Government Watchdogs Help Save Richmond County Taxpayers $6 million


Originally posted by CityStink
November 13, 2012
Augusta, GA
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.
It began calmly enough for this correspondent in August 2011. Another chapter in life had been closed with the disposition of all commercial property in Evans, which was our family’s investment of a lifetime.  That adventure of maximizing returns from that investment had required leveraging up multidisciplinary contract and regulatory review skills to a new level in combating hostile forces inside of Columbia County government. The comfort of total retirement beckoned until zero-interest-rate-policies of the Federal Reserve attacked all safe income streams. Thoughts crept in about leveraging up the entire old repertoire of skills on a grander scale, but how?
Along came Deke Copenhaver’s ill-fated attempt to get a downtown stadium for a group headed by former Baltimore baseball great Cal Ripken, Jr.  The whole deal looked suspect all the way from the woods of Lincoln County and a tiny band of opponents rose up to combat the project. This just happened to coincide with a preliminary secretive review of Augusta’s major contracts for the water treatment plant, sales tax project oversight, and the TEE Center construction. The activists had a meeting that I drove down to attend. We quickly found and developed common bonds.
Our first success came a year ago this month, with our opposition to the Laney Walker Bethlehem Overlay District (LWBOLD). We successfully got the Augusta Commission’s motion to approve scaled back to the correct, much more compact Foundry Node, rather than the huge overall LWBOLD. This early project coincided with the creation of the CityStink.net blog (the name being a parody of Sylvia Cooper’s City Ink column in The Augusta Chronicle)  and a social media group called Augusta Today, a parody of the name Augusta Tomorrow — the latter being a group of elite self-appointed downtown power-brokers who are responsible for many of the ill-conceived taxpayer funded boondoggles over the past 30 years in Augusta.
A large element of success was a core group comprised of Augusta political ‘gadflies’ at whom the Augusta Chronicle was prone to scoff, researchers, and amateur media types. This group collaborated in a number of issues including overlay zoning, Magnolia Trace, the parking deck controversy in which we broke the story about the undisclosed liens, Laney Walker housing, TSPLOST, the 12thDistrict Congressional election, various Augusta contracts, the DDA, the clock and finally the TEE Center.
Former Mayoral candidate Lori Davis emerged quickly to take the lead in arranging for Georgia Open Records Act Requests and turning the results into hard-hitting reports that were promptly delivered. Kurt Huttar and Tom West are fantastic data hounds and analysts whose work would make all manner of Augusta players wet their pants if the research were released. Dee Mathis was an early core group member who took Laney Walker to heart with a rousing defense of property rights. Andy Cheek is an experienced Augusta political hand from his days on the Augusta Commission. Brad Owens is a now successful security contractor, in addition to his familiarity with the minefield of Augusta politics. All have made their presence known in Augusta.
Potential and real savings for Augusta were identified along the way including a possible $300,000 or so on Laney Walker housing, an apparent $167,000 overcharge on a major contract, perhaps $750,000 over the life of parking deck contracts, and now more than $6 million on the TEE Center Contracts, according to Commissioner Corey Johnson and various news reports in the aftermath of last Thursday’s vote to approve  considerably-amended Tee Center agreements after Augusta Today founder Brad Owens and this writer met with city and manager attorneys,  and three Augusta Commissioners. Johnson put the savings as high as $500,000 a year and our analysis confirms that the savings could easily exceed $400,000 a year between the contract changes and the safeguards to come in the Annual Plan process.
Media reports can be found at Georgia Public Broadcasting’s site which had this to say: “The revised deal cuts the operating losses in half from about $900,000 originally, and it gives Augusta officials the option of renegotiating with the management company after five years.” George Eskola, of WJBF NewsChannel 6 offered the headline “Proposed TEE Center Contract Change Could Save Augusta $500,000His report appears below.
Augusta has never seen anything quite like this grass-roots citizens movement made possible by the use of digital media.. The response has been overwhelming. Our media vehicles of social media groups and CityStink.net have gained a following among the legal, accounting, public policy, and business communities.
The achievements are not bad, not bad at all, for an operation held together by not much more than duct tape, baling wire, and twine.
Augusta Administrator Fred Russell has characterized Augusta Today as a group that is permanently discontented with the TEE Center contracts, saying “We have listened to everything they have said to do and done it, and now they’re not happy.”  Seven of ten commissioners listened better, delaying approval, and securing $400,000 to $500,000 in annual savings.
Augusta Today is happy today, Fred.
In closing, the phrase from District One Commissioner Matt Aitken “It is time to move Augusta forward” suits best. Let’s do that, keeping in mind that approaching problems from all angles makes for the best path forward, one less filled with mistakes. Deke’s and Fred’s way are no longer the only options on the table, when Augusta can save money doing otherwise.
On a more personal note in closing this first annual report card, leveraging up what worked so well before in the corporate and real estate into the glaring lights of Public Policy has been very satisfying. Thanks to each and all who have offered kind words of praise and support.  Thanks even more to the Augusta Today group for their commitment for positive change in government and saving the people’s money.
Who knows where this might end. Maybe what starts in Augusta won’t end in Augusta.***
AG

