CoreCivic Lease Agreements and ESG Strategy
Non-Appropriation Risk Mitigants
Essential Asset
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Together the Facilities in aggregate will hold approximately 40-50% of the State's rated bed capacity; and
ADOC is under pressure, as a result of litigation, to move inmates to more modern facilities with better services
Cross Non-
Appropriation
Vacating of
Premises
Non-
Substitution
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Both facilities must remain funded concurrently, as a Non-Appropriation Event for either facility will be considered a Non-Appropriation Event of both
Leases and constitute a Pre-Payment Event for both
Upon a Non-Appropriation Event occurring on June 30th and not being cured by October 1st, the start of ADOC's fiscal year, ADOC will have 180 days
to vacate the Premises
If ADOC cures by the following March 30th, the vacation process halts and ADOC can stay in the Facility, although there is a limit on how many times
the State can cure a Non-Appropriation Event (any cure must appropriate funds for missed year's payments and next year's payments)
ADOC may not develop or otherwise occupy a different facility which would serve the same purpose of, or materially reduce their utilization of the
facilities being built as part of this project
ADOC may only begin exploring alternatives in the last 5 years of the Lease and occupancy of a new facility may not begin sooner than 6 months
prior to the expiration of the Occupancy Period
Block
Appropriations
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The Legislature historically has appropriated funds as a block grant to ADOC giving ADOC discretion on how to spend the funds
Based upon historic practices the Lease Payments should not be a line item for the Governor to strike
Prioritization of
Payments
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ADOC has discretion over how to spend the appropriations provided by the Legislature and has covenanted in the Lease to prioritize Lease
Payments above all other obligations to the extent permitted by law
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