Private prison giant gets $1.5 billion from DHS, keeps running ICE centers
Private prison operator CoreCivic has completed the $1.5 billion sale of two of California’s largest immigration detention centers to the Department of Homeland Security, the company announced Monday.
The deal, which closed July 2, is expected to generate about $1.1 billion in net proceeds for the Tennessee-based company.
DHS purchased the 1,994-bed Otay Mesa Detention Center in San Diego County for $739.2 million and the 2,560-bed California City Detention Facility in Kern County for $732.6 million, according to a filing with the Securities and Exchange Commission.
Despite the sale, CoreCivic expects to continue operating both facilities under existing contracts with U.S. Immigration and Customs Enforcement.
Those agreements run through August 2027 for California City and December 2029 for Otay Mesa, although the company said the contracts could be renegotiated now that the federal government owns the properties.
The purchase comes as DHS receives a major funding boost. The 2025 federal budget includes about $170 billion for immigration enforcement and detention, including $45 billion to expand detention capacity through 2029.
The acquisitions are part of a broader federal effort to expand immigration detention while relying less on privately owned facilities. Internal planning documents describe the strategy as an effort to increase detention capacity while reducing the number of contracted facilities.
The buying spree has surprised local officials in several states, some of whom said they learned about the purchases only after the deals had closed.
In California, both facilities have drawn scrutiny from Democratic officials over detention conditions.
Otay Mesa has been at the center of a legal dispute after San Diego County sued DHS and CoreCivic, alleging county health inspectors were denied access under a 2024 state law. A federal judge later ordered the facility to allow inspections.
CoreCivic and fellow private prison operator GEO Group are separately challenging California’s inspection law, arguing the state cannot regulate federal immigration detention facilities.
The California City detention center is also the subject of a lawsuit alleging it opened without required local permits. Attorney Grisel Ruiz said the sale does not resolve those concerns and urged local officials to deny permits and force the facility to close.
“The sale to DHS doesn’t change the fact that CoreCivic must still lawfully operate the facility,” Ruiz said.
CoreCivic defended the transaction, saying both facilities were independently appraised under federal standards before the sale.
The company said it is also in preliminary talks with ICE about selling additional detention facilities, though no further deals have been finalized.
CoreCivic plans to use the estimated $1.1 billion in net proceeds to reduce debt, including retiring $238.5 million in senior notes due in 2027, with any remaining funds earmarked for additional debt reduction or potential stock buybacks.
