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Montana Town Gives up on Failed Jail Venture

Two Rivers Authority in Hardin, Montana has decided to throw in the towel on a 464-bed jail the city built with hopes of renting out its cells. Rather than spur economic development, the facility has been an economic disaster.

The 92,273-square-foot Two Rivers Detention Facility was constructed in 2007 to cash in on the prison industrial complex boom. With the tide turning in the need for bed space, the Two Rivers Authority "tried everything they knew and everything possible to fill [the jail], and nothing has worked," said Hardin Mayor Joseph V. Koebbe.

Those efforts included trying to import prisoners from Vermont and Alaska, and offering to house sex offenders. The desperation to lease the jail beds almost resulted in officials turning the facility over to a convicted con artist who wanted to use it for a military training camp in an elaborate scam. [See: PLN, Dec. 2009, p.1]. Things got so bad that Hardin officials unsuccessfully tried to house terrorism suspects from the U.S. military prison in Guantanamo Bay, Cuba. [See: PLN, Oct. 2009, p.28].

To build the jail, Two Rivers issued $27 million in bonds through Capital Markets Group, Inc., a Texas company. The deal was brokered by James Parkey with Corplan Corrections. The bondholders, comprised of four large money managers and two individuals, "ran out of patience" with Two Rivers' efforts to fill the jail and generate revenue.

Two Rivers defaulted on the bonds in 2008, forcing city officials to dip into the facility's construction loan to meet the debt payments. The last payment was made in 2008. In April 2012, the bondholders asked Two Rivers to turn over the deed to the jail and the 40 acres it sits on.

"They would like to get the debt off their books, and rather than go through the foreclosure process, they're asking us to simplify it by turning the title back to them," said Two Rivers Authority Executive Director Jeff McDowell.

The jail could still be opened if prisoners are found to fill its empty cells, most of which are dorm-style units. Mayor Koebbe noted that the property could also be used for other development possibilities such as an industrial park.

As of July 2013, the Two Rivers Detention Facility was still vacant. The facility has remained empty since it was first built.

Sources: Associated Press,, Billings Gazette

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