The Trump administration’s new strategy of purchasing privately owned detention centers has already flooded one company with cash, and it’s worrying immigration advocates that it will upend local oversight efforts.
Over the past two months, the Department of Homeland Security has purchased four lockups in California, Minnesota and Kansas totaling $2.2 billion from CoreCivic, one of two major players in the immigration detention industry.
The federal government is likely to take ownership of even more detention centers owned by CoreCivic and its main competitor, the Geo Group. The companies’ top executives highlighted their negotiations with the Trump administration for further sales during calls with investors Thursday.
While DHS becomes the landlord, the deals in July and August have so far allowed CoreCivic to get paid for day-to-day operations. This change in ownership maintains the status quo on the ground but could make it harder for local officials to oversee what is happening at the centers in their communities.
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CoreCivic said last week the U.S. bought a 1,600-bed detention center in Minnesota that had been dormant for 16 years and a 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas, for a combined $734 million. The company also got a five-year contract to manage the Minnesota center that will bring in an estimated $75 million annually.
In early July, the company announced a $1.5 billion sale to the U.S. of the 2,560-bed California City Detention Facility and the 1,994-bed Otay Mesa Detention Center in San Diego.
Through those sales, CoreCivic grew its cash on hand 10 times over, from $109 million at the end of June to $1.1 billion following the transactions, its chief financial officer, David Garfinkle, said during an earnings call Thursday.
“This is more liquidity than the company has ever had, and provides us with significant flexibility to execute our capital allocation strategy and growth plan,” Garfinkle said.
Meanwhile, the Geo Group is in the process of selling to the federal government several detention centers that Immigration and Customs Enforcement already uses, depending on whether the company can also secure long-term management contracts, George Zoley, founder and chair, said during a call with investors.
“We are pursuing a potential sale of the buildings, but we want to retain the business,” Zoley said. “We consider ourselves primarily a support services operator, and will place particular importance on our ability to continue our support services at any facility sold to ICE.”
Zoley referenced during the Thursday call ICE’s procurement process for new contracts for 5,500 beds in areas of Colorado, Washington, Florida and Pennsylvania, where the Geo Group currently runs detention centers.
A draft procurement package for the contracts for those facilities states that “more stringent state or local laws or regulations shall not apply,” Wired first reported.
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“The last step of the process is pricing on that existing facility for the next contract term,” Zoley said. “There’s a mutual interest by us and ICE that this process hopefully be completed by the end of this quarter.”
The purchase of the facilities is one prong of ICE’s most recent actions to expand detention capacity as part of the Trump administration’s immigration enforcement. ICE has also recently moved to start operations at idle prisons and contract companies to build more housing units across the country, outlined in documents posted in a federal contracting database in July.
Immigration rights advocates expect that the private detention center sales will thwart efforts at the state and local level to ensure safe conditions for detainees. The sales in San Diego and Leavenworth, Kansas, took place in areas where CoreCivic and local officials have been involved in lawsuits over oversight capabilities.
The Leavenworth City Commission had granted a permit to CoreCivic in March to reopen the detention center under an agreement that included a $1 million payment and plans for a local review board.
But city officials didn’t know about CoreCivic’s $238 million sale of the site to DHS until Wednesday morning, when it was publicly announced, City Manager Scott Peterson said in a statement.
Commissioner Holly Pittman said she worries the city will no longer have access to the detention center. Neither CoreCivic nor ICE have said whether the terms under the permit would remain in place.
“My priority right now is preserving those safeguards to the fullest extent legally possible,” Pittman said. “I don’t know with DHS buying that, what our special use permit looks like now.”
The Department of Homeland Security pointed to California’s approach to rein in the detention centers in a statement following CoreCivic’s announcement in July of its $1.5 billion sale of the California City and San Diego detention centers.
“The state’s sanctuary politicians continue to push legislation to outlaw or make private prisons financially infeasible,” Lauren Bis, DHS assistant secretary for public affairs, said in a statement to The Center Square. “Now, with federal ownership of these detention centers, which are crucial to ICE’s detention network on the West Coast, ICE retains the detention capacity needed to arrest, detain and remove illegal aliens.”
In the Geo Group’s previous earnings call in May, Zoley said ICE ownership of the sites was a “logical solution” to overcome Democratic state-level leadership wanting more oversight.
Todd Schulte, president of FWD.us, an immigration advocacy group, said giving up ownership of the real estate would normally be risky for the companies, but that the relationship with the current administration made it a lucrative deal.
“If you’re a private company, you get the benefit of a big cash infusion, and you get the benefit of a long-term contract with your buddies,” Schulte said. “If you’re the government, you get to say, ‘We’re going to restrict oversight and access.’”
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