Texas prison boom going bust

Posted Saturday, Sep. 03, 2011


By Mitch Mitchell



FORT WORTH -- For about 20 years, employees at the North Texas Intermediate Sanctions Facility went quietly about the business of housing hundreds of short-term parole violators.


The prison, a complex occupying almost an entire block at 4700 Blue Mound Road, now is vacant largely as a result of reforms aimed at reducing the state's penal system costs.


Starting in the early 1990s, Texas ignited an almost $3 billion prison building spree, turning to private prison operators to house inmates as the prison population swelled beyond the capacity of state facilities. Now, state, county and city budget cuts, a decline in crime rates, an older population, and penal and court reforms have all contributed to what some call a glut of inmate beds. Those factors have resulted in closed and half-empty prisons and jails.


They have also left local governments, which saw prisons as revenue and job-generators, scrambling to pay for facilities the state no longer needs.


The Texas Department of Criminal Justice earlier this year announced $40 million in expense cuts. Those reductions included not renewing the contract for the North Texas ISF, department spokesman Jason Clark wrote in an e-mail.


"We have enough vacant beds available to cover our operational needs and maintain current ISF operational levels into 2012," he wrote.


The city of Fort Worth, which owns the 424-bed prison building, plans to seek a new tenant or tenants once the lease with the GEO Group, the firm that managed the prison, expires at the end of September, said city spokesman Bill Begley. The facility has been vacant since Feb. 28, when TDCJ's contract with the GEO Group expired, said Bobby Lumpkin, who works with the state's private prison contractor division.


GEO officials declined to comment.


Parole violators who would have gone to Fort Worth's ISF in the past are now in other prisons, said Michelle Lyons, TDCJ spokeswoman. With so many vacant inmate beds, Texas has not had to lease any beds from counties since 2008, according to TDCJ documents.


For counties and municipalities in the prison business, this turn of events has not been good news.


The West Texas city of Littlefield auctioned off its 373-bed minimum security prison, the Bill Clayton Detention Center, on July 28 because of a lack of inmates. The winning $6 million bid is a little more than half the $11.5 million the city paid in 2000 to build the prison, said City Manager Danny Davis. The money will go toward the bond debt, but the city of a little more than 6,000 residents will have to pay $290,000 a year until it pays off the $3.5 million balance, Davis said.


"It will sure beat the $780,000 we're paying every year right now," Davis said.


The city had backed the bonds by a pledge of all the city's taxable property. To avoid default, the city has been cobbling together debt-service payments and last year imposed a debt-service property tax, according to Fitch Ratings.


The more than 1,100-bed detention facility in Jones County, built by Community Education Centers at a cost of about $35 million, has never had inmates, said Dennis Brown, the county auditor. The facility, near Abilene, was supposed to open last September along with a new 96-bed jail, but the state never placed inmates there, county officials have said. Jones County officials are seeking immigration detainees and prison inmate transfers from California and Texas to keep the center afloat, according to published reports.


The county faces the prospect of defaulting on bonds, issued by the county's Texas Midwest Public Facility Corp., that financed the project. The bonds were to be paid from revenue from housing inmates, however, and taxpayers are not on the hook. Ratings on bonds for both facilities have been dropped to CC -- highly vulnerable.


About $3.6 million in bond debt was paid this year from reserves, a county official said Thursday. Trustees and the bond holders will meet later this year to determine how they will proceed once the reserves run out, the official said. "It's a brand new facility," Jones County Judge Dale Spurgin said during a telephone interview Thursday. "It's just a matter of timing. We're continuing to work hard and do everything possible to get the facility populated. Eventually, the state of Texas will need this."


The Burnet County detention center is regrouping after the state decided not to renew its contract to house inmates there. County officials have used part of its new jail to house about 100 employees with the U.S. Marshal's Service. County Judge Donna Klaeger anticipates that the county and its private partner in the venture, LaSalle Southwest Corrections, will find new inmates. As of Aug. 1, the jail housed 318, operating at about 53 percent of its current capacity of 595 beds, according to the Texas Commission on Jail Standards.


The county, through its Public Facility Corp., had issued about $35 million in unrated revenue bonds in 2008 to pay for the detention center, according to the offering statement.


