Category: Augusta Politics

Breaking News!: Committee Fails to Pass Parking Deck Agreement

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Originally posted on CityStink
Mon. Jan. 30, 2012
Augusta, GA

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. Cost Recovery Works is no longer in business, as of December 31, 2020.

!Breaking News!

This just in. The revised management agreement for the new $12 million Reynolds Street Parking Deck has failed to win approval in committee. In a 2-2 tie vote, the motion to send the deck agreement to the full commission with committee recommendation failed by default. Committee members Jerry Brigham and Wayne Guilfoyle voted in favor of sending the deck management agreement forward without a recommendation. Commissioners Alvin Mason and William Lockett were opposed. It takes at least 3 votes to pass a motion. Ties cannot be broken in committee and thus the motion fails by default.

This vote comes amid a new controversy that City Stink broke last week revealing that there are liens on the property under the deck held by Wells Fargo Bank (formerly Wachovia) as collateral for a loan to prospective deck operator Augusta Riverfront, LLC for more than $7,000,000.

Commissioner Bill Lockett wanted to hold off on the vote altogether to proceed with the management agreement until after a forensic audit of the land transactions and financing of the parking deck is completed. Brigham asked if the forensic audit was germane to the discussion over the management agreement. General counsel Andrew McKenzie said that it was.

Lockett’s motion to delay the agreement pending the outcome of the forensic audit failed 2-2 with Guilfoyle and Brigham opposed.

The attorney who handled most of the legal transactions for the city over the parking deck, Jim Plunkett, was in the hot seat at today’s committee meeting. As we told you last Friday, commissioners were never told about the liens by Plunkett or city administrator Fred Russell, nor were they told that a parcel under the TEE Center itself was never deeded over to the city by Augusta Riverfront, LLC as it was promised on multiple occasions. That took most commissioners by complete surprise. Some commissioners were calling for Plunkett to be removed as the attorney overseeing the project on behalf of the city. That sparked Fred Russell to jump to Plunkett’s defense. Committee chairman Jerry Brigham shouted over everyone that he had heard enough.

Attorney Jim Plunkett told commissioners that he had an agreement from Wachovia (now Wells Fargo) for release from the liens prior to construction of the deck. Plunkett also told commissioners that easements could not be established until after construction of the deck was completed. From the expressions on the faces of commissioners and others in the chambers, it was obvious not many people were buying that line. Bill Lockett asked about the timing and the release of information and why commissioners were consistently left out of the loop.

Commissioner Lockett told Plunkett, “This body has been misled over and over…”

Commissioner Aitken, who is not on the committee but was present in the chambers for other business, urged committee members to forward the parking deck on to the full commission for approval saying that he was proud that Augusta Riverfront, LLC gave things up in the new agreement. But the revised agreement only had minor tweaks and did not address deeding the land to the city as commissioners were originally told it would be at the Dec. 9th, 2009 commission meeting where the TEE Center and deck were approved.

Aitken said, “Sometimes when votes are cast we have to deal with it and move forward.”

But for now, the management agreement is stalled until commissioners get more information. But the city finds itself in a real pickle. According to Jim Plunkett, an agreement between the city and Augusta Riverfront, LLC must occur before the air rights will be released.

Now the big question is: What happens next?


Bowles was absent from the committee meetings today. His position on the matter is crucial. Now the agreement moves on to the full commission next week without any action or recommendation from the committee. All eyes will be watching Bowles. He could be the wild card in all of this.
Stay tuned, we will bring you more updates.***

Deeds and Misdeeds: A “Chronicle” of Promises to Donate Land for TEE Center/Parking Deck

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“Donate the land? We were only joking!”

Originally posted on CityStink
Monday, Jan. 30, 2012
Augusta, GA
By Al Gray

The Author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

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, totaling 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 a Chronicle story from January 13, 2007 by staff writer Laura Youngs (Editor’s Note: the article is no longer available online.) 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 (Editor’s Note: article is no longer available online) 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.”

Bad Investment

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 construction.

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 the possibilities?”

