Legislature(2001 - 2002)
03/20/2001 09:19 AM House STA
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ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 20, 2001
9:19 a.m.
MEMBERS PRESENT
Representative John Coghill, Chair
Representative Jeannette James
Representative Hugh Fate
Representative Gary Stevens
Representative Peggy Wilson
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 149
"An Act relating to correctional facility space and to
authorizing the Department of Corrections to enter into an
agreement to lease facilities for the confinement and care of
prisoners within the Kenai Peninsula Borough.
- MOVED HB 149 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 149
SHORT TITLE:PRIVATE PRISON IN KENAI
SPONSOR(S): REPRESENTATIVE(S)CHENAULT
Jrn-Date Jrn-Page Action
02/26/01 0437 (H) READ THE FIRST TIME -
REFERRALS
02/26/01 0437 (H) STA, FIN
03/13/01 (H) STA AT 8:00 AM CAPITOL 102
03/13/01 (H) Heard & Held
03/13/01 (H) MINUTE(STA)
03/13/01 (H) MINUTE(STA)
03/15/01 (H) STA AT 8:00 AM CAPITOL 102
03/15/01 (H) Heard & Held
MINUTE(STA)
03/20/01 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
REPRESENTATIVE MIKE CHENAULT
Alaska State Legislature
Capitol Building, Room 432
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of HB 149.
RYNNIEVA MOSS,Staff
to Representative Coghill
Alaska State Legislature
Capitol Building, Room 102
Juneau, Alaska 99801
POSITION STATEMENT: Provided information related to HB 149.
ACTION NARRATIVE
TAPE 01-26, SIDE A
Number 0001
CHAIR JOHN COGHILL called the House State Affairs Standing
Committee meeting to order at 9:19 a.m. Committee members
present at the call to order were Representatives Coghill,
James, Fate, Stevens, Wilson, Crawford, and Hayes.
##hb149
HB 149-PRIVATE PRISON IN KENAI
Number 0024
CHAIR COGHILL announced that the first order of business would
be HOUSE BILL NO. 149, "An Act relating to correctional facility
space and to authorizing the Department of Corrections to enter
into an agreement to lease facilities for the confinement and
care of prisoners within the Kenai Peninsula Borough."
CHAIR COGHILL reminded the committee that testimony had been
closed on HB 149 and the bill referred to a subcommittee. Those
on the subcommittee were Representatives James, Hayes, and Fate.
Others who attended the meeting were Mark Higgins of the Kenai
Peninsula Borough, Frank Prewitt of Cornell Corrections, Denny
DeWitt from Representative Eldon Mulder's office, Deven Mitchell
of the Department of Revenue, Cathy Heroy from Representative
Hayes' office, Barbara Cotting from Representative James'
office, Brenda Balash from Representative Fate's office, Margot
Knuth from the Department of Corrections, and Shawn Cochran from
the Fairbanks News-Miner.
CHAIR COGHILL said the subcommittee had submitted a written
report and was returning HB 149 to the full committee without
any recommendations for changes. He asked the will of the
committee.
Number 0226
REPRESENTATIVE CRAWFORD offered Amendment 1:
On line 18, page 2, add:
(4) The cost of construction per bed shall not be
more than the Anchorage Jail project.
(5) The cost of daily operation per bed shall not
be more than Spring Creek Correctional Center.
REPRESENTATIVE CRAWFORD explained:
I just to want to make sure that this is a good deal
for the state. I would like to see a prison built. I
would like to see our prisoners brought home from
Arizona. Because there were no numbers in the
original bill, I felt like we needed some reassurance
that the private prison could be done [for] about the
same cost as the public prisons that we've built.
CHAIR COGHILL objected for purposes of discussion.
Number 0373
REPRESENTATIVE JAMES said she did not object at all to putting
restrictions on the cost. The co-chair of the House Finance
Committee has told her they will be putting a dollar amount in
HB 149 when it gets to that committee. She said she did not
know how the costs of construction compared in Anchorage and in
Kenai. "I don't know that they're comparable; I don't know that
they're not, either," she said. She would not object to
including the limitation in HB 159 because Finance is going to
be giving the numbers scrutiny later.
REPRESENTATIVE CRAWFORD said people from Cornell Corrections
told him they expect to have economies of scale because the
proposed prison in Kenai is a larger prison and that they expect
that both their construction and operating costs will be much
cheaper than those for the Anchorage jail project.
