Two stories about the economics of for-profit prisons in Texas have caught our attention this month. Both talk about a recent spate of communities in Texas defaulting on bonds that were issued to pay for private, for-profit prisons intended to detain or incarcerate immigrants.
The basics of the stories - one by Bloomberg's Lauren Etter ("Border jails facing bond default as immigration boon goes bust," August 2) and the other by the San Antonio Express-News John MacCormack ("Prison bust spreads across rural Texas," August 22) - cover the boom in private prisons financed by local Texas communities on the promise that federal contracts would come rolling in.
Bloomberg's Etter summarizes the issue:
"In Texas, the heart of a jail-building boom over the past decade, nine of 21 counties that created agencies to issue about $1.3 billion in municipal bonds to build privately run correctional facilities largely for migrants have defaulted on their debt. A dozen other facilities from Florida to Louisiana to Arizona, many that housed immigrants, have also defaulted, according to figures from Municipal Market Analytics, a bond-research firm based in Concord, Massachusetts."
Several other Texas facilities are in danger of defaulting as well. The story covers the incredible boom in facilities being built between 2000 and 2010 on county-issued debt (largely through quasi-governmental entitites often called Public Facilities Corporations or PFCs) through the lense of La Salle County, just north of Laredo. In La Salle, county officials issued more than $20 million in debt to build a detention center that won a U.S. Marshals contract for private prison corporation Emerald to detain pre-trial federal prisoners, mostly immigrants being charged with entering or re-entering the country without authorization.
But other prison companies were pitching similar deals in other parts of the state and soon the "demand" for immigrant prisoners couldn't keep up with supply of prison beds. Counties were left on the hook - with more than $700 million in outstanding debt around the state, according to Bloomberg, mostly for jail contruction. In La Salle, the company simply pulled out of the deal last winter and left the county's PFC with more than $20 million in debt and a jail with a leaking roof.
The side of the story that isn't, in my opinion, detailed sufficiently in either piece is that the private prison companies have emerged largely unscathed because of these lost contracts. Companies like Emerald in La Salle or GEO Group in Eagle Pass made money on these deals while the getting was good and then walked away from the contracts when the bottom fell out of the market. This is a classic case of privatized profit for the prison companies and socialized risk for the taxpayers of small, often struggling, counties. And, to make it even more scandalous, in many of these deals, the bond issuers, prison developers, and prison pitchmen got paid up front. In La Salle, former Webb County Commissioner Richard Reyes reportedly got paid $700,000 to put the deal together. I bet that's $700,000 La Salle County wishes it had now.
What's even more remarkable is that Emerald, the same private prison corporation that walked away from the facility in La Salle because it couldn't find enough prisoners to make it profitable, is still out pitching similar schemes in other parts of the state - recently in Alvarado and Cleveland.
Note to Texas counties - If a jail financing deal seems too good to be true, it most likely is.
On August 18, Cleveland, TX Mayor Niki Coats announced at a city council meeting that a private prison operator had withdrawn plans to build a new immigrant detention facility.
The news drew cheers from more than two dozen residents who showed up to protest.
One week earlier, private prison contractor, Emerald Companies, had asked the city for a letter of intent. Coats refused to sign, saying, "It's not the kind of growth in the community we need."
Coats later explained that Emerald withdrew the plan claiming they had another location in mind.
When the Cleveland Advocate asked other Texas county judges about the impact on counties of building immigrant detention facilities, Polk County Judge Sidney Murphy had this to say:
"According to Murphy, in Polk County, the IAH Detention Facility operated by MTC of Utah and built a little more than 10 years ago is required to pay the county a per diem fee per inmate. However, the population of the 1,000-bed facility is so low, with only 300 beds being used, it is no longer generating any income for the county.
“'Why build a 1,000-bed facility when there is one less than 30 miles down the road that has only 300 beds being used?' Murphy asked."
Burnet County Judge James Oakley said after his county entered a 20-year revenue bond deal with a private prison company, the deal eventually went belly up, leaving the county with lost revenue and a facility that was much bigger than necessary.