 Russell:   “They’ve agreed to donate the property. ”

Commissioner Betty Beard had earlier raised questions about land ownership at a July 7th, 2009 commission meeting with 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.***

Fred Russell is Running Out of Excuses

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Originally posted by CityStink
Friday, Jan. 27, 2012
Augusta, GA
Commentary
By The Outsider

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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Just how many more major screw-ups from Fred Russell will Augusta Commissioners tolerate?  Well it doesn’t get much bigger than the total clustermuck over the TEE Center Parking Deck. As we told you with our breaking news story yesterday: TEE Center Parking Deck Air Rights Gone With The Wind!, not only does the city not own the land under the deck, but that land has liens on it held by Wells Fargo Bank (formerly Wachovia) for use as collateral on a loan for over $ 7 million to Augusta Riverfront, LLC, the same entity seeking the management contract for the deck and the TEE Center. That not only puts the city at a huge disadvantage in the negotiations over the management contract, but it also appears to leave taxpayers at risk of losing their $12 million asset if Augusta Riverfront, LLC defaults on their loan. That’s a position the city should have never been put in.

But that’s exactly where we are. And what’s Fred’s response? Well this is what he told George Eskola of WJBF yesterday:

“We’ve got lawyers, we got bond attorneys, we’ve got everybody who’s charted around, thinking this is safely where we need to be. At the end of the day and people on the sidelines are having issues.”

Oh really? I suppose the, “people on the sidelines” Russell is referring to are the citizen activists like Lori Davis, members of Augusta Today and City Stink who exposed this new bombshell. And we have to wonder if this news would have ever come out if not for the tenacity of  these citizen activists. It appears that commissioners were completely surprised by these revelations. Mayor Pro-tem Joe Bowles said in George Eskola’s report:

“We didn’t know that, of course, and that’s something we just got information on. I’m waiting for clarification from our attorneys. If we built a building on property that, you know, secured debt for somebody, I do have a serious issue with that.”

We are glad that the Mayor Pro-tem is taking this issue seriously, but he and other commissioners and the Mayor should be more than just concerned, they should be downright outraged. It seems that the more layers of the TEE Center/Parking Deck onion you peel away the more rotten it gets. And it appears that commissioners have been left in the dark through the entire process. And who’s job is it to keep commissioners in the loop? City administrator Fred Russell.

Russell knew about the liens, but neglected to tell commissioners. But Russell also told commissioners the land would be donated for the deck, but neglected to inform them again when that changed to only “air rights.” How can commissioners continue to have confidence in a city administrator who consistently leaves them in the dark on some of the most important and expensive issues facing the city?

And it’s not like this is the first time. Russell cost the taxpayers hundreds of thousands more than it should have cost to terminate incompetent employees because he did not keep accurate records of their true job performance and then he negotiated their very generous golden parachutes. When commissioners gave Russell more authority over personnel matters, he took that as an opportunity to award generous raises to over 40 select employees, when commissioners were looking for more cuts to balance the budget. We could take up an entire column on previous Russell screw-ups, but we will leave that for another time.

Now Russell is saying that the issue of the bank liens on the property where the $12 million parking deck sits is just a matter of some “loose ends” that need to be tied up by “the lawyers.” Oh really? Well shouldn’t all of these “loose ends” had been taken care of before the city built a $12 million parking deck with taxpayer’s money on land it doesn’t even own that has liens against it? Who would build a house on someone else’s property that had bank liens against it? You don’t need a degree in finance to understand the stupidity of these actions. And Russell’s excuses just aren’t adding up.

And what about those lawyers? Russell is not the only one to blame here. Commissioners should also have some serious questions for attorney Jim Plunkett, who handled most of the legal transactions and bond financing for the city over the TEE Center, the parking deck, and the Laney-Walker/Bethlehem Redevelopment. Surely Plunkett knew about the liens, so why did he not take care of clearing up those “loose ends” before the city started up the bulldozers on the construction of the $12 million parking deck? Why were the bonds issued before the liens and other ownership issues were taken care of? And should we expect any similar surprises over the transactions involving the Laney-Walker/Bethlehem redevelopment with its bond financing inextricably tied to the TEE Center/parking deck?