Number 0505
REPRESENTATIVE STEVENS said he was troubled by (5) because, "My
understanding was that the reason we'd even consider privatizing
a prison is that it would be less." The proposed amendment says
it should not cost more, and he wondered if that was "an open
door to ... charge up to that point"?
REPRESENTATIVE CRAWFORD said he just wanted to make sure the new
prison would not cost more than what the state is doing on its
own already.
REPRESENTATIVE STEVENS wondered if the amendment should say the
new prison should cost less than what the state is paying now.
Number 0598
REPRESENTATIVE CHENAULT said he didn't know what the costs are
now. He would assume that the costs in Kenai would be a little
higher than they are in Anchorage, based on the cost
differential in the foundation formula for funding schools.
CHAIR COGHILL asked Representative Chenault if he would support
Amendment 1.
REPRESENTATIVE CHENAULT replied no, "just for the simple fact
that I don't know what those numbers are."
Number 0663
REPRESENTATIVE JAMES said she didn't think Amendment 1 was
necessary because HB 149 has a Finance Committee referral. If
making Amendment 1 would make the State Affairs Committee feel
better, she didn't think there was anything wrong with it.
However, she wanted to support the sponsor of HB 149.
CHAIR COGHILL said he agreed and was going to maintain his
objection because he thinks the comparison between the two is
"tough language to navigate through." He would prefer not to
send HB 149 out of committee with that language, he said.
REPRESENTATIVE STEVENS said he was going to vote for Amendment 1
because, "I think it sends a very clear message that it would
just be unconscionable if it cost us more than other projects."
REPRESENTATIVE CRAWFORD said that is the reason why he didn't
put in Amendment 1 that it should cost less, but simply said at
the very least it should equal what we're doing with the public
prisons today. "They told us that there's 15-20 percent
savings, and I'm willing to give them some slack" he said, "but
I'd like to have this in there so that I know that we're doing
this for the right reasons. The reason that they've used to
sell this concept is that it's cheaper for the state. I believe
we should have some control here. The original bill just gives
them carte blanche." He is aware of the Finance referral, but
believes ... that "we're the folks that set the policy ... and
it is incumbent upon us to set good policy."
Number 0852
REPRESENTATIVE FATE asked if anyone knew the effective date of
HB 53, which authorized the Anchorage jail project. "The reason
I'm asking that question simply is that finances aren't static,"
he said, and the cost for the same thing might be more now due
to inflation. Conceptually, he agreed [with Amendment 1], he
said.
CHAIR COGHILL asked Representative Crawford if he knew the
effective date and/or the change order rate of the Anchorage
jail?
REPRESENTATIVE CRAWFORD knew that in other construction
projects, additional costs due to inflation are taken into
account. What he was attempting to assure that the final cost
of the Kenai prison was not more than the final cost of the
Anchorage jail. He said he would be glad to say the "final
cost" in this Amendment 1.
NUMBER 1006
CHAIR COGHILL asked if there was any objection to inserting
"final cost". There was no objection.
Number 1035
REPRESENTATIVE JAMES said she was going to vote against
Amendment 1 because she thought HB 149 "could not go to full
passage with that language included." She knew that some
numbers were going to be crunched in the Finance Committee.
REPRESENTATIVE WILSON said she was uncomfortable about making
Amendment 1 "if we don't know the numbers."
REPRESENTATIVE CRAWFORD said he would also be glad to put into
Amendment 1 an escalator for inflation.
REPRESENTATIVE FATE said he hadn't considered change orders, and
that those are also dynamic and there sometimes are lawsuits
that go along with change orders. "It might be good to just
leave it the way it is," he said.
Number 1212
REPRESENTATIVE CHENAULT said he thought there are a lot of
unknown costs at this point, and that the Kenai Peninsula
Borough will work out the numbers through the Finance Committee.
REPRESENTATIVE CRAWFORD said:
I know that when they wrote HB 53, [they] wrote into
it what the costs would be two years in advance. Now
what's good for the goose ought to be good for the
gander. If we can write those costs in on a public
jail, why in the world can't we write it in on a
private jail?
CHAIR COGHILL noted that the procurement code is invoked in HB
149, so there is some control over cost.
REPRESENTATIVE JAMES observed that the title of HB 149 is, "To
authorize the Department of Corrections to enter into an
agreement..." She said she couldn't imagine the Department of
Corrections making a lease agreement on the facility that was
not in line or less than current costs of operation. "We have
to trust that there's other people out there ... more
knowledgeable than us," she said. "I understand the concern,
and it's a valid one, but I just don't think at this point in
time in this particular bill that this is necessary, and if it's
not necessary, then we ought not put something in that's not
necessary."