Video: Augusta Commission Committee Discusses Heery/Dukes Contract

Tuesday, June 11, 2013
Augusta, GA
From CityStink.net Reports
Contributions were made to this article by Al M. Gray, 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.
An Augusta commission committee gave no recommendation to proceed with the multi-million dollar contract with Heery International yesterday, deadlocking at 2 to 1. Marion Williams and Wayne Guilfoyle voted not to proceed with extending the contract as-is. Grady Smith and Corey Johnson voted in favor of extending the contract “as-is”. CityStink.net was there yesterday and got exclusive video of the meeting including where Cost Recovery Specialist Al Gray challenged Heery officials. You can watch that video below.
You can also see our most current investigative piece concerning the Heery saga:

Even an Overseer Needs Oversight

Heeryly Absent

Originally posted on CityStink
June 9, 2013
Augusta, GA
by Lori Tabb Davis
Contributions were made to this article by Al M. Gray, 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.
The entire hullabaloo over extension of Augusta’s Project Management contract with Heery International involving community liason Butch Gallop, campaign contributions, gifts to county commissioners, and other hysteria, brings one repetitive thought. Where is the oversight over the Heery overseers?
Can I say totally absent? For certain it is stunningly absent.  For now, I brand it Heeryly absent.
When our Augusta Today and Citystink.net team of contributors submitted Georgia Open Records Act requests regarding the Heery contract itself and various contract documents from projects that Heery is and was being paid to manage, control, and supervise for the City of Augusta, we found absurd contradictions with Heery’s role as overseer.
When we looked in the contract and elsewhere for the project procedures manual governing Heery’s performance of the work, we learned that Augusta had none. Our sources told us that an early effort to adopt one was squelched.
  1. Because there was no project procedure manual, perhaps that was the reason that there was no job progress photography protocol to provide us with date-stamped color photos, accompanied by delivery and storage details, of the infamous Tee Center Kitchen Equipment, only black and white pictures of boxes in an unidentified, undisclosed location.
  2. Because there was a lack of coordination of design documents for the Tee Center and already-operating Conference Center, perhaps that is why my open records request for the design of the HVAC for the Tee Center and Conference Center dating back to the days when the Marriott was a Radisson was met with a data disk with blank directories from the city. I fault Augusta for that, but if Heery is Augusta’s Program Manager, shouldn’t they make sure old and new documents are better coordinated?
  3. Because it looks like general contract limits on change orders do not appear to carry through to subcontracts, eye-popping amounts of Augusta’s funds could be in jeopardy.
  4. Heery, if I understand correctly, was paid rates up to and exceeding $200 per hour to provide such services!
  5. The new estimated costs Heery wants to extract from Augusta has been presented at an increase of $1.6 million, including a $149,000 increase/ overrun for the Tee Center, a project that was a total disaster from A to Z.
If Heery is kept, at least $350,000 needs to be cut from that 1.6 million dollar number! I think if all aspects of it were examined, the number that could be cut would be triple that.
How about oversight allowed to Augusta to oversee the overseer Heery by their contract? That was Heeryly absent, too.
  1. The contract cost was put on auto-pilot with 4% annual rate escalation built into the original 2004 Contract. This continued until 2011, when Heery billed slightly lower rates and continued to do so into 2013. The 4% escalation remains, with a consumer Price Index adjustment. With inflation likely to pick up, who knows what the rates will be with compounding like Augusta has seen.
  2. The 2004 contract allows confirmation of the direct cost classification of Heery’s employees without providing what the billing classifications are in terms of employee education, qualifications, certifications, and experience. It sure looks like the program manager Heery has wide latitude to assign people to this contract without Augusta really having the criteria set for their billing rates! (Does Butch Gallop ring a bell? What is a community liason anyhow?)
  3.    The contract does not provide for proof of the direct costs of Dukes, Edward, Dukes or Gallop and Associates, who are not Heery employees, but Heery “sub consultants”.  What are they?
  4.  Access is restricted to “accounting records”, when it is probably the Heery personnel files that would best be used to verify billing classifications.
  5.  There is a statement –  “Owner may only audit accounting records applicable to a cost reimbursable compensation” This sure sounds like the negotiated rates are sacred and cannot be analyzed by Augusta. Such limitations must go. When paying millions of dollars for professional services, shouldn’t Augusta be able to audit anything that touches on what the city is getting?
Our team’s investigative efforts have born amazing results for Augusta and it is a shame to see them stymied by restrictions on audit rights. We saw that the Messerly waste water contract with ESG mandates that Georgia Open Records access be extended to every significant subcontractor. Subcontracts and major supply orders under Heery-managed general contracts need to be brought in line with that standard too. We cannot help if we are stonewalled by contractors and the administration.
After the numerous controversies and fiasco’s involving Augusta projects, Butch Gallop and Associates, the Tee Center, and Tee Center parking decks, it is clear – the overseer needs oversight and the Augusta administrator, starting with George Kolb and continuing under Fred Russell,  has not provided it, he has avoided it. Heery, understandably aiming to please the client, looks like it became a rubber stamp.
If the Augusta Commission extends this contract, citizens should expect better controls, refunds of any miscalculated rate overcharges (if any exist), and lowering of rates to reflect known factors favorable to Augusta. Augusta needs to ditch Butch Gallop now, too.
Our Augusta reformers love old movies and I used to get all into being Lois Lane. Here is a segment that came to mind as I pondered all of this.

