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Jail CEO explains setbacks

But he also tells analysts Downtown lockup has been lucrative

By Kate Nash
Saturday, August 11, 2007

Lockup study to begin

A new player has emerged in the effort to reduce Bernalillo County's jail population.

The Mid-Region Council of Governments received a $200,000 appropriation from the state to study and come up with solutions to the chronic crowding of the Metropolitan Detention Center.

The jail on Friday held 2,716 inmates. Its rated capacity is 2,239.

"The goal is coming to a solution about overcrowding at the jail," said MRCOG Executive Director Lawrence Rael.

The group will act as a third-party facilitator to help the county and the city - at odds for years over the jail - work together on solutions. Representatives of the court system also will participate.

"The goal here is to put the past aside and look into the future at what is going to be the new way of doing business, because it's clear these counties can't go it alone," Rael said.

The council will present ideas to the Legislature next year.

Possible ideas include a regional jail, Rael said.

"Counties are saying, `Jails are taking up all of our budgets,' " he said.

The head of Cornell Companies Inc. says Bernalillo County's Downtown jail wasn't one of the company's "best" as it struggled with management turnover, failed to meet the needs of a federal immigration agency and earlier this month lost the agency as its main customer.

Yet the jail was a moneymaker for the company - accounting for $1.7 million of the $2 million second-quarter revenue increase in the company's adult prisons division, another Cornell official said in a teleconference this week with analysts.

Concerns about the facility were a top priority during the call. But before Cornell Chairman and CEO James Hyman talked about the revenues, he addressed issues at the lockup, saying they were "on everyone's minds," according to documents obtained by The Tribune.

The Regional Correctional Center is mostly empty after Bernalillo County and the Immigration and Customs Enforcement agency removed more than 700 inmates in recent weeks. Fewer than 200 U.S. Marshals Service detainees remain.

During the conference call, Hyman, who visited the center in June, talked about the facility owned by Bernalillo County and run by Cornell.

Operating challenges at the jail have stemmed from its "population volatility," Hyman said, adding that the quality and stability of operations at the RCC have improved since 2006.

"However," Hyman said, "if we had operated RCC as we do our best facilities, no one would have had any basis for criticism. But we didn't."

Over the past nine months, Cornell has revamped the center's leadership, improved staff training and pay rates, and improved operating procedures, he said.

In an interview Friday, Hyman said the RCC "clearly has not had the stability of operations that what I would say our better facilities do. In part, your best facilities tend to have very constant, long-term leadership teams, and they can drive the application process and training with the staff."

At least four wardens have run the jail since Cornell took control of the lockup at Fourth Street and Roma Avenue Northwest in 2004.

During the conference call, analysts repeatedly asked questions about the RCC - one of 79 jails Cornell operates in 16 states. In New Mexico, Cornell also manages the Lincoln County Detention Center.

In particular, analysts wanted to know what the company is predicting will happen with so few inmates in the Downtown jail, which is designed for 970 inmates.

Hyman said the company is "not forecasting when any increase (in jail population) will occur." But Cornell is "actively marketing the vacated beds to other customers in the event that ICE decides not to use the beds we provide," he said.

The recent decline in jail population has forced the company to lower its earnings projections for the second half of 2007, he said.

Revenues for the adult secure institutional services division - one of three divisions in the company - were $47.8 million in the second quarter.

ICE officials have said they won't know when or if they will return prisoners to the RCC until they complete a review of the facility. Spokeswoman Leticia Zamarripa said Friday it's unclear when the review will be done.

During the last review of the jail done by ICE, the immigration agency found that the building didn't meet two of its 38 standards, although agency officials wouldn't say which standards were unmet.

In the teleconference, Hyman said the two were in "recreation" and "tool control," but said ICE didn't provide him much detail on those or other reasons the agency pulled out its detainees.

"There is no one that has said `This is the reason why' " ICE transferred its prisoners to other facilities, he said.

"The problem I've got is (that) I've dissatisfied the customer to the point where they have taken a pretty extreme action. The task we have is to try and address their concerns," Hyman told the analysts.

The jail is under scrutiny from federal officials after a Korean immigrant last year died in an Albuquerque hospital while in RCC custody.

The lockup also is in the cross hairs of New Mexico inmates' attorneys who are seeking more access to the jail as part of a 12-year-old lawsuit about crowding and health care conditions for Bernalillo County inmates. The attorneys' request for greater access is pending before a federal judge.

Both the county and ICE have denied that they transferred inmates out of the RCC because they feared becoming snared in the lawsuit.

In a filing in that lawsuit this week, a county attorney wrote that having the lawsuit apply to the Regional Correctional Center would mean that other jails where the county houses inmates when the Metropolitan Detention Center is full would be reluctant to take in their overflow inmates.

A county attorney also said "no one should be surprised" if the U.S. Marshals Service pulled out of the RCC, leaving an empty building and no money to pay the rent. The Marshals Service, however, hasn't indicated it will leave the jail, located close to courthouses in the city's center.

Cornell pays the county $1.2 million a year to lease the building. The county uses the money to pay the bonds on the Health Services Unit at its Metropolitan Detention Center.

The contract between Cornell and ICE is still in place; canceling it would require 180 days of notice, Hyman said in the teleconference.

During an interview with The Tribune, Hyman also said Cornell laid off 10 jail employees after ICE removed its inmates.

The company "clearly will face another decision at some point" about other staff cutbacks, he said.

So how is the news about RCC playing with analysts?

Kevin Campbell, vice president of the Equity Research Department at Avondale Partners, said Cornell is still an attractive stock.

"I think it is actually a very good company to invest in at this point," he said.

In part, Campbell said, Cornell is appealing because it is expanding in an industry that's growing.

"The supply and demand with the industry is that there is very limited supply and very significant demand."

Cornell, which has about 9,000 beds in the country, plans to add another 4,500 by 2009.

Still, Campbell said, news of the RCC is catching analysts' attention.

"Obviously, it's negative when a company has operation issues sufficient enough to lose customers, and for a company this size as well, it's a bigger risk."