Denver officials have declined to renew more than $10 million in contracts with two for-profit companies that operate halfway houses.
The City Council voted Monday to kill proposed contracts with CoreCivic and GEO Group, which run six community corrections facilities in the city.
These companies also operate private prisons across the U.S. and have contracts with Immigration and Customs Enforcement to run immigrant detention facilities.
City staff declined to comment on what would happen next.
The state Department of Corrections would likely need to find prison space for more than 500 people or grant them parole if the residential-style facilities close in Denver.
Mayor Michael Hancock's administration also could try to renegotiate the contracts and send them back to the council.