00 SENATE BILL NO. 2012 01 "An Act expressing legislative intent regarding privately operated correctional facility 02 space and services; relating to the development and financing of privately operated 03 correctional facility space and services; authorizing the Department of Corrections to 04 enter into an agreement for the confinement and care of prisoners in privately operated 05 correctional facility space in the City of Whittier; giving notice of and approving the 06 entry into and the issuance of certificates of participation for the upgrade, expansion, 07 and replacement of a certain correctional facility in the City of Bethel; giving notice of 08 and approving the entry into lease-financing agreements for that project; and providing 09 for an effective date." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 01 to read: 02 LEGISLATIVE INTENT. It is the intent of the legislature in secs. 2 and 3 of this Act 03 to secure additional correctional facility space and services through a privately operated 04 correctional facility in Alaska. The legislature expects the Department of Corrections to 05 contract with the City of Whittier for privately operated correctional facility space and 06 services similar to those currently acquired for medium-security Alaska prisoners in a 07 privately operated prison outside the state. The legislature anticipates a privately operated 08 correctional facility will bring competitive management styles and operations to Alaska. The 09 legislature expects that the initial per diem cost at a privately operated facility (excluding 10 costs related to major medical, prescription medication, and transportation of prisoners and 11 other services excluded in contracts for Alaska prisoner care and custody in privately operated 12 facilities outside the state but including the capital costs for construction of the facility, 13 including debt service) will be 18 - 20 percent less than the current average per diem rate for 14 all state facilities as reported to the federal government for reimbursement purposes and 15 should be approximately $89 to $91 in current dollars. 16 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 AUTHORIZATION TO CONTRACT FOR CORRECTIONAL FACILITY SPACE 19 AND SERVICES WITH THIRD-PARTY CONTRACTOR OPERATION. (a) The 20 Department of Corrections is authorized to enter into an agreement with the City of Whittier 21 for the purpose of acquiring correctional facility space and services for a minimum of 25 22 years for persons who are committed to the custody of the commissioner of corrections. 23 (b) The agreement entered into under this section is predicated on and must provide 24 for an agreement between the City of Whittier and one or more private third-party contractors 25 under which private, for profit or nonprofit third-party contractors construct and operate the 26 facility by providing for custody, care, and discipline services for persons committed to the 27 custody of the commissioner of corrections under authority of state law. In the agreement 28 with the City of Whittier, the commissioner of corrections shall require that the city procure 29 one or more private third-party operators through a competitive procurement process. The 30 procurement requirements of this subsection are satisfied if the City of Whittier in exercising 31 its powers under AS 29.35.010(15) for procurement of land, design, construction, and 01 operation of a facility, follows its municipal ordinances and resolutions and procurement 02 procedures. 03 (c) The authorization given by (a) of this section is subject to the following 04 conditions: 05 (1) the agreement must cover a minimum of 1,000 prison beds, and, subject to 06 (2) of this subsection, the payments by the Department of Corrections must be sufficient to 07 cover: 08 (A) a capital component consisting of the cost for the development and 09 constructions of the facility, including all debt service; and 10 (B) an operating component consisting of the operating costs based on 11 per diem operating charges for a minimum of 1,000 prison beds; for a period of five 12 years from initial operation of the facility the operating component must include a 13 reasonable adjustment for costs not incurred until full occupancy; 14 (2) the agreement must provide that the obligation of the Department of 15 Corrections to make payments under the agreement is subject to annual appropriations of 16 funds by the legislature; 17 (3) the agreement must contain terms providing that the commissioner of 18 corrections may direct the City of Whittier, after notice and reasonable opportunity to cure, to 19 terminate its contract with a private third-party contractor operating the facility in accordance 20 with the provisions of (b) of this section, and to procure a replacement third-party contractor, 21 if the commissioner finds that the private third-party contractor has failed to provide or cause 22 to be provided the degree of custody, care, and discipline required by terms of the agreement 23 and that the private third-party contractor has been given notice and reasonable opportunity to 24 cure as provided in the third-party contractor's agreement with the City of Whittier; 25 (4) the authority of the commissioner of corrections to enter into the 26 agreement is subject to the condition that the contract between the city and the operator 27 requires the operator to provide culturally relevant counseling services to incarcerated Alaska 28 Natives. 