In July 2011, anyone with at least $5 million to spare was invited to bid on a 373-bed, state-of-the-art, turn-key minimum-security prison on 30 acres of land in the cotton-farming town of Littlefield, Texas.
The tiny town, with a population of 6,500, agreed to build what was originally a private prison for juvenile offenders after developers convinced city officials there was a burgeoning market for prisoners that would allow Littlefield to rake in huge profits by renting cell space to overcrowded prison systems. The citizens of Littlefield were not allowed to vote on the issue.
The city’s haste to buy into the scheme to profit from keeping people locked up has cost Littlefield residents dearly. Initially, they spent $11 million to construct the Bill Clayton Detention Center. The city issued bonds to raise the money and still has more than $9 million in outstanding debt. The prison hasn’t generated revenue for the last two years, requiring the city to raise taxes and fees, fire municipal employees and suspend the purchase of equipment such as a police car just to make the $65,000 monthly payments on the bond debt. That allowed Littlefield to avoid defaulting on the bonds; nonetheless the city’s bond rating was severely downgraded, making it expensive for the town to borrow money. [See: PLN, March 2011, p.34].
The private prison project had a promising start. Littlefield initially contracted with Correctional Services Corp. to run the facility. After the Texas Youth Commission stopped using the prison to house juvenile offenders, Idaho and Wyoming provided prisoners for several years. But riots, escapes and the suicide of an Idaho prisoner who left a note complaining about conditions in solitary confinement prompted Idaho to withdraw its prisoners in 2009. [See: PLN, June 2009, p.1]. Soon thereafter GEO Group, the private prison firm operating the facility at the time, announced it would be leaving. When the company departed it took 100 jobs with it.
Prompted by an empty prison that generated no revenue but cost $65,000 a month to maintain, the city decided to sell the Bill Clayton Detention Center. It was listed on the website of Tulsa-based William & William Real Estate Auctioneers in July 2011 with a $5 million reserve. Littlefield lost money on the $6 million winning bid by an unnamed bidder, but that was fine with some local officials.
It’s best “to get out from under this debt so we can get back to some sort of normalcy,” said Littlefield City Manager Danny Davis, who noted the city had learned its lesson. “Anytime we are signing up for a long-term agreement that looks good right now, we’ll know we need to look further down the road,” he observed.
Unfortunately, Littlefield’s hopes of finally ridding itself of its money-pit of a jail were dashed in September 2011 when the auction purchase fell through, leaving the city right back where it started with a vacant facility saddled with millions of dollars of debt.
“With the detention center, nothing has happened easy,” said Davis. “It’s been a struggle for us all along, so, in some ways, we were not that surprised that we’ve got a continued struggle.”
Prison populations are stabilizing or declining throughout the nation as cash-strapped governments look for ways to save money. Private prison contracts are some of the first expenses that are cut. The Texas Department of Criminal Justice (TDCJ) has cancelled contracts for 2,000 private prison beds, including the North Texas Intermediate Sanctions Facility and the Fort Worth Community Corrections Facility, both managed by GEO Group. Thus, Littlefield is not alone in feeling the pain of a shrinking private prison market.
Jones County built a new $34 million, 1,100-bed prison and $8 million, 96-bed jail just north of Abilene, Texas. The TDCJ had promised to fill the prison but later reneged. The private prison developers made their money and left the Texas Midwest Public Facility Corporation to pay $314,000 a month for the two facilities that house no prisoners and generate no income. County officials paid $3.6 million in 2011 from their reserves, but after the reserves run out who knows what will happen?
“The market has changed nationwide in the last 18 months or two years. It is certainly a different picture than when we started this project,” said Dale Spurgin, County Judge of Jones County.
There may be no solution to that problem except the one taken by Grayson County, Texas, which was planning to build a $30 million, 750-bed jail that was double the capacity the county needed, until the public pressured local officials to stop.
“When you put the profit motive into a private jail, by design, in order to increase your revenues, your profits, you need more folks in there and they need to stay longer,” said Bill Magers, mayor of Sherman and a leading opponent to the oversized and privatized jail.
Although Corrections Corporation of America, the world’s largest private prison operator, maintains that demand for the company’s prison beds is strong – especially for federal immigration detainees – other private prison firms have not been so fortunate. Community Education Centers (CEC), a New Jersey-based company, has been pulling out of jails it runs in Texas due to unprofitability, citing “the current [jail] population fluctuation.” Falls County, Texas, which formerly contracted with CEC, has a for-profit jail that is losing money due to a shortage of prisoners that has created a glut of unneeded and thus unwanted private prison beds.
“If somebody is out there charging $30 a day for an inmate, we need to charge $28,” stated Steve Sharp, County Judge of Falls County, who is trying to stop the money that is hemorrhaging from the county through its jail. “We really don’t have a choice of not filling those beds.”
Burnet County and Johnson County also have had problems after entering into private prison ventures, only to have contracts canceled or private prison companies pull out. CEC canceled its contract with Johnson County in March 2010, a year early, due to unprofitability.
“I would hope that counties and cities would do some population projections before they go forward with building these jails,” said Marc Levin with the Texas Public Policy Foundation. “Any business has to consider how a government’s perspective might change. No one is entitled to assume that certain policies are going to remain in place.”
However, the problems faced by cities and counties with vacant or under-utilized correctional facilities have worked to the advantage of large, overcrowded jail systems in Texas. The Harris County jail in Houston uses about 700 private prison beds, and towns like Littlefield have been contacting Harris County to offer bed space for rent.
“It really is a buyer’s market right now, especially for a county our size,” said Harris County Sheriff’s Department Captain Robin Kinetsky, who oversees prisoner processing for the county’s jail system. “They’re really wanting to get our business. So we get good deals.”
Of course, the “good deals” for large, overcrowded jail systems are awful for small towns struggling to stay afloat in a sea of private prison debt. Which is yet another reason why privatized prisons aren’t such a good idea.
Sources: NPR, Dallas Morning News, www.star-telegram.com, www.kcbd.com
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