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Kansas DOC Underestimates Cost of New Prison by $51 Million

by Christopher Zoukis

The Lansing Correctional Facility, located in the Kansas City area, is crying out for a wrecking ball and a bulldozer. Parts of the facility were built in the 1860s, and the Kansas DOC has determined that even its newer buildings are not as safe or efficient as modern prisons.

When legislators asked the DOC to recommend the least-expensive option to replace the aging facility, prison officials concluded that a lease-purchase arrangement was the best deal for taxpayers. That would involve contracting with a private company to build the prison, lease it back to the DOC for up to 40 years and then sell it to the state.

The total cost, according to department estimates? A cool $155 million. The actual cost, according to a July 2017 legislative audit? Around $51 million more, at $206 million.

According to the audit, the DOC’s estimates “were missing key variables and used inconsistent assumptions that tended to favor a lease-purchase option.” Specifically, the department’s proposal failed to adjust future costs to present-day dollar amounts and presented alternate calculations of construction cost, depending on the prison’s ownership arrangement.

Significantly, the DOC also failed to include the estimated $35 million it would cost to buy the facility back from the private company that built it (at a profit) and leased it to the state for decades (also at a profit).

DOC spokesman Todd Fertig did not formally dispute the audit’s findings, but defended the department’s neutrality on the issue.

“I think all along we’ve been open to either option,” he said. “We’ve never tried to weigh one in favor of the other.”

One legislator was not ready to let the department off the hook for neglecting to include over $50 million in its cost estimate.

“They wanted us to choose that option [lease-purchase], or allow them to choose that option, so the fact that they fudged the numbers doesn’t surprise me,” said state Senator Laura Kelly, a member of the joint legislative committee that instituted the audit.

According to the audit, the least expensive option would be the traditional model – issuing bonds to finance the prison construction at a cost of $178 million over 20 years.

Regardless, in November 2017 the DOC announced it had picked CoreCivic, previously known as Corrections Corporation of America, to build a 2,432-bed prison to replace the Lansing Correctional Facility. The company would require payments totaling $362 million over a 20-year lease period, with no final purchase cost.

Several legislative committees must approve the plan; lawmakers expressed concerns about the proposal, which has the governor’s support, at a hearing on January 11, 2018, but key legislative leaders later allowed it to proceed.

“We will rue the day, I believe,” Senate Minority Leader Anthony Hensley said about the prison lease-purchase arrangement. 


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