The Augusta Chronicle
newspaper has always supported Georgia Corrections
Commissioner Wayne Garner's no-nonsense policies with regard
prison inmates. There's a big perception, though,
that Garner has run
amok with regard to the new
private prison program.
Jenkins County will be
the home of Georgia's sixth private prison. Yet
this prison and two others under construction are not
being built through
would the Nashville-based Corrections Corp. of America
on such a seemingly risky, costly move?
Well, the CCA claims it has an "understanding" with
"the state" (through
Garner?) to fill their three
prisons and recoup their $135 million
guess who is Garner's longtime best friend? Oily
lobbyist Jim Hammock.
Yet Garner claims
he's had no talks with any CCA employee about the
three prisons. (If any discussion has taken place, the
law has been
broken.) State law also requires
that any contract with a private prison
be awarded through a competitive public bidding
Garner is leaving office, so what better time to
ask him and the CCA
what "understanding" there is
to circumvent legal open bidding? Gov. Roy
Barnes says he knows of no such "understanding."
The CCA already holds state contracts for two
prisons, and Hammock
boasts of having powerful friends
in the Democrat-controlled General
does the nation's largest prison-building company
can just get its legislative cronies to
get competitors shoved aside so it can
from running three more prisons?
Garner provide Hammock with secret inmate statistics
indicating a new governor would quickly need three more
prisons in order
to handle an unanticipated inmate
influx due to tightened parole board
An Atlanta newspaper reports Garner called
Hammock 48 times on his
state car phone in the 63
days after the Request for Proposal was issued
the first two prisons CCA built.
before CCA got the contract -- and was a direct
the RFP language. So what other funny
business has a telephone- happy
Garner been up to?
Will he later end up working for CCA?
governor should intervene in what could be the first
scandal on his
watch. If Hammock is successful in
lobbying key lawmakers to
rubberstamp and fund the
three new prisons without competitive bidding
violation of state law, it will make a mockery of Barnes'
INS contractor's role and record come under fire
latest of CCA trouble spots
The Star-Ledger Newark, N.J.
troubles have alarmed immigrant advocates, who
whether the company is capable of dealing with
the detainees housed at Elizabeth, mainly seekers of
political asylum who have not been convicted of any crimes.
They remain under the authority of the Immigration and
Naturalization Service until they are deported or prove their
case and win release.
"Clearly, CCA does not
have a good track record. It has a horrible track
record," said Penny Venetis, who runs the Rutgers
Constitutional Litigation Clinic in Newark and has represented
various Elizabeth detainees. "If a company has a bad
track record dealing with criminal detainees, you can't
trust them to work with a population that is in civil
The problems at Elizabeth come two years after the
center reopened under CCA- and with INS officials
touting it as a model for the agency's far-flung
The center had been closed in
1995, after 100 detainees rioted in anger at the
conditions there under the privately run Esmor Corrections
Corp. The INS, stung by criticism, terminated the Esmor
Andrea Quarantillo was named the Newark INS
director after the riot. CCA took over the center in
January 1997, and Quarantillo said: "This has got to be a
success. We will view it as a success if it's a facility
that is safe for detainees, secure so the public has
confidence, and humane."
Yet for some, that confidence
has been shaken. An assistant warden said he was
fired in March 1998 after he took complaints about
detainee mistreatment to CCA officials. Last fall, several
detainees launched hunger strikes over the lengthy period
Most recently, the FBI opened
an investigation into the allegations that guards
beat and verbally abused two detainees Jan. 28, then
tried to cover up their actions. Rep. Robert Menendez,
a Democrat whose district includes Elizabeth,
called for congressional hearings.
chief of security was removed, while two supervisors
and six guards were barred from contact with
detainees. Another guard was fired for refusing to cooperate
with investigators, and three others soon quit due to
allegations of drug use. In addition, Warden Karen Nicholson,
on the job just 11 months, resigned, citing personal
"I was told by the new district director and by
Commissioner Meissner that this would be a model for the
nation," said Menendez, referring to INS leader Doris
Meissner. "It's obvious to me that this is far from a
model. It's become a nightmare."
said, "We're looking at how we can proactively look at
CCA to instill in their corrections officers a real
respect for human dignity."
