Originally Published: January 26, 2010 8:59 p.m.
PRESCOTT VALLEY - A proposed private prison with 5,000 beds will be an economic boon by creating thousands of jobs during construction and operations and generating tax revenues, according to a Scottsdale-based economist.
Elliott D. Pollack & Co. projected construction for the proposed prison would create 3,945 direct, indirect and "induced" jobs with $172.2 million in wages and a total economic effect of $469.9 million during the construction period. Construction alone would cost $300 million, according to the report.
Once the prison opens, it will create 885 direct jobs, and 425 direct and induced ones with $49.3 million in wages, Pollack stated in the report. The annual economic output would be $109.3 million.
Indirect jobs refers to employment that businesses create when they provide goods and services for operating the prison, and include manufacturers and wholesalers, Pollack explained in a 12-page economic analysis released Monday. The spending of wages on goods and services from direct and indirect jobs in turn creates induced jobs.
The private prison also would generate $25.2 million a year for state, county and local governments during construction, and exceed $7.9 million a year in revenues from operations, Pollack's report states.
Pollack produced the report for the Prescott Valley Economic Development Foundation, which has held talks with Corrections Corporation of America to build a private prison off Fain Road near the Grapevine Industrial Park. He based construction estimates, job and inmate figures, taxable corporate income and an estimated utility budget on information that CCA supplied.
Pollack staffers are scheduled to speak about the report during a meeting of the Town Council Thursday evening.
"I think it is very impressive," foundation Executive Director Gary Marks said.
Marks issued a press release Dec. 17 in which he stated the prison would create 400 full-time jobs. He and other business and civic leaders met that day with a CCA official.
CCA would create more full-time jobs because Marks based that figure on a prison with 1,000 to 1,200 beds - not 5,000 - CCA spokeswoman Louise Grant said.
"If CCA were to submit a proposal to build a 5,000-bed prison, that would mean more than 800 stable careers for locally hired people from Yavapai County," Grant said.
Grant noted the state government has not issued the request for proposals (RFP) from prison companies to house a maximum of 5,000 inmates. The state could award 20-year contracts to CCA or other companies to house the inmates at existing prisons, new prisons or both.
She also said CCA, which operates four prisons in Eloy and two in Florence, likely would hire an outside general contractor because a prison requires specialized construction skills. She added CCA cannot guarantee that it will hire local subcontractors or recruit employees strictly from the tri-city area, which has an official unemployment rate of 9.3 percent.
"We always make every commitment to hire local subcontractors," Grant said. "Our culture and commitment is to hire as many (people) locally as possible."
Grant spoke hypothetically because her company awaits a decision from the state.
Pollack qualified its report as well.
"The analysis outlined in this study is based on currently available information and estimates and assumptions about long-term future trends," the report states. "Such estimates and assumptions are subject to uncertainty and variation. Accordingly, we do not represent that the results will be achieved."
The analysis also does not consider costs associated with providing services to the prison, the report stated.