DOTHAN, Ala. – Gov. Kay Ivey said this morning she was disappointed that the investment bank Barclays has withdrawn from underwriting the financing of two privately owned prisons that Alabama would lease and operate.
The governor said Barclays’ decision would not stop the plan to lease new prisons, which the Ivey administration and the Alabama Department of Corrections have been working on for more than two years.
“The state is fully committed to this project and has put in place new options to advance this vital transaction in a timely and efficient manner,” Ivey said in an email this morning.
The chairman of the General Fund budget committee in the state Senate said the news is troubling. The Ivey administration has pursued the plan without seeking approval of the Legislature.
“It shows that the Legislature’s concerns about the program continue to be justified,” Sen. Greg Albritton, R-Atmore, said. Among those concerns include the cost of the plan and the fact that the state would not have ownership at the end of the 30-year leases, he said.
Bloomberg News reported the decision by Barclays and reported that a second investment bank involved in the deal, KeyBanc Capital Markets, has pulled out. A third firm, Stifel, declined comment on whether it would remain involved.
A statement from Barclays said: “We have advised our client that we are no longer participating in the transaction intended to provide financing for correctional facilities in the State of Alabama. While our objective was to enable the State to improve its facilities, we recognize that this is a complex and important issue. In light of the feedback that we have heard, we will continue to review our policies.”
Bloomberg had reported last week that Barclays’ membership in the the American Sustainable Business Council was terminated because of its involvement in the Alabama prison deal. Critics said Barclays’ participation in the Alabama deal contradicted its announcement two years ago that it would no longer provide new financing for private prisons. Barclays said the Alabama plan was different because the state will staff and operate the prisons.
Ivey, in response to this morning’s announcement that Barclays was backing out, said in an emailed statement: “The state of Alabama is disappointed that Barclays Plc has elected to no longer participate as an underwriting entity in the Alabama Prison Program. These new facilities, which will be leased, staffed, and operated by the state, are critical to the state’s public infrastructure needs and will be transformative in addressing the Alabama Department of Corrections’ longstanding challenges.”
In February, Ivey announced that she had signed leases on new men’s prisons in Escambia and Elmore counties. They would be built by a development team led by CoreCivic, a national private prison firm. At that time, the governor’s office said the “financial close” for the deals would be on June 1.
A third prison is planned for Bibb County. It would be built by a different development team.
In January, 13 organizations signed an open letter to state legislators calling the prison plan a “30-year mistake.” The plan calls for 30-year leases of the three prisons at a total cost of over $3 billion.
LaTonya Tate, founder and CEO of the Alabama Justice Initiative, said other groups involved in opposition to the new prisons include Alabama Students Against Prisons, the Alabama Appleseed Center for Law & Justice, The Ordinary People Society, the ACLU of Alabama, the Southern Poverty Law Center, Fighting Toxic Prisons, the National Council for Incarcerated and Formerly Incarcerated Women & Girls, Southern Crossroads, Block The Brierfield Prison, and No Prison For Tallassee.
State Auditor Jim Zeigler has been an outspoken opponent.
In December, the U.S. Department of Justice sued Alabama, alleging the state violates the constitutional rights of inmates by failing to prevent prisoner-on-prisoner violence and sexual abuse, failing to prevent excessive use of force by correctional officers, and failing to provide safe conditions.
The Ivey administration and the Department of Corrections have maintained that new prisons are part of a broader fix for the problems that have resulted from decades of neglect.
The three new prisons would replace as many as 11 of the 13 men’s prisons.
“Our current correctional facilities are dilapidated, structurally failing, and in need of significant upgrades,” Ivey said in this morning’s statement. “It is not a matter of if our current facilities will fail, but when. Given the exorbitant deferred maintenance costs associated with renovating our existing facilities, replacing this infrastructure, which has far outlived its useful life, is the best path forward and the only fiscally responsible decision for the state.
“The new facilities have been specifically designed for the State to address our urgent needs and are a key part of a comprehensive solution to concerns identified in current and pending litigation. These new, state-of-the-art facilities will provide safer, more secure correctional environments that better accommodate inmate rehabilitation, enhance medical and mental health services, and improve the quality of life for all those who live and work in them.
“Replacing our current infrastructure, which was never designed to accommodate inmate rehabilitation, will empower the state and the ADOC to make the important shift from warehousing individuals to rehabilitating returning citizens. This is a bed replacement program as up to 11 of our existing, failing facilities will be closed, which, along with associated staff savings, underpins affordability on the project.
“Pursuant to the lease agreements, the Alabama Department of Corrections will be the only tenant of the new facilities and will be solely responsible for prison operations. To be abundantly clear, these are not private prisons – they will be run by the State. As the sole operator and tenant, the ADOC will be contractually obligated to make lease payments that cover all facility maintenance, lifecycle replacement, and financing costs for the full term of the bonds.”
CoreCivic also released a statement in response to the decisions by the investment banks to pull out of the deal.
“The state of Alabama is facing a humanitarian crisis, and we’re proceeding with efforts to help deliver desperately needed, modern corrections infrastructure to replace dilapidated, aging facilities that originally were designed with one purpose in mind – to warehouse individuals, not rehabilitate returning citizens,” CoreCivic Public Affairs Director Amanda Gilchrist said. “Our partners in Alabama appreciate the solutions we’re providing to help improve conditions for the incarcerated people in their care, and they appreciate those in the investor community who continue to support these critical infrastructure projects.
“The reckless and irresponsible activists who claim to represent the interests of incarcerated people are in effect advocating for outdated facilities, less rehabilitation space and potentially dangerous conditions for correctional staff and inmates alike. This type of extremism does nothing but put politics over people, and exacerbates rather than solves the challenges facing our criminal justice system.”
Carla Crowder, executive director of the Alabama Appleseed Center for Law & Justice, said in response to CoreCivic’s statement about “irresponsible activists”:
“Alabama is too poor a state to dump $3 billion into buildings to warehouse thousands of Alabamians. This is space only, no funding for rehabilitative and educational programs and services. To suggest expensive new buildings will solve the persistent human rights crisis that has defined the Alabama Department of Corrections for nearly a decade is disingenuous at best.
“We’re advocating for Alabama to not have a higher incarceration rate than nearly every other jurisdiction on the planet. And that means sentencing reform, parole reform, investments in people and communities, not cages. Additionally, we are certain ADOC could add abundant education, programming and treatment space for well under $3 billion and actually own the buildings.”
