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REAL ESTATE TRANSACTIONS | 3 Months Ended
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Mar. 31, 2015
REAL ESTATE TRANSACTIONS |
4. | REAL ESTATE TRANSACTIONS
Idle Facilities CCA has five idled facilities that are currently available and being actively marketed to other customers. The following table summarizes each of the idled facilities and their respective carrying values, excluding equipment and other assets that could generally be transferred and used at other facilities CCA owns without significant cost (dollars in thousands):
|  | Design Capacity |  |  | Date Idled |  |  | Net Carrying Values |
Facility |  |  |  | March 31, 2015 |  |  | December 31, 2014 |
Prairie Correctional Facility |  |  | 1,600 |  |  |  | 2010 |  |  | $ | 18,459 |  |  | $ | 18,748 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 2010 |  |  |  | 18,844 |  |  |  | 19,033 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 2010 |  |  |  | 44,113 |  |  |  | 44,480 |
Otter Creek Correctional Center |  |  | 656 |  |  |  | 2012 |  |  |  | 23,881 |  |  |  | 24,089 |
Marion Adjustment Center |  |  | 826 |  |  |  | 2013 |  |  |  | 12,868 |  |  |  | 12,978 |
|  |  | 5,994 |  |  |  |  |  |  | $ | 118,165 |  |  | $ | 119,328 |
For the three months ended March 31, 2015 and 2014, the five idled facilities incurred combined operating expenses of approximately $1.8 million and $1.9 million, respectively. The operating expenses incurred in 2014 exclude the incremental expenses incurred in connection with the activation of the Diamondback facility which began in the third quarter of 2013 and continued until near the end of the second quarter of 2014, when anticipated opportunities to activate the facility were deferred. CCA considers the cancellation of a contract as an indicator of impairment and tested each of the aforementioned facilities for impairment when it was notified by the respective customers that they would no longer be utilizing such facility. Upon notification of cancellation by the respective customers, CCA concluded in each case that no impairment had occurred. CCA updates the impairment analyses on an annual basis for each of the idled facilities and evaluates on a quarterly basis market developments for the potential utilization of each of these facilities in order to identify events that may cause CCA to reconsider its most recent assumptions. As a result of CCA’s analyses, CCA determined each of the five idled facilities to have recoverable values in excess of the corresponding carrying values. Construction of New Facilities In order to retain federal inmate populations CCA currently manages in the 1,154-bed San Diego Correctional Facility, CCA is constructing the 1,492-bed Otay Mesa Detention Center in San Diego. The existing San Diego Correctional Facility is subject to a ground lease with the County of San Diego. Under the provisions of the lease, the facility is divided into different premises whereby, pursuant to an amendment to the ground lease executed in January 2010, ownership of the entire facility reverts to the County upon expiration of the lease on December 31, 2015. As of March 31, 2015, CCA has invested approximately $136.1 million in the new facility. CCA expects to complete construction of the Otay Mesa Detention Center during the third quarter of 2015. CCA plans to offer this new facility to house the existing federal inmate populations at the San Diego Correctional Facility. In November 2013, CCA announced its decision to re-commence construction of a correctional facility in Trousdale County, Tennessee. CCA suspended construction of this facility in 2009 until it had greater clarity around the timing of a new contract. In October 2013, Trousdale County received notice from the Tennessee Department of Corrections of its intent to partner with the County to develop a new correctional facility to house state of Tennessee inmates. In April 2014, CCA entered into an agreement with Trousdale County whereby CCA agreed to finance, design, build and operate a 2,552-bed facility to meet the responsibilities of a separate IGSA between Trousdale County and the state of Tennessee regarding correctional services. In July 2014, CCA received notice that Trousdale County and the state of Tennessee finalized the IGSA. The IGSA with the state of Tennessee includes a minimum monthly payment plus a per diem payment for each inmate housed in the facility in excess of 90% of the design capacity, provided that during a twenty-six week ramp period the minimum payment is based on the greater of the number of inmates actually at the facility or 90% of the beds available pursuant to the ramp schedule. As of March 31, 2015, CCA has invested approximately $87.4 million in the Trousdale Turner Correctional Center and construction is expected to be completed in the fourth quarter of 2015. Activations In September 2014, CCA announced that it had agreed under an expansion of an existing IGSA between the City of Eloy, Arizona and ICE to house up to 2,400 individuals at the South Texas Family Residential Center, a facility leased by CCA in Dilley, Texas. Services provided under the amended IGSA commenced in the fourth quarter of 2014, have a term of up to four years, and can be extended by bi-lateral modifications. The agreement provides for a fixed monthly payment in accordance with a graduated schedule. Under terms of the amended IGSA, ICE can terminate the agreement for convenience, without penalty, by providing CCA with at least a 90-day notice. In addition, terms allow for ICE to terminate the agreement with CCA at any time, without penalty, due to a non-appropriation of funds. ICE began housing the first residents at the facility in December 2014, and the site is expected to be ready for full capacity during the second quarter of 2015. Under the fixed monthly payment schedule of the amended IGSA, ICE agreed to pay CCA $70.0 million in two $35.0 million installments during the fourth quarter of 2014 and graduated fixed monthly payments over the remaining months of the contract. As described in Note 2, CCA used the multiple-element arrangement guidance prescribed in ASC 605, “Revenue Recognition” in determining the total revenue to be recognized over the term of the amended IGSA. CCA determined that there were five distinct elements related to the amended IGSA with ICE. In the first quarter of 2015, CCA recognized $36.0 million in revenue associated with the amended IGSA with the unrecognized balance of the fixed monthly payments reported in deferred revenue. The current portion of deferred revenue is reflected within accounts payable and accrued expenses while the long-term portion is reflected in deferred revenue in the accompanying consolidated balance sheet as of March 31, 2015. In January 2015, a class action lawsuit was filed in federal district court for the District of Columbia against the Secretary of the Department of Homeland Security (“DHS”) and certain ICE officials. The complaint sought to certify a class of plaintiffs, consisting of Central American mothers and children who (i) have been or will be detained in ICE family detention facilities since June 2014, (ii) have been or will be determined to have a credible fear of persecution in their home country under federal asylum laws and (iii) are eligible for release on bond pursuant to certain federal statutes but have been or will be denied such release after being subject to an ICE custody determination that took deterrence of mass migration into account. In February 2015, the court certified the class and granted the plaintiffs’ motion for a preliminary injunction, enjoining DHS from detaining class members for the purpose of deterring future immigration to the United States and from considering deterrence of such immigration as a factor in such custody determinations until a final determination has been reached on the merits of the action. On March 20, 2015, DHS moved the court to reconsider and vacate its order, arguing that the relief the court granted exceeded that which was appropriate in the case. Plaintiffs responded to the DHS motion, and DHS has until May 8, 2015, to submit a response to that filing. Any adverse decision with regard to this contract could materially affect CCA’s financial condition and results of operations.

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- Definition The entire disclosure for real estate transactions including acquisitions, real estate closures and idle facilities, sales, construction of new facilities, activations, and other leasing transactions. + References No definition available. + Details
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