Impacts to the Town of Florence due to the Closure of ASPC-Florence

February 3rd, 2020

The Town of Florence has reviewed the direct and indirect impacts of the potential closure of the Arizona State
Prison Complex – Florence. These impacts are both direct, and indirect, and represent the best estimate that the
Town can make, based on the limited information that we have at this time. These estimates could be easily
updated, as the details of the potential closure unfold.

1. Loss of State-Shared and County Transportation Tax Revenue - $1,500,000 per year

a. Town Revenues are highly dependent upon the distribution of revenue from the State. These
revenues are typically based upon population estimates received from the U.S. Census Bureau
each May. The July 1, 2018 population estimate is the Bureau’s latest projection for Florence.
That number is 26,419 residents and includes a population of 17,000 inmates which are
incarcerated in the nine group quarters facilities located within Florence’s town limits. According
to the Daily Count Sheet for January 13th, 2020, there are 3,600 prisoners at the ASPC-F Complex
(excluding those in Globe).

b. Vehicle License Tax (VLT) – Decreases from $1,633,773 in FY20 to $1,411,146. This is an annual
loss of $222,627 to the Town’s General Fund.

c. Highway Users Revenue Fund (HURF) – Decreases from $2,028,423 in FY20 to $1,752,019. This is
an annual loss of $276,404 to the HURF/Street Maintenance Fund.

d. State-shared Sales Tax (TPT) – Decreases from $2,721,685 in FY20 to $2,350,813. This is an
annual loss of $370,872 to the General Fund. An unknown amount of money will also be lost
from commissary sales. This could be tens of thousands of additional dollars per year, but the
impact will have to be audited before a dollar amount can be attached.

e. Income Tax – Decreases from $3,416,358 in FY20 to $2,950,826. This is an annual loss of
$465,532 to the General Fund.

f. Loss of Pinal County Transportation Excise Tax (TET) Revenues – Decreases from $1,274,910 in
FY20 to $1,110,121. This is an annual loss of $164,789 to the HURF/Street Maintenance Fund.

g. Of the combined $1,500,000 impact, $1,059,000 is lost in the Town’s General Fund, which totals
about $14,000,000. Under this scenario, the General Fund will see about 7.6% less revenue. This
will result in lower service levels and potential reductions in workforce for the Town of Florence
organization. Positions funded by the General Fund include Police, Fire, Library, Parks,
Administration, Planning, and some Public Works positions.
 h. The remaining $441,000 impact is felt in the Town’s HURF and Street Maintenance funds. The
Streets budget stands at about $3,300,000 which means a 13.4% reduction in revenues. Total
personnel costs in this line item equal $1,000,000. The $441,000 loss will result in significant
cuts to projects and potentially to personnel, whose positions may be left vacant by attrition.

2. Wastewater Revenue – $1,250,000 per year

a. The Town signed an agreement with the State to provide wastewater (sewer) service to ASPC-F
and expand the Town’s South Wastewater Treatment Plant (SWWTP) to have the capacity to
handle the additional flows. Since that time, ASPC-F has represented between 25-30% of the
total flow handled at the SWWTP. The loss of ASPC-F would result in a direct loss of $1,250,000
per year of revenue from the treatment of wastewater.
b. This money, which goes to the Town’s Wastewater Enterprise Fund, is necessary to sustain the
current rate structure of the Town of Florence water and wastewater systems. Plant operations
must continue, regardless of the presence of the ASPC-F, however, the loss of revenue from
ASPC-F will necessarily result in significant increases to the water and sewer rates for all other
customers on the Town of Florence system.

3. Water Recharge Facility – Loss of 300 acre-feet of recharge per year, at a value of $211,151.

a. The Town of Florence opened a Water Recharge Facility at its South Wastewater Treatment
Plant in 2018. Based off annual flows from the ASPC-F, and by reducing the flows by a
percentage due to evaporation and/or sales to customers, a conservative estimate for a loss of
recharge is 300 acre-feet. The Town’s rate study lists an effluent charge of $2.16 per 1,000
gallons, which means the loss of 300 acre-feet of recharge has a value of $211,151 per year.

4. Loss of Franchise Fees and Utility Fees – Estimated at $50,000 per year

a. The 3,600 prisoners at the ASPC-F represent approximately 13% of the Town of Florence’s total
population. As such, it makes sense that a portion of the fees and revenues that the Town
receives from some utility companies and franchisees (particularly, the electric utility) is
attributable to the presence of these inmates. Losing this facility could result in a loss of
associated franchise fees by over $50,000 per year.

