CoreCivic sells Otay Mesa Detention Center to government

S1: Welcome in San Diego. It's Jade Hindman on today's show. What's behind the billion dollar sale of the Otay Mesa detention facility? And what else is included in that? This is KPBS Midday Edition connecting our communities through conversation. The private company CoreCivic sold San Diego's Otay Mesa Detention Center to the federal government. The $1.5 billion sale includes a facility in Kern County. The deal comes as we learn more about health and safety hazards inside Ice facilities across the U.S.. Joining me with the details is Wendy Frey. She's a border and immigration reporter for Cal Matters. Wendy , welcome to the show. Hi.

S2: Hi. Good afternoon. Jade.

S1: So walk me through the details of this deal. 1.5 billion is a big number. How does that break down? Yeah.

S2: Yeah. So , um , on Monday quarterback , you know , which is one of the country's largest private prison , uh , providers they announced this deal that it will be selling to or it has sold two of California's biggest immigration detention centers to the Department of Homeland Security for a billion and a half dollars. That's a , you know , obviously a huge amount. The federal government paid about 739 million for Otay Mesa Detention Center and about 733 million for California City , which is up in Kern County and a little bit bigger of a facility than Otay Mesa.

S1: And why did the federal government want these facilities? Uh.

S2: Uh. That is a great question. So it is going to kind of flip the usual arrangement. So for decades , you know , the model has been that the private companies own the buildings and the government is paying to use them. And now the federal government is going to actually own the buildings , the real estate outright. And that could have real implications For California's ability to oversee what happens inside. So you probably know , in 2024 , California passed a state law that would let local health inspectors inside these facilities to inspect and see what's going on with the health and safety of people being detained inside. And now there is a question over whether or not they will be able to continue doing that.

S1: I mean , this it sounds like , you know , like you're saying this is a part of a government effort to really transition away from private detention. Can you talk more about what's driving this? Yeah.

S2: Yeah. So I mean , at the center of it , the whole engine behind the whole deal is the huge amount of money that DHS is sitting on. Right. So the spending bill that President Trump signed last year , some people call it the one big Beautiful Bill act. But , you know , other people do not. But it poured this just unprecedented amount , huge amount of money into immigration enforcement. And that includes $45 billion for detention capacity alone. So what the federal government wants to do is increase its ability to hold up to 100,000 people a day in detention , which is a lot more than than our current detention capacity. So they're looking for places across the country. They're looking for warehouses that they can convert into detention facilities , and they're looking for ways to sort of expand , um , how fast they can move people through the facilities , and then also how many people that they can hold at a time. Mm.

S1: Mm. So many questions there. Um , but CoreCivic says they'll still be running operations through their existing contracts with Ice , though. How long do those last. Yeah.

S2: Yeah. So that's the part that's sort of surprising I guess about it is it is not going anywhere. So they sold the buildings. But they do they say in the SEC filings that they do expect to continue running the day to day operations at both facilities under the existing management contracts that they have. So that would be the same guards , the same , you know , the same medical director that they have at Otay Mesa and California City , and just kind of the same operations going on inside the Pacific says in those filings that their contract with California City runs through August 2027. And then the Otay Mesa one was just renewed. And so it goes through 2029 , and they have an option in there. If everything's going great. And Ice is happy that they could extend it to 2020 for another five years after 2029. Now there's no guarantee. And CoreCivic says that they have to say that in their future looking information that they share with their investors , right? They're a public company. And so they have to acknowledge that there's no guarantee. And really , there was never any huge guarantee the government could renegotiate the terms at any time. But even more so now that it owns those properties , they could decide that they want to run the facilities themselves. But for now , what we know is Corsia thinks , then expects that they'll continue running them and they get the $1.1 billion in net proceeds from the sale of the property. Mhm.

S1: Mhm. Tell me more about this. This company we keep mentioning CoreCivic. What is their role in the immigration picture today for those who don't know. Sure.

