Earlier this year, the Trump administration announced it would begin buying warehouses and converting them into mass detention centers for migrants; concentration camps by any other name, setting aside $38,3 billion to do it. After spending more than $1 billion and awarding another $1.3 billion in contracts to convert those warehouses into migrant detention centers, the plan is allegedly being tossed aside as the Department of Homeland Security (DHS) has reportedly opted to sell the buildings at below-market value.
The idea of converting consumer-focused facilities into detention centers isn’t new. The U.S has regularly allowed the use of abandoned retail sites like department and grocery stores to house migrants, mostly migrant children. The facilities, typically overseen by the Department of Health and Human Services (HHS), Office of Refugee Resettlement (ORR), house unaccompanied minors and migrant children separated from their families. Many, such as the Casa Padre facility in Brownsville, Texas, and despite a long history of abuse and neglect, are still in use today,
However, the idea of purchasing massive, Amazon-sized warehouses and converting them into detention centers far exceeded any previous mass incarceration plans. A wanton cruelty summed up best when former acting Immigration and Customs Enforcement (ICE) Director Todd Lyons equated migrants with products and said the facilities would be like “Prime, but with human beings,” referring to Amazon’s “Prime” service.
To pull this off, DHS employed deceptive practices to keep its Detention Reengineering Initiative out of the public spotlight and away from oversight. By using a relatively unheard-of U.S. Navy procurement system called the Worldwide Expeditionary Multiple Award Contract (WEXMAC), ICE was also able to fast-track purchases and skip standard public bidding procedures and public comment periods. This allowed them to buy the properties out of public view before hiring construction contractors to retrofit them into detention centers.
The Winners
ICE then used EXMAC brokerage firm SK2, LLC, to purchase properties around the country, paying well above market value. While SK2 likely reaped a generous commission from the sale of overpriced real estate, it is one of the few companies unlikely to be involved in the buying back of any properties. Once the Department of Homeland Security lists the warehouses as vacant, they will be sold as surplus through the General Services Administration (GSA).
Other entities, however, could profit a second time. The original developers and private equity firms from whom ICE purchased the warehouses can buy them back on the surplus market for pennies on the dollar, thus putting profits in their pockets a second time. While the warehouses will typically be offered to other agencies or local and state government institutions before being sold to private equity, this gross misuse of taxpayer dollars to enrich the already wealthy is akin to much of the corruption we’ve seen out of the Trump White House in his second term.
Goldman Sachs and Dalfen Industrial operate a joint venture involving a real estate investment fund managed by the majority owner, Goldman Sachs, and Dallas-based Dalfen Industrial. The two sold a 470,000-square-foot vacant warehouse in Roxbury, New Jersey, to ICE for $129.3 million, twice its appraised value. In a recent court filing, DHS conceded that it will not be using the New Jersey facility and has opted to sell it.
Private equity is now positioned to purchase it at a handsome discount, leading to what can only be described as even bigger taxpayer-subsidized profits.
Likewise, an 830,000-square-foot warehouse in Salt Lake City, Utah, was sold to ICE by a subsidiary of DWS, majority-owned by Deutsche Bank, for $145.4 million – a price local real estate brokers called “unheard of” for the local market. The plans for converting this warehouse into an “Amazon-style” detention center have also been scrapped. DHS has reportedly listed this warehouse as another one to be sold on the surplus market.
Another warehouse sold to ICE by Blue Owl Capital is the 1.3-million-square-foot former Big Lots warehouse in Tremont, Pennsylvania. After ICE spent $119.5 million to purchase this property, DHS has reportedly slated the warehouse to be sold on the surplus market after ditching plans to convert it into a detention center. Similarly, ICE bought a $22.1 million, 473,000-square-foot warehouse in Detroit from a joint venture between Sabal Investment and Crestlight Capital for $34.7 million. Plans to convert it to a detention center have been halted.
Again, three warehouses in Georgia were sold in two separate purchases by a company registered as CRP/AI Oakwood Owner, LLC, a joint venture between a developer, the Alliance Industrial Company, and a private equity firm, the Carlyle Group. The three properties totaled 825,000 square feet and were purchased for $68 million and $128 million, respectively. These closures are being attributed to lawsuits filed by cities and states, both liberal and conservative, due to concerns about inadequate conditions, strains on their local infrastructure, ICE bypassing local governance (code enforcement, zoning), and the risk of budgetary damages.
Additionally, the lawsuits and secrecy behind the purchases of these warehouses prompted the DHS Office of Inspector General (OIG) to open an investigation into the acquisition process in early May. Lawsuits seeking accountability and the OIG investigation make it likely that the newly anointed leader of DHS, Markwayne Mullin, wanted this disaster off his plate. While the potential sale of warehouses and the idea that ICE is abandoning its Detention Reengineering Initiative are widely seen as victories, the story is playing out quite differently in other states.
Texas, Arizona, Maryland
What hasn’t been discussed much is how DHS seemingly plans to move ahead in Texas with the Amazon Priming of immigrants. Flint Development Group sold a warehouse in the San Antonio area valued at $37 million to ICE for $66.1 million, a purchase Bexar County Commissioner Tommy Calvert said “reeked of corruption.” Despite pushback from local leaders, ICE is moving ahead with its plans to convert the 640,000-square-foot building designated as an industrial cargo facility and unfit for human occupancy into a “Regional Processing Center.”
The other warehouses purchased were in the El Paso area. Flint Development sold three buildings totaling 296,000 square feet to ICE for $122.8 million, ten times over the assessed land value at the time. While ICE has declared that it will not convert the buildings into a detention center, the warehouses will not be sold. They will instead be used as administrative and training facilities, according to current acting ICE director David Ventruella.
In Arizona, ICE purchased a 400,000-square-foot warehouse for $70 million to create a 1500 bed detention center. The agency set aside $700 million to convert the facility, and DHS has awarded more than $300 million in contracts to Garda World to facilitate the conversion. The cost of this single site to taxpayers is expected to exceed $800 million. Like Texas, despite pushback, ICE is moving ahead with yet another inhumane facility with little accountability.
In Maryland, FRND-Hopewell LLC, a subsidiary of Fundrise, a real estate crowdfunding platform, sold an 850,000-square-foot warehouse to ICE for $102.4 million in what Rep. April McClaim Delaney (D-MD) called “covert.” Sen. Chris Van Hollen (D-MD) said the administration was “spitting in the face of communities from Minneapolis to Maryland and wasting our tax dollars.” Defense contractor KVG LLC was awarded a $113 million contract to convert the facility with possible growth to as much as $641 million over four years.
As most of the country has resolved itself to the idea that ICE has backed down from its concentration camp project, not only is ICE moving ahead with its plans, but it also bears remembering that the massive and brutal tent-based facility located at Fort Bliss in El Paso, Texas, known as Camp East Montana, is still in operation. As bad as these facilities are, it seems the wealthy still want a piece of the action.
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