“You…you’ve got me, who’s got you?”

Harrisburg in Augusta is in free fall. Deke Copenhaver might be an Ironman, but he is no man of steel. Heery has him, but who has Heery?  Looks to me nothing but hot, stagnant city air.
Somehow I think both would just as soon see me, go splat. Augusta too, if there is a dime involved for them to get.

–    LD

Downtown Augusta Brawl Video Goes Viral

Monday, May 6, 2013
Augusta, GA
From CityStink.net Reports

A video of a violent brawl in downtown Augusta, GA on the night of April 27th has been making the rounds of social media. Police say they are just now finding out about the violence more than a week after it occurred even though gun shots were fired. On The night of May 3rd, a couple was violently attacked with baseball bats on Riverwalk. Is violence in downtown getting out of control? Will these incidents reverse efforts to revitalize downtown? Where were the police? At Operation Rolling Thunder Checkpoints perhaps?
We here at CityStink.net decided to enlarge the video of the brawl in an effort to help the police identify suspects. Oh we also added some background music and production values too. Maybe the DDA can use it as a promotional video for downtown. Come downtown ya’ll, where everything’s waiting for you!

Teeing Off for the Last Time

Originally posted on CityStink
March 8, 2013
Augusta, GA
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.
A journey for this writer that began about a year ago concluded on Monday, February 11, 2013 with a presentation before the Finance Committee of the Augusta City Commission. Commissioners Wayne Guilfoyle and Bill Lockett had requested a final act of assistance with respect to the tumultuous Tee Center operating agreements in the form of an analysis of the proposed Tee Center plan and budget that had been submitted by Augusta Convention Center operator Augusta Convention Center Management LLC, a subsidiary of Augusta Riverfront LLC and a related entity to Morris Communications, publisher of the Augusta Chronicle.
The Chronicle local government writer who covered the meeting made no mention of my report, which was very kindly received by all of the commissioners.
The analysis provided was compiled in a very rapid fashion, as is customary with Augusta events, but questioned about $323,000 of costs (the revised schedule accompanying this article is somewhat higher from factors mentioned in the discussion) within the budgeted loss of $804,000. The discussion, key issues, and related amounts are as follows:
  • The inclusion of $10,048 for vacation and holidays had been questioned because budgeting 2080 hours indicated that the costs were included elsewhere in salaries. This was not seriously contested and it was agreed that using the figures for imprecise budgeting would not be determinant of the actual costs paid.Since access to the management company’s records was not afforded Augusta, one had to assume that nothing else was in the “Payroll tax” line item besides payroll taxes, hence $24,626 in unidentifiable costs were questioned. ACCMLLC responded that there were insurance costs and 401k costs in the figure. The response was unsurprising and those other costs are defensible.Credit card fees at $3,702 were questioned, because catering that would have generated heavy credit card usage has been stripped from the final agreement, leaving only event organizers as the only likely payers. ACCMLLC contested that assumption, but not totally convincingly, in this observer’s estimation.
  • Various maintenance items were questioned at $7,800, because the facility would be under warranty for a year, but this analyst had missed the fact that ACCMLLC showed those expenses starting in later months of operation. ACCMLLC convincingly answered that question.
  • Property Insurance at $48,000 was listed, despite the fact that property insurance was specifically to be bought separately by Augusta, not by the manager. The response was that the description was incomplete, with other insurance being included.
