DHS buys two California immigrant detention centers for $1.5 billion
WASHINGTON — The Department of Homeland Security bought two of the largest immigrant detention facilities in California for $1.5 billion, according to the private prison company that sold them.
The purchase comes as the department — flush with cash after Trump’s One Big Beautiful Bill Act infused the agency with $170 billion — has moved to scale up its capacity to detain immigrants without relying as heavily on private prison corporations.
In announcement Monday, the Tennessee-based CoreCivic said the sale of the 2,560-bed California City Detention Facility and the 1,994-bed Otay Mesa Detention Center in San Diego closed on July 2.
The company said it expects net proceeds of about $1.1 billion after income taxes and transaction expenses.
Ryan Gustin, public affairs director for CoreCivic, said such sales are not uncommon and that “the process was marked with rigor and integrity.” He added that the valuations were established through the federal government’s required appraisal process, using independent appraisers, who determined objective fair market value.
The sale doesn’t immediately change anything at the facilities — CoreCivic expects to continue managing them under existing contracts with U.S. Immigration and Customs Enforcement, according to the company and a filing with the Securities and Exchange Commission.
But the terms of those contracts could be modified given the change in ownership, the filing states. The California City facility contract expires in August 2027 and the Otay Mesa facility contract expires in December 2029, with the option to extend for another five years.
“We are pleased with the sales of these two mission-critical facilities for the Company’s government partner, which demonstrates the value of the Company’s underlying real estate portfolio, while reflecting our role as a long-term, flexible solutions provider to government,” CoreCivic CEO Patrick Swindle said in the announcement.
The Department of Homeland Security did not immediately respond to a request for comment.
During a quarterly earnings call in May, George Zoley, CEO of the GEO Group, another major private prison corporation, said that the company had been in discussions with ICE “regarding the potential sale of multiple facilities.”
Critics of the purchases of detention facilities say the Trump administration is simply looking to avoid state and local oversight by bringing them under federal ownership. That issue was raised during the GEO Group earnings call when a participant later asked why the federal government wants to own the facilities instead of contracting with third parties.
If the facilities are federally owned, Zoley replied, there are “more protections from unwarranted litigation that infringes upon the activities of the ICE processing centers.”
Zoley said federal ownership would bolster the legal defense of the facilities and the argument that “states can only have very limited involvement.”
“There’s been litigation regarding overseeing medical services, food services, general cleanliness, etc.,” Zoley continued. “It’s really unprecedented and I believe it’s fundamentally unconstitutional. As some blue states are considering more active involvement in oversight of facilities, I think the logical solution to much of that is federal ownership of the facilities.”
California tried to kick private detention operators out of the state, but the 2020 law was overturned in the Ninth Circuit Court of Appeals. Since then, state leaders have established oversight mechanisms through laws that allow for monitoring and investigation of detention centers by the California Department of Justice and local health authorities.
Asked to comment about the sale, Sen. Alex Padilla (D-Calif.) said his congressional oversight visits to facilities operated by CoreCivic have shown that immigrants who pose no public safety threat are being held in “unacceptable conditions.”
“Whether these facilities are operated by a private contractor or owned by the federal government, my expectations remain the same,” he said. “I will continue demanding transparency, accountability, and humane conditions that respect the dignity and rights of every person in immigration detention.”
Eight ICE detention facilities now operate in California, with a combined capacity to hold nearly 9,000 people.
The California City and Otay Mesa facilities have both been the subject of lawsuits by detainees alleging detainee mistreatment. CoreCivic calls such allegations unfounded and says it complies with all regulations concerning the treatment of detainees.
In its announcement on Monday, CoreCivic said the company is in discussions with ICE about potentially selling additional detention facilities, though it said those talks are in various stages and it’s unclear whether the sales will go through.