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

$15 Million Augusta CONference Center Pays $25,000 a Year to City

Originally posted by CityStink
Thursday, November 1, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Augusta Riverfront LLC is the proposed caterer for the City of Augusta’s new Tee Center and a sister company is slated to be the Tee Center Manager. On Tuesday Augusta Riverfront’s Darryl Leach appeared on the Austin Rhodes show on WGAC to defend the controversial contracts for catering and management presented to the Augusta Commission.  During the show Leech brought up the fact that the existing Augusta Conference Center had cost Augusta about $14 to $15 million to build.
Since I just got back a response to my Georgia Open Records Act Request for Conference Center lease payments last week it was surprising to hear that those buildings cost $15 million 11 years ago. What was more surprising is that Augusta only sees about $25,000 a year in lease payments on that $15 million complex!
Yes, you read that right. Augusta’s return on the Augusta Conference Center   is 0.17% a year!
Scanning the accounting I got from Augusta’s legal department was interesting, to say the least.
In the Tee Center Workshop on October 10, 2012, Augusta Riverfront LLC President Paul Simon said this regarding the Conference Center  lease : “However, we get in that case we get all of the profits from the center except we give the city 5% of the room rents, not just catering .” Maybe he meant to say  “just not catering”, but then Augusta attorney Jim Plunkett earlier in the same meeting referred to Conference Center profits/ losses being shared by the city.
Wait a minute. The records that I got from the records request show that the leases were figured at 5% of the greater of Center expenses or Center revenues, with Augusta getting $23,395 in 2003, $21,493 in 2004, $25,137 in 2005, $24,381 in 2006, $27,559 in 2007, $14,828 in 2008, $26,277 in 2009, $26,434 in 2010 and $25,992 in 2011! The revenue figures were room rentals alone with NO CATERING REVENUES INCLUDED!
The 1999 Agreement that covers this says that “miscellaneous revenue” is supposed to be included in the base for the annual lease payment calculations. Isn’t catering an item of “miscellaneous” revenue, when it was not excluded from the contract language for the lease payment calculation?
The Conference Center lease says that the annual lease payment and reporting is supposed to be submitted by Riverfront’s “certified public accountant”, but  we could not find the name of the Riverfront  controller on the roster of Georgia CPA’s.
Expensive Issues for Augusta:
In 2008, Riverfront deducted $13,164 from Augusta’s payment for resurfacing the hotel parking lot. This sort of expenditure doesn’t seem covered as an Augusta cost because hotel parking lots are hardly this city’s responsibility, although it might be covered under the separate parking lease referenced in the agreement. It looks like Riverfront arbitrarily reduced Augusta’s payment to cover an expense that they felt entitled to.
If Augusta gives them a bank account that is an open pipeline to taxpayer general funds, like Finance Director Jerry Brigham told us two weeks ago will be the case,  will Riverfront feel ENTITLED to make deductions from payments to Augusta like this?
The next thing I saw that was surprising is that Riverfront figures ½ the electrical utility costs for the entire complex of hotels and conference center go to the conference center! How was this percentage arrived at? For the Tee Center, is this how the $350,000 Paul Simon suggests as the estimated Tee Center Power bill will be figured – a ballpark guesstimate? Should not there be separate metering for the conference center? Is there separate metering to make damned sure that the $350,000 power bill all goes to the Tee Center and not the hotel/conference center complex?
I have submitted an Open Records Request for the electrical design drawings for the Tee Center, in the hope of getting answers to these question from the Augusta Today membership, which now provides access to engineers who now join the Augusta Today and CityStink.net of investigators and watch dogs.
More than one commissioner is sniffing around this one, too.
Even bigger an issue is whether the Convention and Visitor’s Bureau is actively marketing events that cross over from the Tee Center where Augusta gets the costs, into the Conference Center, where Augusta gets no revenue – all revenue goes to Augusta Riverfront LLC.
More than one commissioner wants that question answered too.
It is wonderful to have a clear majority of Augusta commissioners now working for the people. I never thought I would see the day. Most frightening to those wanting to drain Augusta’s general fund should be this – These guys are showing real signs of UNITY!
When do we go the other way and start getting our money back? In the case of the TEE Center,  a power shift is overdue. From the looks of how aggressively Riverfront pursues Augusta’s money, the taxpayers need this commission to show backbone!***
Lori Davis GORA Response 10262012 – Conference Center Lease
LD
Conference Center 2008 Schedule

