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| Private Detention Facility Forced into Bankruptcy, Sold at Auction |
| By prisonlegalnews.org |
| Published: 10/01/2013 |
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The Irwin County Detention Center (ICDC) in Ocilla, Georgia has been sold at auction after the facility’s owner, Municipal Corrections LLC, was forced into bankruptcy court by bondholders. A 2007 agreement between Irwin County and Municipal Corrections demonstrates the risks that government agencies assume when they issue bonds to invest in prisons and jails. The agreement allowed the county to house up to 30 of its own prisoners at ICDC at no charge, excluding medical costs. In return, the county – which also hoped to create more jobs – issued $55 million in tax-exempt lease revenue bonds to pay off other bonds and finance a 512-bed expansion at ICDC, bringing the facility’s total capacity to 1,201. The bonds were to be paid with revenue received from Immigration and Customs Enforcement (ICE) and the U.S. Marshals Service, for holding detainees at ICDC. However, the facility failed to house enough prisoners to generate sufficient income to make the bond payments – a problem that has plagued a number of other detention centers built by cities and counties hoping to cash in on for-profit incarceration. Consequently, in January 2012 an Irwin County Superior Court judge, at the county’s request, ordered ICDC to be sold at auction to cover $1.6 million in unpaid taxes owed to the county and the city of Ocilla. The tax sale caused the bond trustee, UMB Bank N.A., to notify bondholders that the bond payments were in default. With the sale set for March 6, 2012, the bondholders filed an involuntary bankruptcy petition to protect over $54 million in outstanding bond debt. The bankruptcy case was opened in Nevada, where Municipal Corrections is registered. The company’s owner, Terry O’Brien, owns several other firms with connections to ICDC. While he has a background in construction, marketing and finance, bond records do not indicate that he has any experience managing a prison or jail. In fact, the records state O’Brien had a “limited operating history and limited assets.” Read More. |
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