Two Alabama construction companies could be in the best position to get state contracts to build two men’s prisons under a proposal lawmakers are now weighing.

Montgomery-based Caddell and Birmingham-based BL Harbert were both part of teams expected to build prisons under Gov. Kay Ivey’s earlier plan to lease from private developers three new facilities. That plan fell apart in the spring, but some legislative leaders say Caddell and Harbert have been vetted and put in the groundwork to quickly move on construction, if the Legislature can pass a bill that includes borrowing as much as $785 million.

“It would be problematic if we tried to move out and get somebody else,” Sen. Greg Albritton, who has helped lead discussions on new prisons over the summer, said. “(These companies) are in the best position to do this work.”

The draft legislation, which House and Senate GOP and Democratic caucuses discussed last week in closed meetings, allows the

state to bypass normal bid processes on the two proposed 4,000-bed men’s facilities planned in Elmore and Escambia counties.

Caddell and Harbert have worked on prison plans under Ivey’s original proposal for more than a year-and-a-half, Rep. Steve Clouse, R-Ozark. He’s the House General Fund budget committee chairman and will sponsor the prison bill in a likely special session.

“For all practical purposes, they’re ready to go,” Clouse said about the companies.

In design-build contracts, a single entity performs both the design and construction under a single agreement.  In the more standard design-bid-build, designers and contractors are hired separately.

While the bill would allow Cadell and Harbert to be selected without the normal bid process, they were involved in the months-

long request for qualifications and request for proposals processes under Ivey’s lease plan that began in 2019.

“We believe that it is building upon what was already a competitive process,” said Othni Lathram, director of the Legislative Services Agency that drafts bills and studies their fiscal impact, was in all four caucus meetings last week discussing the bill.

He said the proposal would cut roughly a year off the completion of the two men’s prisons and save the state about $75 million by locking in material costs sooner.

“What’s design-build is the general contractor services,” Lathram said. “The bill specifically requires that every bit of the sub contracting work be bid out and those general contractors give the state complete transparency on both the process and those bids.”

Clouse said the two Alabama contractors will likely deal with Alabama subcontractors.

“Obviously they’re going to have an advantage from a distance and a time standpoint,” Clouse.

Legislative leaders have said they’d like to get construction on the Elmore men’s prison underway by early next year. Time can’t be wasted, Albritton said.

“We’ve got pressure from the courts, we’ve got pressure from the crumbling facilities that we’ve got, we’ve got pressure from the county jails,” Albritton said. “There’s all kinds of chain reactions just waiting for something to trip. I don’t think we have the luxury of delay or wait or extended review.”

Billy Norrell, executive director of the Alabama Association of General Contractors, said the organization is excited by the possible projects in the prison bill.

“The sheer size alone of the projects will keep some members from participating as a prime contractor, but the relationships that are built with whoever does get awarded the job could mean tremendous opportunity for contractors of every size,” Norrell said. “We are hopeful that our elected leaders will support this program as presented by Gov. Ivey and her team in the Legislature.”

Ivey’s original lease plan would have had men’s prisons on private land in Elmore, Escambia and Bibb counties. The new proposal being pushed by legislative leadership has the 4,000-bed prisons built on state-owned land in Elmore and Escambia counties. A third men’s prison is possible in phase III of the plan. Phase II includes a women’s prison in Elmore County to replace the current Tutwiler Prison. It would be done under the traditional design-bid-build process.

Using ‘lost revenue’

While the draft bill allows the state to borrow $785 million for prison construction and renovations, lawmakers are estimating they can use about $400 million in federal American Rescue Plan Act dollars on the plan.  Using that money would allow the state to turn dirt on the Elmore prison more quickly.

Specifically, that’s the COVID rescue money considered “lost revenue.”

The lost revenue is a portion of the $2.1 billion fiscal recovery fund the state is receiving that will be deemed replacement for revenue the state would have collected through normal business had there not been a pandemic.

