A $45 million jail in rural Florida is able to pay back investors with the help of an increase in ICE detainees and a loan from the USDA. Photo courtesy of ICE
MIAMI, Oct. 31 (UPI) -- In an effort to boost rural economies struggling for jobs, the United States Department of Agriculture is loaning millions of dollars to rural municipalities to build or maintain prisons that are geared toward detaining local inmates and undocumented immigrants in federal custody.
One recipient of the low-interest loans is Baker County, Fla., a rural area of about 27,000 people in northern Florida. The USDA is set to approve a $35 million loan to the Baker County Development Corp., a nonprofit corporation created by the county to run the jail. The loan will help the county's nonprofit entity pay back bondholders who invested in the original $45 million cost to build the facility in 2008.
The county's ability to pay back bondholders was in question after the IRS found the original bonds were not tax-exempt and the county has to reissue them as taxable, which raised interest rates to about 7 percent and exposed the county to millions in back taxes and penalties.
The USDA loan decreases Baker County's interest rate to 3 percent and a deal with the IRS removes the penalties and back taxes, which would have been difficult to pay for a county where nearly 20 percent of the population lives below the poverty line and property values have been in decline.
Baker County's lavish jail is able to attract the loan because of a recent influx in Immigration and Customs Enforcement detainees, which provide the bulk of the revenue needed to keep the jail in business.
Built for growth that didn't happen
The USDA's jail construction program is designed to give a shot to rural economies, but in Baker County's case, it serves as a bailout for a 512-bed, $45 million jail facility that was built at a time when large growth in the area was expected but didn't pan out.
Ed Barber, the chairman of the BCDC, said plans for the building were conceived before the 2008 recession and economic optimism was high. Developers were coming into the county with plans to build new projects and take advantage of the area's proximity to growing Jacksonville, located about 30 miles east straight down Interstate 10.
"Everybody was ultra-optimistic about the good times rolling -- prior to the recession," Barber told UPI. "They felt like county growth was going to be significant and the need for county inmates would get bigger."
Instead of using county funds to pay for the new jail, county leaders decided to build a bigger jail than necessary for a county of 27,000 people and planned to use the extra space to draw revenue from the federal government by holding immigrant detainees for Immigration and Customs Enforcement.
The total cost ended up being $45 million, including construction and land acquisition. That was a big amount for a small county, but leaders considered it a smart investment at the time.
"This was an opportunity to capture the ICE market, so to speak, and at the same time accommodate the need to build a new jail, so they built it several times bigger than they would have," Barber said. "They felt like they were getting ahead of the curve and it would be a good deal for the county."
But in 2008, when the country's economy flopped, Baker County's other development plans fizzled, which meant no additional tax revenue and no population increase.
To worsen the situation, there wasn't an influx of immigrant detainees coming in like they had planned.
Fluctuating deportation numbers
According to the Migration Policy Institute, the number of "removals" (the legal term for a deportation through a court order) under President George W. Bush steadily increased during his eight years in office, starting with about 189,000 in 2001 and ending with 359,000 in 2008.
But under President Barack Obama, deportations remained at about the same level as Bush's last year in office, with slight increases of about 35,000 per year.
The once booming deportation market seemed to have plateaued and Baker County's detention center wasn't getting as many detainees as they had planned for.
There just wasn't much of a need for an out-of-the-way detention center in northern Florida. And by Barber's estimate, the county was losing around $1 million per year on operating costs.
In 2012, the Obama administration increased its deportation numbers to more than 416,000 removals -- the highest number in U.S. history -- and then broke its own record in 2013 by deporting 434,000 people, followed by 407,000 in 2014.
The immigration detention business looked to be getting back on track. But in 2015, as immigration once again became a controversial topic, this time spearheaded by presidential candidate Donald Trump, deportation numbers declined to the lowest numbers of Obama's tenure -- 333,000 in 2015 and 344,000 in 2016. Still higher than the Bush administration's highest deportation year, but well below the Obama administration's average.
Once again, Baker County missed out on getting the number of ICE detainees it needed to not lose money every year on its costly jail facility.
"The first seven or eight years were very tough," Baker County Commissioner Bobby Steele said. "The actual inmate counts weren't what they needed to be."
But that has changed over the past two years.
Although ICE removals during 2017 and the first three quarters of 2018 under the Trump administration were well below the Obama administration's peak deportation years, there has been a substantial increase since 2016. And that has led to more ICE detainees being held in Baker County.
These days, there are 300 or more ICE detainees, as well as a few U.S. Marshal prisoners, in the Baker County jail -- a 300 percent increase over previous years, when the facility was losing money. And like before 2008, county officials are optimistic once again.
"Long term, it's going to be a good solution for the county," Steele said.
Rural job opportunities
The pending USDA loan would help keep an important job provider in business.
The jail employs about 40 full-time workers, all of whom are employees of the Baker County Sheriff's Department.
Under the county's agreement, the jail is owned by a nonprofit corporation, in which the board of supervisors is appointed by the county commission. But the jail is operated by the sheriff's department and staffed by sheriff's employees who have certification in either corrections or law enforcement.
"Probably 85 to 90 percent have certification in both," Steele said.
The jobs start at $34,000 per year, which is average for a rural police officer starting wage in rural Florida, and employees get county benefits.
For Baker County, the jail serves as a public works project that adds several jobs with benefits and room for growth -- a rare combination in economically depressed areas. But jails providing those opportunities has been an increasing trend.
According to the Vera Institute, the USDA has funded over $360 million in jail construction in rural areas since 1996.
Those facilities, like Baker County's, are rather small and either ran by local governments or a private entity created by the local government.
The prison business can be profitable, and private prison companies like GEO Group have been seeing substantial increases in profits.
John Eason, an associate professor of sociology at Texas A&M University and author of the book, Big House on the Prairie, which looks at how prison construction affects rural economies, says it's questionable how much of a positive impact the prison business has on depressed, rural economies, especially if they need to take out loans to pay for the jails.
"These towns are often in desperate, dire straits and that's why they're willing to take out loans to build these facilities," Eason said.
According to Eason's research, prior to 1990, there was evidence that prisons improved the economic situation of rural towns by slightly increasing property values and median income. But after 1990, those benefits waned and, in some cases, the economic situation in rural prison towns worsened.
Eason compares a rural town with a prison and a rural town without a prison as two rocks rolling downhill.
"They're still going to be heading downhill, but not as quickly," he said. "That's what a prison or jail does. It gives them a little break so they're not falling downhill quite as fast."