  • Electrical power was budgeted at 10 to 11 cents per kilowatt hour, whereas Georgia Power has special rates of as little as 3.5 cents per kilowatt hour. The amount questioned of about $115,000 was the difference in the average industrial rate in Georgia of 5.5 cents and the 11 cents budgeted. The response was that after some 6 months or so of experience, rates would be negotiated with Georgia Power. This writer is of the opinion that this was a cost that the manager should have negotiated in advance.
  • ACCMLLC had provided no figures for the labor costs of Tee Center employees when they work for the Marriott Hotel or existing conference center project, for which Augusta bears no costs. 50% of designated management employees and 20% of other employees produced an estimated $113,760 in question. This issue was not specifically addressed in the meeting other than that the audit of actual costs would catch any credit or refunds due to Augusta.
Discussion ensued that the city must show extreme diligence in administering the Convention Center contracts, because there are 4 entities with separate accounting and contract treatment, despite the “Augusta Convention Center” moniker being used to refer to the overall facility, even extending to the titles on the plan and budget.
A suggestion was made to have the accountant transferred over to Augusta, but that recommendation was not met with any approval.
A commissioner asked what the recommendation would be for approving the budget. The response here was that a budget should not be the basis for rejecting the plan, that it was probably wise to provide a cushion because no one wants to revisit it later in the year, and that respect for property rights attendant with approving the operating contract meant that the plan should be approved.
So many assurances beyond those in the contracts are on video at this point that it will be hard for the parties on either side to renege without generating a firestorm.
Everyone involved is tee-totally exhausted.
Your correspondent would like to thank the City of Augusta for this opportunity. Doing the Augusta Project for a year and 3 months including the Tee Center before adding the Falcons’ Stadium project last month, provided simply stunning chances to expand knowledge into new areas of expertise, especially Convention Centers. The Augusta Project is over and now the next phase will begin.
Thriving on the unconventional for the last 30 years has turned ‘boring’ accounting into a lot of fun.
To the citizens of Augusta, I offer thanks for their kind support and a promise to strive to fix Augusta, as best we can.

Short Sheeted via Term Sheet


Public Thrown for Loss in (nearly)Free Falcons Stadium?
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.
Georgia Dome to be Torn Down for new Falcons Stadium
About two months ago, a “term sheet” was signed by the Georgia World Congress Center and the Atlanta Falcons to build a new retractable-roofed stadium for their pro football team. After the travails that followed the notorious Augusta Tee Center Term Sheet, the mere mention of that phrase was enough to raise eyebrows.
The thought came to mind “What if……?” What if it was a one-sided deal against the public? What if the consultants’ reports were not analyzed? What if the cost to the taxpayer was a whole lot greater than advertised? What if the legalese meant huge opportunities for cost-shifts to the public? What if media was silent because of the team owner’s position on the board of the Atlanta newspaper’s parent company?
The deal was too huge and the possibilities too big to ignore, so this author performed a month long investigation on the reported stadium costs versus what the documents showed. The report that came from this effort is the inaugural article in agraynation.com, the multimedia blog born out of the Augusta Project, that work being a year-long series of investigations and articles that appeared in City Stink and the Augusta reform Facebook pages.
The Falcons say they are paying $700 million of the $1.2 billion cost.
Are they really? Or is this another prank of being short sheeted via term sheet? Will the weary public think it is turning in to a warm comfy bed, only to find all openings denied?
Most of the cost is all ours.
There is a big rush to get this deal approved ASAP.
Stay tuned.