Mayor Retreats from Locked and Loaded Commissioners on Tee Center

Originally published October 31, 2012 on the defunct CityStink.net site.
Wednesday, October 31, 2012
Augusta, GA
From CityStink.net Reports
Locketted and Loaded was Commissioner Bill Lockett when the Tee Center was removed from Monday’s Augusta Commission Committee meeting. See our exclusive video below:

Commissioners Should Call Paul Simon’s Bluff

Originally posted on CityStink
Monday, October 29, 2012
Augusta, GA
By The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Well here we go again. Just a week has passed since the  contract with Augusta Riverfront LLC to manage  the TEE Center failed to get six commission votes for approval and once again commissioners will revisit the issue today at noon. During the waning hours of Friday, Mayor Deke Copenhaver called for the special meeting of the commission for today to approve the management contract like he did a week ago. This tactic is to keep critics of the contract from being able to get on the agenda to speak out against it. Bottom line is: Mayor Copenhaver is bound and determined to ram this thing through at all costs.
And the costs could be very high for the taxpayers if this contract is approved today. We found out a couple of weeks ago that operating losses for the TEE Center would be around $900,000 a year — and the city would be on the hook for all of it. Mind you, these are the numbers coming from Paul Simon of Augusta Riverfront LLC, and if history is any guide in regard to their numbers, you can probably double those figures. That means that the new convention center could be a drain on the city’s general fund. Compounding these losses are loopholes in the contract that allow Augusta Riverfront LLC to shift their personnel expenses over to the city and even give out generous bonuses to their staff and stick the city of Augusta with the bill.
So what has changed with this contract in the past week? Absolutely nothing. It’s the same bad deal for the taxpayers that commissioners rejected last Monday. The mayor is hoping that he can persuade at least one or two commissioners to give in and approve the same contract today. He sent out an email this past Friday imploring commissioners to approve the contract at today’s special meeting and warned of losses and stigmatization of the facility if conventions have to be cancelled. The mayor is either terribly naive or being purposefully disingenuous.  Let’s hope enough commissioners don’t buy the Mayor’s lame argument. As we understand it, the Mayor may have even lost two votes since last week. We shall see after the results come in from today’s meeting.
Manufactured Crisis
Paul Simon of Augusta Riverfront LLC has been threatening commissioners with the prospect of convention cancellations as a means to force them to approve this hideously lopsided contract. It’s all a ruse and it reminds us of another manufactured crisis from the Fall of 2009, when commissioners were being given a similar ultimatum to approve the TEE center or risk losing a new Hyatt Place hotel. Well here we are three years later and there are still no signs of that hotel. You can read more about that in our previous story: The Hotel that Never Was.
Now why did Augusta Riverfront LLC wait until the 11th hour to bring a management contract forth? Why was this not done months or even years ago? Why? Because by waiting until the last minute, Paul Simon can manufacture a crisis and get the contract he wants — not the contract that is best for the city. In fact, this current contract was drawn up nearly entirely by his attorneys at Hull Barrett.What kind of partnership is that? What were the attorneys hired by the city doing all of this time? You would think the attorneys for both parties would have gotten together in a room and drawn up a contract — with each side compromising on certain points, overall giving both sides a contract with which they were satisfied. But that did not happen. Here we have a contract drawn up by the attorneys for the other side being dropped in the laps of commissioners at the last minute with them being told they must approve it — or else.
Or else what? To hear Paul Simon and Mayor Copenhaver tell it, the new convention center would lose out on conventions scheduled in January if this stinking pile of crap they are calling a management contract is not approved today. It’s all a bluff. Let’s remind everyone that the city is already loosing $900,000 the first year even with these conventions.  Any profit that these conventions may generate will mostly go to Augusta Riverfront LLC. They get the profits from booked rooms in their hotel. They get all of the profits from food and beverage sales prepared in the $1.4 million kitchen that the taxpayers paid for. Does anyone with an ounce of common sense think Augusta Riverfront LLC is going to cancel these events for which they are the sole party making any profit? The city just covers all of the costs, so Paul Simon’s company can make all the profit.
But let’s ask another question. Since Augusta Riverfront LLC does not yet have the contract to operate the facility, what gave them the authority to book these events in the TEE Center in the first place? How do we not know that these first couple of conventions were not already booked for the existing conference center? Does it not seem rather odd that a  group like the Georgia Chiefs of Police Association would book their meeting in a facility without anyone officially in charge to manage it? These events are typically booked many months if not years in advance. We’ve heard two stories — that the Convention and Visitors Bureau was booking these conventions and that The Marriott was booking them directly. But even if the CVB was booking these events, doesn’t a reservation require a deposit? And wouldn’t that come with the assurance that a professional company would be managing the event? Why is all of this being done backwards? Who books conventions in a facility where there is no one to manage it?
