Under the deal, the county would lease the prison from the Detention Facility Corporation and then contract out operations to Emerald Correctional Management. Under the terms of the lease agreement, the county would pay Emerald $6.5 million for operating the facility during its first year in 2005. The Texas Criminal Justice Reform Coalition disagreed with the analysis of a feasibility study done on behalf of Municipal Capital by North Carolina-based consulting firm GSA Ltd. that the project would generate sufficient revenues to repay the principal and interest on the bonds. Their interpretation of the findings was that the county would incur a loss of at least $500,000 per year even in the best-case scenario.

 

The first orders for the bonds were placed on July 25, 2003 but a temporary restraining order issued on the same day halted trading and forced the underwriters to revoke them. The temporary restraining order was granted following a lawsuit by three local residents. The suit alleged that the county's commissioners had violated the Texas Open Meetings Law by failing to post an adequate public notice about the meeting at which the bonds were approved. The restraining order was subsequently dismissed by the State District Judge and the bonds were re-approved in August 2003.

 

DETAILS: In August 2003 Hudspeth County's West Texas Detention Facility Corporation completed a $23.5 million tax-exempt revenue bond deal with underwriters Herbert J. Sims & Co. and Municipal Capital Markets Group to build a speculative private prison in the county.

 

The first orders for the bonds were placed on July 25, 2003 but a temporary restraining order issued on the same day halted trading and forced the underwriters to revoke them. The temporary restraining order was granted following a lawsuit by three local residents. (One of the three, Bill Addington, helped to defeat plans supported by then-governor George W. Bush to build a nuclear waste dump in the county in 1995.) The suit alleged that the county's commissioners had violated the Texas Open Meetings Law by failing to adequately post a public notice of the meeting at which the bonds were approved.

 

The restraining order was subsequently dismissed by the State District Judge, and the bonds were re-approve in August  2003. The attorney representing the residents said that the judge had not allowed him to call witnesses or present evidence. He was also not granted the three days normally allowed for counsel to consider the motion to dismiss.

 

Under the deal approved by the county, it would lease the prison from the Detention  Facility Corporation and then contract out operations to Emerald. The prison operator would be paid $6.5 million the first year and $6.8 million the following year. The Texas Criminal Justice Reform Coalition disagreed with the analysis of a feasibility study done on behalf of Municipal Capital by North Carolina-based consulting firm GSA Ltd. that the project would generate sufficient revenues. Their interpretation of the findings was that the county would incur a loss of at least $500,000 per year in the best-case scenario.¹

 

The feasibility study noted that the proposed prison's distance from the nearest federal courthouse was a "positive factor." The conventional wisdom for prison siting is that financial risks for any prison increases rapidly if it is more than 40 miles from a federal courthouse. The proposed facility was 88 miles from the nearest federal courthouse. Critics also pointed out that the study also failed to consider the impact of the 2,098-bed jail in Reeves County, 125 miles from Sierra Blanca, the Hudspeth County seat.

 

According to Bill Addington, the county commissioners did not respond to his queries about the cost of the feasibility study and who had paid for it. He said that the majority of the residents of Hudspeth County were unaware of the fact that the prison was being financed with revenue bonds. He also said that there was nobody else besides him at the meeting.²