“Donate the land? We were only joking!”
Originally posted on CityStink
Monday, Jan. 30, 2012
By Al Gray
The Author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
As the Augusta Commission wrangles over terms for the management contract with Augusta Riverfront LLC over the new $12 million Reynolds Street parking deck and the TEE Center still under construction , we must be reminded that this is not the first time this massive project has hit roadblocks and been mired in controversy. In fact this has been an ongoing saga for more than six years since voters approved $20,000,000 in SPLOST funds for a Trade and Exhibit Center on the Fall General Election ballot in 2005.
Dirty Deeds Not Done Cheap: A Time Line
As we told you in our breaking news story last Thursday: TEE Center Parking Deck Air Rights Gone With The Wind, not only was the land under the parking deck never deeded over to the city by 933 Broad Investment LLC (as commissioners were told it would be), but we also discovered liens on the property held by Wells Fargo Bank (formerly Wachovia) as collateral for a loan to Augusta Riverfront LLC totalling over $7,000,000! But we also found out that Augusta Riverfront LLC also still retains ownership of a parcel under the TEE Center itself across the street that was supposed to be deeded to the city.
Since Augusta Riverfront LLC is ultimately headed by Augusta Chronicle publisher William (Billy) S. Morris III, it seems only fitting to turn to his paper to help fill in the paper trail on the true story behind the land deeds.
We found this Chronicle story from January 13, 2007 by staff writer Laura Youngs. At that time a TEE Center task force had just finished negotiating a revised operating agreement with Augusta Riverfront LLC for the TEE Center and recommended the facility be built on land adjacent to the Augusta Marriot Hotel and Suites owned by Augusta Riverfront LLC. Under the agreement then, Augusta Riverfront LLC “had AGREED TO DEED THEIR LAND over to the city for the TEE Center.”
Deeding the land was viewed by some commissioners at the time as a quid pro quo for the generous operating agreement that had the city paying Augusta Riverfront LLC $350,000 a year for operating expenses and capital improvement costs for running the center, in addition to it being connected to their hotel. The TEE Center was being built entirely with public money.
But commissioners continued to balk at the operating agreement as being too lopsided in favor of the interests of Augusta Riverfront LLC, with taxpayers assuming most of the financial risk. So it stalled again.
Fast forward to July of that same year. Now we find a July 8th, 2007 guest column in The Chronicle penned by Augusta Convention and Visitors Bureau (CVB) Barry White and CVB President and CEO Phil Wahl. They both sing the praises of Augusta Riverfront LLC and their generous offer to donate their riverfront land for the facility, writing: “Not only does Augusta Riverfront LLC bring proven expertise, it has offered to donate to the city downtown real estate valued at an estimated $1 million. The LLC also will pay annual center operating expenses over $250,000 and capital improvements over $100,000 a year.”
Donation of the land was one of the major selling points to commissioners for locating the TEE center next to the Augusta Riverfront LLC owned Augusta Marriot Hotel & Suites and awarding them the operations contract.
Now fast forward to 2009. The TEE Center project is still stalled because now it is learned that the facility will cost nearly double the $20,000,000 voters had approved in the 2005 SPLOST. That news had many people rethinking the whole deal altogether and even suggesting alternatives, such as renovating existing facilities to use with the initial amount from the SPLOST. Former Augusta Mayor Bob Young penned a guest column that appeared in The Chronicle on September 27, 2009 that suggested the James Brown Arena could be expanded and essentially function as a TEE Center at a significantly lower cost than building a new facility. Also, the city already had a management contract with Global Spectrum to operate the arena and this could cover the TEE functions as well, instead of entering into a separate contract with Augusta Riverfront LLC for a new facility on the riverfront.
A rebuttal to the former Mayor’s column appeared a week later in The Chronicle from former Augusta CVB treasurer and chairman Abram Serotta, telling us that the “TEE project MUST be ok’d.“ Mr Serotta once again brings up the issue of land ownership at the Reynolds Street site, writing : “Land purchases have been negotiated and, in total, the city has invested more than half-a-million dollars in the project to date.“
But some critics were trying to tell us that spending money on a TEE Center was just simply a bad investment, period. Commissioner Betty Beard had made a motion in September 2009 to see what it would cost to bring Dr Heywood Sanders, a professor in the College of Public Policy at the University of Texas-San Antonio to Augusta to rebut claims being made by Barry White of The CVB and others that a TEE Center would be an economic boon. Dr. Sanders authored the 2005 Brookings Institution study: Space Available: The Realities of Convention Centers as Economic Development Strategy, which debunks many of the myths about convention centers being significant economic stimulators.
