CoreCivic is selling two ICE detention centers to the federal government

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Private prison company CoreCivic has sold two of California’s largest immigration detention centers to the U.S. Department of Homeland Security in a deal valued at $1.5 billion, the company said Monday.

CoreCivic said it expects the sale of the Otay Mesa Detention Center in San Diego County and the California City Detention Center in Kern County to bring the company estimated net proceeds of approximately $1.1 billion.

The sale ended on July 2, according to a recent filing with the US Securities and Exchange Commission for which the federal government paid $739.2 million for the 1,994-bed Otay Mesa center and $732.6 million for the recently opened 2,560-bed California City center.

CoreCivic stated in a press release which plans to continue managing the day-to-day operations of both facilities in accordance with current contracts with United States Immigration and Customs Enforcement (ICE). The company acknowledged in its filing that the terms of those contracts could be renegotiated now that the federal government owns both properties outright.

They may not renew. CoreCivic’s contract in California City expires in August 2027, and its contract in Otay Mesa runs through December 2029 with an option to extend for another five years.

This purchase comes at a time when the Department of Homeland Security has a an unprecedented influx of funds . The 2025 federal budget allocated approximately $170 billion to the department for immigration enforcement and detention, including $45 billion specifically earmarked to expand detention capacity in fiscal year 2029.

The acquisition of the two parcels of land is another step in the federal government’s plan to expand the nation’s immigration detention capacity without relying on the two largest private prison contractors, according to report from the Brennan Center for Justice at New York University School of Law in February.

The proposed transition from private custody was described at the time as “ICE’s Detention Reengineering Initiative” in U.S. Immigration and Customs Enforcement documents released by the city of Social Circle, Georgia, where city leaders are concerned about the pressure that a large detention center housing between 7,500 and 10,000 people puts on municipal services.

According to the unsigned ICE memo, “this new model will allow ICE to create an efficient detention network by reducing the total number of contract detention centers used, while increasing total bed capacity, improving custody management, and streamlining removal operations.”

Department of Homeland Security Acquisition Program surprised the local authorities in at least five states that learned of the acquisitions and their purpose after the deals were closed. According to the New York Times, some of these projects have faced legal challenges, although the agency appears to be moving forward with the acquisition of four warehouses.

Health inspections at ICE detention facilities.

California law allows state and local officials inspect immigration detention centers and Democratic leaders have taken notice of conditions inside since President Donald Trump began his second term. Eight ICE detention centers operate in the state, down from six when former President Joe Biden left office.

Sen. Alex Padilla, a Democrat, has visited both lands which CoreCivic sold to the federal government and advocated for the needs of detainees, including access to health care.

“Too many people who do not pose a threat to public safety and who should not be detained are nevertheless found in unacceptable conditions, with insufficient access to medical care, legal advice, clean water, nutritious food and other basic needs,” he said in a statement. “Whether these facilities are operated by a private contractor or owned by the federal government, my expectations remain the same.”

The Otay Mesa Detention Center is at the center of an ongoing lawsuit over local health inspections. In March, San Diego County officials sued the federal government and CoreCivic after claiming health inspectors were prevented from conducting a full inspection under a 2024 state law. A federal judge later authorized county health officials to access the detention center.

Private prison companies CoreCivic and GEO Group challenged California’s county-level corrections inspection law in court in 2024, arguing that states cannot pass laws that directly interfere with the federal government’s core functions. The GEO Group argued that the state law was unconstitutional because it interfered with federal authority over immigration detention centers.

“This is Trump’s mass incarceration agenda getting bigger, more permanent and more expensive, with CoreCivic making billions of dollars while continuing to run the cells. DHS may own the building, but it doesn’t own the law,” San Diego County Supervisor Tera Lawson-Remmer said in a written statement about the sale.

California City opened last year in eastern Kern County, about 100 miles north of Los Angeles, on land the company previously operated as a state prison. A federal lawsuit is currently underway to determine whether the facility was opened without proper permits in a remote California town.

Grizel Ruiz, an attorney for the Immigrant Legal Resource Center, said the change in ownership does not change her organization’s view that the center opened its doors without the necessary permits.

The organization plans to ask the California City Planning Commission on Tuesday to deny permits and close the facility. Attorney General Rob Bonta has called upon to do the same.

“The sale to DHS does not change the fact that CoreCivic must continue to legally operate the facilities,” Ruiz said.

Ruiz also noted that the sale agreement appears favorable to CoreCivic as they collect the proceeds from the sale of the property as well as the revenue from continuing to operate the Immigration and Customs Enforcement facility.

“They can have it all,” Ruiz said.

CoreCivic said the sales prices were determined through a federal government process in which independent appraisers factor in replacement cost, depreciation and land value to determine fair market value. Spokesman Ryan Gustin said the government reviewed the assessments for compliance with federal standards.

“The process was characterized by rigor and integrity,” he said in an emailed statement.

An increase in sales is possible.

The company also disclosed that it is in talks with ICE to sell additional detention centers to the federal government, although it noted that those talks are in the early stages of a deal and may not materialize.

Tennessee-based CoreCivic said the proceeds from the sale, which will total about $1.1 billion after taxes and transaction costs, could be used to repay its bank loan and repay $238.5 million in senior notes due 2027. The remaining funds will be reserved for further debt reduction or possible stock buybacks.

Patrick Swindle, president of CoreCivic, said in the press release, “We are pleased with the sale of these two critical facilities to the company’s government partner, which reflects our role as a provider of flexible, long-term solutions to the government.”

Correction: This story has been updated to correct an error in the amount of money CoreCivic plans to use to pay off its debt.