DHS is buying two California immigration detention facilities for $1.5 billion

WASHINGTON — The Department of Homeland Security has bought two of California’s largest immigration detention facilities for $1.5 billion, according to a private prison company that sold them.

The purchase comes as the department — flush with cash after President Trump’s One Big Beautiful Bill infused the agency with $170 billion — has moved to expand its capacity to detain immigrants without relying heavily on private prison companies.

In an announcement Monday, Tennessee-based CoreCivic said the sale of the 2,560-bed California City Detention Center and the 1,994-bed Otay Mesa Detention Center in San Diego closed on July 2.

The company said it expects a profit of about $1.1 billion after income tax and transaction costs.

Ryan Gustin, director of public affairs at CoreCivic, said such sales are rare and “the process is marked by rigor and integrity.” He added that the valuation was established through the federal government’s required valuation process, using independent appraisers who determine fair market value.

The sale doesn’t change anything immediately for the agencies — CoreCivic expects to continue to manage them under existing contracts with US 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 changed given a change in ownership, the filing said. The California City facility’s contract expires in August 2027 and the Otay Mesa facility’s contract expires in December 2029, with an option to extend for another five years.

“We are pleased with the sale of these two most important facilities to the Company’s government partner, which demonstrates the value of the Company’s real estate portfolio, while demonstrating our role as a long-term, flexible solutions provider to the government,” said CoreCivic Chief Executive Officer Patrick Swindle in the announcement.

A Homeland Security spokesman confirmed that the purchase was made possible thanks to funding from Trump’s massive tax bill, which “allowed ICE to expand detention facilities to fulfill the President’s promise of mass deportations.”

“Unlike in states like Florida and Oklahoma, ICE cannot rely on local and state partners to find a place of detention in California,” said the spokesperson, who did not give their name in an emailed statement. “Sanctuary politicians continue to push legislation to ban or make prisons financially independent [unfeasible]. Now, with federal ownership of these key detention facilities in ICE’s west coast detention network, ICE maintains the detention powers necessary to arrest, detain, and remove illegal aliens.”

During a quarterly call in May, George Zoley, CEO of GEO Group, another large private prison conglomerate, said the company was in discussions with ICE “about the potential sale of multiple facilities.”

Critics of the purchase of the detention facilities say the Trump administration is simply looking to avoid national and local scrutiny by placing them under federal ownership. That issue was raised during the GEO Group’s earnings call when a participant later asked why the federal government wanted to own facilities instead of contracting with third parties.

If the facilities are under federal control, Zoley replied, “there is more protection against unauthorized charges that violate the operations of ICE processing facilities.”

Zoley said federal ownership would strengthen legal protections for institutions and argue that “states can only be so involved.”

“There have been accusations about overseeing health services, food services, general hygiene, etc.,” continued Zoley. “It’s unprecedented and I believe it’s unconstitutional. As other green states are considering getting involved in building oversight, I think the most logical solution to that is state ownership of the facilities.”

California tried to kick independent lock-in operators out of the state, but the 2020 law was struck down in the 9th Circuit Court of Appeals. Since then, state leaders have developed oversight mechanisms through laws that allow for the monitoring and investigation of detention facilities by the California Department of Justice and local health authorities.

Asked to comment on the sale, Sen. Alex Padilla (D-Calif.) said his oversight conference visits to facilities run by CoreCivic showed that immigrants who pose no threat to public safety are being held in “unacceptable conditions.”

“Whether these facilities are operated by private contractors or by the federal government, my expectations are the same,” he said. “I will continue to demand transparency, accountability, and humane conditions that respect the dignity and rights of every person in immigration detention.”

Eight ICE facilities now operate in California, with a combined detention capacity of nearly 9,000 people.

The California City and Otay Mesa facilities have both been the subject of lawsuits by inmates alleging mistreatment. CoreCivic calls the allegations baseless and says it complies with all laws related to the treatment of prisoners.

In its announcement Monday, CoreCivic said the company is in talks with ICE about selling some detention facilities, though it said those talks are in various stages and it’s unclear if the sale will go through.