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 agreement to 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." CS FOR HOUSE BILL NO. 53(RLS)(title am) "An Act expressing legislative intent without the force of law concerning correctional facility space and the Cleary v. Smith case; adding, as a general power of municipalities, the power to provide for, and enter into agreements concerning the confinement and care of prisoners; relating to authorizing the Department of Corrections to enter into agreements to lease facilities for the confinement and care of prisoners with the City of Delta Junction and with the Municipality of Anchorage; and providing for an effective date." Representative Elder Mulder was invited to join the committee. He read his sponsor statement into the record. He said this bill would accomplish three things. First, in the intent section, it gave the Court express Legislative intent that they would work with the Commissioner of Corrections to relieve overcrowding conditions. Second, the department would be authorized to contract with the communities of Delta Junction/Ft. Greely re-use authority for the conversion of Ft. Greely to a private prison. Third, the Commissioner of Corrections would be authorized to contract with the Municipality of Anchorage for the replacement of the Sixth Avenue Jail. Representative Mulder noted several good reasons for this bill, including: jobs for Alaskans, inmates would be held in Alaska and there were no other reasonable proposals on the table at this time. He specifically noted that by the end of FY '99, Alaska would have over 850 inmates being held in a private prison in Arizona, costing the State well in excess of $14 - $15 million. That kind of expenditure could be utilized to help fund Alaska payroll to pay for Alaskans. (Tape malfunction at this point.) Representative Mulder told the committee that this bill would go along way to ensure the security of the future of Delta Junction and providing for a healthy re-use of the facility and an expansion of the economy in Delta Junction. Margaret Pugh, Commissioner, Department of Corrections was invited to join the committee. She introduced Margot Knuth, Assistant Attorney General, Department of Law. Ms. Knuth said that creation of beds would not solve the overcrowding in Alaska. (Further tape malfunction.) She noted that the Bethel jail had been grossly overcrowded for years and that in general, overcrowding in Alaska was at an intolerable level. She drew the committee's attention to several other proposals that could be considered regarding the overcrowding issues, such as expansion of the Palmer facility and ownership of the facility at Delta Junction. She noted that the re-use proposal would be helpful to Delta Junction. However, with reference to the expansion of the Palmer facility, there would be little to no transportation costs to keep the inmates in-State. However, all issues must be clarified including the cost effectiveness of the facility in Delta Junction and if services could be provided reasonably elsewhere in the State. She explained a small technical issue with the title of the bill. In response to a question from Senator Adams regarding BRAC law she said she could not explain it but would contact Department of Community and Regional Affairs for him. Senator Donley asked about the title change. Ms. Knuth said it was necessary because Delta Junction was a second class borough and Fort Greely was outside the city boundary. With regards to sections two and three of the bill extra territorial powers applied and if not included in the title it would create a technical problem. Senator Donley said he did not see any existing conflict, however. Ms. Knuth said that a second-class city did not have the power to house criminals, and therefore without the title change the sections would not be effective. (Tape #82, Side A switched to Side B at approximately 11:40 a.m.) Senator Donley felt it was inclusive in the title where it was provided in the title where it said "...enter into agreements to lease facilities for the confinement and care...". This could give notice they were included and was all that was required. Ms. Knuth further stated that if the title were amended it would probably avoid litigation at some further point. This was a preventative suggestion. Co-chair Sharp said he could only continue the hearing on this matter until noon and did want to hear from the Delta contingent that had travelled to Juneau to give testimony. Further hearings on this bill could not be before 27 March. In response to Senator Donley, Co-chair Sharp said the bill would not be moved today. Co-chair Pearce had several questions she wanted to ask and he wanted to give everyone a chance to testify on this bill who wanted to. After short discussion with Senator Donley regarding rescheduling of this matter, Co-chair Sharp said he would try to work it in earlier, including Saturday or Sunday hearings. He then invited the Delta contingent to join the committee. Glen Wright, Mayor of Delta Junction testified before the committee. He said this bill would help the community help itself by bringing about three hundred jobs and allowing a quality of life for the area. Doris Fales, Delta Junction Coalition testified before the committee. She said this bill would help create jobs. She said the Coalition had worked with the community in order to promote economic growth. Ray Woodruff, Executive Director, Delta Junction Coalition