Avalon Opens New 300-Bed Facility, Increasing Texas Operations by 200%.

OKLAHOMA CITY--(BUSINESS WIRE)--June 8, 1999--

Avalon Correctional Services, Inc. (Nasdaq:CITY), a leading owner and operator of community correctional facilities and programs, announced today the completion of a new 300-bed correctional facility in El Paso, Texas. The new facility is contiguous to the Company's existing facility in El Paso, Texas, acquired by Avalon in 1996. The Company's existing 150 bed El Paso Intermediate Sanction facility is operating at its capacity. The new facility is projected to initially generate revenues of approximately $2.4 million annually.

The new 300 bed facility will be utilized to provide comprehensive correctional services including short term detention, transportation, case management, rehabilitative services, and substance abuse treatment services. The facility was designed and constructed by Avalon to meet a need for residential placement and programming for 200 additional adult male offenders for the Texas Department of Criminal Justice.

Donald E. Smith, Chairman and Chief Executive Officer of Avalon said, "The new 300 bed facility in El Paso is a great example of the opportunities we continually seek. The original facility in El Paso was acquired in 1996 and required substantial operational improvements and attention. We were able to bring the acquired program into contract compliance, make improvements to the physical plant, establish quality programming, and obtain new contracts. The turn-around of the acquired operation has provided the opportunity for Avalon to provide additional services to our contracting agencies."

Avalon Correctional Services, Inc. is a leading developer and manager of privatized community correctional facilities and correctional programming in the United States. Avalon currently has a total offender bed capacity of 1,333 in Oklahoma, Colorado and Texas, in addition to specialized programming for 225 offenders. For more information about Avalon contact our web site at http://www.avaloncorrections.com or call 405/752-8802.

Certain statements in this release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "intend," "expect," "should," "would," and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The above factors are more fully discussed in the Company's SEC filings.