The Department of Homeland Security has acquired two of California’s largest immigrant detention centers from the private prison company CoreCivic for $1.5 billion, a move aimed at expanding federal detention capacity without relying as heavily on private operators. The transaction, which closed on July 2, includes the California City Detention Facility with 2,560 beds and the Otay Mesa Detention Center in San Diego, which holds 1,994 detainees.

CoreCivic, based in Tennessee, anticipates net proceeds of approximately $1.1 billion after taxes and transaction costs. The company will continue to manage the facilities under existing contracts with U.S. Immigration and Customs Enforcement (ICE), though contractual terms may be renegotiated due to the change in ownership. The contract for the California City facility expires in August 2027, while the Otay Mesa contract extends to December 2029, with provisions to extend both for an additional five years.

The purchase was facilitated by increased funding provided to the Department of Homeland Security through the Trump administration’s signature tax legislation, which allocated $170 billion to bolster the agency’s operations, including ICE’s detention network. A Homeland Security spokesperson noted that federal ownership of these facilities is crucial to maintaining detention capacity in California, where "sanctuary" state policies and legislation have limited local or state support for immigration detention, particularly discouraging private prison operations.

CoreCivic’s public affairs director, Ryan Gustin, emphasized that the sale followed a rigorous federal appraisal process using independent evaluators to establish market value. CoreCivic’s CEO, Patrick Swindle, described the transaction as a demonstration of the company’s ability to provide flexible, long-term government solutions through its real estate portfolio.

The decision to bring detention centers under direct federal control has sparked debate, with some private prison industry leaders suggesting the shift aims to reduce state oversight. GEO Group CEO George Zoley indicated in a quarterly earnings call that federal ownership could provide stronger legal protections against litigation related to facility conditions and management, which he described as increasingly aggressive in some states. Zoley asserted that federal control limits state interference, which he characterized as “unprecedented” and potentially unconstitutional.

California has a history of contesting private detention centers. In 2020, a state law sought to phase out private prisons but was blocked by the 9th Circuit Court of Appeals. Since then, California authorities have implemented oversight mechanisms that include investigations by the state Department of Justice and local health agencies.

Senator Alex Padilla, who has conducted oversight visits to CoreCivic-run facilities, expressed concerns about detainees being held in what he described as “unacceptable conditions,” particularly for those posing no public safety risk. He stated that regardless of ownership, he will continue to advocate for transparency, accountability, and humane treatment in immigration detention.

Currently, ICE operates eight detention centers in California with a combined capacity nearing 9,000. Both the California City and Otay Mesa facilities have faced lawsuits alleging mistreatment of detainees, which CoreCivic disputes, maintaining compliance with all relevant regulations.

CoreCivic also disclosed ongoing discussions with ICE regarding the potential sale of additional detention centers, though the outcomes of those negotiations remain uncertain.