In March 1998 the
Haskell City
Council, the Haskell
County Commissioners
Court and the
Development
Corporation of
Haskell joined
forces to form the
Rolling Plains
Regional
Corporation, a
non-profit entity,
to build a
regional jail, a
youth detention
facility and a
privately run
prison.
Voters approved the
sale of $20 million
in bonds for
the Rolling Plains
Regional Jail
Facility, which
comprised a 48-bed
county jail and a
500-bed detention
center and
was completed in
early 2002. Concerns
by local residents
about its tax
consequences for the
city and the county
had delayed the
process.
The
county jail had an
average population
of 35 per day until
July 2002.
The detention center
received its first
57 detainees from
the Immigration and
Naturalization
Services in July
of that year. The county
lost some of its
prisoners to Dickens
County.
Management and
Training Company
initially operated
the facility. Under
the county's
contract with MTC,
payments on the
certificates of
obligation were last
in order, following
payments on the
revenue bonds and
payments to the
operator. When the
county failed to
renegotiate the
order of payments
with MTC, it decided
to contract with a
new operator,
Emerald Correctional
Management
Corporation.
DICKENS COUNTY
In
1998 Correctional
Services Corporation
(CSC) bought the
Dickens County
Correction Facility
from the county for
$9.25 million. The
facility was
operated by the
Bobby Ross Group but
owned by the county.1
The county had
built the facility
for $4 million. At
the time of the
sale, the county
still owed $2.65
million. The County
Judge declared that
in addition to
making $6.6 million
on the sale, private
ownership would make
the facility
taxable. CSC
announced that it
would increase
salaries by 30
percent and add
nearly 300 beds to
the 486-bed prison.
In August 2001
Dickens County
issued tax-exempt lease
revenue bonds to
reacquire and
refinance the
facility. The bonds
were issued through
the county's Public
Facility
Corporation, which
was authorized to
issue debt for
public purposes
under state law. It
was unclear as to
why the county
wanted to reacquire
an existing facility
owned by a private
prison company,
particularly in
light of the fact
that it had just
signed a 15-year
contract with CSC to
continue operating
it.
After
issuing the bonds,
the county bought
the facility from
CSC for $10.6
million.2
It was again unclear
as to why the county
would be interested
in reacquiring a
facility with $13
million in debt,
which was almost
five times the
original debt it had
incurred for
building the
facility. It was
also puzzling that
the county bought it
at a higher price
than CSC had paid.
Other than CSC
making money from
the sale, the other
party that would
benefit from the
transaction and the
bond issuance were
the underwriters.
NEWTON COUNTY
In
June 1998
Correctional
Services Corporation
announced that it
had signed a
contract to operate
a 872-bed facility
in Newton County.3
In March 2002 the
company announced
that it had entered
into an agreement
with the county to
extend its operating
contract for the
Newton County
Correctional Center.
The new agreement
was part of a
refinancing
transaction for the
facility, which was
owned by the Newton
County Public
Facility
Corporation. The
Corporation recently
completed an
offering of lease
revenue bonds. CSC
did not have any
liability in
relation to the
bonds or its related
lease arrangement.4
WILLACY COUNTY
In
May 2002 Management
and Training
Corporation was
awarded a $43
million contract to
operate a private
prison in Willacy
County.5
The Willacy County
Public Finance
Corporation issued
$23.9 million in
bonds to finance the
construction of the
prison to house
detainees for the
U.S. Marshals
Service.
NOTES
