CoreCivic, a Tennessee-based private prison operator, has completed the sale of two major immigration detention facilities in California to the U.S. Department of Homeland Security (DHS) for $1.5 billion. The deal, finalized on July 2, 2026, involved the transfer of the 1,994-bed Otay Mesa Detention Center in San Diego County for $739.2 million and the 2,560-bed California City Detention Facility in Kern County for $732.6 million.
Despite the sale, CoreCivic will continue to operate both facilities under existing contracts with U.S. Immigration and Customs Enforcement (ICE). The agreement for the California City facility runs through August 2027, while the Otay Mesa contract extends until December 2029, with potential for renegotiation now that the federal government owns the properties.
This acquisition aligns with DHS's broader strategy to expand immigration detention capacity while reducing reliance on privately owned facilities. The 2025 federal budget allocated approximately $170 billion for immigration enforcement and detention, including $45 billion to expand detention capacity through 2029.
The purchase has raised concerns among local officials and advocacy groups. In California, both facilities have faced scrutiny over detention conditions. Otay Mesa has been involved in legal disputes, including a lawsuit alleging denial of access to county health inspectors under a 2024 state law. A federal judge later ordered the facility to allow inspections. CoreCivic and fellow private prison operator GEO Group are separately challenging California's inspection law, arguing that the state cannot regulate federal immigration detention facilities.
The California City detention center is also the subject of a lawsuit alleging it opened without required local permits. Attorney Grisel Ruiz stated that the sale does not resolve these concerns and urged local officials to deny permits and force the facility to close.
CoreCivic defended the transaction, stating that both facilities were independently appraised under federal standards before the sale. The company plans to use the estimated $1.1 billion in net proceeds to reduce debt, including retiring $238.5 million in senior notes due in 2027, with any remaining funds earmarked for additional debt reduction or potential stock buybacks.
This development highlights the ongoing debate over the privatization of immigration detention and the role of private companies in managing such facilities. While the federal government seeks to expand detention capacity, concerns persist regarding oversight, conditions, and the influence of private entities in the immigration enforcement process.