Borough reacts to article on prison

A recent Anchorage Daily News article on the Goose Creek Correctional Center portrayed the borough as bumbling a big project while hiring friends and excluding the real professionals.

Readers should look deeper and do not forsake the facts.

At issue is a water and wastewater treatment plant for the correctional center at Point MacKenzie. The prison has walls up on four of five buildings and is on track to be completed by 2011. It is the state’s largest vertical public construction project, and it would not have come to be without the Mat-Su driving it.

The prison means 600 construction jobs with a payroll of $100 million, as well as some 350 permanent Corrections jobs, all while our nation and state are mired in an economic tailspin. It means returning the tens of millions of Alaska dollars now circulating in another state, where our male inmates are presently housed.

So you can see why a lengthy article that suggests wrongdoing and ineptness without any basis and that simultaneously ignores solid achievements, is both harmful and a case of the big city reporter not grasping that his rural neighbor is competent. Here are the facts:

Newspaper article claim No. 1

The Mat-Su Borough chose Valley Utilities over a “larger” team led by JL Properties and after five months had not informed JL Properties of the reason.

Response No. 1

Evaluators found that Valley Utilities had a superior water and wastewater solution. The proposals were evaluated and ranked by Charles Braun, a borough employee, Corrections Deputy Commissioner Dwayne Peeples, a state employee, and Steve Nuss, an employee of Anchorage Water and Wastewater Utility. The Valley Utilities proposal had a better quality of water and lower capital and operating costs. Lastly, Valley Utilities was just as sophisticated as JL. Both proposers offered similar financing methods — through the use of municipal bonds with private financing alternatives as a secondary means. JL Properties was informed of the proposal scoring and participated in several phone calls regarding the results. Borough code does not allow detailed information of the proposals to be disclosed until a contract is signed, which, to date, has not happened. The process was ethical and the costs reasonable.

Newspaper article

claim No. 2

That a member of the Valley Utilities team helped the borough prepare the water and sewer bid package and was also privy to inside information: Ted Trueblood of Tryck, Nyman, Hayes.

Response No. 2

Not true. A third party engineering firm, Hattenburg, Dilley and Linnel (HDL), prepared the request-for-proposals requirements for the water and wastewater facility. Mr. Trueblood, the member of the Valley Utilities team, was not, and is not, associated with HDL.

Tryck, Nyman, Hayes, Mr. Trueblood’s former firm, was involved in the site selection process. Mr. Trueblood had access to the geotechnical information developed during the initial selection process. So did the rest of the world. In fact, the geotechnical data was posted on the borough website two years ago. The information was disclosed and discussed during the public process for the site selection. The site selection process preceded the RFP process by almost two years.

Surprisingly, the ADN article fails to mention that the “losing” JL Properties proposal team includes Neeser Construction Inc., the actual design/builder of the prison. Neeser Construction Inc. was provided all of the information as part of the design/build proposal for the prison. Thus, the JL Properties team had the best access to all of the information and data long before the proposal was drafted and issued for the prison’s water and wastewater facility. This is the same information and data to which Mr. Trueblood is alleged to have had special access.

Newspaper article

claim No. 3

The article also suggests the interest rate on the sale was abnormally high and tens of millions were lost because of the borough’s bad timing.

Response No. 3

The rate is not abnormally high, and had the borough waited, any additional bond revenue obtained today would be lost by higher construction costs.

Additionally, the borough was able to sell bonds in a rock-bottom market when municipalities across the nation were unsuccessfully scrambling for bond buyers for worthy projects. This success was lost on the Daily News reporter. Most important, if the bonds had not sold, the project would have died.

Here is a closer look at why the interest rate is not high.

The true interest cost of the prison bond sale is 5.88 percent. For comparison, the borough sold certificates of participation with a true interest cost of 5.19 percent a few months earlier. The difference between the two TICs is 0.69 percent higher, but not abnormally higher.

A quote in the article by Devon Mitchell of the state Department of Revenue claims that today’s interest rate on bonds is 4 percent, alluding that had the sale taken place today a lower interest rate would reduce financing costs. A big however: The costs for concrete and steel have increased by about 20 percent since the bonds were sold. Thus, any interest rate savings would have been eliminated by higher construction costs.

Newspaper article claim No. 4

Valley Utilities’ proposed fees are more than 10 times higher than what the state of Alaska Department of Corrections pays for water and wastewater services at its Hiland Correctional facility in Eagle River.

Response No. 4

True, however comparing Hiland Correctional and Goose Creek water/wastewater fees is a case of comparing apples and oranges. In fact, there is no urban site in the Mat-Su comparable to Hiland. Hiland Correctional Facility is connected to the Anchorage Water and Wastewater system, which was paid for with federal dollars, the U.S. Environmental Protection Agency. Hiland Correctional did not have to amortize any costs other than minimal connection lines. Locating the prison in one of the proposed urban Mat-Su areas would not have been less expensive, as assumed in the article.

The solution championed by the ADN article is that the prison should have been located in Palmer. However, connecting to Palmer’s wastewater facility would require a $43.7 million dollar investment to bring the plant up to standards and more funds to expand it to be capable of treating the prison’s expected 200,000 gallons per day of effluent. This cost is 2.6 times more than the estimated cost of providing a wastewater plant at Point MacKenzie. Therefore, the cost of providing wastewater treatment at the Point MacKenzie site is actually significantly lower than at Palmer. In addition, after a thorough public involvement process, members of the public voiced displeasure with the Palmer site and overwhelmingly preferred the Point MacKenzie site.

By writing this, we do not wish to demean the respectable trade of investigative journalism. Our culture needs more of it in this day of anonymous blog postings. However, in this case, we have to tell our side of the story because the article did not.

John Duffy is Mat-Su Borough manager.