It’s been said that necessity is the mother of invention. In the case of California’s budget crisis, dire necessity has birthed some extraordinary inventiveness, like Conan the Governor’s creative proposal to sell off San Quentin Prison to private investors. Perched atop San Francisco Bay, the San Quentin Big House occupies pricey real estate with spectacular views that would command a pretty penny on the market if put to more glamorous use. But then there’s the problem of where to relocate 5,000 hard-case inmates, 600 of whom are currently lodged on death row, and how to pay for a new facility.
So let me dust off an idea I first proposed years ago, way ahead of its time. At first blush this may sound like the kind of satire you’d read in The Onion, but it’s quite serious and practical. It’s also an ironic reversal, in the age of President Barack Obama, of government encroachment on the private sector. How about a little private encroachment on the government sector for a change? What I’m talking about is prison condos.
It’s expensive enough for the state or the federal government just to operate these slammers, running as much as $30,000 per inmate annually. With competing capital demands for highways and eroding infrastructure, public construction dollars for prisons are especially hard to come by. The cost of new construction in high-security prisons like San Quentin can run about $100,000 per inmate. A 5,000-bed facility could top $500 million. Instead of having the state foot this bill, why not have it raise capital by selling individual condo units to private investors? Owners could choose between lower-priced cells in solitary confinement (“condo-minimums”) or multi-occupant, deluxe cells (“condo-maximums”).
An investor could borrow the money from a financial institution with the proceeds going to the state to finance construction. The state would, in turn, pay investors rent. The quality of these loans would be far superior to the money dished out to sub-prime borrowers that led to the recent housing bust. True, owning a condo in Vail might be more exotic, but look at the practical considerations. Incarceration is one of the nation’s leading growth industries, with more than 2.2 million captive customers nationwide.
Like other states, California is currently more than 50,000 inmates above designed capacity. As a prison condo landlord, you’d never have to worry about finding a renter, fret about the loss of income in a bad snow year or worry about tenants running off without paying. You certainly wouldn’t need a security deposit. And the state could even guarantee you the use of your own unit should you ever get sentenced to a long prison term.
As residential rental property, interest payments on your mortgage would be tax deductible, along with depreciation on your prison condo. With guaranteed rental income in perpetuity, there’d always be a ready resale market. And when you sell, the profit would qualify for the lower tax rate on long-term capital gains. You’d also be spared the petty aggravations and routine problems and expenses most other condo owners suffer. There’d be no monthly HOA dues. You wouldn’t have to worry about thoughtless renters placing metal objects in the microwave or leaving the fireplace screen open and damaging your carpet. No more ski gouges on foyer walls. Maid service wouldn’t be necessary. And no need to spend a lot of money hiring an interior decorator to furnish your condo. Prison decor tends to be economical, durable and traditional.
The idea has great potential for both the state and prospective condo owners. And just think about the interesting signatures and messages you’d find in your guest book.
Mike Rosen’s radio show airs weekdays from 9 a.m. to noon on 850-KOA.
