Cornell Corrections Targets Alaska

Twenty years ago a class action lawsuit in Alaska resulted in a consent decree setting the maximum number of prisoners for the state at 2,786. In 1995, the Alaska Department of Corrections (ADOC) had to ship nearly 800 prisoners to the Corrections Corporation of America (CCA) facility in Florence, Arizona, and move another 653 to halfway houses to keep the number at an acceptable 2,656.

Article by Julia Lutsky 

Editor’s Note: Over the past several years, Cornell Corrections, Inc. (CCI) has sought to move their private prison operation into Alaska. They have worked with a handful of Alaskan business interests, lobbyists and politicians. Their initial involvement in Delta Junction thwarted, they are now doing all they can to build and operate a private prison on the Kenai Peninsula. As we go to press, the fate of the proposed private prison rests with Alaska voters. The following article by Julia Lutsky is an anatomy of the prison privatization push in Alaska to date.

Twenty years ago a class action lawsuit in Alaska resulted in a consent decree setting the maximum number of prisoners for the state at 2,786. In 1995, the Alaska Department of Corrections (ADOC) had to ship nearly 800 prisoners to the Corrections Corporation of America (CCA) facility in Florence, Arizona, and move another 653 to halfway houses to keep the number at an acceptable 2,656.

Republican state legislators were not happy with sending almost $19 million a year to another state to house Alaskan prisoners. Eldon Mulder, House Finance Committee Co-Chairman and, since 1996, strong private prison advocate, was particularly upset. In 1999, he sponsored legislation to allow dismissal of the consent decree if there were no ongoing violations. Superior Court Judge Elaine Andrews held there were none the following year. Scott Taylor, attorney for the prisoners who had initiated the class action suit, warned that “[t]he danger ... is that the Legislature not get the idea ... that they can shut down the contract in Arizona and bring everybody back.” Ergo, Alaska needed another prison.

Then in 1998, the federal government announced it would close Fort Greely outside Delta Junction in 2001. This location had drawn the attention of the private prison industry and of state and local legislators. A new prison on its facilities would provide construction, maintenance and service jobs, replacing jobs lost with the proposed closure of the army base. Delta Corrections, the local operation of the corporation Allvest, Inc., sold the idea of a private prison at Fort Greely to the Delta Junction city government. Bill Weimar, a former manager of state halfway houses and president of Allvest, took charge of efforts to obtain necessary funding.

Governor Tony Knowles’ administration had originally urged the expansion of existing regional jails rather than the construction of a large prison. In 1998, however, the legislature approved and he signed a bill authorizing an 800-bed medium security private prison in Delta Junction. Two years later, the federal government altered its plans: Fort Greely would remain open and become the site for a missile defense system. Elections in the fall of 1999 changed the balance of power in the Delta City Council and it voted to rescind the contract with Allvest. The company sued. Unless the federal government pays the reimbursement Allvest seeks, Delta Junction stands to lose as much as $1.1 million.

Since the state wanted to open a prison by the summer of 2003, and a private one still seemed possible, Weimar -  who had sold the Alaskan operations of Allvest to the national corporation, Cornell Corrections, Inc. (CCI) for $21 million - would have to turn his eyes elsewhere. And the 1998 legislation, which had authorized that the prison be built only on the military facilities at Delta Junction, would have to be amended or replaced.

Further south, on the Kenai peninsula, officials had been considering the problem of a parcel of land next to the Wildwood Pre-Trial Facility, home to 250 prisoners. The Wildwood site had originally been an Air Force Base and it had evidently been transferred to the Kenai Natives Association (KNA) when the military left some years back. It was later purchased by the state and the Wildwood Pre-Trial Facility constructed. The parcel of land next to it, however, still belonged to the KNA. Since developers had been reticent to build because of its location next to Wildwood the Kenai Natives Association made feasibility studies to determine the best use to which the land could be put. Not surprisingly, one of the leading suggestions was another prison. This piece of KNA land - and its facilities - might therefore be the solution for the prison Alaska sought to build. The state, however, would not deal directly with the KNA; the land and facilities would have to be acquired by the Kenai Peninsula Borough.

During the summer of 2000, the KNA had begun discussions with Weimar and Cornell Corrections on the possibility of constructing an 800 - 1,000 bed prison on the land. Together they presented the idea to the Kenai Peninsula Borough City Council last September. Though no assurances had come from the state to that effect, one of the arguments used to convince the borough was that the facilities could be shared with the Wildwood Complex. And the KNA land is also adjacent to the airport which would simplify the transferring of prisoners.