AG

Enslaved Forever on the TEE Plantation


Monday, November 12, 2012
Augusta, GA
By The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article
Now all Augustans lie prostrate to Massa Billy and Massa Paul, thanks to the 6-3 vote of the Augusta Commission to pass the TEE Center deal last Thursday, November 8, 2012. White, black, Mexican, Korean, Chinese or Indian, the entire City of Augusta is now enslaved to Billy Morris and Paul Simon or, if you believe Augusta radio talker Austin Rhodes at WGAC, the Morris children.
No one can really tell who the owners of the new TEE Center management company are because it didn’t even exist until last month and it was registered by an intermediary to keep the ownership hidden, something Augusta’s procurement policies seem to prohibit. It will just have to suffice that the person’s listed on various documents for the original Morris/Simon LLC suggest that the Morris family are the principal owners. Even the Augusta Chronicle, who has acted throughout the TEE escapades as a front for these shadowy LLC’s, has been forced to weakly acknowledge that there are ties with Morris Communications.
The place where they put the permanent shackles on the people was originally supposed to be Augusta’s wonderful new TEE Center, but the massas had confiscated the building before the last concrete set up. They weren’t content to just stick spurs in horses over there in their Hippodrome in Aiken County, now the children all across Richmond County find themselves bound to a plantation and they didn’t have to move to Morris’ Creek Plantation, Wade Plantation, Butterfield Plantation or Millhaven Plantation to do it.
When you are in Augusta, you don’t move to the plantation, the plantation comes to you. Worse of all, the legalese says you and your descendants are slaves to the Morris massa’s TEE House FOREVER!!!
Yes. You read that right.
Mayor Deke Copenhaver and Administrator Fred Russell cheered as Commissioner Corey Johnson, Commissioner Matt Aitken and four other commissioners voted for this:
“Term of this Agreement” shall mean the period of time commencing on the date of this Agreement and continuing in perpetuity for so long as the TEE Center is in existence and shall include the period of time following any casualty with respect to the TEE Center for so long as City has the right to rebuild the TEE Center.
Now reader, you are just about to read the last part of that and tell me it is a way out of the Tee Center for Augusta because it ends when the TEE no longer exists.  Well, it is like the old tale of Dem Bones – “Toe bone connected to the foot bone: Foot bone connected to the leg bone: Leg bone connected to the knee bone…..” You just have to make the connections to get the whole body of facts.
Reading on:
During the Term of this Agreement (perpetuity), City shall, at its sole cost and expense, maintain the TEE Center to the Standard for so long as the TEE Center shall exist.
Getting a better picture now, reader? The “Standard” is whatever Billy and Paul’s interpretation of what their Marriott Hotel says it is and Augusta has to pay whatever it takes to meet their ‘Standard.’ That sounds expensive already, doesn’t it?
Now you Doubting Thomases who are left thinking that this pay-out to Morris and Simon isn’t FOREVER, get with the program. “The knee bone is connected to the thigh bone, and the thigh bone is connected to the hip bone.” And so it goes with the Tee Center. You follow the boneyard and find out it is the TEE Center. Now a Doubting Thomas would say “Well, if Augusta decides to contract with someone else or close down the Tee Center, we can stop paying them or stop paying costs on their behalf, right?”
This isn’t exactly true, according to the contract:
The parties acknowledge that Developer has an important interest in insuring that the TEE Center is maintained in accordance with the Standard, whether or not Developer serves as the Manager or Caterer. Accordingly, this Agreement, and particularly this section of this Agreement, may be enforced by Developer. (Developer is the Morris/Simon)
 
In other words the Morris/Simon massa still has the power over the taxpayer, even if their contract is lifted.
Are you getting a queasy feeling in your stomach, Hephzibah? So you on Warren Road think that the TEE plantation you are on will meet an emancipation proclamation that sets you and all your descendants free from PERPETUAL bondage? Dear readers might still not be convinced that the TEE Center is their massa FOREVER. It’s time to read some more:
During the Term of this Agreement (PERPETUITY, remember?), City shall, at its sole cost and expense, procure and keep in effect fire and extended coverage for the TEE Center and all personal property located thereon, including rent loss or business interruption …, in amounts at no time less than the total replacement cost therefor. Such policy referred to above shall name City and Developer as loss payee and additional insureds, as their interest may appear.
 