But nothing will be cancelled in January. Does anyone really expect the owners of The Marriott to start cancelling room reservations? Don’t bet your life on it. The excuse coming from the folks at Augusta Riverfront LLC is that they need time to train and hire staff to stage these conventions and they must have their contract approved before they can do that. That is utter baloney and they know it! Are we to believe that here in the last couple of days left in October of 2012 that they do not  have the adequate staff trained to handle these events that are scheduled at the convention center just a little more than two months away? Really? Is this who we really want managing this facility? Let’s be serious here. The folks at Augusta Riverfront LLC have been managing the city’s adjacent conference center for over 20 years now. The TEE Center is just a larger space. This is just an excuse to manufacture a false crisis.
Other Options Out There
But OK, let’s assume that Augusta Riverfront LLC is this woefully unprepared at the last minute. Why should  the city succumb to their demands because of their own incompetence? It’s not like there are not other options. According to city administrator Fred Russell, Augusta Riverfront LLC will not agree to  a 1 year interim management contract with the option to renew for 14 years. But perhaps another professional management company would. We have one right down the street that has a national reputation for managing large events. In just a few short years they have managed to turn a facility that had a maligned reputation that was struggling to attract events, into one that routinely brings big name acts to The Garden City.
That management company is called Global Spectrum. The way they have turned the James Brown Arena from a desolate embarrassment to an arena buzzing with activity with a renewed optimism is nothing short of miraculous. Officials at Global Spectrum have already indicated that they would have no problem hosting the first few conventions at the new TEE Center– so why not let them? At least Global Spectrum is not holding a gun to our heads demanding us sign a lopsided contract that gives them carte blanche to loot the taxpayers of Augusta. So, if the folks at the Marriott say they are unprepared at this stage to host these conventions, then lets go with the folks who are prepared over at Global Spectrum
. We just might find out that they could do a better job for less money. Their performance managing The James Brown Arena and Bell Auditorium has certainly been impressive
The Augusta Convention and Visitors Bureau should now be doing all they can to assure these groups who have conventions scheduled at the TEE Center that their event will go on and will be a smashing success and they look forward to  having them come back to the Garden City very soon.
The Next Step
So far, the only leverage Augusta Riverfront LLC has is issuing threats of convention cancellations. What that has done is create a diversion by manufacturing a crisis to take attention away from their awful contract that they are trying to strong arm commissioners into signing. So commissioners could neutralize that manufactured crisis today by making a motion to work with the Coliseum Authority and Global Spectrum to see to it that no conventions are cancelled. Then Augusta Riverfront LLC would no longer have something to hold over our heads and attention would be directed where it belongs — at the details of this contract.
If Augusta Riverfront LLC does not want to come back to the table as a partner, then I am sure the city can find any number of professional management companies, including Global Spectrum, who would be willing to come in and run this facility on terms much more favorable to the city. A lot of attention has been paid to the demands of Augusta Riverfront LLC — a company that has invested zero of their own dollars in this facility. They have essentially received a $50 million dollar gift from Augusta taxpayers — and that’s not good enough — they want more! So now its time for the commissioners to start paying attention to the interests of Augusta taxpayers — after all, we are the ones with all the money invested in this facility, not Augusta Riverfront LLC.
And if Mayor Copenhaver is really serious about getting a management contract approved, and if he really has the best interests of Augusta taxpayers at heart, he will stop pulling these stunts of calling these special meetings in hopes he can scrounge up 6 votes to pass this turkey of a contract. Frankly, it’s insulting to the commissioners and the people of Augusta to keep bringing this same contract back over and over. If the Mayor wants to do something constructive he would invite the critics of this current contract to the table and let’s go through it line by line and work together to get the best deal for the city.
So far, the mayor has seen fit to deny us an opportunity to be heard. But now is his chance to do the right thing. First of all chunk this lopsided contract. Then, bring all of the parties together, including the citizen activists who have done much of the work discovering the deficiencies in this current contract, and let’s go through it line by line and take out all of these loopholes and gotchas that will cost taxpayers $millions. That’s how this process should have been handled from the very beginning. It’s not too late to do it the right way now. ***

