MEMORANDUM

TO: Tim Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

FROM: Dale Bagley, Mayor

DATE: November 9, 2000

SUBJECT: Ordinance 2000-59

This ordinance authorizes the borough to negotiate an agreement with the state that would allow the borough to operate a prison facility in the Kenai Peninsula Borough. It would also authorize the administration to publicly solicit competitive bids for a site upon which the prison would be located and for the design, construction, and operation of the prison facility.

Kenai Native Association ("KNA") approached the borough last August, and the assembly approved a resolution supporting its proposed establishment of a private prison near Wildwood. Since then, KNA learned that the state would not directly contract with it to operate a prison, and instead preferred a government-to-government contract. Accordingly, KNA approached the borough with a request that the borough contract with the state to operate a prison, and the borough in turn contract with KNA to lease KNA's land adjacent to Wildwood and have KNA design, build, and operate a prison on that land. KNA then intended to subcontract for the operation of the prison. The borough would use tax exempt revenue bonds to finance the construction of the prison, which is estimated to cost approximately $80 million and result in the creation of approximately 250 to 300 permanent full-time jobs in the borough.

Upon reviewing KNA's proposal, the administration supports the proposed concept of building and operating this prison but could not, under the code, justify sole sourcing this project to KNA. Accordingly, this ordinance would authorize the mayor to solicit competitive bids for a turnkey operation including the land, design, construction, and operation of the prison facility. Any contract would be subject to the state's entering into an operating agreement with the borough which the assembly would first approve by resolution. Authorization and sale of the revenue bonds would be accomplished through a separate process initiated after approval of the state contract.

Shortened hearing is requested because the state legislature begins its next session January 8, 2001, and the state legislature's approval of the private prison proposal would be needed. It is believed that the project would be most likely to succeed if it is presented to the legislature at the beginning of its session to provide them with the maximum amount of time to review it. Additionally, KPB 5.04.110 requires that this project be submitted for voter approval as it costs more than $1.5 million. However, because the funding for this project would come from the state, and because requiring voter approval would likely prevent this project from being presented to the legislature during the upcoming session, it is requested that the assembly waive the voter approval requirement in the code.

This is presented to the assembly as an ordinance because it waives the code requirement for voter approval of projects costing more than $1.5 million. Also, an ordinance allows for maximum public hearing and authority for amendments should the assembly so desire. It is my intention to request that, in addition to hearing this ordinance on December 12, the assembly hold a special meeting on December 19, 2000, to provide additional time for public input on this significant matter and give it further consideration. Your consideration of this proposal is appreciated.