So, there you have it. Augusta has to pay for the TEE Plantation in PERPETUITY and pay to insure that it is replaced in PERPETUITY. If it is destroyed, the Morris/Simon hotels are almost certain to be destroyed too, so replacement would be driven more by the Morris/Simon decision on what to do with their hotel complex than anything Augusta decides.
How great is the claim on Augusta’s tax system to pay for the TEE Plantation? On the financing side, the project was built using general obligation sales tax bonds, as certifications by the Construction Manager, R.W. Allen attest. General obligation bonds are backed by the fullest ability of Augusta to tax people out of their homes and businesses out into the street. On the operations side of the TEE Plantation, hoteliers get looted for the first $250,000 (another $100,000 goes into capital spending), but then the rest of the TEE Center losses come out of the General Fund, which also is fed by the power to tax folks into poverty. When a contract like the TEE contract gets executed, that obligation comes before paying for essential city services, like fire and police protection.
Now that the whole skeleton of bones has been assembled, the full picture of the TEE Center deal is this – All of the people of Augusta-Richmond County, their children, and descendants are now under double general obligations to the extent of the value of all of their property to the Morris children and descendants in PERPETUITY.
Get used to the shackles and chains that Mayor Deke put you into.  Only death or getting out of Augusta will give relief.
Can you say that you’ve been TEE-totally subjugated?
It sure looks this way to an Outsider.***
OS

Special Report: Out of Line Asking for a Single Line?

TEE-Totally Fried Circuits
A $2.6 million Cover Up?
Originally Posted on CityStink
Thursday, November 8, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article
In $15 Million Augusta CONference Center Pays$25,000 a Year to City  this writer brought up the issue of the enormous electrical power costs that were evident in an earlier Georgia Open Records Request in which the accounting for Augusta Conference Center lease payments was obtained. Those records suggested that the Conference Center Manager, Augusta Riverfront LLC (owner and operator of the Marriott hotels), was using estimates to separate power used by the Marriotts from that charged to Augusta’s Conference Center rather than precise separate metering.
That got me to thinking. If they are estimating for the Conference Center, where they are responsible for the power bill, are they going to estimate again for the TEE Center power? Will there be separate metering for the bill that the taxpayer has to pay out of the General Fund of Augusta-Richmond County?
In a Georgia Open Records Act Request submitted on October 31, 2012 an official inquiry was made to access the simple single line diagram that would answer my question. A single line diagram looks like this:
 It doesn’t show locations, specifications, or details, it just shows how power enters a development or building and the uses to which it is directed. Imagine the shock when the response from Augusta’s Law Department was a refusal to provide an answer to my request based upon” considerations that disclosure “would compromise security.”
Why is Fred Russell’s and Deke Copenhaver’s Law Department engaged in this cover up? Russell flits about, dismissing public watchdogs’ efforts as being concerned over nickles and dimes, when he hides the truth about the legitimacy of a $5.2 million ($350,000 for 15 years) Tee Center Cost? Proposed Management company executive Paul S. Simon thinks that ” this is a very expensive building to operate”, while citing a $350,000 annual power bill as a reason, so a key player doesn’t see this Fred’s way.
Sources tell me that the way the TEE Center electricity was routed was such that the Tee Center, where Augusta pays the bill, is on the same incoming circuit as the Conference Center, where Augusta Riverfront LLC pays the bill.  They say that, in the aftermath of last Friday’s meeting between three Augusta Commissioners with Augusta’s contracted counsel and an Augusta Riverfront LLC attorney efforts are underway to accomplish separate metering.
The watchdogs want to see proof of developments on the issue. We want to see savings.
At just one-half the costs indicated by Mr. Simon, this is a $2.6 million question. It is good to see a team of Augusta Commissioners looking for answers that Fred Russell and the Law Department intend to hide.
-LD

