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Lawmakers consider mothballing Alaska prison project

  • Author: Patti Epler
  • Updated: September 27, 2016
  • Published March 1, 2011

Alaska lawmakers are considering mothballing the still-unfinished $240 million prison in the Matanuska Valley because cost overruns and other factors have made it cheaper to keep housing Alaska prisoners in facilities Outside.

The 1,536-bed facility is being built by the Matanuska-Susitna Borough in a remote part of the Valley near Point McKenzie. The plan is for the borough to lease it back to the state. It is expected to open later this year but with just 30 prisoners in what the state has described as a test project.

But Senate Finance Committee members, who grilled Department of Corrections officials last week about the prison, are now figuring out that the Goose Creek Correctional Facility will cost about $53 million a year to operate. Leaving the prisoners Outside -- about 1,000 are currently in Colorado -- would cost about $21 million a year.

Simply mothballing the prison -- which means finishing up construction and paying basic maintenance including heating costs to keep the pipes from freezing -- comes in at about $20 million a year, including $17.8 million in debt service on construction costs.

Some senators suggested at Thursday's committee hearing that it appears the facility has become more of an economic development project for the borough at state taxpayer's expense. It is the state that is paying for roads and utilities to an area so remote that some have described the prison project as creating a small town where once there was nothing.

No utilities existed in the area and the state loan agency had to sell $20 million in bonds so a local utility company could put in water and sewer. The prison is the only customer, so the state will be the only entity repaying that debt until other businesses or facilities move to the area, which wouldn't be for many years, the committee was told last week.

State officials tried to explain that the financing arrangement and other financial issues are complicated.

"You call it complicated, I call it fandangled," Finance Committee co-chair Sen. Lyman Hoffman shot back.

Assistant attorney general Jeff Stark, who worked with corrections on the project, said the project costs were higher because there were no utilities. Normally, he said, a facility would hook up to existing utilities.

"That's the point," Hoffman said. "The project should have been built closer to where the utilities are."

He is one of the biggest critics of the project, in large part because he believes state corrections officials went way beyond the intent of legislation he co-sponsored in 2004 that was aimed at easing prison and jail overcrowding throughout the state while returning Alaska prisoners home.

The committee learned Thursday that, in the seven years since Senate Bill 65 was adopted, no improvements have been made to the prison in Bethel, one of the highest crime areas in the state. Expansions planned in Fairbanks, Seward, Dillingham and Kodiak also were scaled back or never carried out, according to corrections officials.

Hoffman, who is from Bethel, was clearly furious. He pointed to SB 65 which included clear spending limits and detailed per-bed costs that the state was supposed to stick to.

Leslie Houston, director of administrative services for the department, agreed that the costs set out in the bill were exceeded.

"So basically you broke the law," Hoffman stated flatly.

"I won't say we broke the law, sir," Houston replied. "But I will say from (when) the bill was passed 'til ground was broken at Goose Creek, the economy and so many things changed in that time."

Hoffman is not the only Finance Committee member who is unhappy with how the state's prison plans have turned out. Co-chair Sen. Bert Stedman indicated he and other members had basically forced the department to come to the table and lay out what has happened since SB 65 was passed.

"I wasn't expecting this to be pretty," Stedman said at the end of the hearing.

He and other committee members have asked for documentation and backup material to show why decisions were made over the past eight years, starting with turning the project over to the Mat-Su Borough and why SB 65's requirements were not followed.

Stedman said the committee would have more discussion about the prison, including whether it might be cheaper to simply mothball the facility. He noted that, even without debt service, the operating cost would be more than $50 million a year. It may be better just to leave the prisoners where they are, he suggested.

Sen. Johnny Ellis said he would be hard-pressed to ever vote again for a measure like SB 65 without some sort of clearer explanations as to what, in his opinion, has gone wrong.

"I think it's clear that we are being held up for greater costs than anticipated," he said, pointing to the decision to build the facility in a remote location thereby "using the state facility for development and land speculation."

Sen. Lesil McGuire told reporters on Tuesday that she is particularly unhappy that the intent of SB 65 to bring prisoners home has "fallen by the wayside."

She had anticipated there would have been some help for Bethel in particular, she said, noting that crime rates are climbing in Western Alaska at the same time there are efforts to help people in their own communities.

"There's a real concern on the part of the Finance Committee that (prison) costs are not being managed," she said. "We are left holding the bag and now we've got to unpack it."

Contact Patti Epler at patti(at)

Note: This story has been updated to correct the date SB 65 passed the Legislature. It was 2004, not 2003.