The U.S. Treasury Department set up a formula for calculating that amount of projected revenue that includes looking at the previous three year’s revenue growth. Any drop in that growth in 2020 could be considered lost revenue.

The Alabama Department of Finance last week said the exact amount is still being calculated.

The money is allocated by the Legislature, and the revenue replacement money may be utilized for most any purpose, except for certain specifically prohibited uses such as deposits into pension funds or offsetting reductions in tax revenues caused by tax cuts, according to the Finance Department.

Meanwhile, depending on guidance from Treasury, more Rescue Plan money could be used for prisons later, Clouse said.

“I’m hopeful we can use another $150 million to $200 million,” Clouse said.

In July, Alabama Arise and other advocacy groups asked Ivey to spend the federal relief money on investments in public health and economic opportunity.

While Arise has advocated for years for changes to the state correctional system, Executive Director Robyn Hyden said prisons should not be the lawmakers’ priority for this COVID relief money.

“Those funds were specifically to rescue the American people from the worst impacts of COVID,” Hyden said. “So it’s really disappointing to see our state turn away funding for unemployment assistance and turn away help that could go directly to people who are struggling for health care. But then, the first thing our lawmakers are thinking about when they see this money is, oh, let’s build prisons.”

Arise’s suggestions include direct help to low-income families and bonuses for health care workers, shoring up the state’s unemployment benefits fund and improving educational infrastructure to help people get better jobs.

“There are real, critical underlying issues that our state is facing and building new prisons isn’t going to solve those issues,” she said.

Counting votes

Last week’s caucus meetings were to lay out legislation to lawmakers prior to a special session likely in October. Leadership, including Ivey, doesn’t want to call a high-profile special session just to have the bill fail.

The House and Senate leaders this week will be counting votes to measure support for the bill that will start in the House. Leaders know the bill is most likely to fall apart in that 105-member body than in the 35-member Senate.

House Speaker Mac McCutcheon told his caucus members he wanted an answer by this coming Wednesday.

Several senators told Alabama Daily News last week that they like what they’ve seen in the draft, but their support will depend on what actually comes out of the House.

“This is an issue we want to see resolved,” Sen. Chris Elliott, R-Daphne, said. “…I think we’re closer than we ever have been before. I don’t think it’s a perfect solution but I think it’s a reasonable one and a conservative one. But it’s a matter of what comes out of the House and what’s going to be palatable to my Senate colleagues.”

He agreed with Albritton that there aren’t many companies who can build large prisons.

“We’re trying to build an airliner here — it’s Boeing or Airbus,” Elliott said.

Elliott also said the draft calls for the work of subcontractors on the prisons to be bid out.

“There’s a lot of transparency built in here,” he said.

Sen. Larry Stutts, R-Tuscumbia, said he thinks the draft “is a framework we can work with.”

“(Prisons) have been a problem that’s been put off for a long, long time, and we’ve got to deal with it,” he said. “And if we can use some of the federal money, that’s going to soften the blow to the state budgets considerably.”

Prison plan specifics

The draft calls for a multi-phase plan that includes:

• Phase I: Two new 4,000-bed men’s prisons in Elmore and Escambia counties;
• Phase II: A new 1,000 bed women’s prison in Elmore County and renovations or demolition and reconstruction to existing prisons in Jefferson and Limestone counties and either Barbour or Bullock counties;
• Phase III: When Phase II is mostly complete, the Alabama Department of Corrections will perform “an evaluation of men’s prison facilities based on a current facilities assessment and inmate population trends to determine if additional facility beds need to be replaced.”

The bill also allows for the purchase or rental of the Perry County Correctional Facility. The privately owned prison, which is currently empty, would be used to facilitate work release and other rehabilitative and re-entry efforts.

The bill would authorize the state to borrow up to $785 million. The annual debt service on the bond would be about $50 million, according to information given to lawmakers.