Plunkett has a long relationship with the city in handling legal matters involving these public-private partnership real-estate ventures. Records show that the city paid the Sherman, Plunkett and Hamilton firm $577,538 for outside legal work last year. Susan McCord documented the particulars in a series of articles. She wrote, “Jim Plunkett specializes in economic development legal work, such as the public-private partnerships between Augusta and operators of the Trade, Exhibit and Event Center and the Laney-Walker and Bethlehem redevelopment project.” (Editor’s Note: January 8, 2012 article by Susan McCord no longer available online.)

But in this case it appears it was the private interests being protected and the public’s interest was being put at great financial risk. We have to wonder if this is the first time something like this has happened regarding one of these Public-Private Partnership real-estate developments, or is it just the first time it has been exposed? Perhaps that’s something for investigative journalists to look into.

But now the ball is in the commissioners’ court. How will they proceed  over the management agreement with Augusta Riverfront, LLC with these revelations? And how will they deal with this latest Fred Russell screw-up? And what about that forensic audit that commissioners approved back in December to look into irregularities over the land deals involved in the TEE Center Parking Deck? Should that not be expanded to included the entire TEE Center and the Laney-Walker redevelopment? And why would commissioners trust Fred Russell to help choose the auditing firm to essentially investigate him? And can commissioners now truly trust Russell to negotiate a deal over a proposed downtown ballpark with Ripken Baseball in the best interest of the taxpayers? Maybe it’s time for commissioners to rescind that vote on tasking Fred Russell to develop a creative financing package for that ballpark. Can they really trust Russell with handling another multi-million dollar development after this?

Ok, commissioners, it’s up to you now. It’s time to stop dragging your feet on the forensic audit. And it’s time for you to honestly reevaluate the confidence you have placed in city administrator Fred Russell. Oh, and we’re still waiting to see some leadership from Mayor Deke Copenhaver on this issue. Time is running out and the public is watching.***

Stay Tuned. More is to come on this issue.

Paul Broun Schooled on His RINO Friends

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In March 2010, Arrowflinger Al engaged Dr. Paul Broun at a Lincolnton, Georgia town hall meeting. Topics were financial fraud, mad GOP spending, and GOP party principles.

More recently, local Augusta, Georgia talk show host Austin Rhodes was embarrassed by the National Defense Authorization Act Controversy when Paul Broun had a radio town hall meeting on his show on Friday January 13, 2012. Broun inexplicably voted for NDAA, gutting the Bill of Rights. Rhodes has since excoriated Arrowflinger Al for “suddenly” turning on Representative Broun but that was the fourth time Broun was engaged by this former supporter and urged to change his history of support of fake Republicans or to stop the financial looting of America with law enforcement.

Is this true? Did Broun get unceremoniously and dumped by this loyal supporter? Or was the supporter justified in deciding that Broun had been dismissive of his concerns over four public meetings in 5 years?

First, Broun was engaged at a fundraiser in Augusta in 2008, then this meeting in 2010, then on C-Span again in the fall of 2011, and finally on the January 13, 2012 town hall meeting.

How many second chances does Paul Broun think he deserves?

Anybody who gave Barack Hussein Obama power and dominion to seize the Arrowflinger without a warrant, detain him without limit, provide no notice to next of kin or even execute him is to be opposed with every fiber in one’s being.

Sorry Paul. Times up. You had one more last chance. You blew it.

That Constitution you carried around in your pocket was just a prop by just another common politician.

This saddens. It is life. The really great thing is that your opponent, Steven Simpson is a really bright man who is consummately prepared to replace you.

(video courtesy of the Lincoln County Technology Department)

Breaking News! TEE Center Parking Deck Air Rights Gone With The Wind!

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!!CityStink Exclusive!!

No Police Protection, Just a Liened Deck?

