Legislature(1997 - 1998)
02/03/1998 01:40 PM House FIN
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* first hearing in first committee of referral
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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 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."
Representative Mulder introduced the bill, noting that
prisons in Alaska are all overcrowded. He acknowledged
that he had been approached by the Mayor of Delta Junction
in hopes of turning Fort Greely into a private prison
facility. The City is under pressure to create a plan for
that facility by March 15th.
Representative J. Davies questioned why a bill would be
required to accomplish this intent. Representative Mulder
responded that the statutes don't clearly stipulate whether
or not the legislation would be needed. Hence, should the
Department of Corrections undertake such a contract, he
believed the State would be taken to Court. Representative
J. Davies read from the current statute AS 33.30.031: "If
the Commissioner determines that suitable state correction
facilities are not available, the Commissioner may enter
into an agreement with a public or private agency to
provide necessary services." He stressed that current
language is broad and straightforward, which could address
the recommended need.
Co-Chair Therriault advised that the language currently
before the Committee was permissive and that there would be
discussion on whether "may" should be replaced by "shall".
Additional language could be used to instruct the
Administration in a particular direction.
GLEN E. WRIGHT, MAYOR, CITY OF DELTA JUNCTION, stated that
in 1994, the downsizing of Ft. Greely, created a stressful
economic situation in that area. At that time, the
community formed Delta/Greely Community Coalition. With
the Governor's help, the Coalition became the entity
responsible for implementing a plan for Ft. Greely.
JIM CARLSTROM, PRESIDENT, DELTA/GREELY COMMUNITY COALITION,
DELTA JUNCTION, stated that the coalition consisted of
twelve members from the community. The work of the
coalition was to determine a replacement alternative for
Ft. Greely. Until a proposal was received from ALLVEST,
there was no viable option to fill the bill. Mr. Carlstrom
commented that the City Council, the school district and
most organizations in the community supported the proposal.
The plan was presented before the community in two
different scheduled events to educate them. When the vote
occurred, 62% voted for the measure, recommending ALLVEST
continue forward. He stressed that by March 15th, the reuse
plan must be submitted.
Representative J. Davies asked if the City of Delta
Junction has the authority to operate such a facility.
Mayor Wright replied that the City will be a "go-between"
the Department of Corrections and ALLVEST Corporation. He
understood that the city of Delta Junction would have a
contract with ALLVEST and with the State Of Alaska.
Representative J. Davies asked if the city had police
powers. Mayor Wright said that there was no need.
Representative J. Davies understood that those powers would
be required by ordinance because Ft. Greely is located five
miles from the city limits.
Co-Chair Therriault questioned the community's basic
understanding of the issues proposed. Mr. Carlstrom stated
that open meetings for the community had taken place on
December 16th, January 8th and January 15th. An election was
held on January 17th. The initial letter of intent was
received from ALLVEST in December. He felt that as a
coalition, the information had been dispersed efficiently
and the community was well informed.
LT. COL. DAVE ANDERSON (TESTIFIED VIA TELECONFERENCE), U.S.
ARMY, MATSU, noted that in the redesigning of the military
base, economic resources can be made available to
facilitate recovery. This option has been provided to the
Delta/Greely Community Coalition. The Army is committed to
support the community in whatever reuse they determine
beneficial for that area. There will be an impact based
on the current proposal, as realignment would begin one
year early. He suggested such action would impact the
civilian employees.
Representative Mulder asked if the federal employees
supported the plan. Lt. Col. Anderson replied that the
Federal Employees Union at Ft. Greely has endorsed a plan
to undertake realignment in the year 2000. There are
concerns that it is now scheduled one year early.
Representative Mulder asked if $48 million dollars to clean
up the facility would be sufficient. Lt. Col. Anderson
replied that currently, the program would cost $48 million
dollars for demolition of those facilities that the Army
will not retain. There are 1.7 million square feet of
facilities; the Army will retain about 250 thousand square
feet of those facilities. In the current proposal, almost
900 thousand square feet will be reused.
K. LESLIE KIRK, CONCERNED CITIZEN OF DELTA JUNCTION, spoke
against the proposed legislation. He stressed that a
misunderstanding currently exists. The Coalition consists
of a selective group of people who were chosen because of
their support of the proposal. Mayor Wright represents only
20% of the people in the Delta Junction area.
