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Answers to some questions surrounding prison proposal

Posted: Monday, September 24, 2001

Question: Why has the private prison project been rushed through the borough?

This project began in July 2000 when the Kenai Natives Association asked the Kenai Peninsula Borough Assembly to support its efforts to build and operate a prison on KNA land next to the Wildwood Correctional Center near the city of Kenai. In response, the assembly adopted Resolution 2000-075 supporting the concept of a private prison to be built and operated by KNA, but recognizing that the borough may be needed as a pass-through agency for state funding.

Following a meeting with the Department of Corrections, it became apparent that the DOC would only proceed with this project with direct local governmental involvement and with specific legislative approval. Legislative approval of this project for the Kenai Peninsula Borough appeared extremely unlikely unless the borough could present a team of companies prepared to build and operate the prison.

In March 2001, the Kenai Peninsula borough completed a three-month competitive procurement process to select the team to help the borough promote, and potentially design, construct and, for at least the first five years, operate the prison. The selected team consisted of Cornell Corrections Inc., Veco/Neeser, Livingston Sloan and the Kenai Natives Association. Rep. Mike Chenault introduced House Bill 149 which passed both the House and the Senate and was signed into law by the governor on May 29, 2001. The Cornell team diligently promoted that legislation.

Some actions were taken quickly to meet legislative deadlines so this project could even be addressed by the borough. However, the project is still in its early phases. If Proposition 1 passes, several significant steps remain that will probably take at least a year before the final decision is reached to proceed.

Question: If the voters approve the ballot proposition, what remains to be done before the final decision to build the prison is made?

A feasibility study will be conducted by an independent third party to do a detailed analysis of the social, economic and infrastructure effects of the proposed prison project.

A citizens Private Prison Advisory Committee will be appointed to allow additional public input and participation.

There will be negotiation of an agreement to either buy, or lease with an option to buy, the Kenai Natives Association land near the Wildwood Correc-tional complex.

A contract will be negotiated with the Department of Corrections addressing prison design, construction, operation, training, funding, liability, oversight and many other issues. The Department of Corrections will retain close oversight of the project.

The borough will hire a project manager to assist in negotiating the various contracts and to manage the project as authorized and budgeted in Ordinance 2001-019.

With this additional information, the borough assembly will then decide whether to go forward with the project. Even if the assembly decides to continue, several more items will require assembly approval. These include:

Approving contracts for the design, construction and operation of the prison.

Final approval to issue revenue bonds to finance the project and reimburse the borough for expenses associated with the project.

It is likely to take at least a year to accomplish all these steps before the final decision is made to build the prison.

Question: How much has the borough spent on this project?

Through the Oct. 2 election, the borough will have spent approximately $76,700 on this project. Of this amount, approximately $30,000 was spent advertising for and evaluating the competitive proposals (to promote state legislation, and potentially to build and operate the prison), $40,000 for a lobbyist in Juneau, and the remaining funds were for travel expenses to view operating private prisons, travel to meet with the Department of Corrections and to support passage of HB 149, and miscellaneous meeting expenses. While this project has not yet resulted in additional labor costs to the borough it has involved significant administrative staff time.

Question: What risk does the borough face by financing design and construction with revenue bonds?

Payments received from the state for leasing the facility will first be applied to repayment of these bonds. Only this revenue stream and the prison facility will be collateral for the bondholders. The full faith and credit of the borough will not be pledged. Details regarding state payments for operations and other expenses and recourse for nonpayment will be negotiated in the above-described agreements.

Dale Bagley is the mayor of the Kenai Peninsula Borough.



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