testified before the committee. He told the committee that turning the post into a prison was one of the first and only major proposals received. Letters were written to approximately 118 Federal and State agencies asking for any interest in Ft. Greely. No interest or answer was received from them. The Army also went through the same procedure, receiving no interest. The community had an interest, however and brought the matter to a vote. He said the vote on this proposal brought out the most voters in two years. The majority of the community supported the bill. Co. Dave Anderson, Post Commander, Ft. Greely testified before the committee. He described the BRAC process and realignment program as currently planned for the committee. He noted that the Army had supported the community of Delta Junction and its re-use efforts. These efforts included the surplusing of approximately 1-1/2 million square feet of facilities on the installation and 18 hundred acres property. The Army would retain all training areas and ranges for continuing training and testing missions in Alaska as used by the Army and Air Force throughout the year. The approved realignment plan was to reduce fifty percent of employees in FY 2000 and fifty percent in FY 2001. Re-use of the facility would negate all requirements for demolition of the property currently programmed at approximately $48 million. He voiced his concern with the process, including taking care of the employees of Ft. Greely during the transition. Senator Phillips asked about the city election in mid- January. Mr. Woodruff said the election was conducted as close to a complete election as possible. It was an opinion poll and no one was turned away who was a registered voter or had registered to vote. This was conducted on an area- wide basis rather than just the City. Senator Phillips asked if it was a special election. Mr. Woodruff indicated that it was not an official, special election. Senator Adams asked for an explanation of the BRAC law. It was his understanding the Governor set up the coalition to finding re-use of the facility. He also asked for an explanation on the conveyance organization agreement which had to take place and asked where it was in the process with the Governor. Mr. Woodruff said a letter had been provided the Governor requesting the final stages of the process be implemented through the LRA. It has not been responded to as of yet and the Department of Community and Regional Affairs has been contacted. He noted for the committee that this was a change in the way the Federal government did business. It only went into effect last year, and they became aware of it sometime in December last year. Senator Adams asked that if there is no signature on the conveyance what would happen? Colonel Anderson said he did not fully understand the question. Senator Adams further explained that due to costs, what would happen if the Governor did not sign the conveyance. Colonel Anderson said the local Re-use Authority had been recognized by both the Governor and the Federal government. Ft. Greely reservation qualifies for rural economic development conveyance with no cost to a community. He felt this was the main drive since the property could be obtained at no cost by the local Re- use Authority. Senator Torgerson asked if this was for a particular plan. His understanding was that Delta would take ownership of the facility. Colonel Anderson concurred. Senator Torgerson voiced further concern that the Governor may not sign the conveyance if he found that prison beds could be supplied cheaper at another location. Colonel Anderson said if that happened the facility would be open for bid again or demolition. In further response to Senator Torgerson's question regarding an agreement, Mr. Wright explained that the only agreement made was between the Re-use Authority and all this. The City does not enter into any agreement until the bill is passed and the Governor signs it. The City will work with the Department of Corrections. Senator Torgerson said it was his understanding there were provisions in the bill that said it should be competitively bid, however, it looked like that had been ignored and an agreement signed anyway. Mr. Woodruff explained the lease document that was worked out. This was in order to get started on the lease request. There was no intention to shortcut any provision of AS 36.30. He said even by pushing everything hard it would take approximately fourteen months to complete the project. Therefore, a lease document was signed. However it would not be valid if the Legislature did not pass the bill, the Governor did not sign it, if the Department of Corrections refused to get a contract with Delta Junction, or if Delta Junction did not get their proper contract the lease would then be invalid. He said ample exclusionary clauses had been included also. Co-chair Sharp thanked the Delta contingent and continued the taking of testimony. J. Frank Prewitt, President and Chief Executive Officer of Allvest, Inc. was invited to join the committee. He explained the site photography and site plan for the committee. He said that the reutilization of Fort Greely was good public policy in terms of returning dollars to the State of Alaska and helping out Delta Junction. He noted that the Greely proposal was the best in the past eight years. He said the issue of centralization and regionalization was not an either-or proposition. Each State needs long-term felon sentence beds that