Originally posted on CityStink
January 26, 2012
Posted at 1:37pm
Augusta, GA

By Lori 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Let me say right now I am not a real estate expert. I can only speak from years of owning, buying and selling homes. Every time I bought a house and financed it, there was a security deed recorded by the bank that had to be satisfied before I could sell it or at the time of the sale. My lawyers would get a cancellation of the security deed recorded so that the property liens would be ended. We all know and have been through this.I first raised my concerns about irregularities with the ownership of the land under the TEE Center and companion parking deck in an article that appeared in City Stink on January 11, 2012. See: TEE Center LLC Trap. At the time the local media paid little attention to my findings. Well, I think this new information may change that.

Why didn’t Augusta Richmond County worry about cancellation of a series of security deeds, security deed modifications, and financing statements filed against the land 933 Broad, LLC owns under the TEE Center deck? Why wasn’t this done before Augusta built a $12 million structure on top of this land it doesn’t own? (please see documents at the bottom of this story)

The very simple real estate indexes at the clerk of court’s office show no cancellation of these security deed filings. Where are the cancellations?

IF there were no cancellations, and all of this paperwork is still good, hasn’t our city-county government made one of the biggest errors any of us has ever seen? Whose parking deck is it now, anyway? If the TEE Center and deck management deal is for 15 years, is the deck that landowner’s at the end of just 15 years?

IF the landowner defaults on the loans, won’t Augusta lose its prized $12 million facility to the bank? There are no filings establishing any rights whatsoever of Augusta to this land, as far as I know and what previous media reports have told us.

IF the loans are still in place, how is the interest on the loans going to count against the Tee Center profit and losses that Augusta shares in?

IF the city had not established a value of more than $2.1 million an acre (based on land swap and hot dog operator buy-out costs) for Senator Jackson’s .07 acre corner, what would have claimed as the land value? The tax assessor’s value? If Augusta has to buy the land after the fact, what will it cost after this charade?

IF all the liens are there, why on earth would the commission want to rush approval of the TEE Center and deck deal before Bill Lockett and the 5 other commissioners’ forensic audit is done? Why the rush? I think we know now.

Can the other LLC, Augusta Riverfront, borrow against the parcel that it owns under the Tee Center itself? It doesn’t look like there are security deeds on it, but that side of the street is a huge complicated blizzard of paperwork. I get a headache looking at this stuff.

How did Fred Russell expect to get any rights at all without running into the deeds? I got it – we got air rights!

The people got air rights while somebody got a free $50 million facility? Over in Harrisburg bullets fill our air because Ronnie Strength’s budgets get slashed. If you think I am angry over this, you are right!

I am not a lawyer, but these are questions that demand answers and accountability.

Does anybody in Augusta’s administration have a clue? As of the writing of this story, City Administrator Fred Russell has confirmed that liens still do exist on the property where the deck is located. Wonder why he never informed the commissioners about this?

Fred has to go.***Stay Tuned to WJBF News 6 tonight for George Eskola’s report on this story

Below are some of the documents supporting this article (3 separate .pdfs total)
There are more documents that will be released in due time, so stay tuned.

933 Broad Plat

933 1st UCC

2010 933 UCC

ArrowFlinger Report 01192010: NDAA Vote by Rep. Paul Broun

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Here is Rush Limbaugh to explain to Representative Broun the enormity of his disastrous vote for the National Defense Authorization Act.

https://youtu.be/MGkrrFLspQw

Here is Paul Broun discussing the matter on C-Span Washington Journal.

https://www.c-span.org/video/?310075-4/representative-paul-broun-fiscal-cliff

(Note: The above linked clip contains the following Licensed Music:

Song: My City Was Gone  Artist: Pretenders  Album: My City Was Gone
Licensed to YouTube by WMG (on behalf of Warner Music UK); Big Deal Music (Publishing), Sony ATV Publishing, LatinAutor, Abramus Digital, LatinAutorPerf, BMI – Broadcast Music Inc., and 9 Music Rights Societies
Clip is included for reference in discourse as a matter of Journalism, serving an Educational purpose for the Public Good, and is herein included under the terms of Fair Use.)