In a Sept. 16, 2009 Augusta Chronicle article by Johnny Edwards, it is stated that: “Dr. Sanders said cities throughout the country are losing money on trade centers and, desperate to book events, are offering discounts and incentives that make competition even stiffer.”
In the end, Dr. Sanders was never consulted by the Commission and the TEE Center and a new parking deck were approved on Dec. 9, 2009.
In a Dec. 10, 2011 Chronicle article by La Tina Emerson we learned that the CVB is having difficulties with booking conventions for the facility still under contruction.
Commissioners Ask Questions About Land Ownership
Commissioners were told repeatedly by Fred Russell at that Dec. 9th 2009 commission meeting that land parcels for the parking deck and for the TEE Center itself owned by Augusta Riverfront LLC would be donated to the city. Commissioner JR Hatney brought the issue up and asked for clarification from Fred Russell: Below are excerpts from the minutes of that meeting:
Hatney: “The other question I would ask to our Administrator I remember when we talked about the parking deck before. We were not so warm on that issue and the volume was $500,000 and you’ve come back and you said you were going come back with a lower scale because it would be more cost effective to go ahead and do that then to I believe pay a $1.1
million or something like that on I guess the lease or rent or whatever you do and still that
eventually buy the property. You said this property’s going to be given? Talk to me.”
Russell: “ I need the map. There we go. If you look at the round area up there, there
if you look at that brown area would be the area that we’re looking at for the building the parking
deck. And then if you look at the two areas that are not being donated, one of which belongs to
the radio station which is a, sorry about that. That’s where the hotdog stand is. That’s owned by
a private individual. The other part of the place is owned by WAGT Television. The balance of
that is owned by Riverfront Development and that’s the property that’s going to be donated.”
and later on in the minutes….
Hatney: “About donating the site, about donating? Did we check with them yet on
Russell: “They’ve agreed to donate the property. “
Commissioner Betty Beard had earlier raised questions about land ownership at a July 7th, 2009 commission meetingwith Fred Russell.
At this meeting Fred Russell was referencing a map outlining the various land parcels that the city would need to acquire or would be donated for the parking deck and TEE Center:
Russell: “I haven’t finalized anything waiting for your approval but I’m getting very close to giving you the final documents on all three if not the schematic designs, the land acquisition and the operating agreements. Land acquisition, the green part is the park for the TEE Center. The area in black is owned by the Riverfront Development Corporation or some subsidy there is, there are. They will be donating that property towards the completion of the TEE Center. The other two pieces of property in negotiation are the Lock Shop and the warehouse building on the corner.“
The green part that Russell is referring to on the map is a parcel under where the TEE Center would be built that Augusta Riverfront LLC had agreed to deed over to the city, as we told you earlier in the Chronicle paper trail. And as we told you last week, Augusta Riverfront LLC still owns that parcel. It was never deeded to the city as promised.
Betty Beard asks for clarification about this parcel at the July 7, 2009 meeting:
Ms. Beard: — what are they donating again?
Mr. Russell: The area in the black is the property that they own.
Ms. Beard: In the black?
Mr. Russell: The little black square up there, green I’m sorry.
Mr. Mayor: Outlined in black.
Ms. Beard: Oh across the street.
Mr. Russell: That’s the location of the TEE Center itself.
And later in the minutes Betty Beard had the foresight to bring up the issue of the significance of Air Rights regarding the parking deck:
Ms. Beard: In one part of the information it said air rights would be donated.
Mr. Russell: I’d like to talk about that a little bit later. That gets into the parking issue and there’s a couple items we’ve got there that we need to talk about if you don’t mind.
Ms. Beard: Well, what about the Trade Center itself?
Mr. Russell: That’s the green property.
Ms. Beard: I mean the air rights.
Mr. Russell: We build a building there. The air rights would not be significant. It would be part of the building itself.
Ms. Beard: I don’t know why people say they are not significant. Okay.
Betty Beard was right. The issue of air rights are extremely significant, as we now know that is all the city ended up with for the parking deck as the land was never donated by Augusta Riverfront LLC. And the green parcel across the street under the TEE Center that Beard references was also never deeded to the city. So what about the air rights over there for the TEE Center?
Today the Augusta Commission meets in committee to decide whether to approve a revised management contract with Augusta Riverfront LLC for the parking deck and TEE Center. It would be wise for them to hold off on that until this matter can be investigated further. Rushing into things without having all of the pertinent information is what initially put them into this mess and rushing now into another bad contract is certainly not the way out of it. We will have an update on this story as it becomes available. Stay tuned.***