have sufficient economies of scale to accommodate those offenders through the period of their incarceration. Jail space is also needed. Therefore, use of the Greely proposal would alleviate overcrowding in a cost-effective fashion. He felt the argument was a philosophical disagreement between privatization and a government delivery of correctional services. The private sector has filled in to accommodate the void left by the government's inability to respond quickly enough to overcrowding concerns or by the cost of government delivery of correctional services, which in some states such as Alaska is extreme. Many alternatives to incarceration have been explored. As an example he said that during the Hickel administration the Department of Corrections did nothing more than sort through their offender population moving low-risk offenders out into less costly alternative facilities, such as halfway houses and treatment programs. He felt this was a correct process as these low-risk offenders needed to be moved out of long- term, costly hard beds. He referred to the Bethel facility and said alternatives were available to the overcrowding at that facility. Further, he said that they believed the Greely proposal provided relief in a cost-effective fashion and said both the debt service and the operating cost of the facility on a daily bed rate would be under $70/day/inmate as compared to the State's present costs. Services at Greely were also anticipated to meet the highest standards of the industry, both structurally, operating and hiring and training standards. The direct impact of the Greely proposal would be relief in the present prison population. There would be no loss of State jobs, an augmentation of correctional services, State-operated facilities to be safer because over-crowding would be relieved, cost containment for the Department of Corrections and economic development for Delta Junction. Mr. Chilters, Delta Junction was invited to join the committee. He referred to an aerial photograph which was passed out to committee members only of the Ft. Greely site. He noted that the facility must meet all ACA, ADA and codes for re-use. He explained the reutilization of the existing facility included revitalization of the facility's infrastructure, security, access for the handicapped, medical, secured entrances and it's relationship with the community. Mr. LaResche, Delta Junction was invited to join the committee. He explained to the committee how the contract would work and how it complied traditionally with states using this method. He said it was a fairly simple chain of contracts and financing whereby the State would contract with the City of Delta Junction to provide prison beds, the facilities and operations for twenty years. Then, Delta Junction would contract with the lessee/owner of the facilities to provide the capital facilities themselves. He said that this lessee/owner policy and procurement process went out with competitive solicitation. Allvest won the procurement process. The facility owner who would be leasing the facility to the City renovates the buildings for use as a prison and finances the whole thing with private financing. At this point, he noted that the State was used to financing and owning things with State money, i.e. the Anchorage facility. In this case, however, financing and security would be for Allvest. If Allvest were to default on the bond or the prison to fall or not meet its criteria, the State would not be liable for paying for it. Delta Junction, again, would contract with someone else to operate the facility. As stated in the bill, the Department of Corrections may require that Delta Junction use a process similar to the procurement code to pick the private operator. He believed this process was simple and highly effective and would allow the State to procure complete services for under $70. For the record, Mr. LaResche noted that the State previously had three years to respond to an RFP in order to own the facility and they showed no interest whatsoever. Co-chair Sharp thanked the testifiers for appearing before the committee. Senator Donley notified the co-chair that he could cancel his 4:30 p.m. meeting on the Aleyeska Central School so the Senate Finance Committee could meet earlier on this matter. He noted the Anchorage Chief of Police and others from out of town were present and wanted to testify. Co-chair Sharp said it would be a possibility for those who were in town. However, the committee could not get teleconference participation for those out of town. Also, the co-chair and Senator Torgerson had a Senate Resources Committee meeting from 3:30 p.m. to 5:00 p.m. There proceeded discussion amongst committee members as to possible times to continue the hearing to. (Tape #81, Side B switched to Tape #82, Side A.) Co-chair Sharp said the committee would further consider a possible time for continuation of this matter and he would make an announcement from the Senate Floor. He appreciated the offers from Senator Donley and also from Senator Phillips who is vice-chair and could run the meeting, however, the committee room and teleconference were not available. He said advised those on teleconference and present at the meeting he would get word back as soon as possible as to when this bill would be rescheduled for public hearing to include public testimony. ADJOURNMENT Co-chair Sharp adjourned the committee at approximately 12:40 p.m. until tomorrow at 10:00 a.m. SFC-98 -21- 3/18/98