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Is the private prison boom going bust?

Mitch Mitchell raises the issue of the Texas speculative prison boon goin

g bust in an excellent story in Saturday's Fort Worth Star Telegram ("Texas prison boom going bust," September 3).  The story starts by covering the state's closure of GEO Group's North Texas Intermediate Sanction Facility as part of broad cuts to the prison system by the Texas Department of Criminal Justice. 

"The Texas Department of Criminal Justice earlier this year announced $40 million in expense cuts. Those reductions included not renewing the contract for the North Texas ISF, department spokesman Jason Clark wrote in an e-mail.

"We have enough vacant beds available to cover our operational needs and maintain current ISF operational levels into 2012," he wrote.

The city of Fort Worth, which owns the 424-bed prison building, plans to seek a new tenant or tenants once the lease with the GEO Group, the firm that managed the prison, expires at the end of September, said city spokesman Bill Begley. The facility has been vacant since Feb. 28, when TDCJ's contract with the GEO Group expired, said Bobby Lumpkin, who works with the state's private prison contractor division.

GEO officials declined to comment."

The story then highlights four other counties that are in trouble because they floated debt to build speculative private prison facilities. At least two of them have had private operators bail on them when the going went bad. In Littlefield, problems at the Bill Clayton Detention Facility caused the state of Idaho to remove its prisoners.  Then the operator, GEO Group, ended its contract for the facility, leaving the city holding bag.  According to Mitchell's article:

"The West Texas city of Littlefield auctioned off its 373-bed minimum security prison, the Bill Clayton Detention Center, on July 28 because of a lack of inmates. The winning $6 million bid is a little more than half the $11.5 million the city paid in 2000 to build the prison, said City Manager Danny Davis. The money will go toward the bond debt, but the city of a little more than 6,000 residents will have to pay $290,000 a year until it pays off the $3.5 million balance, Davis said.

"It will sure beat the $780,000 we're paying every year right now," Davis said."

In Jones County, CEC's facility appears to be in trouble as well:

"The more than 1,100-bed detention facility in Jones County, built by Community Education Centers at a cost of about $35 million, has never had inmates, said Dennis Brown, the county auditor. The facility, near Abilene, was supposed to open last September along with a new 96-bed jail, but the state never placed inmates there, county officials have said. Jones County officials are seeking immigration detainees and prison inmate transfers from California and Texas to keep the center afloat, according to published reports.

The county faces the prospect of defaulting on bonds, issued by the county's Texas Midwest Public Facility Corp., that financed the project. The bonds were to be paid from revenue from housing inmates, however, and taxpayers are not on the hook. Ratings on bonds for both facilities have been dropped to CC -- highly vulnerable."

Read the full article - including updates on the struggling LaSalle Southwest Corrections facilities including the Burnet County Jail and the Johnson County facility formerly operated by CEC - here.