Legislature(2003 - 2004)
04/29/2004 09:05 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 65
"An Act authorizing the Department of Corrections to enter
into agreements with municipalities for new or expanded public
correctional facilities in the Fairbanks North Star Borough,
the Matanuska-Susitna Borough, Bethel, and the Municipality of
Anchorage."
This was the sixth hearing for this bill in the Senate Finance
Committee.
Amendment #7: This amendment replaces the words "a minimum of 25-
years" with "a term not to exceed 25-years" in Section 5, page
four, line three, of the Version 23-LS0392\E committee substitute.
Co-Chair Green moved to adopt Amendment #7. This "technical"
amendment would address the leasing of correctional facility space.
There being no objection, Amendment #7 was ADOPTED.
Co-Chair Wilken noted that Co-Chair Green has provided a sectional
analysis [copy on file] for the Version "E" committee substitute
that was previously adopted by the Committee.
GREG PEASE, Executive Director, Gastineau Human Services and Board
Member representing the States of Washington, Oregon, Idaho,
Alaska, and Montana on the American Probation and Parole
Association, shared with the Committee "the importance of programs
that assist offenders, victims and communities, and community
assets" treatment and support groups; specifically faith-based
community initiatives that assist in re-entering violent offenders
back into the community. He noted that when contemplating
legislation such as this bill that addresses the expansion of
correctional facilities, it should be noted that current State
Statutes require that six months prior to an inmate's release date,
that individual should attend a community residential center that
would assist them in reentering a community. He urged that this
requirement be continued "if not expanded." He supported
incarcerating people in the State as opposed to outside of the
State facilities as it would allow them to be closer to their
families and support groups. Therefore, he urged the Committee to
be aware that, in addition to housing needs, program needs must be
provided for.
Mr. Pease also asked members to question the reason why so many
individuals are being incarcerated "to begin with." He noted that,
in this State, the majority of those incarcerated are Alaska
Natives. More importantly, he urged the Members to consider what
happens to inmates upon their release from jail. He expressed that
the United States has experienced "a prison/jail building boon"
which, he stated must be recognized as providing "short-term,
temporary low-income housing for, primarily, mental health
beneficiaries in this State." He pointed out that the majority of
the individuals serving time in State prisons and jails are
probation and parole violators.
Senator Dyson questioned the relevance of Mr. Pease's comments to
this bill.
Mr. Pease expressed that while this bill would provide more jail
facilities, it does not address the aftermath faced by those
incarcerated once they are released from prison. Other than
providing a big building, this legislation does not provide a
support system to assist individuals re-entering society. Absent
this focus, he attested, a cycle of re-offending would evolve. This
in turn would require more facilities to be available.
Senator Dyson ascertained; therefore, that the testifier is not
speaking in opposition to the bill, but is rather speaking to the
fact that this legislation only addresses a portion of the problem.
Mr. Pease commented that the number of incarcerated parole and
probation re-offenders is a testament that the State does not have
a proven success rate in keeping people from re-offending. In
addition to the money being expended to construct a prison
facility, funding must be included to support the Therapeutic Court
and other mandatory programs.
Senator Dyson understood therefore, that the testifier is not
against the bill.
Senator Bunde asked for clarification that the testifier is not
implying that people have been incarcerated without committing a
crime.
Mr. Pease responded no, the intent of his testimony is to highlight
the need to provide assistance to people while they are
incarcerated that would assist them upon their release.
Co-Chair Green, the bill's sponsor, informed the Committee that, at
her request, the Department of Corrections would be testifying to
provide expertise regarding the technical aspects of the bill. The
testimony would be provided in a neutral manner.
Co-Chair Wilken acknowledged Co-Chair Green's comments and
specified that, were the Department uncomfortable with a question,
Co-Chair Green would address it.
JERRY BURNETT, Director, Administrative Services, Department of
Corrections, read information from the aforementioned Sectional
Analysis of the Version "E" committee substitute as follows.
Sections 1, Section 2, and Section 3. Requires correctional
officers, parole officers, and probation officers working in
all correctional facilities in the State of Alaska to have a
valid certificate issued by the Alaska Police Standards
Council.
Section 4. Authorizes the Department of Corrections (not later
than July 1, 2009) to enter into agreements with the Fairbanks
North Star Borough, the Matanuska-Susitna Borough, Bethel,
Municipality of Anchorage and city of Seward for new or
expanded correctional facilities. The authorization is subject
to 5 conditions.