Catering May Crater Augusta Finances

TEE Catering Delivers Sweets To Whom?
Originally posted on CityStink
Thursday, November 8, 2012
Augusta, GA
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.
Part 2 of Reviewing Augusta’s Tee Center Contracts
When Augusta’s Trade, Exhibition, and Event (TEE) Center was officially presented as a concept for approval in August 2007, what stood as the partnership agreement was an unsigned, undated document entitled  “Term Sheet.” between the city and Marriott Hotel Franchisee Augusta Riverfront LLC. Under that agreement, Augusta was not in the catering business and was not slated to furnish $1.4 million in kitchen equipment, or if it was, that detail was not spelled out for the Augusta City Commission.
Much has been written on this blog about the saga of the Tee Center Kitchen Equipment and that tale is not one to be retold now.
What is now germane is  that the Augusta Commission has been presented with a raft of contract and legal documents to be approved and executed that clearly should have been in place by late 2009, having been repeatedly promised as being “finalized” by City Administrator Fred Russell in the last half of that year. Now the Commission is being asked to whisk these complicated deals through in an expedited fashion lest Tee Center events face cancellation.
After the Management Agreement, the Tee Center Catering Agreement has the greatest impact upon TEE Center operations, as Augusta Riverfront LLC is already the Manager of Augusta’s Conference Center and Caterer for events there. Augusta is paid no share of catering from its Conference Center under previous deals.
The following represents a summary of the primary Catering Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form,  write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.
Solutions were designed to be the product of meeting participants and were not suggested in the summary.
The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.
 Primary Issues
  1. Since most of the language in the Catering Agreement mirrors the language of the previously-reviewed and annotated Management Agreement, this document will only be annotated with comments and questions unique to this agreement.
  2. Phantom legal documents (see “ Conference Center Management Agreement dated____, 2012”) should not be referenced.
  3. ARLLC (Augusta Riverfront LLC) is both Conference Center operator and Caterer with a captive LLC (TEE Center Manager Augusta Convention Center Management LLC) between them. Isn’t this just a fiction to eliminate a conflict of interest as alluded to in the Catering Agreement?
  4. Controls over inventories of food and beverage (to prevent co-mingling of Augusta, Hotel and Conference Center purchases) being in place before contract execution should be mandatory.
  5. If Kitchen doesn’t serve Hotels (as has been publicly stated by the Marriott General Manager), can’t that reference be taken out?
  6. Cross over events into the Conference Center will deprive the Tee Center of catering revenues, while the agreements relieve the Conference Center of costs.
As with the Management Agreement, time will tell how many of the above issues are addressed, handled, and rectified.
 -AG
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. He is a frequent contributor to CityStink.net.

Can Augusta Avoid Outsized Tee Center Costs?

Augusta’s Tee Shot Hits Rough
Originally posted on CityStink
Wednesday, November 7, 2012
Augusta, GA
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.
Part One – The Management Agreement
When Augusta’s Trade, Exhibition and Event (TEE) center was approved in 2007, prudence might have suggested that one of the first steps in the process of building the facility might have been to execute the Management Agreement in advance.  This being Augusta, Georgia, where almost nothing is done in accordance with normal business practices, the building has gotten within weeks of being used before a management agreement was even submitted to Augusta commissioners for approval. Worse, the management agreement was one of a covey of documents to flush out for approval.
A very rapid assessment of the provisions of the contracts was needed, because the proposed Manager immediately began hawking the loss of events that might result if the Augusta Commission has the temerity to actually deliberate on the terms and conditions of the entire contract documents.
The following represents a summary of the primary Management Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form,  write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.
Solutions were designed to be the product of meeting participants and were not suggested in the summary.
The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.
Tee Management Agreement Major Issues at 11/2/2012
  1. Differences in 2007 and 2009 Commission Approvals and these Documents. No cost cap. Unlimited conduit to Augusta General Fund.
  2. Cost shifting between agreements. Electric utility example. Beer inventory example. $300,000 a year for 50 years = $15,000,000( Augusta’s Laney Walker Improvement cost calculation method)
  3. Kitchen built under Tee Agreement where ARLLC supplies equipment switches to 50 year Conference Agreement where Augusta supplies and repairs kitchen equipment with no revenue from Conference Center.
  4.  No accounting provisions for backcharged labor to Hotels or any other credits, refunds, rebates, or other benefits going to Augusta.
  5. Cross indemnification between Tee and Conference Center – sever-ability issues. WHO IS LIABLE?
  6.  Too many ways to circumvent Annual Plan, including that an unknown, unknowable “Standard” trumps everything, including Annual Plan.
  7.  Fringe benefits and bonuses, including for LLC PRINCIPALS, are unlimited.
  8. Accounting and auditing envision most of the accounting off TEE Center books, without rights of audit to ALL HOTEL ACCOUNTING records on a real time basis.
  9. Conventions can be booked using Tee Exhibition Hall while using Conference Center where Augusta gets no revenues.
  10. When Augusta signs these contracts, it assumes extraordinary indemnity provisions immediately so that it would have to advance payments to the Manager to defend the Manager from actions by Augusta
Time will tell how many of the above issues are addressed, handled, and rectified.
-AG