The Kenai Natives Association lobbied native organizations throughout the state for support for the private prison. Rick Segura, KNA’s president and CEO, argued that while native American males make up seven percent of Alaska’s population, native men make up 37 percent of the prison population. Three hundred of them are in Arizona and should be brought home to Alaska if for no other reason than that family visits, so necessary to rehabilitation, are nearly impossible with the men so far away.  The KNA would also like to establish rehabilitation programs specifically directed to Native American prisoners.

Cornell Corrections had, along with the KNA, been a part of Corrections Group North (CGN), a “limited liability” partnership originally made up of Cornell and Weimar Investments who were - as Delta Corrections - behind the plan for a private prison at Fort Greely. CGN had submitted a response to a “request for qualification” issued early this year by the Kenai Peninsula Borough City Council seeking a group of companies to work with the borough on the planning and construction of a private prison. Its response was rejected because the Borough Council was uncomfortable with CGN’s “limited liability” status. Cornell then agreed to be the prime contractor in a letter written in mid-February, 2001, to the Council by Cornell’s president and CEO, Steve Logan. According to Jeff Sinz, Kenai borough financial director, CGN then ceased to play any part in the Kenai prison project; it had been replaced by Cornell Corrections.

Prisons, even private prisons, are an expensive proposition. In this case, costs were to be financed through the issuance of public bonds. If the public
refuses to vote the bond measure, said Sinz, and “the bonds are not issued to pay for capital costs associated with the project, then the costs will be treated as an operating expenditure of the borough’s general fund.”  How much these costs might amount to has never been specified.

The Kenai Borough Assembly subsequently approved 8 to 1 the negotiation of a contract with Cornell Corrections. This vote was in spite of a letter from three of Kenai’s five member legislative delegation questioning the fact that only one contractor was seriously considered and that public funds would be used without defining the costs of the prison. These were also the reasons cited by Pete Sprague of Soldotna, when he cast the sole opposing vote.

So the choice of Cornell Corrections was made in the absence of any competitive bidding. Sinz, one of those on the five member panel rating the interested corporations, said that primary among the considerations had been Cornell’s choice of location on the land near the existing facility at Wildwood. There was also Cornell’s promise of an undisclosed  “promotional” package.

This “promotional” package was discussed behind the closed doors of state legislative committees. Both the House and Senate approved a measure for the design, construction and operation of a private prison on Kenai peninsula. An amendment requiring competitive bids for the contract was voted down. In its final form, it authorized the Dept. of Corrections to enter into a five-year lease agreement with Kenai Borough for construction of the 800 - 1,000 bed prison at a cost of $80 to $100 million.

In May, the measure enabling the DOC to enter the lease agreement was signed by Governor Knowles. The Kenai Borough, in turn, entered a partnership with Cornell to construct the prison, which would belong to the borough, be financed by the state and operated by Cornell. It is still unclear whether the land would actually be purchased or leased from the KNA. That will have to be decided once plans are finalized.

Relationships between political and corporate players, as well as political contributions, have been present throughout Cornell’s efforts to expand their business in Alaska. The wife of House Finance Committee Co-Chairman, and privatization advocate Eldon Mulder, Wendy, is an aide to Cornell lobbyist Joe Hayes. “I don’t deal with clients,” she said; the only reason she took the position was to keep the family together during the legislative sessions. She does not lobby but goes to her husband’s office in the Capitol “to pick up the mail,” she says. She did however run her own lobbying business back in 1995. And for her non-lobbying assistance, in 1999 Hayes paid her $65,000 and in 2000 she received a twenty percent increase, according to Alaska Public Offices Commission (APOC). Mulder himself received $2,600 from Allvest in the ‘96 elections and $2,500 toward the ‘98 elections.

According to the National Institute on Money in State Politics, Cornell gave a total of $50,275 in political contributions in 1998, the major part of which went to Republican candidates.  Of the total, $6,375, however, had gone to Democratic Governor Knowles, who later signed the legislation authorizing the private prison.

Jerry Ward, Republican State Senator, former corrections official and private prison promoter from Anchorage, owns a company that manages real estate for the Kenai Natives Association. Neeser Construction, part of the Corrections Group North consortium, is presently constructing a $50 million jail in Anchorage. Neeser and the engineering firm VECO (also part of CGN) are heavy campaign contributors to Alaska politicians.

Part of the contract between Kenai and Cornell provides for a feasibility study to be done after Phase One (promotion and planning of the prison) is complete but before Phase Two (construction and operation) is actually decided. Phase One was essentially completed by the end of summer, 2001. Requests for Proposals (RFPs) have gone out to independent firms to conduct the feasibility study but it is highly unlikely that the study will be completed any time soon. Such an arrangement means, of course, that the amounts of money involved, and the cost to Alaska taxpayers, have not yet been determined. At least not publicly.