(1) Average capital cost per bed may not exceed $135,000 in
the Fairbanks North Star Borough (up to 80 beds),
Matanuska-Susitna Borough (1,200 to 2,251 beds),
Municipality of Anchorage (up to 200 beds) and City of
Seward (up to 144 beds); and must not exceed $155,000 a
bed for Bethel. These costs are adjusted for inflation.
(2) For new facility construction, the municipality will own
the facility and the state will operated the facility.
The state will lease the facility for a term of not more
than 25 years with annual lease payment not exceeding
$11,600 a bed. (Similar to Anchorage Jail and Spring
Creek Correctional Center in Seward)
(3) For expansion of existing facilities, there will be a
joint ownership agreement between the municipality and
the state and the state will operate the facility. The
state will lease for not more than 25 years and payments
may not exceed $16,700 a bed for the Bethel facility and
$14,600 a bed fro the Fairbanks, Anchorage and Seward
facilities. The state will own these facilities, so will
own the newly expanded parts as well).
(4) Lease agreements must allow the Commissioner of
Corrections to terminate the contract for cause.
(5) The Commissioner may not enter into an agreement if bonds
issued for the new or expanded facilities are below
investment grade. (Investment grade is a term of art that
means single A or better - see Alaska Permanent Fund
Statute: Investment responsibilities of the board AS
37.13.120(g)(7)
Further, expansion of the Anchorage jail may only occur if it
is funded by up to $30,000,000 in federal receipts.
Co-Chair Wilken asked for further information regarding the single
"A" bonding requirement.
Mr. Burnett stated that the language in Section 4, subsection (5)
indicates that a test regarding the bonding capacity of the bonding
community and the State must be considered, as the bonds would be
State debt under the aforementioned definition.
MARC ANTRIM, Commissioner, Department of Corrections, noted that
this language addresses one area of concern raised by the
Department of Corrections.
Mr. Burnett referred the Committee to the "CSSB 65 Version E Cost
Comparison" chart attached to the aforementioned Sectional
Analysis, that specifies that the total cost of expanding the
Fairbanks Correctional Facility by 80-beds would amount to
$10,800,000. To provide two additional security guards per shift,
11 new positions would be required. The City of Fairbanks' annual
lease debt service would equate to $1,076,000, the annual operating
expenses would be $1,329,200. Thus, the total annual cost would
amount to $2,405,200.
Co-Chair Wilken understood therefore that the total bond package
required to expand the Fairbanks correctional facility by up to 80-
beds would be $10,800,000, based on a per bed maximum expense of
$135,000. The State could not enter into a lease agreement
exceeding 25 years nor exceed an inflation adjusted amount of
$1,076,000 per year. Operating costs of $1,329,200 per year would
be borne by the State, and, at the end of those 25 years, the State
would own the expanded facility.
Mr. Burnett clarified that the aforementioned expansion expenses
would be in affect were a 15-year lease in place. Annual costs
would be lower were a 25-year lease in place.
Co-Chair Wilken understood therefore that an annual revenue stream
of $1,076,000 would be required to support bonds based on a 15-year
lease.
Mr. Burnett agreed that this would be the amount required to
support "the pass through lease cost net."
Senator Hoffman asked for confirmation that the "Annual Capital
Costs (lease debt service)" column on the chart depicts a 15-year
lease amount.
Mr. Burnett affirmed.
Mr. Burnett stated that the Department's fiscal note was calculated
based upon this Cost Comparison chart.
Mr. Burnett read the City of Whittier correctional facility
information, as depicted in Section 5 of the Sectional Analysis, as
follows.
Section 5. Authorizes the Department of Corrections (not later
than July 1, 2006) to enter into an agreement with the City of
Whittier to acquire correctional facility space for at least
25 years and facility operational services for not more than
five years. Before entering into a contract, Department of
Corrections and Administration must conduct a feasibility
study to determine whether the state can provide these
services for the same or less cost than a third-party
operator. An agreement with the City of Whittier cannot be
made unless the state cannot provide these services for the
same or less cost.
Further, an agreement between the state and the City of
Whittier requires an agreement between the City of Whittier
and a 3rd party contractor to construct and operate the
facility. The agreement between the City of Whittier and the
3rd party contractor must be based on a competitive bid
process. The City of Whittier must follow state procurement
procedures. The Commissioner of correction also must approve
the facility design before the agreement.
Authorization for the agreement is subject to 5 further
conditions:
(1) Must be a minimum of 1200 beds and a maximum of 2251 beds
and payments by DOC must be sufficient to cover all
capital and operating costs, not including inmate
transportation.
(2) The obligation of DOC to make payments is subject to
annual appropriation of funds by the legislature.
(3) The Commissioner of corrections retains the authority to
terminate the contract with the third party.
