction did not get their proper contract the                     
lease would then be invalid.  He said ample exclusionary                       
clauses had been included also.                                                
                                                                               
Co-chair Sharp thanked the Delta contingent and continued                      
the taking of testimony.                                                       
                                                                               
J. Frank Prewitt, President and Chief Executive Officer of                     
Allvest, Inc. was invited to join the committee.  He                           
explained the site photography and site plan for the                           
committee.  He said that the reutilization of Fort Greely                      
was good public policy in terms of returning dollars to the                    
State of Alaska and helping out Delta Junction.  He noted                      
that the Greely proposal was the best in the past eight                        
years.  He said the issue of centralization and                                
regionalization was not an either-or proposition.  Each                        
State needs long-term felon sentence beds that have                            
sufficient economies of scale to accommodate those offenders                   
through the period of their incarceration.  Jail space is                      
also needed.  Therefore, use of the Greely proposal would                      
alleviate overcrowding in a cost-effective fashion.  He felt                   
the argument was a philosophical disagreement between                          
privatization and a government delivery of correctional                        
services.  The private sector has filled in to accommodate                     
the void left by the government's inability to respond                         
quickly enough to overcrowding concerns or by the cost of                      
government delivery of correctional services, which in some                    
states such as Alaska is extreme.  Many alternatives to                        
incarceration have been explored.  As an example he said                       
that during the Hickel administration the Department of                        
Corrections did nothing more than sort through their                           
offender population moving low-risk offenders out into less                    
costly alternative facilities, such as halfway houses and                      
treatment programs.  He felt this was a correct process as                     
these low-risk offenders needed to be moved out of long-                       
term, costly hard beds.  He referred to the Bethel facility                    
and said alternatives were available to the overcrowding at                    
that facility.  Further, he said that they believed the                        
Greely proposal provided relief in a cost-effective fashion                    
and said both the debt service and the operating cost of the                   
facility on a daily bed rate would be under $70/day/inmate                     
as compared to the State's present costs.  Services at                         
Greely were also anticipated to meet the highest standards                     
of the industry, both structurally, operating and hiring and                   
training standards.  The direct impact of the Greely                           
proposal would be relief in the present prison population.                     
There would be no loss of State jobs, an augmentation of                       
correctional services, State-operated facilities to be safer                   
because over-crowding would be relieved, cost containment                      
for the Department of Corrections and economic development                     
for Delta Junction.                                                            
                                                                               
Mr. Chilters, Delta Junction was invited to join the                           
committee.  He referred to an aerial photograph which was                      
passed out to committee members only of the Ft. Greely site.                   
He noted that the facility must meet all ACA, ADA and codes                    
for re-use.  He explained the reutilization of the existing                    
facility included revitalization of the facility's                             
infrastructure, security, access for the handicapped,                          
medical, secured entrances and it's relationship with the                      
community.                                                                     
                                                                               
Mr. LaResche, Delta Junction was invited to join the                           
committee.   He explained to the committee how the contract                    
would work and how it complied traditionally with states                       
using this method.  He said it was a fairly simple chain of                    
contracts and financing whereby the State would contract                       
with the City of Delta Junction to provide prison beds, the                    
facilities and operations for twenty years.  Then, Delta                       
Junction would contract with the lessee/owner of the                           
facilities to provide the capital facilities themselves.  He                   
said that this lessee/owner policy and procurement process                     
went out with competitive solicitation.  Allvest won the                       
procurement process.  The facility owner who would be                          
leasing the facility to the City renovates the buildings for                   
use as a prison and finances the whole thing with private                      
financing.  At this point, he noted that the State was used                    
to financing and owning things with State money, i.e. the                      
Anchorage facility.  In this case, however, financing and                      
security would be for Allvest.  If Allvest were to default                     
on the bond or the prison to fall or not meet its criteria,                    
the State would not be liable for paying for it.  Delta                        
Junction, again, would contract with someone else to operate                   
the facility.  As stated in the bill, the Department of                        
Corrections may require that Delta Junction use a process                      
similar to the procurement code to pick the private                            
operator.  He believed this process was simple and highly                      
effective and would allow the State to procure complete                        
services for under $70.  For the record, Mr. LaResche noted                    
that the State previously had three years to respond to an                     
RFP in order to own the facility and they showed no interest                   
whatsoever.                                                                    
                                                                               
Co-chair Sharp thanked the testifiers for appearing before                     
the committee.                                                                 
                                                                               
Senator Donley notified the co-chair that he could cancel                      
his 4:30 p.m. meeting on the Aleyeska Central School so the                    
Senate Finance Committee could meet earlier on this matter.                    
He noted the Anchorage Chief of Police and others from out                     
of town were present and wanted to testify.                                    
                                                                               
Co-chair Sharp said it would be a possibility for those who                    
were in town.   However, the committee could not get                           
teleconference participation for those out of town.  Also,                     
the co-chair and Senator Torgerson had a Senate Resources                      
Committee meeting from 3:30 p.m. to 5:00 p.m.                                  
                                                                               
There proceeded discussion amongst committee members as to                     
possible times to continue the hearing to.                                     
                                                                               
(Tape #81, Side B switched to Tape #82, Side A.)                               
                                                                               
Co-chair Sharp said the committee would further consider a                     
possible time for continuation of this matter and he would                     
make an announcement from the Senate Floor.  He appreciated                    
the offers from Senator Donley and also from Senator                           
Phillips who is vice-chair and could run the meeting,                          
however, the committee room and teleconference were not                        
available.  He said advised those on teleconference and                        
present at the meeting he would get word back as soon as                       
possible as to when this bill would be rescheduled for                         
public hearing to include public testimony.                                    
                                                                               
ADJOURNMENT                                                                    
                                                                               
Co-chair Sharp adjourned the committee at approximately                        
12:40 p.m. until tomorrow at 10:00 a.m.                                        
SFC-98 -21- 3/18/98                                                            

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