Mr. Kirk advised that correspondence had been made with
three universities to consider the use of Ft Greely. He
continued the "public" meetings referenced by the previous
speaker were not public participation meetings but instead
presentations by ALLVEST. He noted that questions were
asked how the plan would be able to use the people of Delta
Junction. ALLVEST was not able to give any guarantees for
those concerns.
Mr. Kirk continued, the vote taken was not legal. In order
to have a legal vote, it must be noticed at least a twenty
(20) days prior the vote. He reiterated that the vote was
not legal. People were allowed to register to vote when
they showed up to vote. According to Alaska law, there
must be a thirty-day waiting period after a person has
registered before they are allowed to vote. The vote
allowed absentee and fax balloting which was done
incorrectly.
Mr. Kirk advised that if the ALLVEST proposal is not
accepted and there is not another proposition available
immediately, Ft. Greely will not be demolished right away.
The facilities would then be placed into the private sector
to bid for fair market value. He believed that the complex
would be sold.
(Tape Change HFC 98- 15, Side 1).
Mr. Kirk reiterated that the City of Delta Junction is in
an uproar regarding this legislation. ALLVEST provided the
Coalition a contract to be signed without reading the
document. In that document, all building contents will be
given to ALLVEST; all the private property would be leased
to ALLVEST for $10 dollars a year and after 5 years they
would then own the equipment. Mr. Kirk again stressed that
the people of Delta Junction want to have a legal vote
within the required time frame. Mr. Kirk concluded
reiterating that there are three universities contemplating
use of the facilities. He noted that the post was
perfectly geared for use as a college. There has been a
proposition that it be used as a special junior college for
Native Alaskans as a step between the village and
university.
FRANK PRUITT, PRESIDENT, ALLVEST CORPORATION, ANCHORAGE,
noted that ALLVEST made the initial proposal to the local
reuse authority. He advised that the proposal would return
dollars to Alaska since the State currently sends prisoners
out to Arizona. He emphasized that the facility would be a
very good correctional facility.
Alaska is unique in that we house both our misdemeanants
and long-term felons in the same facility. There has not
been a comprehensive plan putting Alaska in that spot. This
has evolved, as we are a small state with remote criminal
justice infrastructures. The issue is polarized between
having a centralized system and regional expansion. Ft.
Greely would provide 800 long-term medium security beds for
incarceration of Alaskan offenders. Space is needed in the
regional jails to accommodate this population. He added
that he was not aware of any other state, which transferred
prisoners out.
Currently, the Department of Corrections is operating over
emergency capacity with nearly 600 more prisoners than they
have legal beds. When ALLVEST met at Ft. Greely, they
understood that the base was scheduled for realignment and
was going through a public process to find a developer to
provide the reutilization. ALLVEST approached the
Coalition after most of their other ideas became
unfeasible. ALLVEST encouraged the Coalition to educate
the public in placing a correctional facility in that area.
He added that ALLVEST is comfortable that Ft. Greely could
be turned into a secure facility. Employees can be hired
and the facility can be built and operated at a competitive
price. He recommended that the Legislature should
establish a "not to exceed figure" with the legislation.
ALLVEST proposes to augment the State of Alaska
correctional services through a private-public venture that
will provide high quality correctional services at a
competitive price.
Representative J. Davies reiterated his concern regarding
the need of the proposed statute. Mr. Pruitt replied that
Bob LeResche would be better able to answer that query.
Title 33 was revised during the Hickel Administration to
enable private prisoner contracting out to Arizona. Mr.
Pruitt believes that the Department of Corrections has the
authority and responsibility to private contract care of
inmates.
TOM LIVINGSTON, ARCITECT, LIVINGSTON & SLOAN, ANCHORAGE,
stated that the proposal being offered is essentially an
18-acre site in the middle of Ft. Greely. Over a dozen of
the current facilities would be renovated. The concrete
frame construction would receive a 40% renovation. There
exists over 320 units of housing to be utilized by staff at
the facility. Capital costs associated with the process
are estimated to be $32 million dollars, amortized per bed
cost per day. ALLVEST has invested over 1000 hours of
design time to date. He concluded that the conversion of
Ft. Greely to a prison would be safe and also secure,
making economic sense.
