DesignBuildFinancing of Privately Operated Detention Facilities Allison Bass

Design/Build/Financing of Privately Operated Detention Facilities Allison, Bass & Associates, LLP A. O. Watson House 402 West 12 th Street, Austin, Texas 78701 512/482 -0701

MAJOR CAVEAT!!! HIRE QUALIFIED LEGAL COUNSEL n These projects have a large number of potential problems: n n n 1. 2. 3. 4. 5. Public Relations Financial Construction Operational Legal

Traditional Methods-1 st Step n Hire an Architect or Engineer n n n Cannot competitively bid Architect or Engineer- Sec. 2254, Tex Gov. Code. Professional Services Procurement Act Issue RFQ for Architectural or Engineering Professional to Design Jail Once Hired-Architect/Engineer Designs Building for use in Selection Process

Traditional Methods-2 nd Step* n Decide on method of financing n n n Certificates of Obligation or Anticipation Notes requires traditional Competitive Bidding-lowest responsible bidder Pure Tax Revenues Revenue Bonds n May be used if facility will be used to house state or federal inmates for a fee

Traditional Methods-3 rd Step n Decide how you want to award contract n n n n Traditional Competitive Bid (lowest bid) Competitive Bid (Design/Bid/Build)-best value Competitive Sealed Proposal-best value Construction Manager at Risk. Construction Manager as Agent Design/Build Job Order Method-repairs/rehabilitation

Statutory Alternatives 361. 053 L. G. C. n Allows qualified entity (City or County, or a nonprofit corporation acting on behalf of city or county) to hire a private vendor to provide for the financing, design, construction, leasing, operation, purchase, maintenance or management of a jail, detention center, work camp, or related facility.

LO-96 -117 n n n Contracts must be awarded by RFP Exempts a similar statute, Article 351. 102 L. G. C. , from Competitive Bidding requirements and Professional Services Procurement Act-Note, subsequent legislation calls into doubt. Reasonable to believe 361. 063 has the same benefits-Subject to legislation

Public Facilities Corp: Chapter 303 Local Government Code n n Allows creation and use of public facility corporations with the broadest possible powers to finance or to provide for the acquisition, construction, rehabilitation, renovation, repair, equipping, furnishing and placement into service of public facilities at the lowest possible cost. Authorized to issue bonds on behalf of its sponsor for purposes of Section 103 of the Internal Revenue Code. (Exclusion of Interest as Income on Investments)

Public Facility Prerequisites n n n Sponsor must determine a public interest to create such a facility. Approve proposed Articles of Incorporation See that PFC is operated in accord with non-profit corporation standards, i. e. regularity of meetings and records

PFC Powers and Duties n n n May acquire title, lease, convey, or dispose of public facility property Issue bonds Make contracts Lend money, invest money Sue or Be Sued (Waiver of Immunity) Is a Governmental Entity-Open Meeting/Records Obligations

PFC Bonds n Debt Service Payable only from Revenue derived from public facility. n n Debt is not an obligation or pledge of credit of the Sponsor. Bonds fully disclose fact that sole recourse to purchaser are assets of the PFC, and not the Sponsor or tax base of Sponsor

Local Governmental Corporations n n Chapter 431 -Transportation Code Similar to PFC-But more flexible n n Non-Profit Corporation Authorized to perform wide range of governmental and quasi-governmental functions

Bonds Must Be Approved by Attorney General n Law permits issuance of revenue bonds without election, but no taxation support permitted. Revenue Bonds must be reviewed and approved by Attorney General Bond Review Board-Registered with Comptroller of Public Accounts n Thereafter-Valid and Incontestable n

For More Information: n Allison, Bass & Associates, LLP n n n 512/482 -0701 voice 512/480 -0902 fax Law@Allison-Bass. com