CHAIR COGHILL announced his intention to bring Amendment 1 to a
vote.
Number 1414
REPRESENTATIVE STEVENS had no objection to Amendment 1 if the
maker of the Amendment would be willing to add something taking
into account inflationary changes.
REPRESENTATIVE CRAWFORD confirmed that he agreed to do so. He
withdrew Amendment 1 as presented and offered it as a conceptual
amendment including accommodation for inflation.
Number 1480
A roll call vote was taken. Representatives Stevens, Crawford,
and Hayes voted for Amendment 1. Representatives James, Fate,
Wilson, and Coghill voted against Amendment 1. Therefore,
Amendment 1 failed by a vote of three to four.
Number 1534
REPRESENTATIVE CRAWFORD offered Amendment 2 to HB 149:
Page 2, line 16
Insert:
(4) The successful contractor(s) under this
chapter shall assume full liability for itself and its
agents in respect to the operation and management of
the facility.
REPRESENTATIVE CRAWFORD explained that the reason he is
proposing Amendment 2 is that after reviewing a number of cases
involving Cornell and other private prisons, "it seems that
their defense in lawsuits has been that they're just acting as
an agent of the state." He said he would like to make sure at
the outset that it's known on both sides that the prison
contractor is acting on its own "because we don't have the state
oversight that we would in a public prison, and I'd like for
them to shoulder the liability for any lawsuits resulting from
possible mismanagement or actions of their staff," he explained.
CHAIR COGHILL objected for purposes of discussion.
Number 1636
REPRESENTATIVE WILSON asked if the state is not liable anyway.
CHAIR COGHILL said there certainly would be a responsibility.
REPRESENTATIVE JAMES noted that there are three entities
involved -- the state, the borough, and the contractor -- and
said she wasn't sure that any one of them should have full
liability except for their own misdeeds. She understood the
purpose of Amendment 2, but was not convinced that it did
exactly that.
REPRESENTATIVE FATE surmised that the matter of liability is
going to come up in the contract. "The state and Cornell and
any other party would be remiss if they did not have the
attorneys there to forge a contract placing those liabilities
where they should," he said. He noted that HB 149 does not have
a referral to the House Judiciary Committee, and he said he is
very uncomfortable going over in this committee legal matters
that should be addressed in that committee. He said he was
going to vote against Amendment 2. "If we want to remand this
to the Judiciary Committee, that's another thing," he said.
Number 1816
CHAIR COGHILL observed that the amendment is getting very
specific in an area where HB 149 has allowed for a broad
agreement. He wondered if in deciding to define this one area
might imply that the legislature did not mean to define other
areas. He said he understands the desire, but thinks it will be
provided for as a matter of contract.
REPRESENTATIVE CRAWFORD read an excerpt from a lawsuit in which
it was stated:
There is no connection between Cornell Companies,
Inc., and the state nor the state and the named
defendants. As a result, the defendants are not
directly liked to the state government and their
actions are not directly attributable to the state.
This means the company and its employees can be held
jointly and separately liable for the actions of the
employee.
REPRESENTATIVE CRAWFORD then cited another lawsuit in which
Cornell Corrections had attempted to shift liability to the
state.
CHAIR COGHILL said Representative Crawford had made his point.
"Yes, there is a liability issue," he said, "But I can't
believe an agreement between Kenai and the company isn't going
to contain those discussions. That is not something we are
entertaining in the overall bill."
Number 1962
REPRESENTATIVE HAYES asked if Chair Coghill would be willing to
request to the Speaker that HB 149 have a Judiciary Committee
referral to address that issue if the sponsor had no objection.
CHAIR COGHILL said no, "simply because we are dealing with a
policy agreement between the State of Alaska and Kenai as they
enter into a third-party agreement, so I think that ... a policy
discussion needs to stay out of the whole legal area of
debate.... My interest is in moving this [HB 149] up to the
Finance Committee because there are financial issues that need
to be dealt with."
REPRESENTATIVE JAMES, noting that she had been a member of the
Judiciary Committee for many years, said she did not think the
State Affairs Committee needed to put anything in HB 149 that
wasn't in HB 53, which had undergone legal review, and on which
HB 149 is modeled.