Al Gray: Now, A Fair Deal from the Governor

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A Fair Deal From the Governor

Originally posted by CityStink
Sunday, Jan. 15, 2012
Augusta, GA
By AL Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Among Governor Nathan Deal’s 2012 legislative proposals there is real gem, one that cries out for implementation and doesn’t require new legislation – taxation of internet sales. Enforcing the abandoned use tax requirements already on the books will increase Georgia’s tax revenues from sales and use taxes to where they should be, increase fair compliance, and put Georgia’s imperiled retailers on equal footing with out-of-state wholesalers and online sales sites, like the booming Amazon.com.

Cries of “taxing the Internet” or this being a tax increase are wrong. Ignorance of the law is no excuse. The existing laws of the states with sales taxes, including Georgia, invariably include a reciprocating use tax. Georgia has a use tax that operates this way – if the consumer buys an item of taxable tangible personal property where the seller did not charge the sales tax, that consumer is legally bound to complete a use tax return and pay the use tax due to the state at the time of filing the return.

This is the use tax return form and instructions explaining how the use tax operates.

No new legislation is needed. This is not a new tax. It is the Georgia “Fair Tax.” Everybody pays, or they should be paying. Why not allow and encourage the Georgia Department of Revenue to audit residents for payment of the use tax on their online purchases? It can be done electronically by requesting taxpayers’ annual credit card listing of transactions to allow the revenue auditors to verify that purchases from unregistered, unremitting out-of state firms have been reported for use taxes and that the taxes have been paid on taxable transactions.

Auditing use taxes would very quickly gain compliance from the imposition of interest at 12% and onerous penalties, provided that the use tax return was updated to provide for payment of these items. Another boost to compliance is that there is an infinite audit period for residents who have not filed, because failure to file eliminates the 3 year statute of limitations. Couple 12% interest onto 10 years of taxes will get anyone’s attention!

The first group to be audited and brought into compliance with the laws of the state should be the members of the Georgia General Assembly. The politicos can lead by example or face being made examples. The Georgia Department of Revenue should be required to audit these Georgia citizens first, publicize failures to comply, and impose full penalties and interest for a number of years.

Once citizens and legislators, alike, rediscover this Fair tax, Georgia’s retailers will have more than a level playing field because of the onerous shipping and handling charges applied by the online sellers.

Congratulations to Governor Nathan Deal on this very timely, justified, reasonable, and fair component to tax reform. It is one that will work. Thank you, governor, and let’s roll with this great idea.

Good Deal.***

Al Gray

Sen. Hardie Davis’ Tax-Free Energy Drink

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Taste Grates, Less Filling

Orginally posted on CityStink
January 14, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

When Augusta Democrat Senator Hardie Davis heartily endorsed Nathan Deal’s latest financial brainstorm, the elimination of sales and USE tax on energy used in manufacturing, we were surprised for a host of reasons, the main one being that it will cost Augusta Richmond County $millions in lost tax revenue. In a time that the state and municipal governments are desperate for revenue, Davis wants to give away stable sources of sales taxes that cannot be replaced? He wants to shift the Georgia tax burden from corporations to constituents on fixed incomes, like social security recipients?

Then it hit us. Hardie Davis is switching to the Republican Party. Good for him. It will be a marriage made in heaven – the Gold Dome. It might be even smart politics. Everyone involved can guzzle tax free energy drinks courtesy of the Georgia Traditional Manufacturers Association (TIPAC). The legislators have a ken for fun drinks, but to constituents this one grates the tongue and doesn’t fill the revenue coffers with anything more than hot air.

If Hardie isn’t going GOP, he has sure failed us with a stellar imitation. Right about now, Hardie and every other GOP hawker of this money give-away are screaming about passing this exemption to become “competitive.” Change the word to “cannibalistic” and you about have it. What this give-away does is to strip Augusta Richmond County and the 13 county region of $11 million of sales tax revenues over 10 years, if you believe the projections underlying the huge new transportation tax increase. This writer knows the losses to be far worse. You can multiply that $11 million (see page 11) by 4 – the loss on the new 1% transportation tax, plus the existing 3% local, special, and educational taxes, for a stunning $44 million over ten years! If the legislators tinker with not having the exemptions apply to local sales, that subverts the simplicity always cited for a sales tax.