29 (d) Nothing in secs. 2 and 3 of this Act is intended to prevent the City of Whittier 30 from issuing bonds as permitted for municipalities under state law, including AS 29.47.390, 31 to finance the construction of the facility. The bonds may be secured by and payable from 01 revenues of the facility, including those described in (c) of this section. Revenues of the 02 facility are not revenues of the City of Whittier for purposes of AS 29.47.390. 03 * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 APPLICABILITY. The provisions of AS 33.30.031(a) do not apply to an agreement 06 for correctional facility space and services in accordance with the provisions of sec. 2 of this 07 Act. This applicability section does not affect the authority of the commissioner of 08 corrections to designate the correctional facility to which a prisoner is assigned. 09 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 NOTICE OF THE ISSUANCE OF CERTIFICATES OF PARTICIPATION AND 12 OTHER FINANCING. (a) Subject to annual appropriation, the Department of 13 Administration is authorized to enter into a lease-financing agreement for the project 14 described in (e) of this section. 15 (b) The state bond committee is authorized to provide for the issuance of certificates 16 of participation in one or more series in the aggregate principal amount of $17,895,000, plus 17 costs of required reserves and costs of issuance, to pay for the costs of upgrade and expansion 18 and other costs of financing the project described in (e) of this section. The estimated total 19 cost of construction, acquisition, and equipping the project is $19,000,000, which shall be 20 paid from the proceeds of the certificates of participation issued under this section. The 21 estimated aggregate annual amount of rental obligations under the lease-financing agreements 22 is $1,700,000. The total payments for the full term of the certificates of participation are 23 estimated to be $25,500,000. In this subsection, "cost of construction" includes credit 24 enhancement and underwriting expenses, rating agency fees, bond counsel fees, financial 25 advisor fees, printing fees, trustee fees, advertising fees, capitalized interest, interest earnings 26 used for lease payments, and other costs of issuance, and costs of required reserves. 27 (c) The state bond committee may contract for credit enhancement, underwriting, 28 credit ratings, bond counsel, financial advisor, printing, advertising fees, and trustee services 29 that the committee considers necessary in financing the project described in (e) of this section. 30 (d) The lease payments owed under a lease-financing agreement executed under this 31 section are subject to annual appropriation by the legislature. The legislature intends that 01 money from the general fund will be sufficient to make all lease payments; however, if that 02 source of money is insufficient to make the payments, the payments shall be made from any 03 other valid source, subject to appropriation. 04 (e) The project that may be financed as provided for in this section and the estimated 05 construction and other costs of financing the project, are as follows: expansion of the Yukon- 06 Kuskokwim Correctional Center in Bethel by up to 96 new beds at costs not to exceed 07 (1) $183,300 a bed; 08 (2) $17,593,700 in capital costs; and 09 (3) $5,682,000 in increased operating expenditures. 10 (f) This section constitutes the notice and approval of the project required by 11 AS 36.30.085. 12 * Sec. 5. Sections 1 - 3, ch. 32, SLA 2001, are repealed. 13 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 OBLIGATION OF COMMISSIONER OF CORRECTIONS. The commissioner of 16 corrections shall promptly notify the revisor of statutes that construction has begun on the 17 private prison approved in secs. 1 - 3 of this Act. 18 * Sec. 7. Sections 1 - 3, 5, and 6 of this Act take effect July 1, 2002. 19 * Sec. 8. Section 4 of this Act takes effect the day after the day that the revisor of statutes is 20 notified by the commissioner of corrections under sec. 6 of this Act.