San Antonio Express-News (Sunday)
Migrant shelters are worth billions
Firms, nonprofits, landowners profit
When thousands of undocumented immigrants arrive at the Texas border, they enter not just a legal system, but an industry worth billions.
Next year, it could be worth even more.
Over decades, the need to shelter, clothe, feed and transport tens of thousands of people caught crossing the U.S.Mexico border has resulted in a permanent architecture of corporations, nonprofits, small businesses, local governments and individual property owners who profit from meeting this demand. The unfolding humanitarian and political crisis of the past two weeks is beginning to yield a rapid expansion of this vast, often secretive machinery.
President Donald Trump is requesting more than 25 percent more beds for immigrant detention next fiscal year — which would swell the detention capacity to 52,000 in facilities across the country. In the short term, the military is preparing for thousands more beds to shelter families at Fort Bliss and Goodfellow AFB in Texas, and the Immigration and Customs Enforcement has taken initial steps on plans for
15,000 new beds.
Corporations such as GEO Group and CoreCivic, which together make up 85 percent of the private prison industry in the United States, also are big players in the business of immigration detention. CoreCivic, formerly Corrections Corp. of America, operates more than a dozen facilities in Texas.
Since last year, the two companies and their subsidiaries have received more than $800 million under contracts with the Homeland Security Department and Immigration and Customs Enforcement, according to federal data.
GEO has a regional office in San Antonio, near its Karnes Family Residential Center, and operates two ICE processing centers in Texas, among 11 it manages around the country.
CoreCivic, which has at least $300 million in ICE contracts since last year, is involved in operations of 90 prisons, detention centers and other facilities, among them the South Texas Family Residential Center in Dilley, and ICE processing centers in Houston and Laredo
As the administration’s enforcement of a zerotolerance policy on migrants boosts detention and prosecutions, George Zoley, founder of the GEO Group, said in an April call with analysts that the company expects “to continue to increase our occupancy” and the ICE request for 15,000 more beds could “present opportunities.”
The border will keep drawing people seeking asylum, David Garfinkle, executive vice president and chief financial officer at CoreCivic, told analysts in May.
“The conditions in Central America are not improving,” Garfinkle said.
A sudden expansion of the industry, which holds people while they await asylum or deportation proceedings, bodes ill for transparency, said Silky Shah, director of the Detention Watch Network, a Washington nonprofit that seeks to end immigration detention.
The group has exposed the existence of minimum quotas for beds at detention centers — beds that ICE must pay for even when they’re not filled. Detention Watch obtained public records through lengthy lawsuits after their Freedom of Information Act requests were denied.
Getting information about subcontractors is even harder.
“We don’t know much at all, and we don’t know how much they’re influencing the number of people being detained,” Shah said.
ICE often uses interlocal agreements with county or city governments, which avoids the public bidding process and allows it to hire private jail companies directly. In 2014, for instance, it tapped an Arizona town as a pass-through to funnel $290 million to CoreCivic to operate the center in Dilley. The Arizona town, two states and 930 miles away, stood to make a percentage of the contract, around $436,000.
Because of the border crisis, local governments across the country now are facing political pressure to undo these arrangements. Commissioners in Williamson County, outside Austin, voted Tuesday to end their contracts with ICE and CoreCivic for the T. Don Hutto Residential Center, an ICE facility in Taylor.
Influence
CoreCivic and GEO wield significant influence with the government. Each contributed $250,000 to Trump’s inaugural committee. Together, they spent more than $3 million since last year to lobby in Washington. GEO, based in Boca Raton, Florida, this year moved its annual leadership conference to a Miami golf resort owned by Trump.
GEO has spent
$145,000 in individual contributions this campaign cycle, the majority going to Republicans, including GOP Reps.
John Culberson of Houston and John Carter of Round Rock, as well as Democrat Henry Cuellar of Laredo. Culberson also received money from CoreCivic.
Pablo Paez, the company’s executive vice president for corporate relations, declined to say whether GEO would pursue homeland security’s recent request related to the 15,000 beds. But like others profiting from the business of immigration detention, he attempted to distance himself the recent blowback over family separation.
“Our company does not and has never managed facilities that house unaccompanied minors,” he wrote in an email.
CoreCivic spokesman Steve Owen said that none of the facilities house children “who aren’t under the supervision of a parent.”
Owen was noncommittal on how his company will respond to the re- quest for more detention beds.
“We stand ready to understand and accommodate (ICE’s) changing needs,” he said in an email.
It is hard to know how much — and for how long — contractors will benefit, because of the political uncertainties surrounding Trump administration policies.
But companies may be unwilling to provide thousands of new beds without guarantees, said Alex Cynamon, an analyst with Washingtonbased Height Capital Markets.