It seems the Cleveland mayor and residents may have helped save Liberty County from similar fates.
On August 5th, in the midst of the legal battle concerning the fate of immigrant families currently locked up awaiting their asylum hearings, News 4 Tucson investigators shined a spotlight on how a small Arizona town is cashing in on the detention of immigrant women and children in Dilley, TX.
The report broke down the agreement between the City of Eloy, AZ, Immigration and Customs Enforcement (ICE), and Corrections Corporation of America (CCA).
After the surge of Central American immigrants arrived at the Texas border last year, CCA rushed to build the South Texas Family Residential Center in Dilley, TX. According to ICE spokesperson, Adelina Pruneda,
"The contracting process for the Dilley facility was necessarily accelerated in response to the 2014 humanitarian crisis of families entering through the Texas Rio Grande Valley from Central America. To accelerate the lengthy contracting process, ICE modified an existing contract with the City of Eloy, Arizona, to operate the Dilley facility. Corrections Corporations of America (CCA) has been contracted by the City of Eloy to provide day-to-day operation of the residential facility."
There was no bidding process and the city of Eloy gets fifty cents per bed per day to be the “fiscal agent”, amounting to around $438,000.
Meanwhile, at ICE’s Phoenix office, activists held a protest calling for justice for immigrant detainees who have died in ICE custody at the Eloy Detention Center.
Last week, Bethany reported on attorneys that were being denied access to see their clients at the massive family detention camp in Dilley, Texas operated by Corrections Corporation of America. Today's Austin American-Statesman has an Associated Press article by Seth Robbins detailing even more denial of access to pro bono immigration attorneys at Dilley. According to Robbins:
"Attorney Kim Hunter received a letter earlier this month from immigration authorities telling her she'd been banned from a family detention center in South Texas for being "belligerent" in demanding the release of her clients one late July night.
Andrew Free learned Aug. 3 that he'd also been banished from the country's largest such facility after the attorney marched into a courtroom trailer 10 days before to ask why U.S. Immigration and Customs Enforcement officials were meeting with his clients without his knowledge.
ICE says the two violated visitation standards, but a coalition of immigration attorneys says the bans are unprecedented and is fighting to rescind them as part of its ongoing effort to improve access to the immigrant mothers and their children who are in the U.S. without legal permission and being held at the facility."
Transparency has been an issue at the facility and the other family detention center in Karnes County from the outset with legal support groups and advocates arguing that ICE and private prison corporations, CCA and GEO Group, have inappropriately denied access to academics, lawyers, paralegals, and human rights groups. In fact, Robbins addresses this pattern in his piece:
"[T]he lawyers say immigration authorities are increasingly hindering their ability to represent clients. They gave examples such as citing security concerns as a way to deny access to counsel, limiting access to courtrooms, keeping out psychologists who've received clearance and sudden rule changes, such as not allowing cellphones to be left in lockers, meaning the lawyers must keep the phones locked away in hot cars."
While ICE seems set on keeping scrutiny of its facilities to a minimum, a judge's order may end the practice all together. On Friday, Judge Dolly Gee reiterated her decision from July that the government had violated a settlement agreement from the 1990s governing the detention of migrant children. According to McClatchy:
"A federal judge ruled late Friday night that the Obama administration has just over two months to begin releasing hundreds of migrant mothers and children who have been locked up in government family detention centers as they await their asylum hearings.
In a 15-page ruling that quoted Mahatma Gandhi, U.S. District Judge Dolly Gee in Central California delivered a scolding rebuke of the government's expanded use of family detention centers. But she also granted the government one of its key requests for additional time – as much as 20 days - to continue to hold mothers and children under certain circumstances like last year's surge of nearly 70,000 Central American families into the United States.
“This is a historic decision,” said Professor Stephen Yale-Loehr, who teaches immigration and asylum law at Cornell Law School. “If it stands, it will force major changes to the government’s family detention program.”
While this policy may be good for asylum-seeking families, it's bound to negatively impact CCA and GEO's bottom-lines. We will keep you posted with further developments on family detention.