Ala. lawmakers concerned about risk, cost of private prisons
The financial terms will be disclosed when the deals are final, which the Ivey administration expects to be late this year
By Mike Cason
Alabama Media Group
MONTGOMERY, Ala. — State lawmakers say Alabama’s venture into privately owned prisons comes with troubling uncertainties and potential pitfalls.
Gov. Kay Ivey on Thursday announced the proposed locations of three new prisons and the two groups of companies in negotiations to build them.
It was the latest step in a plan Ivey announced last year to try to fix the state’s overcrowded and deteriorating prisons, conditions that have festered for years.
Cost is one of the unknowns. The financial terms will be disclosed when the deals are final, which the Ivey administration expects to be late this year. The developers will finance, build, and maintain the prisons, which the state will lease and operate.
The prisons will be in Bibb, Elmore, and Escambia counties, three counties that already have prisons. Some of the state’s 13 men’s prisons, yet to be named, will close.
The Alabama Department of Corrections said it intends to control the state’s cost by setting an “affordability limit” of $88 million a year on the cost of the three leases over a 30-year period.
Rep. Chris England, D-Tuscaloosa, one of the lawmakers on a prison study group Ivey appointed, said there are many concerns, including the magnitude of the financial commitment, $2.7 billion over 30 years. That’s assuming the annual cap holds. England said there’s no guarantee it will.
He said state law will require annual renewals of the leases. Factors the state does not control could change the financial standing of the leaseholders, who will bear the debt for the prisons, and force them to cut corners or drive the state’s annual cost over the $88 million cap, England said.
“If you’re telling them beforehand that we’re not paying you anything beyond this, but their profit margins begin to shrink, where do you think they’re going to make up the difference?” said England, who is chair of the state Democratic Party. “On maintenance maybe? On personnel costs maybe? On many other things so they can continue to cut a profit while operating a private prison within the parameters that they have been given.
“But at some point if that does not work, then of course, every year they’re going to come back to the table and say, ‘We need to change some of the terms of this arrangement.’ And every year that goes by when we get rid of all of our old prison infrastructure, we lose more and more leverage. So, this is going to be something that we’re going to deal with every year for the next 30 years.”
Alabama Department of Corrections public information specialist Samantha Rose said the state does not intend to increase the $88 million limit.
“While financial terms have not yet been finalized, the developer teams are well aware of the $88 million affordability limit for the annual lease payments,” Rose said in an email. “The State does not intend to increase that limit year-over-year. As stated in the press release (Thursday’s announcement), the ADOC expects financial close for the facilities to occur in late 2020, at which time the final financial terms will be publicly available.”
Ivey and ADOC Commissioner Jeff Dunn do not promote the plan as a way to increase prison capacity, but to improve the safety for inmates and staff and to better accommodate education and training programs, considered vital to help inmates leaving prison avoid new crimes that send them back. The ADOC says the new prisons will have designs and surveillance technology to operate with 25% fewer correctional officers and will have four times more cells than current prisons, which house inmates mostly in open dormitories.
In April 2019, two months after Ivey announced the prison plan, the U.S. Department of Justice reported findings from an investigation into Alabama’s men’s prisons and alleged the violence, rapes, weapons, drugs, and other problems created conditions that violate the Constitution. A followup DOJ report described violence against inmates by correctional officers.
In a separate lawsuit, a federal judge found that mental health care for inmates failed to meet constitutional standards, partly because of overarching problems of overcrowding and understaffing.
Sen. Greg Albritton, R-Atmore, chairman of the Senate’s General Fund budget committee, said potential increases in the lease payments are one of his concerns about the prison plan. The General Fund is the main source of funding for prisons.
Albritton said he has worked on the prison proposals for four or five years and said it’s his understanding the state will have to renew the leases annually.
“Now, does that open up opportunities for increases? That would seem logical unless there is something done under contract or statutorily to remedy that difficulty,” Albritton said. “At this point, I’m not sure what that would be.”
The state is asking the developers to build prisons that can be used for 50 years. Albritton says that raises the question of what happens after the 30-year lease arrangement.