ED SCHILTER, BJSS ARCITECTS, CORRECTIONAL FACILITY
ARCITECT, OLYMPIA, WASHINGTON, stated that his firm has
been in the practice of architecture for correction
facilities for over twenty-five years. The proposed
facility is similar to one in Washington State, which his
firm has been upgrading for the last ten years. Initially,
the process creates a program to determine the needs of
everyone housed and working at the facility. He emphasized
that the Ft. Greely facility would adhere well to the
proposed use.
JANET MICHAELSON, RETIRED PRISON SUPERINTENDENT, WASHINGTON
STATE, SECURITY CONSULTANT, ALLVEST, echoed that the
proposed plan is very viable. It has all the elements in
place, both program and design. She thought that Ft. Greely
could be a first rate correctional operation, as the layout
lends itself well to the conversion.
Representative Mulder asked if revenue bonds would be
needed to make the transition.
BOB LE RESCHE, PRIVATE FINANCING COUNSEL, ALLVEST, JUNEAU,
stated that there would be no cost to the State. ALLVEST
would finance the $30 million dollar cost of the renovation
with private financing. In order to do the financing at a
reasonable cost, it will be necessary to get the
Legislative permission. Representative J. Davies asked if
a resolution from the Legislature would suffice. Mr.
LeResche replied that a resolution would be worth "little
more than no action". Bond market requires that the
statute specify "shall" rather than "may".
Co-Chair Therriault reminded members that the State of
Alaska will not own the site. Mr. LeResche agreed and
noted that everyone will take the risk; the bondholders
will assume security interest, although, and the greater
security interest will be held by a corporate guarantee.
The State will not be responsible for paying the rate if it
does not work. Representative J. Davies commented that the
twenty-year lease would be subject to an annual
appropriation. Mr. LeResche agreed.
Representative G. Davis asked if the property title of Ft.
Greely would be transferred to the City of Delta Junction.
Mr. LeResche stated that the transfer of the property,
under the Federal Property Redevelopment Act, the federal
government would transfer the property to the local
redevelopment authority to help leverage economic
development in that area. The City of Delta Junction would
be involved as the entity that contracts with the State to
provide both the facility and the operation. Then the City
will contract ALLVEST to create the facility and execute
the operations.
TELECONFERENCE TESTIMONY WAS TAKEN:
ART GRISWOLD (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, testified in support of HB 53. He thought that
citizens of Delta Junction had been given plenty of time to
vote and that they had been well educated surrounding the
issue. He urged Committee members to move the bill from
Committee.
(Tape Change HFC 98- 15, Side 2).
MICHAEL MCCOWAN, (TESTIFIED VIA TELECONFERENCE), MIDDLE
SCHOOL TEACHER, DELTA JUNCTION, voiced support for the
proposed legislation. He spoke against the "prison town"
syndrome and added that the ballot voting time frame had
been adequate. Mr. McCowan urged Committee members to
support HB 53.
DONNA GARDINO, (TESTIFIED VIA TELECONFERENCE), UNIVERSITY
FACULTY MEMBER, DELTA JUNCTION, encouraged the Legislature
to require the bid for the use of Ft. Greely to be placed
into a competitive bidding process to identify the best
value provider for professional services. She voiced
concerned that ALLVEST has never operated a medium security
prison. A competitive process would yield better value to
the State and the community. Unless there are successful
negotiations with ALLVEST including the proper legal and
management approval, there will not be a contract.
KEVIN KELLY (TESTIFIED VIA TELECONFERENCE), DELTA JUNCTION,
voiced support for the proposed legislation. He noted the
penalties that the State pays housing prisoners out of
Alaska due to overcrowding. Privatization of the new
prison would be most beneficial and economical for the
State. He addressed the loss of jobs happening in Delta
Junction due to the downsizing at Ft. Greely. Mr. Kelly
urged Committee members to support passage of HB 53.
DAVID WRIGHT, (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, acknowledged that drastic misinformation
disbursed about the ALLVEST proposal. He pointed out that
a new facility would not be able to compete with the cost
of housing prisoners out of the State in Arizona. He
agreed that a vote had been taken after two rushed meetings
at which the majority of the community were not present.
Many of the people who voted did so without being fully
educated regarding the issue. ALLVEST has a questionable
intent.