When it comes to managing prisons, Garner has
been controversial due to his belief that prisons
should be as they were intended -- houses of punishment.
He got rid of the law libraries, the workout/weight
facilities, the the TV's, etc. This, coupled with former Gov.
Zell Miller's "3 strikes and you are locked up for
life" sentencing reform, habitual felons are getting
put away in Georga (don't wet the bed, Hampton).
Garner and Gov. Barnes are on different pages
politcally. The Augusta Chronicle, a left-leaning daily, has
been used as the attack machine (contrary to their
statement, I haven't seen anything in print showing their
support for Garner). In Southern politics, you just don't
replace your adversaries. You kick them out, conjure up
some dark clouds, and sling some mud. I'll follow this
story and keep the thread updated as it develops. GA
does need those new facilities. G
Atlanta Journal Constitution - 4/20/99
The New Corrections Commissioner - Jim
The 61-year-old grandfather of eight said he probably
will order an audit of the agency to "see what I'm
inheriting," but he already knows he will have to turn his
immediate attention to space issues.
Corrections is full," Wetherington said.
sentenced felons are backed up in county jails waiting for
a space in the state system, which already is
growing by about 1,700 a month. D.O.C. already has moved
inmates into tents in prison recreation yards and into
bunks in common areas in cellblocks. The state also is
renting space in three private prisons.
Wetherington has served as a police officer in Columbus, Ga,
since 1959, including 14 years as Chief of
Due to the ole supply and demand principles, PZN most
likely will prevail in GA, IMO. G
Why is there so much talk about CCA and prison
guards on this board? I thought PZN was going to become
a REIT and most of their income was going to be
derived from building prisons and other correctional
facilities and leasing them back to whatever governmental
agency they are doing business with. I thought PZN would
not have anything to do with the management part of
If the above is true, why
should CCA's problems reflect negatively on PZN. For
instance, Franchise Finance of America builds and leases
restaurants. If somebody gets food poisoning at a Wendy's, or
Hardees, or a Chili's that was built by FFA, don't blame
FFA. They just built the physical plant. They didn't
cook the burgers. Please enlighten me.
I do appreciate hearing the downside of any
situation but so seem obsessed with the negative. You
bounce from one negative topic to another. IMO, it
doesn't help your arguement if you are unable to see 2
Yes, PZN was formed as a captive REIT for CCA.
However, upon the merger completion, CCA became PZN. So,
the captive becomes the captor. OPCO is the captive
of PZN. Some would argue that the market value of
the stock has suffered because the market perceives
PZN to be the captive of the privately held OPCO.
Such a perception is wrong, IMO. OPCO is totally
dependent on PZN. PZN can make OPCO disappear at any time,
simply by merging with it.
Old CCA (and new PZN)
always pursued a bricks and mortar strategy (WHC is
still trying to catch up). As you of all people should
be most aware (by your postings), the management
side is frought with problems. What is unchanging is
the acute shortage of beds for prisoners. If OPCO
loses a mgmt contract in a PZN owned facility, where do
you think the prisoners will go? Chances are they
will stay in the PZN faility and be managed by either
another private entity or by the government. I suspect
the government would not balk at a lease value based
on $75,000 per bed.
Remember, CCA got to
where it was for a reason: there was a shortage of
prison beds. There still is. That doesn't change
wheteher or not you like CCA or PZN or REITs or Doc or
Doc is telling us that as the "market" for beds
evolves, the capital intensive strategy is the way to go.
I believe he can read this better than his
competitors, and that he can continue providing a
product/service that appeals to governments.
Saying PZN is
dependent on OPCO to make lease payments is too
superficial. PZN is dependent on governments needing beds.
OPCO is a conduit, and will be less important as such
in the future as PZN leases directly to the
government. OPCO's just there to meet REIT requirements.
