By Jose E. Navarro, MBA | California | September 18, 2026
SAN DIEGO — On July 2, CoreCivic sold the Otay Mesa Detention Center — the 1,994-bed immigration facility it has operated in San Diego County since 2015 — to the U.S. Department of Homeland Security for $739.2 million. The company’s own 2025 financial disclosures list the facility’s book value at $159.8 million. Taxpayers, in other words, just paid more than four times what the building was worth on CoreCivic’s own books, and CoreCivic did not have to give up a thing to collect the check: it continues to run the facility day to day under its existing ICE contract, collecting the same per-detainee revenue it always has.
The Otay Mesa sale was one of two California transactions closed within weeks of each other. CoreCivic also sold the newly opened, 2,560-bed California City Detention Facility in Kern County to DHS for $732.6 million, part of a four-facility, $2.2 billion nationwide sell-off that also included sites in Kansas and Minnesota. Company executives told investors the combined deals would net CoreCivic roughly $1.6 billion after taxes, money the company says it intends to use substantially for stock buybacks — a direct transfer from the federal ledger to shareholders. A CoreCivic spokesman said the prices were set through a federal appraisal process that accounted for replacement cost, depreciation and land value, and that the government reviewed the appraisals for compliance with federal standards. Whether that method explains a roughly four-to-one gap between book value and sale price is a question no elected body in San Diego has had the chance to examine. The timing adds another layer: DHS’s buying spree comes as the federal government is projected to run at least a $2 trillion deficit this fiscal year, with the national debt already exceeding the size of the entire U.S. economy, and as Congress fights over a stopgap bill just to keep the rest of the government funded past September 30. A department that cannot currently guarantee its own doors stay open found room this summer to pay $2.2 billion in cash for four buildings a private company had been operating comfortably for years without owning them outright. CoreCivic is also not the only operator positioned to repeat the move. GEO Group still owns and runs the 1,940-bed Adelanto ICE Processing Center in San Bernardino County outright, meaning it could pursue the same sale-and-keep-operating structure CoreCivic has now used twice in California alone.
The financial mechanics matter because of what changes with ownership. As a private landlord-operator, CoreCivic carried the capital cost of maintaining Otay Mesa — roof, fire and life-safety systems, structural repairs. As a government-owned, contractor-operated facility, that capital liability now sits with DHS, meaning federal taxpayers, not CoreCivic shareholders, will fund whatever deferred maintenance or upgrades the building needs going forward, on top of the premium already paid to acquire it. CoreCivic keeps the operating contract, the daily per-diem revenue, and the sale proceeds. It has shed the asset risk. Immigrant Legal Resource Center attorney Grisel Ruiz, who has tracked the California City facility’s permitting fight, put it simply: CoreCivic gets to “have their cake and eat it too.”
That facility opened only last year and is already the subject of federal litigation over whether it obtained proper local permits, along with separate complaints from detainees about conditions at CoreCivic-run sites elsewhere in the state. Under the new ownership structure, any liability arising from those disputes now attaches to a taxpayer-owned building operated under contract, not solely to a private company’s balance sheet. None of this was subject to San Diego County or Kern County review. The sales closed as federal real-estate transactions between CoreCivic and DHS, disclosed to investors before most local officials learned of them. A parallel deal in Leavenworth, Kansas played out the same way: the city manager there said officials did not know about CoreCivic’s $238 million sale of its local facility until the company announced it publicly.
California’s 2019 law banning new private-prison contracts, AB 32, does not reach any of this. The Ninth Circuit struck it down as applied to federal ICE contracts in 2022, and in any case a sale of real estate to the federal government is not the kind of contract the law was written to stop. What is left is a fiscal pattern rather than a legal violation: a private operator identifies an asset the federal government urgently needs, sells it at a price set through a process the public cannot independently audit, keeps the contract to run it, and hands the long-term capital risk to taxpayers who had no vote in the transaction. Otay Mesa will keep operating exactly as it did the day before the sale. The only thing that changed is who owns the risk on the building — and it is no longer the company that built its business model on running it.
Human-Directed AI Journalism — reporting and analysis produced under human editorial direction with AI research and drafting assistance.