NCJ Number
100081
Journal
Government Finance Review Dated: (August 1985) Pages: 7-13
Date Published
1985
Length
7 pages
Annotation
This article examines private-sector alternatives for financing prison construction, discusses their costs and benefits, and cites where and how they have been used.
Abstract
Several leasing arrangements provide alternatives to current revenue and general obligation bonds. A straight lease, used by 18 corrections departments contacted in a 50-State survey, is an agreement in which the lessee acquires use, but not ownership, of the leased property. The lease may be written with an option to buy or as a sale-leaseback in which government property is sold to private investors and simultaneously leased back to the government for its use. In another alternative, a public improvement is financed and acquired by a third party who then enters into a lease/purchase agreement with a political subdivision. The political subdivision generally retains control of the facility's design, construction, operation, and maintenance. For correctional facilities, lessors are usually nonprofit legal entities (joint power authorities, public works boards, or nonprofit corporations) permitting tax-exempt financing. These legal entities then can raise funds for construction by issuing revenue bonds or certificates of participation. Lease/purchase financing is the newest and least frequently used alternative. Independent legal and financial analysts should be consulted if these complex leasing alternatives are considered. 2 exhibits and 20 footnotes.