The new jail on State Highway 6 has an impressively low detention population: zero.

The 816-bed Jack Harwell Detention Center officially was completed in February.

But Community Education Centers, the New Jersey-based detention company under contract to manage and operate the jail, has been unable to secure agreements with state and federal agencies to house inmates.

County commissioners learned Thursday that Community Education Centers has not secured agreements to house inmates at the Jack Harwell Detention Center.
Duane A. Laverty/Tribune-Herald

Meanwhile, CEC must begin repaying the $49 million in project revenue bonds that financed the construction of the jail. The $313,000 monthly debt service is to be paid using revenue from housing inmates, placing the company under a crunch to fill beds.

While funds already have been set aside for the first payment of $1.9 million due in June, CEC must begin making revenue soon or risk defaulting on the bonds. Doing so would mean the county loses the new jail.

CEC wants some relief from the county to cover the financial obligation, but some commissioners say getting involved could end up costing taxpayers.

County Judge Jim Lewis, Commissioner Ray Meadows and former Commissioner Wendall Crunk voted for the construction of the new jail. Commissioners Lester Gibson and Joe Mashek voted against it.

Fewer inmates

Feasibility studies conducted in 2008 showed the county would need 1,296 beds by the end of this year, slightly above the combined 1,260 capacity between the McLennan County Jail and the downtown jail.

While the county faced severe overcrowding in 2008, there were only 860 inmates in the county jail Thursday afternoon, with 20 inmates at the CEC-run downtown jail.

Peter Argeropulos, CEC senior vice president, reported the dilemma to the McLennan County Commissioners Court on Thursday.

CEC began reaching out to agencies in the fall only to find that few prison facilities were housing inmates outside their facilities.

Immigration and Customs Enforcement, for example, scrapped plans for a new fugitive apprehension unit in Waco.

The Texas Department of Criminal Justice began pulling its inmates from private detention centers in August.

“What we expected and what the studies had indicated have not materialized at this point,” Argeropulos said.

Solutions debated

One option Argeropulos suggested was to close down the 329-bed downtown jail and transfer the staff and inmates to the Jack Harwell Detention Center. The move would help CEC pay debt service but also cause the county to lose as much as $400,000 from the operation of the downtown jail.

“Your plan’s not working, and it’s not working because you can’t get the prisoners, so you’re coming to the court wanting concessions that are going to cost the taxpayers money,” Commissioner Kelly Snell said. “That’s where I have a problem.”

McLennan County commissioners listen to CEC officials at the Thursday meeting.
Duane A. Laverty/Tribune-Herald

CEC Warden Mike Wilson, who oversees the downtown jail and would head the new jail, said moving the inmates would help address safety concerns at the facility.

“All of a sudden, once you get a new car, that old car you got isn’t worth driving anymore, that’s the bottom line,” Snell said.

Argeropulos also asked the court to temporarily waive an administrative fee of $2 per inmate per day CEC is to pay to the county until revenue exceeds operation costs.

“I don’t see why the county has to be asked to bend over and do all the compromise,” Gibson said. “I think that some of the burden should be upon your side to do what you can to ease the burden.”

Another option Argeropulos raised is to sign an interlocal agreement with Harris County, which is battling serious overcrowding issues.

Harris County has transferred about 650 inmates to Newton County, with another 450 housed in Bowie County and 200 in Louisiana.

CEC had a six-month agreement to house 320 Harris County inmates that expired in February. But CEC did not get any inmates during that period.

Argeropulos said Harris County was willing to pay only $45 per person per day to house inmates at the Jack Harwell Detention Center, lower than the $54.50 rate CEC originally expected.

“Right now, it’s a buyers’ market,” Argeropulos said. “As beds become vacant, people can become a little more picky in terms of who they want to negotiate with and what’s the best rate they can get.”

Argeropulos said CEC intends to apply for a bid to house federal inmates. The Federal Bureau of Prisons is expecting to need up to 3,000 beds later this year, a proposal that may likely net higher housing revenue, he said.

“It’s not a new revelation, it’s been in newspapers nationwide that facilities are lacking prisoners,” Lewis said. “It’s not an ideal situation, but anybody who’s been in this business knows that there’s ups and downs on it. . . . The population will go up not only here but nationwide. The industry just keeps on growing.”

Long-term outlook

Still, Argeropulos said CEC would not open the jail until it had secured enough inmates to sufficiently cover the debt service and operational costs.

The bond package includes a $4 million reserve fund that will cover about a year of payments. However, that fund can only be accessed if there are no inmates in the facility, Argeropulos said.

CEC exercised an escape clause last month to pull out of managing Johnson County jails with one more year to go on a three-year contract.

Argeropulos said Johnson County’s jail population had dropped by 25 percent, causing CEC to lose money.

Herbert Bristow, attorney for the county, said if CEC defaulted on repaying the bonds, the county would not be liable to make payments.

The McLennan County Public Facility Corp., a seven-member board including the commissioners court, issued the bonds in 2009.

“It was done by design to insulate the county,” Bristow said. “But the end result is if it’s a doomsday deal, and we can’t find any prisoners to put in it . . . the bondholders have the right to take the property back and get whatever value there is in it.”

Argeropulos said he would bring the court a formal proposal for action later this month.

Mashek said the discussion reinforced the concerns he expressed in 2008 when he voted against the new jail.

“It looks like they’re trying to cover up problems they’re having and wanting the county to bail them out, and I’m not in a position to bail anybody out, especially CEC,” Mashek said.

rdennis@wacotrib.com

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