ICE detention center struggling financially

OCILLA -- A privately owned detention center that houses hundreds of illegal immigrants in South Georgia narrowly avoided being auctioned off at a county tax sale this year after the Atlanta-based owner’s creditors forced the company into bankruptcy proceedings.

Now the fate of Irwin County's largest private employer is at stake, as is a considerable chunk of the county's tax base, demonstrating how illegal immigration and economic development can be intertwined.

Located about 180 miles south of Atlanta, the Irwin County Detention Center houses detainees for U.S. Immigration and Customs Enforcement and the U.S. Marshals Service. About 200 jobs are tied to the detention center in Ocilla that now houses slightly more than half its capacity.

“If it closes, then everybody loses their jobs ... and the inmates go back to wherever they came from, but we hope that it never gets to that,” said Joey Whitley, chairman of the Irwin Board of Commissioners.

The facility is at the center of a complex financial arrangement involving the county and several private companies linked to the same Atlanta-area businessman, Terry O’Brien. O’Brien owns Municipal Corrections LLC, which owns the detention center. He also has an interest in two other companies involved in its management. He did not respond to repeated requests for comment. An attorney for his company said he was still evaluating the bankruptcy case.

The problems started after the county -- hoping to create more jobs and save taxpayer money -- issued $55 million in tax-exempt bonds in 2007 to help pay off other bonds and to finance an expansion of the center by 512 beds to a total of 1,201. As part of the arrangement, the county gets to house up to 30 of its own inmates in the detention center for free, not including medical costs.

The bonds were to be paid off with revenue from the center, which receives federal funding for holding federal detainees. But the center has not housed enough detainees to cover the bond payments, Whitley said in court papers. As of Thursday, the detention center was holding 653 people. In February, the trustee in the arrangement -- UMB -- wrote to bondholders, saying the bond payments were in default.

In January, at the county's request, an Irwin Superior Court judge ordered that the property to be sold at auction to cover a combined $1.6 million in back taxes owed to the county and the city of Ocilla for 2009 and 2010. That’s a large sum for a county with about 9,500 residents and an annual operating budget of $4.2 million.

The detention center’s tax sale was set for March 6. But its bondholders blocked that by filing a petition in a federal bankruptcy court, claiming $54.1 million in bond debt. O’Brien has been seeking to have the Chapter 11 bankruptcy case transferred from a federal court in Nevada -- where his company was organized -- to one in Georgia.

Before the detention center’s expansion, Municipal Corrections had “limited operating history and limited assets,” bond records show. The records show O’Brien had a background in construction, marketing and finance, but they don’t indicate he had any experience running a jail or prison. As part of the project, his company was to receive between $5,000 and $8,333 monthly to cover “oversight” expenditures.

The county is leasing the jail from Municipal Corrections, an arrangement that allowed Irwin to issue the tax-exempt bonds for its expansion, county officials said.

The county signed an agreement with a second company linked to O’Brien -- Detention Management LLC -- to operate the jail. The contract says that company is to be paid a $21,469 monthly management fee from the detention center’s revenue. The company is also responsible for working with ICE and the U.S. Marshals Service to steer more detainees to the detention center, Whitley said. The company’s website lists O’Brien as one of its leaders. No one from that company's Atlanta office responded to a request for comment this week. A third company connected to O’Brien -- Correctional Center Consultants LLC -- was hired to help manage the project, bond records show. O’Brien is the company’s managing member.

Over the past few years, U.S. Sen. Johnny Isakson and U.S. Rep. Jack Kingston have gone to bat for the center, writing Homeland Security Secretary Janet Napolitano about its ability to house ICE detainees. Isakson got involved in 2010 when Irwin County officials informed his office that Alabama officials -- facing the loss of about $5 million in annual federal funding and 41 county jobs -- were trying to get ICE to change its plans to move many of its detainees from an Alabama jail to the detention center in Ocilla.

Isakson said he was not aware of the Ocilla center’s financial problems when he intervened. A spokesman for Kingston said the congressman was also unaware of those problems when he got involved.

The financial strains surrounding the facility were not apparent Thursday, when the warden gave an Atlanta Journal-Constitution reporter and a photographer a roughly one-hour tour. Clad in orange uniforms, dozens of ICE detainees played spirited games of soccer and volleyball in a fenced-in courtyard. Inside, other men were engrossed in checkers and card games. In another wing, female detainees made cards for their families using brightly colored construction paper.

The center sits outside of town, within view of grazing cows. The warden -- Barbara Walrath -- said she has everything she needs to run the detention center safely and securely.

"Operationally, nothing has changed," she said.

Meanwhile, a spokeswoman for the U.S. Marshals Service said her agency will make plans to move its 295 inmates to other locations if financial troubles put their safety in jeopardy. The inmates include men and women from Georgia, South Carolina and Tennessee. Some are awaiting trial on alleged probation violations, white-collar crimes and offenses related to drugs, sex and weapons. Others have been convicted and are awaiting transfer to other federal prisons.

The detention center also holds an average of 350 detainees a day for ICE. Some have already been ordered deported while others are still fighting in court to remain in the U.S. If the center in Ocilla is closed, those detainees will be sent to other ICE detention centers in Georgia, North Carolina or South Carolina, ICE officials said.

County officials hope that if the Irwin Detention Center is sold at auction the buyer will continue to operate it as a detention center. No offers have been made, however, and no potential buyers have been identified, Whitley said.

The detention center is Irwin’s third-largest employer behind its public school system and the Irwin County Hospital, said Hazel McCranie, president of the Ocilla-Irwin Chamber of Commerce. It employs people from Irwin and neighboring counties as office and kitchen workers, security personnel and drivers, she said.

“It’s a vital part of this community,” she said. “I need those 200 jobs here. That’s a lot of people. We are only a community of around 10,000 [people], city and county. So you take something like that out and it is major.”

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