Johnson County is also regrouping following the exit of its contractor, Community Education Centers. CEC signed a three-year contract with the county in 2008 to run the Johnson County Law Enforcement Center in Cleburne. The company bailed out in March 2010 because it was not making enough money, according to Johnson County Judge Roger Harmon. LaSalle Southwest Corrections has been on the job for about 18 months now, he said.


Johnson County held 652 inmates as of Aug. 28 and was operating at about 84 percent of its capacity of 775, the Johnson County jail census showed.


So many such facilities are being vacated nationwide that Jef Conn, the Coldwell Banker real estate agent who engineered the Littlefield auction, now calls himself a detention center specialist.


"We have prisons that are empty and need to be operating," Conn said. "Right now we're working on three in Texas and eight more in other parts of the country. There have been budget cuts all across the nation and that has spurred the need to sell prisons."


Rapid expansion


 Since 1980, Texas expanded from 20 state prisons to 111, attaining the nation's highest incarceration rate. Texas had 112 prisons until the official closure of the Sugar Land facility Thursday.


Now, Texas is finally ahead of the curve when it comes to matching inmate numbers with available bed space.


Some local governments, though, thought the boom would never end. Private prison operators also assured the cities of a steady stream of revenue.


Littlefield asked for one of the new state-owned facilities, but never could get one, Davis said. So city leaders decided to build their own prison and got assurances from the Texas Youth Commission that it would send detainees. That worked for four years.


Meanwhile, TYC built a facility in Waco and began sending detainees there. So Littlefield entered into a contract with Idaho to house inmates, Davis said.


But in 2008 Idaho pulled out following an audit that found that GEO employees were falsifying records and just before a lawsuit by the family of Randall McCullough, an inmate who committed suicide after spending more than a year in solitary confinement.


Littlefield then found it difficult to fill beds.


"You look back and ask why would you take on 30 years of debt on a two-year contract," Davis said. "The community was trying to find ways to grow. When we built this, the community thought it was a great idea. Now it seems like it was not such a good idea."


Some private prison operators also were stung by charges that they were lax in providing training for their work force, that they skimped on food and medical service and that some guards abused offenders.


GEO, which operated the North Texas Intermediate Sanctions Facility, was stung by such criticism.


The company, formerly known as Wackenhut, was criticized for letting one facility fall into disrepair with unsafe and unsanitary conditions, for an escape from the Fort Worth unit and for incidents categorized as riots. In 2010, the company reported a $20.6 million decline in revenue because of the termination of management contracts at the Fort Worth Community Corrections Facility on North Henderson Street, as well as facilities in Venus, Newton and Beaumont and one in Illinois. Still, the company got new contracts for detention facilities in Conroe and Maverick County and in New Mexico; from a Laredo center opened in 2009; and from new services at a center in Pearsall in South Texas, the company reported.


The Fort Worth facility was opened in 1991 at a site that once served as the Fruehauf Trailer Corp. warehouse. The company spent $2.5 million converting the building and was paid more than $34,000 a month for its role operating the facility. Since 1999, a city entity, the Fort Worth Local Development Corp., has owned the more than 50-acre property, which is valued at more than $3.6 million, according to Tarrant Appraisal District records. As landlord, the Local Development Corp. received $17,420 a month in lease payments this fiscal year.


GEO Group's contract for the 424-bed facility came up for renewal last year. By that time, the company had lost several contracts and was under scrutiny for hiring a registered sex offender to guard teens at a TYC facility. The company did not submit a new bid for the North Texas facility, Clark said.


Price break


For those counties like Harris, with more inmates than they can house, the oversupply of beds is a real silver lining. Harris County has 694 inmates in county jails in Texas and Louisiana, down from a two-year high of about 1,500, said Alan Bernstein, director of communication for the Harris County sheriff's department. Housing offers for inmates without health problems are coming in as low as $29 an inmate per day, Bernstein said.


"Two years ago, we were paying $35 to $45 an inmate," he said.


Marc Levin, a criminal justice specialist with an Austin think tank, the Texas Public Policy Foundation, noted that the state recently closed its facility in Sugar Land, the first ever Texas closed without another prison waiting in the wings to replace it, and the conventional wisdom is that the state will close more prisons before ever constructing another one.


"I would hope that counties and cities would do some population projections before they go forward with building these jails," Levin said. "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."


Mitch Mitchell, 817-390-7752