BILL JOHNSON (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, spoke against the proposed legislation. He spoke
to the moral, legal and ethical questions regarding
privatizing prisons. He foresaw the current proposal not
saving the taxpayer any money. Mr. Johnson reiterated his
concern with the way that the process had been handled to
determine the best use of the Ft. Greely facility.
HUGH DOOGAN (TESTIFIED VIA TELECONFERENCE), FAIRBANKS,
spoke against the proposed legislation. He provided a
brief history of the Ft. Greely site noting that a nuclear
power plant had been built there and that it had been
closed in 1972. He understood that there is nuclear waste
buried at Ft. Greely and capped with cement. Buying this
piece of land would be a huge liability for the State of
Alaska and the people of Delta Junction. He suggested that
putting a prison at Ft. Greely will take the U.S. Army "off
the hook".
SHELLIE MATHEEWS (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION. voiced concern with the rapidity with which the
proposal was pushed on the people of Delta Junction. She
urged the Committee to reconsider passage of the proposed
legislation.
PATRICK SCHLICHTING, (TESTIFIED VIA TELECONFERENCE),
CIVILIAN EMPLOYEE, FT. GREELY, DELTA JUNCTION, spoke
against the proposed legislation, noting that the civilian
employees at Ft. Greely are not in support of any proposal
which expedites the Brag time line. Mr. Schlichting also
challenged the proposed $48 million dollar cost associated
with demolition. He requested a cost break down of that
figure. Mr. Schlichting urged Committee members to proceed
with caution.
PATRICK DALTON, (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, questioned if ALLVEST would transport prisoners
from other states to the new Alaska prison. Co-Chair
Therriault advised that concern would be addressed in the
contract.
Mr. Dalton spoke against the voting procedure, which
occurred in Delta Junction concerning the use of Ft.
Greely. He questioned if private prisons would be good for
the State Of Alaska. Mr. Dalton warned that wherever there
is profit, there is a potential for corruption. The
responsibility for criminal justice rests in the hands of
government, not the private sector.
ROBERT BRADLEY (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, stated that he initially voted yes for
privatization of the prison, although, now he agreed that a
revote should be taken in the community when they have been
adequately informed regarding the long-range plan.
DANIEL LUCAS (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, commented that the Commissioner of the Department
of Corrections has the responsibility to get the
competitive bidding process undertaken. He questioned why
ALLVEST was requesting a 20-year lease rather than a trial
lease period. He added that Delta Junction lacks the
infrastructure needed to sign a contract with any major
company. He recommended that the Commissioner of DOC take
control of the situation.
DAN BECK, (TESTIFIED VIA TELECONFERENCE), SUPERINTENDANT -
DELTA SCHOOL DISTRICT, DELTA JUNCTION, voiced concern with
the quality of programs offered in the current school
system given the down-sizing at Ft. Greely. All
possibilities being considered except that for the prison
will not keep the schools at their present status. He
urged the Committee to pass the proposed legislation.
Co-Chair Therriault asked if the teacher's union had taken
a stance on the proposal. Mr. Beck was not aware of action
taken.
LORETTA SCHOOLEY, (TESTIFIED VIA TELECONFERENCE), DELTA
NEWSPAPER EDITOR, DELTA JUNCTION, spoke in support of the
proposed legislation. She commented that membership of the
Coalition adequately represented the Delta Junction
community and that the vote represented a fair and
widespread indication of the entire community.
SAM DIGHTON (TESTIFIED VIA TELECONFERENCE), DELTA JUNCTION,
spoke against building a prison in Delta Junction as it
posed a possible threat to the children of that community.
He recommended that the facility be used for some sort of
tourist business or elderly care center. He urged
Committee members not to make Delta Junction a "prison
town".
FRANK GOLD, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS,
noted that he disagreed that this proposal came before the
community of Delta Junction as it is proposed before the
Finance Committee. He asked the reason for creating a
monopoly in one area. If requirements are the same of
those for the Department of Correction (DOC) employees, the
proposal evades the State Employee Union and the salary
requirements. It would permit a private agency to cut
costs without paying the appropriate wages.
He asked why the State should support a profit agency over
a non-profit, if they are to have control over what is
occurring. This proposal creates that scenario. The State
would not have any control over the budget or the profit.
