Utah leaders never disclosed an $860M estimate to build a new prison and now costs for the project are rising

Lots of numbers were thrown around publicly about the potential cost to move the state prison from the Point of the Mountain, and allow lucrative development on its 700 acres in the heart of the hottest growth area in the state.

But $860 million was not one of them.

Yet, that was the original estimate, state leaders are revealing now, well after they made the controversial prison relocation decision and five months after breaking ground on the new site near the Salt Lake City International Airport.

“That was the estimate from the legislatively created [Prison Relocation] Commission,” Administrative Services Executive Director Tani Downing said last week as she addressed continually rising cost calculations for the project.

However, “When the decision was made to build the prison, we were told to build the prison at $650 million,” which is proving impossible, Downing said. Actually, the commission initially told the public the new prison would cost even less: $550 million.

That first $860 million estimate — provided to the commission by its paid expert consultants — was never mentioned throughout the many hearings and legislative debates.

Apparently the commission, which included state lawmakers, also withheld the estimate from rank-and-file legislators who eventually approved the project with the lower price tag.

As Rep. Merrill Nelson, R-Grantsville, said in a hearing last week, “Where does the $850 million figure come from? We were never told that when we were siting a prison or deciding on how much it cost.”

‘A moving target’

Did legislative leaders intentionally lowball the price to make it easier to win support?

“No. This is a moving target,” said Sen. Jerry Stevenson, R-Layton, a co-chairman of the Prison Relocation Commission and Senate chairman of the Executive Appropriations Committee.

“No, absolutely not,” added House Speaker Greg Hughes, who represents areas near the current prison. “I don’t think that number [$550 million] could ever be accused of being a lowball number. It’s not.”

The Draper Republican said leaders used public estimates they believed at the time.

Paul Edwards, spokesman for Gov. Gary Herbert, added, “We don’t believe there was any effort to lowball. The Legislature made a good-faith and conscientious effort to estimate the real future costs for building the new prison.”

Stevenson and Hughes acknowledge the first cost estimate consultants produced was $860 million, but said it was quickly pared down.

“All they were doing was taking numbers from across the country on what it was costing to build prisons,” Stevenson said. “We knew we could do it for less here” because of the type of prison desired.

Hughes said, “I think it was the size. They were looking at many more beds.”

He added, “There was value engineering done. It was scaled back in terms of the number of beds. We saw that justice reform was changing the number of felons, so we were changing our trajectory of how many prisoners it would ultimately serve.”

Judicial reform has led to detouring more convicts from incarceration to parole and treatment, and has created more programs designed to decrease recidivism. “There’s empty beds at Draper right now,” Stevenson said.

Corrections is not operating at full capacity, but the inmate population has been trending up in recent months. Spokeswoman Maria Peterson said the department is now reopening the 300-bed Lone Peak facility at the main prison campus along with a women’s facility there.

Throughout the prison debate, leaders such as Stevenson said the new state-of-the-art facility near the airport would house 4,000 inmates, with additional convicts held at county jails.

“We felt we could do it for $550 million,” Stevenson said.

One reason costs rose, he said, is the state decided to build the new prison in an area west of the airport without roads or utilities and where the earth must be supported to hold such a big building. “So you have utilities estimates of anywhere from $90 million up to $140 million.” Hughes added that decision avoided more settled areas where residents opposed a prison.

Stevenson said the state may earn back some money over time because it is putting in oversized utilities, hoping to attract other development nearby that would be required to share the costs.

Hughes and Stevenson also noted construction is costing more than anticipated because of a hot economy in which contractors are able to charge more — and said that is mirrored in other projects with higher-than-projected costs, including the $3 billion expansion of the airport, new university buildings and new homeless resource centers.

Edwards, the governor’s spokesman, added, “Estimates are precisely that — they are good-faith efforts to predict future costs. Clearly, the markets for the various goods and services needed in this project have changed. ”

He said the prison should help rehabilitate inmates, not just house them.

“We are committed to providing facilities and programming proven to reduce recidivism. We are quite confident that we can do precisely that on time and on budget,” said Edwards, who also promised the administration would quickly publicize any changes in the cost and scope of the prison project.

‘A can of worms’

But administrative officials said in a hearing last week that the project was done “backwards” — a price set before the work was completed to get a good cost estimate.

Officials from Administrative Services and the Utah Division of Facilities Construction and Management pushed back against criticism from state lawmakers about the rising costs of the project.

“We had no idea” what the price tag would be, Downing said. “We had not programed the prison to determine what the actual costs would be. We were told to build a 4,000-bed prison for $650 million — or at that point it was $550 million.

She added, “The only way we could get it to $650 million was to reduce it to 3,600 beds or 3,200 beds. Or the other option was to leave a piece of it out at the current prison site,” which she said the Governor’s Office, Wilson and Stevenson rejected.

DFCM DIrector Jim Russell also said the Corrections Department has projected a need for 4,000 beds by 2022 — one year after the scheduled completion of the new 3,600-bed prison. A Corrections representative confirmed that projection Friday.

Russell said his team reduced the beds to save money. That’s also why they have reduced the space once set aside for inmate education, laundry and other purposes. Despite all their efforts to find savings, the state and its contractors have only been able to pare the estimate to $692 million.

“And that’s still an estimate,” Downing warned.

“We haven’t gone out to the market and done bids, so we don’t know whether we have forced these two big contractors to lower their estimates and then when we go out to the market, maybe it’s going to come in at $750 million.”

Sen. Gregg Buxton, former DFCM director, began a meeting of the Infrastructure and General Government budget committee this week with an accusatory tone toward Russell, complaining that the new $692 million estimate is “almost double what the original projections were when we started to look at this process.”

But by the end of the meeting — after Downing’s explanation — he had changed his tune.

“It really isn’t your fault,” he told Russell. “You’ve been handed a can of worms.”

Sen. Wayne Harper, R-Taylorsville and the committee co-chairman, struck a similar tone.

“This was not intended to attack you personally. But, as Ms. Downing indicated, there was a breach in the process that caused some problems here. We wanted to get those out on the record so that moving forward we can operate properly.”