Just one Augusta manufacturer provided a written statement in 2010 to the Georgia Tax Reform Council that indicated that her plant pays $2 million a year in state sales taxes on electricity and a staggering $1.5 million a year in local Augusta Richmond County taxes. Right about now some of you readers are exclaiming, “The consumers of the plant’s products really pay those sales taxes!” Right. The problem is that the vast majority of consumers paying the embedded Georgia and Augusta tax of our manufacturers are in other states. Tax payments by consumers spread the revenues around so that they come to rest outside of Georgia. Does this still sound like a good idea?

The $1.5 million Augusta will lose from that plant on SALES taxes is probably dwarfed by USE taxes that are paid by every Augusta manufacturer that uses a heating process loop in any of their production and manufacturing utility systems. This new exemption also covers industrial fuels, such as coal, natural gas, or diesel fuel in addition to electricity. This revenue loss could easily be between another $2 million and $3.5 million of Augusta local taxes (without the new transportation tax). How will Augusta make up the loss of $3.5 to $5 million of local tax? Is it that easy? On the state tax side of the ledger, doesn’t Georgia need the corresponding $7 million or so to pay teachers?

We sympathize with Georgia companies who are hurting, but what about her people?

The Hardie Davis tax free energy drink won’t sustain financial life in a host of other Georgia municipalities with similar concentrations of manufacturing, such as Chatham, Glynn, and Daugherty counties. Even worse will be the unsuspecting smaller counties with an unknown large energy user. State sales tax reporting to counties doesn’t show the source of the revenues, so many really don’t know what is about to hit them. For example, even though the textile industry has moved largely offshore, electricity-guzzling yarn plants have remained in Georgia and the USA. Can little Rabun County afford the loss of $1 million in sales taxes? Heard? Mitchell? Putnam? Effingham? Bartow?

Proponents of the tax free energy treat cite competitiveness needs between the states. This has some validity, as other states have chosen to cannibalize tax revenues in a futile attempt to overcome the $30 an hour labor cost difference with China, just as Georgia has futilely spent as much as $168,000 per $40,000 auto plant job in the race for our politicians to claim some very strange bragging rights. This will be just throwing good money after bad.

Since the justification for this tax break is to attract new plants one compromise that could be made comes out of Georgia’s own manufacturing tax rules from the 1980’s. Back then, a new manufacturer or a major plant expansion qualified for new exemptions, while existing ones had to be content with the incentive packages that they received upon building in Georgia. This would satisfy the lack of competitiveness for new plants without destroying the fruits of the past and the revenues of many Georgia counties with them.

That we would welcome Hardily and Senator Davis could keep his Democratic Party bona fides. Who knows, Augusta even might get an energy drink bottler, with $168,000 per job incentives, of course. Better yet, let’s return good old fashioned mathematics to the legislature. Professor Davis can lead our way instead of drinking Gov. Nathan Deal’s Kool-aid.***

AG

Exclusive: Magnolia Trace Double Take: County Attorney Worked for Developer

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Angry residents gave commissioners and the county attorney an earful back in December

Originally posted on CityStink
January 13, 2012
Appling, GA
By Hwy 221

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

At the tumultuous Columbia County Commission meeting over the Magnolia Trace subsidized housing subdivision on December 6, 2011 City Stink videographer Jill Peterson caught WGAC radio talker Austin Rhodes lending sage advice to Columbia County Attorney Doug Batchelor here:

(Editor’s Note: For the records of the entire meeting, refer back to our article from December 7, 2011, Magnolia Trace: After The Storm (videos with enhanced audio) )

In case the audio was too poor for some readers, Rhodes said, “From now on, you make sure that Mr. Batchelor has a standing order that if anybody like this comes in his office again – kick them out.” The double sounds of “Kaaa-Chinngg…” might have been ringing so loud in Batchelor’s ears that he missed Rhodes’ imperative.

