NLV jail’s housing of federal inmates a losing deal

Thursday, Nov. 24, 2005 | 7:50 a.m.

North Las Vegas, losing nearly $1 million a year by housing federal prisoners, should terminate the contract if the government will not renegotiate, a management audit recommends.

Since October 2002, the federal government has paid the city $72 a day each to house up to 450 inmates, including those awaiting trial in federal court in Las Vegas and those held on immigration violations.

But with the city's daily costs topping $79, North Las Vegas is essentially subsidizing the federal government $7.20 per inmate per day, producing an annual loss of $993,000, according to the audit by San Jose-based Management Partners.

Under a 15-year contract that runs through 2017, North Las Vegas has petitioned the U.S. Marshals Service for a rate increase to $79 a day but has yet to receive a response. That is grounds for terminating the contract if the city so chooses, the audit said.

"Maintenance of this contract for the full duration at the current terms is not an acceptable option for the city of North Las Vegas," the audit said. It even suggested North Las Vegas may be better off to reimburse the federal government the nearly $6 million it paid the city to expand its detention facilities rather than continue the contract.

Phil Stoeckinger, the city's finance director, estimates North Las Vegas' annual losses are closer to $2 million, including indirect costs for staffing in the city attorney's office, human resources and other departments. That figure justifies a daily rate of about $85 to cover the city's costs, but the federal government would not approve a request that high, he said.

"It might be better to take the one-time hit than continue to have a gap that grows over time," Stoeckinger said of reimbursing the federal government the $6 million.

North Las Vegas spends $24 million a year housing about 800 federal, county and local inmates. Minus revenues that the city receives from the federal government and Clark County, North Las Vegas spends $13 million of its own funds annually to operate the facility, the audit said. At the current rate, that cost could grow from $13 million to $40 million by 2012, the report said.

North Las Vegas City Manager Gregory Rose said no decision has been made on whether to opt out of the contract. For now, he said, he hopes the federal government will grant a rate increase to recoup the city's costs.

Rose, who has been city manager since 2003, said the inmate housing deal -- struck under a different administration -- in retrospect could have been better.

"We are presenting a strong case, and it is the right thing to pay us our cost for housing their inmates," Rose said. "This is a subsidy the taxpayers are paying -- money that could be going somewhere else. That is not fair to the citizens of North Las Vegas."

Fidencio Rivera, acting U.S. marshal in Nevada, who called North Las Vegas a valuable partner in providing jail space, said the city's rate increase request has not been ignored. Because of a budget shortfall, a national freeze on prisoner rates was imposed in February, he said.

Rivera said he has recommended that the city's request be approved, but no decision can be made until Congress approves the 2006 budget for prisoner detention.

Rivera questioned why the audit singled out federal prisoners when Clark County had been paying North Las Vegas $50 daily to house inmates until the City Council changed the rate to $70 a day in September.

"I don't think the study is very thorough, thought out and well researched," Rivera said. "It makes some leaps without the proper foundation and justification."

The federal government pays Las Vegas $71.85 daily to hold 180 to 200 prisoners, and California's San Bernardino County pays $66 a day. The national daily rate paid by the U.S. Marshals Service is $69, he said.

North Las Vegas achieves savings by housing federal prisoners because it would still have similar staffing without the inmates, Rivera said. If the city justifies its expenses, it would get reimbursed at $85 to $86 daily, he said.

"We want a fair rate that helps them cover their cost," Rivera said.

North Las Vegas, however, assumes considerable liability by holding federal prisoners and for their transport, according to the audit. And unlike local inmates, federal prisoners may be in custody awaiting trial for violent offenses with long sentences, it said.

If the city terminated the contract, it would benefit only if it reduced staff and capped the number of local inmates held at 300, the audit said. Under that scenario, the city's cost would be lowered to $22 million a year in 2012, down from a projected $40 million, the audit said.

"Getting out of the contract only makes sense if we are able to reduce staff in that area," Rose said. "That may mean switching from a detention officer to a police officer. This would need to be addressed before this is a viable option to us."

North Las Vegas has housed federal prisoners awaiting trial since 1992, and Rivera said the city approached federal officials in 1997 about getting more inmates as a way to generate revenue.

At the time, the Marshals Service was considering converting a state prison in Jean into a detention center, but North Las Vegas lobbied for federal funds to expand its facility for federal use, he said. The city received a $5.8 million grant in 2000 to build a dormitory capable of housing 400 inmates, he said.

"They are the ones who came to us," Rivera said. "We have been operating in good faith. When we did the deal, we expected to have bed space we paid for."

When North Las Vegas approached the Marshals Services in April 2004 to get out of the contract, the city was told that could be done only if the $5.8 million was repaid, Rivera said.

If North Las Vegas terminated the contract, Rivera said, it would create a hardship for the Marshals Service to find other facilities to hold prisoners.

He said there have been discussions with Henderson and Nye County about holding federal prisoners. The Marshals Service also is shuttling prisoners back and forth from California and will be doing the same in Arizona, but that is costly, he said.

Brian Wargo can be reached at 259-4011 or at wargo@lasvegassun.com.