ATLANTA - A physician with a yearslong relationship with the Georgia Department of Corrections has bought a 700-bed former prison for $50,000 - half its appraised value - and stands to make millions running it as a nursing home for old and sick parolees.
At least one competing business complains that the state gave Dr. Carlo Musso, who has conducted its executions, a sweetheart deal and did not give others a realistic shot at the property.
The Atlanta Journal-Constitution tried to contact Musso over several days at CorrectHealth, his prison and jail medical-care company, but he did not respond to messages. The Department of Corrections and State Board of Pardons and Paroles, which will decide who goes to the planned Bostick Nursing Center, declined requests for interviews and would only answer questions - though not all of them - via email.
The sale was completed on Thursday. But documents obtained by the AJC show the state began talking about the property with Musso exclusively at least three years ago, long before advertising it for sale.
DOC's talks with Musso then were about leasing the now closed Bostick State Prison in a deal that would have netted the state almost $537,000 a year in rent. The state would have also invested roughly $8 million in renovations, $2 million of it in prison labor.
Fast forward to last summer, and Musso submitted the lone bid to buy the property, on the grounds of the now closed Central State Hospital, for little more than what a month's rent would have been under the lease deal that had been discussed.
"We didn't want to invest any money in that property to lease it out. It would have taken a substantial amount of money (to repair the building)," said Frank Smith, deputy executive director of the State Properties Commission, the agency that manages the state's real estate.
"(The building is) really not worth anything without spending megabucks, without bringing it up to standards of use," said Steven Stancil, executive director of the commission.
Before the Department of Corrections relinquished the property, it had spent about $270,000 of more than $6 million that had been set aside to renovate the property. In addition, DOC had spent about $40,000 just on upkeep since the prison closed in 2010.
Some inmate labor was used to renovate the property before it was relinquished to the properties commission a year ago.
"How much state government assistance should a private citizen get in launching a private for-profit business?" asked Sara Totonchi, executive director of the Southern Center for Human Rights, which monitors prison conditions. "Carlo Musso has found a cash cow in Corrections."
Two other companies were interested in 2011 in the same business idea as Musso, though they were looking at different places. Alfonza Hagan, majority owner of one company, All-Star Management, told the AJC that the DOC made it clear years ago that its plans for the prison property centered around Musso.
"They (DOC) were telling us... that Dr. Musso was going to put a place over there," Hagan said.
By Oct. 28, 2011, Musso had already lined up approval from the Georgia Department of Community Health to run a nursing home in the 1950s-era building that became a prison in 1987.
He'd also won some important political allies.
"Musso had a business model," said state Rep. Alan Powell, R-Harwell, who was involved in the early discussions. "It looked to me to be a good deal."
So Powell, chairman of the House Public Safety and Homeland Security Committee, wonders why the state was "being so clandestine" about it.
While DOC did not explain the reason for the change from leasing to selling, Smith with the properties commission explained there were concerns about using government bonds to bring the building up to current code if it would ultimately be operated by a private entity.
Musso and the Georgia State Properties Commission closed on the property Thursday. The final cost will be $64,400, $50,000 for the property and $14,400 to repay the state for the cost of preparing for the sale.
According to documents, the planned Bostick Nursing Center will hold 280 "medically fragile" parolees as well as some severely mentally ill patients now living at the soon-to-be-closed James B. Craig Center nearby.
Documents obtained by the AJC indicate that before it began the competitive bidding process required for contracts of this size, the Corrections Department had already planned for Musso take over the former prison. A DOC letter, dated April 28, 2011, says its board would vote soon on its recommendation to lease the property to Musso.
On June 28, 2011, DOC's attorney wrote CorrectHealth and two other companies about the "potential lease of state property for a special population skilled nursing facility."
The open bidding process that letter implied was a sham, in the view of Musso's competitor Hagan.
"It was our understanding that the building was going to be leased to Dr. Musso, but then the letter came out," Hagan said. "We weren't given ample time to do a proper bid." Hagan said he had only a week to prepare a bid to lease the property, prepare applications for state certification to run a nursing home and secure funds.
Musso filed an extensive application to run a nursing home at the Bostick Prison on July 5, 2011.
There are only two nursing homes in Georgia that will take "medically fragile" inmates, which can include sex offenders who have no family or friends willing to provide them homes once they are paroled. But River Willows Nursing Center in Abbeville cannot accept sex offenders because there is a church nearby. Middle Georgia Nursing Home in Eastman will only will take up to 20 sex offenders at a time.
All-Star Management Group - one of the two other companies that had notified the state in 2011 of plans to get certification to run nursing homes for old and sick parolees - said it wanted to operate one in McRae, but the Department of Community Health rejected its application as incomplete. Gracemore Nursing & Rehab said it wanted to open beds to inmates in Brunswick, where it already had a nursing home. But Gracemore never followed through with a formal application.
Musso's application for the Bostick Prison site was approved Oct. 28, 2011.
DOC spent much of 2012 lining up legislative support and state funding to renovate the prison and arranging to lease it to Musso. Then the state Office of Planning and Budget said no on Sept. 10, 2012, to DOC's request to let it keep $5.73 million it had not spent renovating the prison by the end of the 2012 budget year.
Last May, DOC transferred Bostick to the State Properties Commission to be sold, not leased. And in early July, notices of "invitations to bid" ran on state websites for a month and in the Union Recorder in Milledgeville and the Fulton Daily Report in Atlanta.
The only bid submitted, Musso's, was opened Aug. 6.
According to records, Musso will charge $184 for each bed plus anything extra needed for each parolees' medical care. He estimated income from Medicaid, the state-federal health care program for the poor, and Medicare, the federal health care program for the elderly, to be almost $17 million a year. He estimated expenses would be $14.8 million.
Stancil said the property wasn't worth much, despite the appraisal. It would cost hundreds of thousands of dollars to tear down the building if someone wanted to develop the site.
"That's what the market will bear," Stancil said. "We have more than 2,000 acres (in the Milledgeville area) and most of it is vacant. The market is flooded with land down there so there isn't much value (in) maybe 90 buildings and most are sitting empty."
Information from: The Atlanta Journal-Constitution, http://www.ajc.com