<Picture: Yahooins - disclaimer
April 20, 9:36 pm Eastern Time
REIT shares climb
higher on Buffett investments
NEW YORK, April 20
(Reuters) - The shares of real estate investment trusts are
running on high, boosted not only by expectations of
strong first quarter growth, but on recent news about
billionaire Warren Buffett's investments.
as good a reason as any for the recent rally in real
estate stocks, say some industry analysts watching the
shares of larger companies push toward their 52-week
``I think it helps,'' Steve Bloom, an analyst with
Morgan Stanley, said about Buffett's REIT
``He's now invested in his second REIT. Sometimes I'm
surprised by his choice of REITs, but to the degree that a
well-regarded, valued investor is going into these stocks that
certainly has given the group a good swift kick in its
Buffett, chief executive of investment conglomerate
Berkshire Hathaway Inc. (BRKa - news), recently bought 5
percent stakes in two REITs -- Tanger Factory Outlet
Centers Inc. (SKT - news) and Town and Country Trust (TCT
- news), according to filings with the Securities
and Exchange Commission.
Tanger shares soared
to $26.125 from $20.50 when Buffett bought about
417,000 shares on April 9. The share closed at $25.375 on
Tuesday. Likewise, shares of Town and Country are now
trading around $17, up from $15.50 last week when Buffett
bought about 797,200 shares.
Wall Street firm BT
Alex. Brown said REIT share prices as a group soared
7.3 percent on its index last week compared with a
2.3 percent fall in the Standard & Poor's 500
Buffett, known as the ``Sage of Omaha,'' also recently
received heightened attention for saying that virtually
all U.S. stocks are too expensive.
the other hand, are widely considered grossly
undervalued. And after hovering below analysts' price targets,
shares last week began to rise.
AvalonBay Communities Inc. (AVB - news), for example,
jumped to $34.25 on Tuesday from around $31 last week.
Equity Office Properties Trust (EOP - news) shares
closed at $27.06, near a year high of
Buffett was traveling and his spokesman declined comment
on his investments.
Most of the larger REITs,
including Duke Realty Investments Inc. (DRE - news) and
retail REIT Weingarten Realty Investors (WRI - news) are
expected to meet expectations as they report first quarter
results in the next few weeks.
Investment and Management Co. (AIV - news), or AIMCO, on
Monday posted first quarter funds from operations of
$66.2 million, or 96 cents per share, up from the net
FFO reported a year earlier of $39.1 million, or 80
``I think this all seems to have crystallized in last
couple of weeks,'' said Steve Wechsler, chief executive
of the National Association of Real Estate
Investment Trusts, or NAREIT. ``A lot of the industry was
trading below net asset value. That won't last forever in
a functioning marketplace.''
Analysts at BT
Alex. Brown said in a report that they think the rally
can last. The firm has strong buy or buy ratings on
15 companies, including AIMCO, Duke, AvalonBay and
I agree with some of your statements. PZN could
concentrate on design, build, own & lease, or just design and
build. However, DOC's original business strategy was
management of facilities, and I think it still is. I could
be wrong, but the margins and growth appear to be
predominately on the management side. I think this is why DOC
took that piece private. It was worth jeopardizing
PZN's the tax shelter, market capitalization, and so
on. The evidence seems to suggest that PZN was better
off before the merger. The accounting games,
notwithstanding, PZN is still reliant on the long-term lease
revenues from CCA -- not the other way around. You eluded
to the downside of the management business. I think
you are correct in suggesting that it might be
beneficial for PZN to drop it and concentrate on its core
going thru the last half hour of trading. We've
crossed the 50 day moving avg. convincingly. Time to
breach the 200 day. Most of the other REITS I've looked
at have just crossed 200 day moving avg. PZN should
do the same.
Lo' and behold the rest of the investment world
is starting to notice that there may actually be go
investments that are not related to the internet. So now we
see a little money being funneled towards value plays
and small caps. The result for PZN is very promising.
And the funny thing is we are soooooooo far from fair
value. Looking forward to a nice ride and some fat
dividend checks. Cheers.
Editor of the Reitmeister Investment
http://shrike.depaul.edu/~sreitmei/start.html - 4/18 issue is now available