As with most CityStink pieces, let’s seek guidance from the deed and court documents. Directives to mail executed sales documents to Mr. Batchelor appear on the warranty deed for the sale of the land on September 23, 2011 by Dorra, LLC. To Magnolia Trace, LLP recorded in Deed Book 7987, Page 196, and it looks like Mr. Batchelor signed as a witness on Page 197. Here are the delivery instructions:

PLEASE RETURN TO :
Douglas D. Batchelor

Hull Barrett, P.C.

7004 Evans Town Center Blvd., Suite 300

Evans, GA 30809

Directives to mail executed and recorded documents to Mr. Batchelor appear on the security deed from Magnolia Trace, LLP on September 23, 2011 to Sterling Bank, recorded in Deed Book 7995, Page 25. Here are the delivery instructions:

WHEN RECORDED MAIL TO :
Douglas D. Batchelor

801 Broad Street – 7th Floor

Augusta, Georgia 30901

Directives to mail executed sales documents to Mr. Batchelor appear on the Assignment of Rents from Magnolia Trace, LLP on September 23, 2011 to Sterling Bank, recorded in Deed Book 7995, Pages 35-39. Here are the delivery instructions:

WHEN RECORDED MAIL TO :
Douglas D. Batchelor

801 Broad Street – 7th Floor

Augusta, Georgia 30901

The warranty deed was recorded in the Columbia County Clerks office on September 26, 2011, with the security deed and assignment documents being recorded on September 29, 2011, apparently after being signed by Sterling Bank of Poplar Grove, Missouri and returned for recording. The assignment was re-recorded on October 10, 2011, to include a missing exhibit.

The odyssey that began in the Spring of 2010 in Mr. Batchelor’s office looks to have concluded in his office in late September 2011 with Magnolia Trace, LLC land purchase documents. Why were the developer’s purchase documents signed in county attorney Doug Batchelor’s presence? Why were the security deed and assignment papers directed to be returned to him after they were recorded? Does the county attorney usually become involved in closing developers’ property? The protesting citizens were told that the county had nothing to do with the sale of the Magnolia Trace property. Was this the truth? If so, why these delivery instructions? Was Mr. Batchelor serving two masters while garnering pay from both? Why are there no other local attorney’s work in evidence on the sale documents?

A decade ago a group of property rights activists was seeking support from Evans businesses in battling the Evans Town Center ordinance and thought a car dealer to be a likely ally. The manager very quickly asserted that he didn’t see that they had a problem, because the county attorney who wrote the ordinance was their attorney. Frankly, that story wasn’t believed then – there was no substantiation of it – and is hard to believe now. The county video of the December 6 meeting shows uncharacteristically halting, stammering, and searching by Doug Batchelor. That was hardly reassuring.

Earlier this week, the report of the special outside counsel engaged to explore ways of halting Magnolia Trace construction was released. It said that the development cannot be stopped.

The legal work on the other side in advance was just too good to overcome.

CityStink Exclusive: The TEE Center LLC Trap

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TEE Center under construction on Reynolds Street
**CityStink Exclusive!**

Originally posted on CityStink
Jan. 11, 2012
Augusta, GA
By Lori Davis

Al M. Gray, President of Cost Recovery Works, Inc., contributed multidisciplinary review techniques in support of this article. Cost Recovery Works is no longer in business, as of December 31, 2020.

On December 1, 2011, several weeks prior to the Augusta Commission’s vote to engage a forensic auditor to investigate the TEE Center Deck ownership fiasco, I submitted an Open Records request to the Augusta Law Department in an attempt to get to the bottom of  the confusing procession of statements coming from Administrator Fred Russell, Mayor Pro Tem Joe Bowles, and others. I received a response to this request from Staff Attorney Kenneth Bray on December 15, 2011.

Most of the information provided dealt with the Laney Walker Overlay. Most of the rest was missing any dates, including the negotiation term sheet and a schedule which was labeled as a modification. The total packet was about an inch and a half thick. After skimming the documents, I called upon Augusta Today and CityStink.net contributor and cost recovery analyst Al Gray to assist in completing my review.

What we found was stunning new information buried in the document pile. I will get to that later.