“The private entity still owns it,” Albritton said. “Do we still have the option of being there? That’s a bone of contention also that has been asked but not completely resolved yet.”
Albritton said there is an overarching concern about the state’s risk in making a decades-long commitment to companies that will own the prisons.
“What happens when or if the owner fails to make payments, goes bankrupt, has other financial issues, and then the bank tries to repossess?” Albritton asked. “Where is the state in that regard? That’s a question that I think needs to be resolved. Again, by contact or by statute.”
Albritton said the Ivey administration has kept lawmakers informed and been open to questions but has still not answered some of their concerns.
“How the lease will work. When the state is going to own it. What’s the protections for the state under certain conditions? The oversight that the state will have on the private entity so that they’re making sure that they have done the maintenance and such or that they have the money for the maintenance. Those type of things.”
The ADOC has about 17,000 inmates in its 13 prisons for men, plus about 2,700 in work release or community work centers. The new prisons will be designed for a total of 10,000 inmates.
Ivey will appoint a panel to help determine which prisons should close and which could be renovated or used for another purpose.
Sen. Billy Beasley, D-Clayton, has three prisons in his southeast Alabama district, all built in the 1980s. Beasley said he has not been told they would close, but is concerned. He opposes the plan to build new prisons and says those in his district – Bullock Correctional Facility in Union Springs, Easterling Correctional Facility in Clio, and Ventress Correctional Center in Clayton -- could be renovated.
“I’m concerned about it not only for jobs, but I’m also concerned about the fact that I know Clio floated a bond to pay for improvements to the water treatment facility,” Beasley said. “So, they’ve got a debt. If they were to close that prison, then the state needs to be responsible for making sure that debt is taken care of.”
Beasley said Clio would not have have taken on the debt if the prison were not there.
“I’ve expressed my views to the governor and I’ve expressed my views to Commissioner (Jeff) Dunn that our facilities could have been renovated, and we could have had electronic security systems installed into the prisons a whole lot cheaper than building these new prisons,” Beasley said.
The ADOC said major renovations are not feasible in many of the state’s prisons and that overdue repairs amount $1 billion. Beasley said he thinks the assertion that renovations are not feasible is a way to build the case for new prisons.
The senator said he would ask the governor and Dunn to consider keeping the three prisons in his district to use for for nonviolent offenders. He also said the state needs to have effective oversight of the companies that will own the prisons.
“They build these prisons to make money,” Beasley said. “That’s their goal.”
Ivey’s predecessor, Gov. Robert Bentley, proposed a plan to build prisons through a state bond issue. That required legislative approval, and lawmakers could not reach final agreement, so the plan died.
“The Legislature took two sessions to deal with floating a bond issue for prisons,” Ivey said last year when she announced her plan. “Both times it failed.”
Ivey’s plan, with the developers bearing the upfront costs of obtaining the land, financing, and construction, does not require legislative approval.
“The overall plan itself is just the unfortunate result of the Legislature’s inability to pass a plan to actually create an Alabama solution to this problem,” England said. “So, instead, we are having to basically employ an out of state landlord, give them well over two billion dollars to design, build and then ultimately manage our prison system. Where at the end of all that, we don’t own the land, the landlord has more control over what goes on in the facilities than we do, and when it’s all said and done, we also won’t own the buildings.”
As for England’s point that the owners will manage the system, the ADOC’s plan calls for the state to staff and operate the prisons as state facilities. But England said the leaseholders will have plenty of say about decisions that affect the prisons they own because of the risk they bear and the necessity to make a profit.
“If we don’t own the buildings, we have no ownership interest in the buildings, that means ultimate control over what happens there falls to the leaseholder,” England said.
In the announcement that named the locations on Thursday, Dunn said the state has no choice but to find a way to build new prisons.
“It is no secret that the ADOC is facing real, longstanding challenges, most of which are decades in the making and rooted in inadequate, crowded, and structurally failing facilities,” Dunn said. “Building new facilities that improve safety and security for staff and inmates and allow for effective inmate rehabilitation is the right and only path forward.”
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