“The government’s detention policy could change in a month, a year, or with the next administration. That uncertainty makes it a tough bet,” he said.
Under scrutiny
Below the corporate echelons of immigrant confinement are dozens of nonprofits that run shelters for families and children.
The federal government has awarded more than $1.2 billion in contracts that span fiscal year 2017 and beyond, for housing unaccompanied children in Texas alone.
Most of the pacts go to nonprofits such as Austin-based Southwest Key Programs, which has at least $964 million in contracts.
Southwest Key long has branded itself as an angel of the borderlands, stepping in to help address one of the nation’s most vexing social services problems. But of late, it has faced citations from the state licensing agency over deficiencies administering children’s medical care, staff background checks and under-supervision of children.
Its most prominent facility is the largest immigrant children shelter in the nation, Casa Padre inside a former Walmart in Brownsville, housing about 1,500 children. It includes dorms, study and recreation areas, and medical facilities, and opened more than a year before the current crisis. Southwest Key has led media tours, hoping to dispel the misconception that it’s a warehouse full of children in cages, and it said it does not support separating families at the border.
“For 30 years, our work in offering youth justice alternatives, immigrant children’s shelters, and education has served to improve the lives of thousands of young people,” a statement from the group reads.
Still, he nonprofit faces a backlash from activists and politicians, including Houston Mayor Sylvester Turner. He has asked Southwest Key to reconsider a proposed shelter in Houston that would house migrant children.
Some nonprofits are recalculating in the new political environment.
San Antonio-based nonprofit BCFS Health and Human Services, a global network that is the second-largest operator of U.S. shelters for immigrants, declined this month to participate in a proposed no-bid contract worth as much as $1 billion to expand a tent camp for migrant children, according to a report by Texas Monthly.
Reborn as shelters
Houses, schools and stores get reborn as migrant shelters, in a process that generates profits through sometimes convoluted real estate transactions.
Such facilities sit on at least $57.8 million worth of land in Texas, according to property records. Often, ownership is organized under limited partnerships and limited liability corporations, obscuring those who benefit.
Southwest Key’s Casa Blanca shelter, for instance, leases a mansion on 21 acres in San Antonio’s Timberwood Park subdivision, where it’s licensed to serve children aged 5 to 17. The state recently granted it three variances allowing it to increase its capacity from 45 children to 52 until the end of August. Southwest Key is hiring for several positions there.
When the house went on the auction block in 2006, it had the works: an entryway with 40-foot ceilings, a built-in SubZero refrigerator, an elevator, heated pool, guest house, fishing ponds and a log lifter for carrying firewood to the second floor.
Jennifer Spencer cast the winning bid of $1.5 million.
Spencer’s husband, David Spencer, CEO of Prytime Medical Devices Inc. in Boerne, is listed in state filings as the registered agent for Mandelbrot Enchanted Eve, the limited liability corporation that holds the Casa Blanca land. He and a spokeswoman for Prytime Medical did not respond to requests for comment.
In Houston, a developer in the burgeoning Eado district owns a $6 million facility subleased to Southwest Key for a proposed shelter.
Advocates say the plan to hold 240 children between the ages of zero and 17 could make it the first residential center in the nation to hold such small children without their relatives or other foster parents for longer periods of time.
But after the mayor blasted the plan, the developer and landlord, David Denenburg, issued a statement: “We stand strongly against the separation of children from their parents, and will not permit the property to be used in such a way.”
During the lease negotiations with the tenant, Southwest Key indicated it was to house only unaccompanied children detained on the border, Denenburg said. He understood those to be children who had arrived at the border without their parents and who turned themselves in to federal agents.
“This definition did not ever contemplate … children separated from their families,” he said.
The lease was signed May 29, Denenburg said, as public awareness was growing about the scale of the family separation policy.
Denenburg had listed the 53,000 square foot facility as a potential school, rehabilitation facility, mental health facility or “emigration/ deportation hub” with its barbed wire and other security features, according to a real estate listing. He previously leased it to the city of Houston for a shelter for Hurricane Harvey victims. The city paid rent amounting to about $90,000 per month, records show. Terms of the Southwest Key lease are not public, but Denenburg said the property leases for about $1.25 per square foot.
Southwest Key would not say whether it intended to honor Denenburg’s request about separated children, referring questions to the Office of Refugee Resettlement. It did not immediately return messages.
T&R Chemicals, a manufacturer of pine oil and derivatives in Clint, owns the land where Southwest Key operates its Casa Franklin facility in El Paso. This year, the property was assessed at more than $1.1 million.
Lilly Chairez, the company’s treasurer, would not say how much T&R earns from leasing the property.
“They’re the lessees and whatever it is they do, that’s their business,” Chairez said.