Investment underwriter pulls out of megaprisons deal
An investment underwriter has pulled out of financing of the two privately owned prisons the state intends on leasing and operating, according to reports.
Barclays withdrew its investment in the project, which is slated to build a megaprison in Escambia County, Ala. on Bell Fork Road area.
According to reports, Bloomberg News reported the decision by Barclays, and indicated a second investment bank, KeyBanc Capital Markets, has also pulled out of the deal.
“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,” Barclays officials said in a statement on AL.com. “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.”
“The state of Alabama is disappointed that Barclays Plc has elected to no longer participate as an underwriting entity in the Alabama Prison Program,” Gov. Kay Ivey said in an AL.com report. “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.”
Ivey and the Alabama Department of Corrections (ADOC) Feb. 1 signed lease agreements for the construction of two megaprisons, one of which will be located in Escambia County.
CoreCivic’s Developer Team, Caddell Construction; DLR Group; and R&N Systems Design are handling the construction of the two men’s prisons, according to archives.
According to Ivey’s office, the state signed one lease agreement with Government Real Estate Solutions of Central Alabama LLC, a CoreCivic entity, for Facility Two in Elmore County, which will be constructed on Rile Range Road in Tallassee. The prison will specialize in the inmate population’s medical and mental health needs.
The second lease agreement for Escamabia County was signed with Government Real Estate Solutions of South Alabama LLC, another CoreCivic entity.
The term of each lease agreement is 30 years, and are not subject to annual renegotiation. However, options to negotiate occupancy extensions beyond the 30-year lease term are available to the state, according to Ivey’s office.
As of late, organizations have raised opposition to the prison plan.
Alabama Students Against Prisons, The Ordinary Peoples Society, Prodigal Child Project, Alabama Justice Initiative, Auburn Students and Community for Change, Emerge at Auburn University, Fight Toxic Prisons, ACLU of Alabama, Black Lives Matter Alabama and Faith and Works Collective are some of the few organizations opposed to the lease plan, according to AL.com.
Sen. Greg Albritton said during an Escambia County Republican Executive Committee meeting April 19 that Ivey is moving forward with the plan inspite of the pull out, however.
“I’m concerned about it,” Albritton said. “And I’m not the only one. But, I’m afraid she’s going to push that envelope into the $3.2 million abyss. We’ve discovered fairly recently that our $66 million payment had been increased to $88 million per year.”
Albritton was asked where the state is going to get the money to build the megaprisons.
“In all of the good things we have going on financilaly, we don’t have an extra $94 million laying around, in particular when it goes over $100 million,” he said. “Who are we going to take it from? You’ve got to take it from somebody. Is it the taxpayer? Shifting money is difficult.”
Albritton added that he doesn’t have an answer, but mentioned he met with the financial director Tuesday.