He stressed that Delta Junction should keep ownership of
Ft. Greely and lease the facility out. Mr. Gold emphasized
that the facility should not be given away. He concluded
testimony pointing out that there are many agencies
throughout the United States willing to undertake business
at Ft. Greely.
GARY DAMRON, PUBLIC SAFETY EMPLOYEE ASSOCIATION (PSEA),
EAGLE RIVER, suggested that it is time that the people of
the State Of Alaska look at the economics of what we
undertake as a State. State dollars are getting fewer and
further between. He spoke against privatization of prisons
quoting reports from East Coast private prisons. Those
prisons have proven not to be cost effective, they
jeopardize public safety and do not treat their employees
well. Prisoners in their care are not treated in the same
manner as those in State facilities with regard too
educational or rehabilitation programming.
The Alaska Department of Corrections is the finest
correctional system in the United States. There are
excellent programs in alcohol treatment, sex and drug
treatment, mental health treatment and in education. All
of these programs are cost effective and reduce the repeat
offender populations that other states must contend with.
The State Of Alaska also has the safest system in the
United States.
(Tape Change HFC 98- 16, Side 1).
Mr. Damron reiterated, studies have determined that the
costs for a bed and meals per day would be 1% less than in
a private facility. All factors considered, a public
facility is cheaper and safer. Private facility interests
lay not in public safety but in profit margin. One way
they cut costs is by cutting staff.
Mr. Damron elaborated that Governor Knowles has released a
comprehensive plan to expand regional facilities. He
agreed that costs would be expensive, as housing prisoners
is expensive. DOC can do it cheaper than that of a private
firm. He contended that the Department should be able to
bid on the facility.
Co-Chair Therriault asked if cost quotes had included the
debt reimbursement. Mr. Damron replied that the debt load
of both facilities had been counted into the surveys. The
overall savings of bed and meals will be 1%. Co-Chair
Therriault asked if a private firm did open in Delta
Junction, would PSEA try to organize those workers. Mr.
Damron noted most certainly.
Co-Chair Therriault requested the Department of Corrections
position on the proposed legislation.
BILL PARKER, DEPUTY COMMISSIONER, DEPARTMENT OF
CORRECTIONS, responded that the Governor has proposed HB
368, legislation which is the Department's proposal to
expand; an expansion which does not include beds in Delta
Junction. Co-Chair Therriault asked if HB 53 passed, what
would the Department recommend to the Governor. Mr. Parker
stated that the Department would recommend that the best
use of State resources would not be to build those beds.
That undertaking would be more expensive at Delta Junction.
Mr. Parker noted that HB 53 highlights the need that the
State has to expand the system. He pointed out that the
State is currently 1200 beds short and 500 beds over the
Court established cap. The need clearly exists. The
criteria the Department used to address the prison crisis
was:
1. The facilities are safe.
2. The facilities meet the statewide comprehensive
goal.
3. The facilities employee the best correctional
practices.
4. The community named must want the prison.
5. The facility will be cost effective.
Ft. Greely does not meet two of those standards. That
facility would not fit with the statewide plan and would
not be the most cost effective bed space.
Representative Mulder asked if Mr. Parker would recommend
that the Governor veto the bill. Mr. Parker noted that it
would not be his place to recommend a veto on any proposed
legislation. It is safe to say that the Department has
considered other ways to expand and has chosen another
route.
Representative Mulder asked what the Courts option would be
if the Legislature passed the bill and the Governor vetoed
it. Mr. Parker agreed that would place all parties in a
bind.
In response to Representative Kelly, Mr. Parker stated that
the per diem cost for inmates is just over $100 per day
statewide. Overcrowding makes the daily cost go down.
Representative Kelly asked if there were any facilities
that approached the per day cost in Arizona. Mr. Parker
acknowledged that Arizona had the cheapest beds, although,
transportation and medical costs must be added to that
price. Representative Mulder noted that with all costs
included, the daily price per bed in Arizona was $77
dollars. Mr. Parker concluded, noting that the total
Governor's proposed budget would be $88 million dollars.
He emphasized that adding wings to an already existing
facility is cheaper than building a new facility.
Co-Chair Therriault pointed out that the attraction of the
proposal is that the facility would not be built from
scratch and that a structure already exists.
HB 53 was HELD in Committee for further consideration.
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