The city and the prison's parent company disagree with the interpretation of a 1993 deed between Wheelwright and U.S. Corrections Corporation.
The prison closed on Friday, June 3, approximately one month after Indiana inmates were returned to their home-state holding cells.
In July, the prison accepted a contract with the state of Kentucky to house 450 female employees for more than $7 million a year.
In June, the Wheelwright city council met to discuss the "devastating" effects the prison's closure had on the city, which received approximately $10,000 monthly from the prison. Budget concerns continued after the company decided to replace an allotment ($1 per day per prisoner, divided equally between the county and the city) with work crews.
Wheelwright city clerk Mary Ann Slone said the council is still dealing with budget strains. They called a special meeting to discuss the "prison situation" last month, but tabled the matter because city attorney Timothy Parker was not able to attend.
Parker said Thursday that he was supposed to meet an attorney for Corrections Corporation of America, the prison's parent company, but her flight got delayed because of Hurricane Katrina.
Slone said she mailed tax bills out early this year to help maintain the city's budget.
Mayor David Sammons confirmed Thursday that the city is considering a lawsuit against CCA.
"We had a contract with them when the Indiana inmates took over and they paid us and the county 50 cents per prisoner per day. Now they refuse to pay us and the county," Sammons said. "The warden up there, Wohlford, I believe that was his name, when he came to the city of Wheelwright, they changed from a minimum- to medium-security. That was the only way they could bring those inmates (from Indiana) in there. The reason Indiana paid us was that Indiana didn't allow them [the prisoners] to come out and work. Then when Kentucky took over, they didn't want to pay. We're thinking about having them go back to minimum and move a lot of them out. As a city, we have the right to say what comes in and what comes out."
CCA's Assistant General Counsel, Chelli R. Jones, addressed the city's concern in letter to Parker, dated Aug. 31.
Jones, calling the incentive payment a "goodwill gesture," said that CCA changed from a minimum- to medium-security prison in 1999 with the city's "full support" and "in fulfillment" of the requirement of the deed that the prison stay open as an employer with the city. The prison would have closed if the contract wasn't secured by the security transition, Jones argued. The transition created 48 new jobs at that time.
"I have also reviewed the minutes submitted from the Commission's meeting of Dec. 7, 1999," Jones wrote. "The minutes provide no evidence that the deed was an issue or that CCA had any binding obligation to pay an incentive fee. The news article from the city's own paper which covered the meeting stated that the warden explicitly advised the commission and the attending public that 'the center didn't really need the city's approval' and the [sic] CCA was just seeking 'a sense of unity in the decision.' Then, as now, CCA wanted to maintain a positive relationship with the community."
The deed in question allows the city to "assume ownership of the property and any improvements thereon, if the prison ceases operation as a minimum-security facility."
Jones argued that CCA is not required to pay the incentive because the deed contains no prohibition regarding the housing of medium-security inmates, and the city did not have to approve the prison's decision to house medium-security inmates.
The deed, Jones wrote, clearly states that the city cannot take the property unless the prison ceases operation for two years and if the prison failed to keep enough prisoners to employ at least 30 people.
Steve Owens, spokesman for CCA, said Friday that the company's position on the matter has not changed.
"We still don't believe we are obligated to make a payment," Owens said. "We've tried to work to be a good corporate citizen and we've worked to maintain a positive relationship with the community."
Judge-Executive Paul Hunt Thompson, who worked with former Gov. Brereton Jones to build the prison in the 1990s and with then-state Rep. Greg Stumbo to help the prison obtain the Otter Creek contract, previously reported that the county would lose approximately $100,000 a year because of CCA's decision to stop making the incentive payment.