5. Public Safety

a. Each year, the Town responds to requests for emergency service at the ASPC-F. The loss of these
calls will result in approximately 200 fewer calls for service from our public safety dispatchers.
Approximately ¾ of these calls are for fire and medical calls, while ¼ require police intervention.
Staffing levels for public safety agencies, particularly for firefighters and medical staff, may need
to be adjusted due to a decline in need.

b. Emergency response to the Eyman complex is much more difficult than emergency response to
ASPC-F, due to a bridge that is insufficient for emergency vehicle travel. The bridge on Butte
 Avenue is not rated to carry the weight of a fire engine, which exceeds the weight capacity by 7
times. Furthermore, the bridge is too narrow and too close to a curve for appropriate
emergency response. Each time that the Florence Fire Department responds to/from the Eyman
complex, it requires a 5.2-mile detour, due to the insufficiency of the Butte Avenue bridge.
Estimates on replacing the bridge are about $1,000,000.

6. Potential Program Loss

a. Arizona Correctional Industries (ACI) is a valued community partner. The Town often uses ACI
for design and fabrication of items such as park benches or other metalwork, and often uses
inmate labor crews to install fixtures, repair facilities, and maintain the appearance of our
Historic Downtown. Furthermore, ACI uses land within the Town limits for training wild horses
and burros, farming, and for fish operations. These operations are all valued by the Town.

7. Job Loss

a. The Town understands that no current employee of ASPC-F will lose their job as part of the
closure. HOWEVER, there is an opportunity cost for the jobs lost at the ASPC-F complex. At full
capacity, our understanding is that Eyman has about 1,500 jobs and ASPC-F has about 1,000 jobs
– or about 2,500 total jobs between the two complexes. After the full closure of ASPC-F the
maximum capacity for jobs in Florence will be reduced from 2,500 to 1,500 jobs. In other words,
the community will lose out on the potential for 1,000 jobs.

8. Sales Tax, Transaction Privilege Tax, Housing losses

a. With the loss of jobs, and loss of inmates, fewer people will be shopping in Florence. Fewer
correctional officers means fewer gas fill-ups. Fewer employees means fewer lunches or dinners
are spent in local restaurants. Fewer inmates mean fewer visits from family members – family
members that could also spend money in Florence while visiting their loved ones. Fewer
employees (or potential employees) could also mean fewer houses being occupied in Florence,
artificially deflating property values for the remaining homes and business.

9. Slum and Blight

a. Leaving ASPC-F in “as is” condition would increase slum and blight in the area, a condition which
the Town has been focused on improving for the past few years. If the State chooses to shutter
ASPC-F, consideration should be given to reuse the site for an industrial park, a museum, for film
opportunities, or for tourism-based activities. These activities could include haunted tours,
museum and historic tours, or host a variety of events from prison runs to business incubator
activities. As the Governor’s State of the State called for an increase in State Park funding, ASPC-
F could benefit from an initial infusion of capital to prepare the site for State Park use. The draw
could then have significant positive impacts on surrounding state parks and could become an
economic benefit to the region.
 10. Impacts on local economy

a. In addition to the previous, the closure of ASPC-F will have further impacts on the local
economy. The Florence Hospital, a Campus of Mountain Vista Medical Center, has a dedicated
secure wing for prisoner health care. To date, Steward (the owner of Florence Hospital) has
been unable to acquire a contract with the State to provide emergency or critical health care to
patients within this secure wing. Care at this facility could dramatically decrease State costs, as
multiple patients could be monitored by fewer officers, and fewer man hours would be lost to
travel (as currently, two officers must travel with each patient to Phoenix or Tucson, and remain
with them until discharged). If the State could consider increasing reimbursement rates for the
Florence Hospital, it would help sustain this vital community resource in the absence of ASPC-F.

All inclusive, the ASPC-F provides a direct annual benefit to the Town of Florence of well over $3,010,000. Prior
to closure of ASPC-F, we hope the State is willing to discuss options for minimizing these revenue losses. Options
to offset these losses could come from one-time allocations of funding (e.g., for bridge replacement), ongoing
funding, or capital replacement (building new facilities at Eyman to house additional prisoners). The Town has
also looked into taking over wastewater operations for the Eyman Complex, which would yield a significant
savings to the State. This option would require approximately $300,000 for an engineering study, and a few
million dollars in infrastructure repairs. To do this, the Town would seek an agreement with the State that is
similar to the agreement signed to bring the ASPC-F complex onto Town sewer operations in 1988. The Town
would also be interested in assisting with any discussions about renegotiating local contracts with GEO Group
and/or CoreCivic. CoreCivic has available land adjacent to their existing facilities, which is already zoned properly
for correctional use. GEO Group sits adjacent to State Land that could be sold to GEO for expansion. We are
willing to work with the State to minimize negative impacts on the Town and its residents, through whatever
means practical.