REPRESENTATIVE STEVENS observed that the whole issue of
liability is very complex, and "everyone is going to be sued
anyway," and that this area is outside his area of expertise.
CHAIR COGHILL said he thinks that putting in this provision
[about Cornell's liability] would require another discussion of
what the state would require of the Kenai Peninsula Borough. He
thought that would be entering into an area that HB 149 did not
intend. He said he would talk to the Finance Committee to see
if they want to refer HB 149 to the Judiciary Committee and get
into those areas. He spoke against the amendment.
A roll call vote was taken. Representatives Crawford and Hayes
voted for Amendment 2. Representatives James, Fate, Stevens,
Wilson, and Coghill voted against Amendment 2. Therefore,
Amendment 2 failed by a vote of two to five.
Number 2153
REPRESENTATIVE CRAWFORD offered Amendment 3:
Page 1, line 13, through page 2, line 15:
Delete "The agreement to lease entered into under this
section is predicated on and must provide for an
agreement between the Kenai Peninsula Borough and a
private third-party contractor under which the private
third-party contractor constructs and operates the
facility by providing for custody, care, and
discipline services for persons held by the
commissioner of corrections under authority of state
law. The commissioner of corrections shall require in
the agreement with the Kenai Peninsula Borough that
the Kenai Peninsula Borough procure the private third-
party operator through a competitive process similar
to the procedures established in AS 36.30 (State
Procurement Code)."
(c) The authorization given by (a) of this section is
subject to the following conditions:
(1) the lease must provide a minimum of 800 prison
beds;
(2) the agreement to lease must contain terms
providing that the commissioner
of corrections may terminate for cause a contract
with a private third-party contractor operating
the facility in accordance with the provisions of
(b) of this section;
(3) the commissioner may not enter into an agreement
with an agency unable toprovide or cause to be
provided a degree of custody, care, and
discipline similar to that required by the laws
of this state.
* Sec. 2. Section 4, ch. 15, SLA 1998, and sec. 6,
ch. 35, SLA 1999, are repealed.
Insert "The agreement to lease entered into under this
section is predicated on and 23 must provide for an
agreement between the Kenai Peninsula Borough and a
private third-party contractor under which separate
bids will be submitted for:
(1) A private third party contractor constructs that
facility; and
(2) A private third party contractor operates the
facility by providing for custody, care, and
discipline services for persons held by the
commissioner of corrections under authority of
state law.
(c) The authorization given by (a) and (b) of this
section is subject to the following conditions:
(1) The commissioner of corrections shall require in
the agreement with the Kenai Peninsula Borough
that the Kenai Peninsula Borough procure the
private third party operator(s) through the
competitive process established in AS 36.30
(State Procurement Code).
(2) the lease must provide a minimum of 800 prison
beds;
(3) the agreement to lease must contain terms
providing that the commissioner of corrections
may terminate for cause a contract with a private
third-party contractor operating the facility in
accordance with the provisions of (b) of this
section;
(4) (4) the commissioner may not enter into an
agreement with an agency unable to provide or
cause to be provided a degree of custody, care,
and discipline similar to that required by the
laws of this state.
* Sec. 2. Section 4, ch. 15, SLA 1998, and sec. 6,
ch. 35, SLA 1999, are repealed.
RYNNIEVA MOSS, Staff to Representative Coghill, noted that the
amendment was not drafted correctly. "The way it is written,
only the first paragraph of HB 149 is deleted," she pointed out.
REPRESENTATIVE CRAWFORD withdrew the amendment as written and
offered Conceptual Amendment 3:
REPRESENTATIVE CRAWFORD explained that Amendment 3 separates the
bids. The language that is different from HB 149 is:
and a private, third-party contractor under which
separate bids will be submitted for:
(1) A private third-party that constructs that
facility; and
(2) A private third-party contractor operates
the facility by providing for custody, car,
and discipline services for persons held by
the Commissioner of Corrections under the
authority of state law.
REPRESENTATIVE CRAWFORD said the reason he offered Amendment 3
is that having the contract for construction tied to the
contract for operations can hide the cost of construction and he
believes those should be two separate contracts so the state can
see the cost of each.
Number 2251
REPRESENTATIVE JAMES said she thought Amendment 3 has to do with
separating the two for the tax-exempt bond issue, and she would
like information on that.
CHAIR COGHILL said the bonds and the bundling of the contract
are not a policy issue, but a finance issue. He thought the
State Affairs Committee should not open up that discussion.