(4) The contract between the City of Whittier and the third
party must require culturally relevant reformation
services to incarcerated Alaska Native offenders.
(5) No agreement can be made if the bonds issue are rated
below investment grade (Single A or lower)
The City of Whittier may issue bonds to finance construction
of the facility.
Mr. Burnett reminded the Committee that the adoption of Amendment
#7 changed the lease agreement with Whittier to a term not to
exceed 25 years.
Co-Chair Wilken inquired the reason this agreement is specific to
the City of Whittier.
Co-Chair Green explained that this bill evolved as several
different pieces of legislation regarding prison issues were
consolidated.
Co-Chair Wilken asked that further discussion be held until after
Mr. Burnett concludes his review of the sectional analysis.
Mr. Burnett read the sectional analysis pertaining to Sections 6
and 7 as follows.
Section 6. Authorizes the state bond committee to issue
certificates of participation to provide state matching funds
to assist with the cost of construction of community jail
facilities in Kodiak and Dillingham ($4 million for both). The
annual rental obligations for the certificates ($400,000) will
be paid by the state on an annual basis. The total estimated
cost to the state to pay off the certificates is $6 million
(the estimate includes total payments, credit enhancement and
underwriting expenses, rating agency fees, bond counsel fees,
financial advisor fees, printing fees, trustee fees,
advertising fees, capitalized interest, interest earnings, and
other costs of issuance and required reserves). The state bond
committee may not authorize the issuance of certificates of
participation if the issuance lowers the state's credit and
the certificates are rated below investment grade.
Section 7. Approves community jail facilities to receive
proceeds of the certificates of participation authorized under
sec. 6 if the community is able to provide their share of the
matching funds ($1.5 million each) to be used for the upgrade,
expansion, or replacement of the jail facilities at Dillingham
Community Jail and Kodiak Community Jail. Subject to
appropriation, the Department of Corrections is authorized to
pay the annual operating costs associated with the addition of
new beds at those two facilities.
Mr. Burnett noted that the aforementioned chart depicts the
projected State debt service and increased operational costs
associated with expanding the Kodiak Jail by six beds and the
Dillingham Jail by 17 beds.
Mr. Burnett read the final portions of the sectional analysis.
Section 8. Provides notice and approval of the projects
described in sec. 6.
Section 9. Repeals existing statute.
Section 10. Provides an effective date of July 1, 2004.
Co-Chair Wilken ordered the bill HELD in Committee.
[NOTE: This bill was readdressed immediately following the 9:53 AM
recess.]
RECESS 9:53 AM / 2:59 PM
SENATE BILL NO. 65
"An Act authorizing the Department of Corrections to enter
into agreements with municipalities for new or expanded public
correctional facilities in the Fairbanks North Star Borough,
the Matanuska-Susitna Borough, Bethel, and the Municipality of
Anchorage."
Co-Chair Wilken announced that the bill is again before the
Committee. The sectional analysis review was completed during the
earlier hearing on the bill.
SFC 04 # 100, Side B 03:00 PM
FRANK SMITH, Independent Criminal Justice Researcher, testified via
teleconference from an offnet site to share comments based upon his
33-year experience in pre-and-post-prison releases and research
pertaining to the development of alternative programs in this
regard. For the past eight years, an area of focus has been the
development of private prisons. He voiced being pleased with some
of the inclusions in the committee substitute, specifically those
that would require guards and other employees to meet standards.
Several states are addressing similar issues. Continuing, he
stressed the importance of conducting an economic feasibility study
prior to furthering the construction of the Whittier prison, as
when a similarly remote site in Kansas was being considered for a
prison, a study was conducted. The study determined that the
facility would have been "impossible to staff." He anticipated that
a prison in Whittier would also have staffing issues. He recalled
that a study [copy not provided] that was conducted regarding the
construction of a prison in the Delta Junction area determined that
it would be impossible to make a profit at that location.
There being no further testifiers, Co-Chair Wilken announced that
public testimony on the bill was concluded.
Co-Chair Wilken stated, for the record, that he could not support
establishing a prison in Whittier, as it would place a strain on
the community, its schools and its utilities system. Furthermore,
as the City of Whittier's school system is a Rural Education
Attendance Area (REAA), it receives no local funding. Therefore, he
could not support construction of a prison facility in the
community until the City could absorb its school responsibility, as
other communities are required to do.
Co-Chair Green moved to report the bill, as amended, from Committee
with individual recommendations and accompanying fiscal notes.
There being no objection, CS SB 65 (FIN) was REPORTED from
Committee with a new $260,000 fiscal note, dated April 29, 2004
from the Department of Corrections.
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