Money/Financial Interests

Report on CCA 2007 4th Quarter Conference Call

The Corrections Corporation of America (CCA), the nation’s largest prison provider, held its 2007 4th Quarter conference call earlier this year. During the call, CCA updated investors regarding capacity and addressed new beds the company was bringing online as a result of increased demand for new prison beds. Company representatives emphasized that while the country is an economic downturn, the prison system is not impacted by negative economic cycles.

As of February 2008, CCA 41 owned facilities with 50,909 beds and 24 managed only facilities with 26,751 beds. The company managed contracts with 20 states, all three federal agencies, and the District of Columbia. Further, of the beds that CCA owned or managed in 2007 about 6.64% were in Texas.

CCA likes to emphasize its strong presence in the private prison industry; controlling approximately 47% of the private prison and jail beds in the nation. The company acknowledged it's own contributions to the growth of the private prison industry where staff mentioned that in 1990 private prisons numbered 10,973 and in 2007 that number increased to over 164,000 beds.

 

Total Capacity

U.S. Market
Share
Owned and
Controlled Beds
CCA 77,660 47.2% 50,909
The Geo Group Inc. 43,402 26.4% 19,902
Cornell Companies 16,024 9.7% 14,017
Management & Training Corp. 11,945 7.3% 506
All Others 15,581 9.4% unavailable
TOTAL
164,612
100.0%

Source: CCA Q4 2007 Investor Presentation

CCA officials stated that new reports relating to a reduction in Texas prison capacity will not impact CCA contracts since the the private prison company was not planning any local expansion. However, CCA staff emphasized that the state continues to operate its prison -- public and private -- at capacity.

The call also addressed trends at the federal level, including those that would facilitate capacity expansion and benefit CCA's bottom line. Specifically, the recently passed federal FY 2008 budget supports an increase of the immigrant detention population of 32,000 prison beds up from 27,000 beds from FY 2007 and an increase from the President’s previous budget. Further, the budget authorizes the Department of Homeland Security (DHS) to issue future budget requests for additional capacity if needed and requires the agency to update Congress monthly on immigrant detention capacity.

Additionally, the President recently released his FY 2009 budget that increases detention population beds to 33,000. In 2005, funding for detention beds numbered only 19,000. As a result, there will be an addtional 1,000 to 1,500 new immigrant detention beds that will come online by 2009.

The call highlighted trends at the state and federal level and painted an overall picture of the direction of CCA. As advocates working to address the problem of mass incarceration and how private prison operators contribute to that growth it is truly disturbing to observe the comments of CCA represenatives who relish the nation's projected prison prison growth.

Superdelegate Has Ties to CCA

Tracie McMillan over at the Huffington Post has profiled Superdelegate Joseph F. Johnson, a former Corrections Corporation of America board member. He is a member-at-large of the Democratic National Committee from Chantilliy, Virginia - a suburb of Washington D.C.

Reports indicate that he is supporting Senator Hillary Clinton. However, he has not publicly committed to either Clinton nor Senator Barack Obama. In fact, Johnson has donated to both campaigns:

  • Records show that he and Sharron Johnson (of the same address) each donated a legal maximum of $2300 to Senator Clinton's campaign in late 2007; and
  • In the summer of 2007, Johnson gave $1,000 to Senator Obama.

Johnson was appointed to the board of Corrections Corporation of America, the largest operator of private prisons in the country. While serving in that position from 1996 to 1999, Johnson earned accolades and handsome rewards from CCA for convincing Washington, D.C. to send prisoners to CCA's Youngstown, Ohio prison. Johnson also has a history of lobbying for private prison companies in Texas and around the nation.

The private prison in Ohio had a notorious reputation for violence and escapes. By 1998, there had been two fatal stabbings, 44 assaults, and six escapes at the prison. Despite the egregiousness of the incidents, Johnson claims that no one's was to blame. According to McMillan's article:

Mr. Johnson nonetheless profited from the deal, receiving $2.6 million in stock options for his work linking CCA with officials in Washington, D.C. Calling his work "instrumental" to their receipt of the contract, CCA said that Mr. Johnson had "exceeded his duties and obligations" to the company and also paid him $382,000 for his "consulting services" in helping to arrange the deal, and $991,000 for NCRC's services in another CCA prison in Texas.

What an interesting development in the presidential campaign that keeps on going. As potential president-makers, the Superdelegates continue to face scrutiny. It will be interesting to see if any others are linked to private prison companies.

Geo Plans to Open Three Texas Facilities in 2008

From Geo Group Conference Call on February 13th: A webcast of the call can be found here, and a written transcript of the Texas-specific portions can be found here.

"We are working on three separate projects in Texas. In Montgomery County, we are awaiting the county’s completion of a 1100-bed non-recourse bond financed detention facility which we expect will be used by other state or federal agencies. We expect to open this managed [unclear] facility in September and estimate it will generate $14 million in annual operating revenues.

In Laredo, we are building the 1500-bed Rio Grande Detention Center for the US Marshals Service under contract for the office of the federal detention trustee. This facility will cost approximately $86 million when completed and is being company-financed. We expect the contract to generate approximately $36 million in annual revenues when the facility is available to open by October of this year. Our contract with OFDT provides for a fixed monthly payment with an occupancy guarantee of 50% enabling us, again, to recover all of our fixed costs in desired economics at the guaranteed occupancy level. We receive a nominal per-diem for population levels in excess of the 50% guarantee.

In Maverick County, we are constructing a 654-bed detention facility which is being financed through the issuance of non-recourse project revenue bonds. We anticipate the project will be completed and ready for occupancy by the federal or county detention agencies in September. At full occupancy this managed-only facility will generate approximately $10 million in annualized operating revenue exclusive of debt service."

Also of Note

Geo Group may bid on the sale of the Coke County facility that was shut down last October because of unsanitary and unsafe conditions.

"Our guidance also does not take into account our possible reactivation of the Coke County Texas Facility, which is currently the subject of a public auction by its owners—the County."

"...I don’t think they’ve placed any kind of limitations, per se, on which prisoners can come in there"

Geo Group will likely bid on new immigrant detention contracts funded in the 2008 federal budget

"Congress has approved a budget for 2008 fiscal year, and has provided funding that supports a 4,500-bed increase in the immigration detention beds to 32,000 beds from the prior year’s 27,500."

Geo Group is finalizing the renewal terms of a 5-year Bexar County Facility Agreement

“On December 20th, we were selected by Bexar County to negotiate a 5-year contract to continue to operate the 688-bed central Texas detention facility in downtown San Antonio. We are currently working with the county to finalize terms to renew our 5-year agreement.”

Community Opposes Expansion of Half Way House

The Beaumont Enterprise recently reported opposition to the expansion of the Gulf Street halfway house, a private facility owned by Cornell Cos, a Houston-based private prison corporation. The change would have added 50-beds to the 180-bed Beaumont Transitional Treatment Center.

It appears that one of the primary reasons for opposition was the belief that expansion of the center would undermine the land value in the area.

Robert Reyna, Beaumont Housing Authority director, was opposed to the expansion because of the potentially detrimental impact on a $20 million Hope IV housing development that would bring 170 apartments and 83 single-family homes to the former South Texas State Fairgrounds.

Company represenatives stated they withdrew the propsal for expansion after hearing from residents.

Syndicate content