The last financer of a controversial prison offering in Alabama has abandoned the plan, leaving the fate of the new facilities in doubt.
"The state remains committed to comprehensive efforts underway to transform its correctional system and address vital infrastructure needs," a spokesperson for the state of Alabama said late Monday.
Stifel said Monday it is no longer involved with any of the parties in the bond offering that had been planned by the state. The deal would have let private prison operator CoreCivic Inc. build and own two mega-prisons that would have been run and staffed by the Alabama Department of Corrections for the next 30-years.
"This transaction ceased weeks ago when it was withdrawn from the market by Barclays, the lead underwriter," a spokesperson from Stifel told The Bond Buyer. "We are no longer engaged with the parties associated with financing this project.”
Last month,
Bloomberg News reported Monday that a Stifel spokesperson confirmed an email was sent to activists who had urged the bank to withdraw from the transaction.
“Stifel is no longer engaged with CoreCivic, any conduit or the state of Alabama regarding the financing of this project,” Bloomberg quoted Joel Jeffrey, senior vice president for investor relations, as saying.
In a May 4 letter sent to Stifel CEO Ronald Kruszewski, the Communities Not Prisons coalition, urged the bank to rethink its association with the prison plans.
“Please follow the example of Barclays, KeyBanc, and the Public Finance Authority of Wisconsin by permanently suspending your involvement with this ill-advised project,” Veronica Johnson of the Alabama Justice Initiative, wrote in the May 4 letter.
The coalition includes the Alabama Appleseed Center for Law & Justice, The Ordinary People Society, Block the Brierfield Prison, No Prison for Tallassee, The Alabama Students Against Prisons, and The National Council for Incarcerated and Formerly Incarcerated Women and Girls.
In a May 6 response to the letter, Jeffrey said the company appreciated the group’s viewpoints regarding the environmental, social and governance issues surrounding the business.
“Although there are many sides to this issue and little common ground, we believe that there is a general acknowledgment that the state of Alabama faces challenges in the current and historical operation of its correctional systems,” he wrote in a letter to Johnson.
Separately, state auditor Jim Zeigler and state Rep. John Rogers
“The plaintiffs in this bipartisan lawsuit and request this court issue a declaratory Judgment and injunctive relief against the defendants for entering into, and attempting to execute, a contract that violates the Alabama constitution and Alabama law,” the court filing says.
The suit says the state constitution expressly provides that “no new debt shall be created against, or incurred by this state, or its authority” except to “repel invasion or suppress insurrection” and then only if two-thirds of legislature approve. Otherwise, “any act creating or incurring any new debt against this state, except as herein provided for, shall be absolutely void."
The lawsuit says, in addition, "the lease agreements obligate the state to pay interest on the bonds that will be issued to finance the construction of the prisons, another long-term debt that violates the Alabama constitution."
The suit seeks a judgment from the court that nullifies the lease agreements and an injunction that suspends Ivey’s plan.