Number 2354
REPRESENTATIVE STEVENS observed, "This is very important issue
and I don't think we should rush into ... making a decision on
it." He noted that separating the contracts would not mean that
the same contractor could not get both.
REPRESENTATIVE CRAWFORD agreed.
CHAIR COGHILL said he thought that was a legitimate discussion
and that the bill as written asks for the Commissioner of
Corrections to require an agreement with the Kenai Borough that
they go through a competitive bid process. At that point is
where I think that division should be made, he said.
REPRESENTATIVE CRAWFORD said there is another significant area
in the original bill that says, "a competitive process similar
to the procedures established in AS 36.30." The language we
changed was instead of "similar to" just using the language
"36.30" so that we are held to exactly the same competitive bid
process that the state goes through for procurement.
REPRESENTATIVE JAMES called for the question.
Number 2439
A roll call vote was taken. Representatives Stevens and
Crawford voted for Conceptual Amendment 3. Representatives
James, Fate, Wilson, Hayes, and Coghill voted against
Conceptual Amendment 3. Therefore, Conceptual Amendment 3
failed by a vote of two to five.
REPRESENTATIVE HAYES offered Conceptual Amendment 4:
On page 2, line 16, I would like to delete section 2.
REPRESENTATIVE JAMES objected for purposes of discussion.
REPRESENTATIVE HAYES explained that in subcommittee, concern had
been addressed about the Delta Junction issue. He said he
thought removing section 2 allows Delta Junction to remain in
the process in some way.
CHAIR COGHILL observed that Delta Junction was involved in a
lawsuit, and "this would kind of disconnect from that." He
indicated he would vote for the amendment.
REPRESENTATIVE JAMES reported that she had talked with the mayor
of Delta Junction since he testified and that "they don't have
any problem with this part."
CHAIR COGHILL summarized that Conceptual Amendment 4 would
simply delete line 16, which is the repealer of HB 53. He
understood it would not change the situation that Delta is in,
but would "only be a matter of showing them some degree of
comfort that we are not intending to do them any harm."
REPRESENTATIVE HAYES said that was correct.
REPRESENTATIVE WILSON sought clarification that Amendment 4 was
for the benefit of Delta Junction.
REPRESENTATIVE HAYES said, "What this does is it allows HB 53 to
stay on the books, but it gives Delta a little more wiggle room
to try to not just have the prison on Fort Greely, but ... to
look at other areas," or at least it shows a good-faith effort
to do that.
REPRESENTATIVE JAMES observed that the prison on Fort Greely is
dead for all practical purposes.
CHAIR COGHILL observed:
The reason it's a dead issue is because they're not
going to be able to get the place on the base for
prison beds as they had supposed. The bill
specifically talked about using the base. In
repealing this section of HB 149, all we would be
saying is that if it should happen in the next year or
so that minds changed on the federal level and Delta
Junction could obtain use of the base, then they would
be able to pursue it, and that's all it would be
saying.
REPRESENTATIVE STEVENS wondered if Amendment 4 might be clouding
the issue.
REPRESENTATIVE CHENAULT said he didn't think anyone wants Delta
Junction to be injured by HB 149, and he does not think it is
the intent of HB 149 to damage Delta Junction in any way. House
Bill 149 gives Kenai and the state an opportunity to complete
another project to bring prisoners back into the state and
create jobs.
REPRESENTATIVE STEVENS said he thought Representative Stevens
had a good point. House Bill 149 has gone through Legislative
Legal Services the way it is. Although he does not object to
what Representative Hayes is trying to achieve, he is concerned
about clouding the issue, and before voting on Amendment 4, he
would want legal counsel to advise on what the deletion would
do.
REPRESENTATIVE JAMES maintained her objection to the amendment.
A roll call vote was taken. Representatives Hayes and Coghill
voted for Amendment 4. Representatives James, Fate, Stevens,
Wilson, and Crawford voted against Amendment 4. Therefore,
Amendment 4 failed by a vote of two to five.
Number 3032
REPRESENTATIVE JAMES moved to report HOUSE BILL NO. 149, "An Act
relating to correctional facility space and to authorizing the
Department of Corrections to enter into an agreement to lease
facilities for the confinement and care of prisoners within the
Kenai Peninsula Borough," out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, HB 149 was passed out of the House State Affairs
Standing Committee. [HB 149 MOVED OUT OF COMMITTEE]
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:05
a.m.
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