In Alaska groups formed to campaign for candidates or ballot measures are required to register with the state. By mid-May a Kenai group called Citizens for a Private Prison-free Peninsula had formed and registered in order to place a petition on the October ballot for an ordinance “prohibit[ing] the private for-profit operation of a prison or correctional institution within the Kenai Peninsula Borough.” James Price, principal sponsor of the petition and contact person for the group, said he wanted to “get a ruling by the people, which [will be] a binding law by the people. And the people’s voice will have been heard.” Two days before Price filed the initiative application, Assembly member Sprague of Soldotna said it was his intention to put the issue of the prison on the ballot. Had his bill been successful, however, the resulting vote would have been only advisory.

Advocates of the private prison, not to be outdone, formed Concerned Citizens for Responsible Economic Development (CCFRED), led by Kenai attorney Blaine Gilman. His group has “been having meetings with lots of volunteers,” he says, “We’re trying to do a grass-roots campaign with as many volunteers involved as possible.”

By mid-June of this year, so much controversy had been generated with respect to the planned prison that the entire nine member Kenai Peninsula Borough Assembly co-sponsored an ordinance to let borough voters decide whether or not a private prison should be built on Kenai. A ‘yes’ vote will allow the borough to contract with Cornell to proceed with Phase Two (the construction and operation  of the prison) once the feasibility study had been completed; allow the borough to decide on whether it will purchase or lease the KNA land; and for the final Intergovernmental Agreement (IGA) to be signed with the state. A ‘no’ vote will prohibit the construction of any private prison on the peninsula for at least two years (the two year proviso is part of the municipal code).

The ordinance thus combines Sprague’s advisory vote and Price’s voters’ initiative. The October vote has strong advocates on both sides: Bill Popp, a Kenai Borough Assembly member, and an original sponsor of the ordinance, could see no reason why anyone would object since it gives voters the final say. He is a supporter of the private prison because of the 250 to 300 jobs he estimates it would create: “I think there’s a lot of potential for [another] component to the economy of the Kenai peninsula.” Although the ordinance surprised Sprague, he said it “makes [the public vote] binding and ... even preferable to what I was asking.” Soldotna Mayor Dave Carey and the City Council have gone on record as opposing the construction of any private prison on the peninsula. The Council has, however, supported the construction of a publicly owned prison.

Even if the vote okays the prison, the borough could still decline to proceed to Phase Two. Cornell is actively working to see that this doesn’t happen: in addition to promising jobs they have, for example, been the main sponsors of a Red Cross golf tournament held recently on Kenai peninsula; they have met with the Kenai and Soldotna Chambers of Commerce and the Soldotna Rotary. They have also held a working session with the Soldotna City Council; the Council, however, made it clear that it would not support a private prison unless the builders could meet the same staffing, training and security measures that obtain at state operated facilities. At the end of the session, “‘I heard nothing here tonight that changed my mind regarding our resolution, did any of you?’ [Vice Mayor Jim] Stogsdill asked of his fellow council members. No one indicated that they had.” [Peninsula Clarion, 8/10/01]

Michael Gilliland, retired from the federal prison system and formerly a warden for Cornell, is the company’s business development southwest coordinator and conducted some of these meetings. He noted that he was “here to get information out about the company - how we operate across the country with our values, how we would plan to become good neighbors and be active in the community as this prison project goes through.” He added that Cornell would support the pro-private prison CCFRED’s activities.

By early September, according to state recoreds, CCFRED had collected $39,000, of which Cornell had contributed $16,000; Gilman $8,100; the Kenai Natives Association $5,000; Neeser Corporation $5,000; and Teamsters ALIVE $5,000. By contrast, Price’s group, Peninsula Citizens Against Private Prisons, had raised only $2,000: $1,500 from Public Safety Employees Association, $451 from Price and $225 from three individual donations each of which was less than $100.

By that time, too, a new anti-prison group, Public Safety Yes - Private Prison No, had formed. And Cornell had begun to run ads promoting the prison which say they are paid for by Cornell. While the state requires groups campaigning to register, as of this writing (mid-September) Cornell has not registered.

As we go to press the Kenai City Council announced it had voted 4-2 to support the prison, but only with very strong reservations: arrangements would have to be made for connecting the prison to the city’s water and sewage systems; the feasibility study be would have to be completed, studied and approved by the City Council and be made available to the general public; and agreement would need to be reached between the city of Kenai and the borough with respect to the operation of the facility and its effect on the city.

The public, though it still has no information on the amount of public money involved, may have the last word in the matter; it remains to be seen how it will decide on October 2nd.

This article originally appeared in the Fall 2001 issue of Justice Matters.