Legislature(1995 - 1996)
02/20/1996 01:36 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 428
"An Act giving notice of and approving a lease-purchase
agreement for construction and operation of a
correctional facility in the Third Judicial District,
and setting conditions and limitations on the
facility's construction and operation."
Co-Chair Hanley noted that HB 428 would be assigned to a
subcommittee.
Representative Mulder observed that the Department of
Corrections' budget has grown by over 600 percent. He
stressed that the intent of HB 428 is to come to grips with
the spiraling cost of corrections. He noted that HB 428 was
influenced by hearings held during the interim. He
explained that the legislation allows, but does not mandate,
the Department of Corrections to contract with a private
contractor to construct and operate up to a 1,000 bed
facility. The total cost would be up to $100.0 million
dollars. He observed that private contractors projected
that a 1,000 bed facility could be built for $60.0 to $75.0
million dollars. He maintained that savings derived from
the private sector stem from the fact that the private
sector does not have to contend with all the rules and
inefficiencies of the public system.
Representative Mulder addressed misconceptions. He
clarified that the legislation does not require the
construction of 1,000 beds. The legislation allows the
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commissioner to authorize construction of up to 1,000 beds.
He noted that $100.0 million dollars is the upward limit
that can be spent. He added that the safety record of
privately operated facilities is roughly comparable to state
operated facilities. He asserted that the new prison will
relieve overcrowding. He observed that the State is over
capacity by 100 -250 prisoners per day. He noted that the
State is being fined $300 hundred dollars for each
institution each day that the facility is over capacity. He
maintained that the legislation will allow the new prison to
take pretrial prisoners.
Representative Mulder acknowledged that the new facility
will have associated operating costs. He observed that the
State currently spends $6.0 million dollars in the state of
Arizona to house Alaskan prisoners. He stressed that the
bill will not take jobs away from Alaskans. The bill calls
for a project labor agreement for the construction of the
facility that will maximize Alaskan hire and employment. He
emphasized that Alaskan Native corporations and Alaskan
private businesses have expressed interest in the
legislation. He maintained that HB 428 represents new
economic opportunities for Alaskan businesses. He observed
that corrections is a growth industry. He pointed out that
as long as the State continues to pass get-tough-on-crime
legislation the State will be incarcerating more
individuals. He noted that the State is projected to need
962 new beds by the year 2002.
Representative Mulder noted that the facility will be built
some where in the Third Judicial District. He stated that
the facility will not be built at the location of the Alaska
Village in Anchorage.
Representative Mulder summarized that HB 428 represents a
win/win situation. He maintained that HB 428 relieves
overcrowding, brings prisoners back to Alaska, saves the
State money, and provides jobs for Alaskans.
Representative Brown stated that she shares many of the
goals expressed by the Subcommittee Chairman. In response
to a question by Representative Brown, Representative Mulder
emphasized that he has no personal tie to the legislation.
He noted that several Native corporations and private
businesses have expressed interest in the legislation. He
could not provide details of plans by the private sector.
He stated that no particular site has been identified. He
observed concerns by the Mayor of Anchorage. He pointed out
that arrests in Anchorage have more than doubled. He
emphasized that the Commissioner has latitude in selecting a
site.
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Representative Brown expressed concern with the overall cost
of the legislation. She questioned if operating costs and
land purchase are included in the total construction and
related costs as contained on page 3, line 9. She
emphasized the need to compare "apples to apples."
Representative Mulder noted that the Subcommittee has not
received a plan by the Administration.
Representative Mulder noted that the Commissioner of the
Department of Corrections recommends the deletion of the
requirement that contract facilities abide by court orders.
The restriction on housing male maximum security prisoners
will be removed at the request of the Commissioner. The
Department felt that this provision was confusing. The
removal of this provision will allow the Commissioner the
full range of options for housing inmates at the facility.
In addition, the facility accreditation provision will be
removed at the request of the Commissioner. He noted that
design cost will be included in the cost of construction.
Operating costs will not be included.
Representative Mulder reiterated his belief that the private
sector can built the facility cheaper than the State. He
observed that the Department of Corrections estimated that a
400 bed facility would cost $104.0 million dollars. Private
contractors have indicated that the facility could be build
for approximately $65.0 million dollars. He observed that
operating costs will be part of the private bid process. If
the Department feels it can operate the facility at a lower
cost the Commissioner does not need to accept the bid. He
observed that it would be prudent to construct the RFP to
state that if none of the bids meet the requirements in
terms of cost savings no bid will be accepted.
In response to a question by Representative Brown,
Representative Mulder reiterated that maximum security male
prisoners are being excluded to allow the Commissioner more
flexibility. He noted that Spring Creek is the State's
primary maximum prison facility.
Representative Navarre pointed out that a prohibition on
housing maximum security prisoners could restrict the
housing of pretrial prisoners. Removal of the language
would allow the housing of pretrial prisoners. He asked if
the facility would displace current facility beds.
Representative Mulder stated that the new facility is not
projected to displace any current state employees. He
observed that the Mayor of Anchorage is considering the
closure of the 6th Avenue facility. He estimated that
employees of the 6th Avenue facility could be absorbed
within the current system.
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Representative Brown asked the estimated operating costs.
She observed that the annual operating cost of the Spring
Creek facility is $14.0 million dollars. She asked how the
operating costs would be provided for in the State's budget.
Representative Mulder emphasized that the State is being
fined for being overcrowded. Representative Brown pointed
out that the fine is returning to the General Fund.
Representative Mulder observed that options for adding beds
include, additional prisoners being sent to Arizona,
construction of additional beds in existing state
facilities, or the construction of a new facility. All
three options have associated costs. He acknowledged that
sending prisoners out-of-state represents the lowest cost.
He emphasized that it is good public policy to employ
Alaskans.
Representative Brown asked the estimated per day operating
cost per prisoner. Representative Mulder noted that private
contractors have given rough estimates of $55 to $69 dollars
a day. He estimated that bids would be less than the
current state average. He noted that public employee groups
can form cooperatives to bid on the contract.
Representative Mulder noted that the legislation allows a
lease purchase option. The facility could also remain in
the ownership of the private entity. He stressed that a
private entity would pay property tax. Representative
Navarre estimated that the private owner would roll property
costs into the contract bid.
Co-Chair Hanley assigned HB 428 to a subcommittee consisting
of Representative Mulder as Chair and Representatives Kelly
and Navarre.
Co-Chair Hanley noted that the legislation does not require
that a facility be built by a private enterprise. The
Commissioner could request capital funds from the
Legislature.
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