S2: Sure. So , um , there are a huge company , publicly traded company. Uh , it's one of two real giants in the whole private detention space , right? So there's Geo Group , and there's core civic , uh , core civic nationally across the country. They provide about a quarter of all ISIS detention beds. So they they they are running the operations for at least 25% of ICE's detention operations. Um , in California , the the role of private companies is almost every single bed that Ice has. Every Ice detention facility is run by a private contractor. So either a big or a Geo group or MTC in Imperial County. And , um , it's growing , right? So it's up. When , um , Trump first took office , there were six detention facilities in California , and now they're eight , um , being run and California City only opened last year , so that's another 2500 beds in Kern County , which has a lot of detention facilities , I think , for in Kern County already. So , um , and CoreCivic is , you know , business is looking good for your civic right now. You know , they beat expectations. Their stock is up. The president in a quarterly call last year , described these facilities as , quote , mission critical to their government partners. So um , and in these SEC filings , they said this this sale , the proceeds from the sale is going to give it flexibility to grow even more , basically.

S1: Um , and of course , all of this is happening as we learn more about health and safety inside detention centers. Otay Mesa has been at the center of several lawsuits over health inspections. And , of course , again , that center run by CoreCivic. Bring us up to speed on that. Sure.

S2: Sure. So and you guys have been following this a lot , too. So Otay Mesa has been at the center of this legal feud , and really , it's a feud that could determine how other counties across the state approach this. So in 2024 , California passed a state law that gave local health inspectors the authority to go inside and inspect detention facilities. And it's important because other than the Congress granted authority to congressional members to do these inspections , that's really the only place where there could be like a regular oversight. The state does an annual review , but , um , these San Diego County health inspectors could go in anytime. A complaint is , you know , a credible complaint is lodge and see if the if the complaint is true or if it's not true. Right. And so it's a level of oversight that the public could have to know what's really going on inside there. But when San Diego County inspectors tried to show up , I think in March , they were they said that they were blocked. So two county supervisors went and the county health director and some health inspectors , and they said they weren't allowed full access to Otay Mesa. So the county sued both the federal government and CoreCivic. And I think last month , the judge I think that was last month that the judge issued the the the the order saying that the CoreCivic had to let the county health officials inside. So , um , it's important to note to before this law passed , both and in the court filings with this new legal feud with Otay Mesa , both of these private detention companies have pushed back hard against this oversight. Um , with the companies , you know , their side. Their argument is that states can't pass laws that , that , that , that keep the federal government from doing its core duties or its core functions because it violates the Constitution and the court. The courts have upheld that. So it's a real consequential fight. Basically , it's a real interesting legal issue. And it remains to be seen. Now whether this change in ownership affects anything about , you know , I understand that the county health inspectors in this case have already completed the inspection that they wanted to and that their report is due out any time now , this week or next week , but it will remain to see if that changes things about whether health inspectors can continue to go into these facilities now that they're federally owned.

S1: Yeah , I mean , all of this impacts the day to day operations inside the facility and what people who are inside that facility experience , um , on the day to day. But bringing it back , you know , to this $1.5 billion deal , the details of that. Can we anticipate more sales like this in the future?

S2: Uh , so Core civic says yes. Core civic says it's right now in the middle of a negotiations about selling more properties to Ice. It didn't specify whether that's going on in California or in the West. I imagine it's probably in the western region. Right. Um , but the documents don't specify where that is happening. But they do say that they are already in talks with Ice , um , to sell more properties to them. And , um , it's it's interesting. And it also remains , you know , we're doing more reporting right now on this On whether that's the strategy , because , as you know , there was a change in leadership at DHS , right? So this warehouse strategy and the federal government owning all the properties was Secretary Nomes vision. And she's left. So it remains to be seen whether this will be Secretary Mullen's vision , um , as well , or if he'll want to adjust the strategy. And so that's something we're keeping a very close eye on. And I've got it set up now with alerts and stuff that will get alerted right away if any other sales go through.

S3: All right. I've been speaking with Cal Matters reporter Wendy Fry.

S1: Wendy will definitely be following your reports. Thank you so much for joining us.

S2: Thanks , Jade. Thanks for having me.

S1: That's our show for today. I'm your host , Jade Hindman.

S3: Thanks for tuning in to Midday Edition. Be sure to have a great day on purpose , everyone.