Organization of corporation to operate correctional work programs; lease of facilities.

(1) The department shall lease buildings and land to the nonprofit corporation authorized to operate the correctional work programs, the members of which are appointed by the Governor and confirmed by the Senate. The same appointment process shall be followed to fill any vacancy. The corporation shall be organized pursuant to chapter 617 and shall possess all the powers granted by that chapter. The Board of Trustees of the Internal Improvement Trust Fund shall enter into leases directly with the corporation, for a period of at least 20 years, for the lease of the lands that are currently under sublease with the department and used by the corporation for correctional work programs and that are identified as subject to lease numbers 3513, 2946, 2675, 2937, 2673, and 2671 with the Board of Trustees of the Internal Improvement Trust Fund. Any additional improvements to such property leased by the corporation from the Board of Trustees must have the prior approval of the Board of Trustees of the Internal Improvement Trust Fund.

(2) No sublease for land from any other agency of state government shall be in excess of that amount for which the department is obligated to pay under any lease agreement with any other agency of state government.

(3) The corporation shall negotiate with the department to reach and enter into an agreement for the lease of each correctional work program proposed by the corporation. The facilities to be leased and the amount of rental for such facilities shall be agreed upon by the department and the corporation. The length of such lease shall be mutually agreed upon between the department and the corporation; however, the initial lease may not exceed 7 years. The department shall continue to manage and operate the various correctional work programs until the lease between the department and the corporation is effective.

(4) If the department leases a single correctional work program at any correctional institution to the corporation, the corporation shall lease all such correctional work programs at that institution.

(5)(a) Prior to entering into any lease or other separate contract or agreement between the department and the corporation, the department shall determine that:

1. The members of the corporation were appointed by the Governor and confirmed by the Senate;

2. The articles of incorporation of the corporation have been approved by the Governor; and

3. The articles of incorporation contain a provision that prohibits any director from voting on any matter that comes before the board of directors that would result in a direct monetary gain to any director or any entity in which any director has an interest.

(b) The lease must be submitted to the Attorney General for his or her approval as to form and legality.

(c) All leases of land shall be subject to the approval of the Board of Trustees of the Internal Improvement Trust Fund.

(6)(a) Upon the effective date of each lease of each correctional work program, the department shall cause to be remitted to the corporation all funds appropriated for, associated with, or budgeted for the operation of that correctional work program, as agreed upon between the department and the corporation.

(b) No operating loss of any type may be transferred to the corporation.

(7) When it leases any correctional work program, the corporation shall exercise a reasonable effort to employ the personnel of the department who are currently involved in the correctional work programs being leased to the corporation.

(8) Notwithstanding any provision to the contrary, the corporation is authorized to use tax-exempt financing through the issuance of tax-exempt bonds, certificates of participation, lease-purchase agreements, or other tax-exempt financing methods for the purpose of constructing facilities or making capital improvements for correctional work programs and prison industry enhancement programs on state-owned land within state correctional institutions. Such tax-exempt financing may be funded by the General Appropriations Act. If the corporation obtains tax-exempt financing, the state retains a secured interest by holding a lien against any structure or improvement for which tax-exempt financing or state funds are used. The corporation shall include a provision in its financing contract requiring that a lien be filed by the Department of Corrections, on behalf of the state, in order to procure the issuance of tax-exempt bonds or certificates of participation; to enter into lease-purchase agreements; or to obtain any other tax-exempt financing methods for the construction or renovation of facilities related to correctional work programs or prison industry enhancement programs. The lien shall be against the property where any facility or structure is located which has been constructed or substantially renovated, in whole or in part, through the use of state funds. However, there is no requirement for the Department of Corrections to file a lien if the amount of state funds does not exceed $25,000 or 10 percent of the contract amount, whichever is less. The lien must be recorded, upon the execution of the contract authorizing such construction or renovation, in the county where the property is located. The lien must specify that the Department of Corrections has a financial interest in the property equal to the pro rata portion of the state’s original investment of the then-fair-market value of the construction. The lien must also specify that the Department of Corrections’ financial interest is proportionately reduced and subsequently vacated over a 20-year period of depreciation. The contract must include a provision that as a condition of receipt of state funding for this purpose, the corporation agrees that, if it disposes of the property before the state’s interest is vacated, the corporation will refund the proportionate share of the state’s initial investment, as adjusted by depreciation.