Alternate Financial Approaches to Corrections (From Financing Local Delinquency Facilities, P 57-67, 1985, Joseph L White and Deborah M McDonald, eds. - See NCJ-101660)

• NCJ Number: 101661
• Author(s): S M Sorett
• Date Published: 1985
• Length: 67 pages
• Sale Source: Acad Inc (The)
• Language: English
• Country: United States of America

Annotation

In the face of mounting indebtedness, limited resources, and negative public attitudes toward increased government spending, officials are turning to private and third-party financing of juvenile correctional facilities.

Abstract

The service contract (privatization), considered the purest form of private-sector participation in public projects, involves a private entity agreeing to finance, design, construct, operate, and maintain a facility for the municipality. The municipality, in turn, agrees to provide the private enterprise with a predictable amount of business and pays it for its services. A variation of the service contract, a tax-exempt leverage lease, permits the private owner to finance the project with up to an 80-percent third-party investment. lease/purchase agreements, a private lender arranges to finance the total project and then leases the constructed facility to a political subdivision, which assumes operational responsibility. The lessee makes payment until a time when legal title is transferred from the private lessor to the public lessee. Under sale/leaseback agreements, the target of the 1984 Deficit Reduction Act, a municipality-owned facility is sold to a private owner and then leased back to the municpality at favorable rental rates. Both parties are able to share depreciation and tax credits which neither could otherwise obtain.