The first item requested was information relating to the land under the TEE Center Deck being security for any loans or bonds. Since the bonds were known to be general obligation bonds and were tied to the Laney Walker project funding, this was precautionary, with no documents necessarily expected to come back from the Law Department. They provided the bond package for the combined Laney Walker and TEE Center funding.

Emails and any other correspondence relating to the deck between any and all Augusta government parties were requested. None were returned. The Law Department cited pretty wide attorney-client privilege. I was very disappointed by that, given publicized remarks attributed to outside counsel Jim Plunkett about events surrounding the failure to have the various parcels under the parking deck donated by Augusta Riverfront, LLC. Much has been said of discussions of air rights. I hoped to get clarification of that. It looks like the forensic auditor might run into immediate stone walling, based upon the response to my inquiry.

Since Mayor Pro Tem Bowles has spoken on The Austin Rhodes Show and elsewhere of having saved the city $1.5 million due to the ownership and financing, I thought that the request would have at least produced the analysis upon which he was basing his claimed savings. I guessed wrong. Do you suppose the savings are the same place as Augusta taxpayers’ property rights with the deck, which is “up in the air?”

A really obscure document I requested was an insurance certificate from TEE Center and Deck contractor R.W. Allen to Augusta Riverfront, LLC, as an additional insured during construction. While this document is not one that Augusta would have in its possession, Augusta’s program manager Heery International probably should have it and it should have been accessible. Not having this insurance document suggests that R.W. Allen thought it was working on land owned by the Augusta government, not owned by Augusta Riverfront, LLC. It also suggests that program manager Heery was caught off guard, too.

I couldn’t form any conclusions as to whether the land under the decks owned by Augusta Riverfront, LLC was to be donated or not because the documents provided conflicted on this point and had no dates to tell me what the final word was. The dating is critical. There was an undated “modification” to the Augusta Riverfront Term Sheet in the package. It might have been created last week, for all the public knows.

The undated, unsigned “Management Agreement Term Sheet” between the City of Augusta and Augusta Riverfront, LLC in paragraph 6 states, “LLC will transfer to Augusta that portion of its property needed to develop the Trade Center and parking, adjacent to the Convention Center. This land transfer, which will not include air rights, will be at no cost to Augusta.” This term sheet seems to have been modified to reverse this part of the transaction. With no dates, it isn’t possible to tell the sequence of events.

What is clear is that Commissioner Johnny Hatney was told several times by Administrator Fred Russell that the land under the deck owned by the LLC was going to be donated at the December 7, 2009 meeting at which the TEE Center was approved by the Augusta Richmond County Commission. Russell did not clarify that only limited air rights were donated. I think most of the public thinks his talk of, “property that’s going to be donated,” means just that, not “air rights.” Besides, there are schedules that were presented to the commission that show the value of the “Donated Property,” $464,353, as being the assessed value, not plus or minus the “air rights.”

Amazingly, Parcel 037-3-047-00-0, land under the $38 million TEE Center itself, remains owned by Augusta Riverfront, LLC. There have been no recordings with the Clerk of Court Office documenting any changes in the ownership rights with this piece of land, including air rights. As precise as the legal documentation of land ownership and rights is, isn’t it wild that this could happen?

Augusta built $50 million of buildings, some costing nearly $200 per square foot, on land it only partially owns. The taxpayers might get the “air rights” to a parking deck they paid $12 million for. The LLC’s get guaranteed fees and to keep the property, which gives them dominance over the entire complex forever. (A)

“Donation” now means having your cake and getting paid to eat it, too.

Fred thinks this was a bargain.


A forensic audit cannot happen soon enough, and trust me, we will be watching every step of the way.

A. According to the detailed term sheet, the public was guaranteed not much more than that the LLC bears losses after the operations loses $250,000 of the public’s money, and that figure excludes depreciation and interest. The public would bear those in addition to the losses. According to the modification provided, this was changed to the LLC’s getting fees and the public taking the gains and losses from operations.

Augusta Tee Deck Open Record Request Response
Tee Land Acquisition Documents
TEE Center Term Sheet Document
Term Sheet Modifications Undated Current Tasks Including Deck Info