Video: TEE Center Management Contract is Riddled with Land Mines

Originall posted by CityStink
Sunday, October 28, 2012
Augusta, GA
From CityStink.net Reports

On the eve of Mayor Deke Copenhaver forcing yet another Tee Center vote on balking commissioners, Augusta Today contributor Al Gray challenges cost controls after being silenced by Copenhaver a week earlier. See our video report below.

 

 

Video: Bowles Bows to TEE Bonuses

Originally posted on Citystink
Wednesday, October 24, 2012
Augusta, GA
From CityStink.net Reports
Augusta Commissioner Joe Bowles takes a stab at Tee Center Management Bonuses, but falls to Simon Says and ends up voting for them anyway. Watch Simon say the taxpayer is going to lose and his managers will be paid in the video below.

Augusta Held Hostage: Day 18

Originally published on the defunct Citystink.net site on October 11, 2012.

 

Originally posted on CityStink
Thursday, October 11, 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.
Yesterday, yet another Tee Center work session was scheduled by Augusta Commissioner Jerry Brigham. This meeting came on the heels of an amazing series of revelations, contradictions, and absurdities emanating from the fiasco of the first Tee Center work session last week.
On hand to present for Tee Center partner and soon-to-be manager were Mr. Paul Simon of Augusta Riverfront LLC and Mr. Bob Kuhar. Present to answer questions and representing the city was attorney Jim Plunkett.
A comparison of the minutes from that work session, the unsigned, undated 2007 Partnership Term Sheet, and the December 2009 special called meeting of the Augusta Commission bring forth a plethora of questions:
  • Who is Augusta Convention Center Management LLC, who is named the TEE Center Manager? Where  is an assessment of this entity’s financial viability? Who are its principals? Don’t we need to know who they are to be sure that they are not paid as the contract dictates?
  • In the last work session Mr. Simon called for us to look at the Commission’s December 7, 2009 vote authorize the mayor to execute the Tee Center CORE agreement, but this document does not now exist, does it? Doesn’t this invalidate the motion that passed the Commission in December 2009?
  • The Tee Center Catering Agreement references that certain Conference Center Management Agreement dated as of __________, 2012 by and between Caterer and City. Where is this document? If it does exist, why were we not provided with it?
  • Let us see if we understand this correctly from the last work session: Mr. Simon said“So what I’m saying to the city in this (August 2007) term sheet we’ll give you land. Now what are we getting back for our land? We’re getting the kitchen. The term sheet says “The LLC and Augusta will allow the necessary modifications to the Convention Center to provide for the combined use of the kitchen, laundry, and back of the house areas.” The Term sheet also says that “AUGUSTA AND LLC AGREE TO THE FOLLOWING TERMS TO OWN, BUILD, AND OPERATE THE TRADE CENTER” Doesn’t this mean that the LLC agreed to bear costs in the term sheet for which it is responsible?
  • Doesn’t the 2007 Term Sheet say that “Augusta’s Capital Funds shall specifically not be used for items related to Kitchen Equipment, Laundry Equipment, or any Convention Center and Convention Center and/or Hotel capital cost.” When did the Commission assume its LLC partner’s cost of Kitchen Equipment?
  • Mr. Simon cites that the Tee Center cost estimates included $700,000 for kitchen equipment (later increased to $1.4 million without any change in the estimate) but why isn’t this a LLC cost to “own, build, and operate?” when the Term Sheet says it is an LLC cost?
  • The invoice for the Kitchen Equipment shows refurbishment of existing kitchen equipment. Whose equipment was this? Whose equipment will it become?
  • The RW Allen Contract caps the overhead and profit on a subcontract but the kitchen equipment invoice for roughly $1.4 million and data in Augusta’s possession is insufficient to determine whether this limit has been breached? Why don’t we insist on getting the information required to assure this limit has been met?
  • In the work session of last week, Mr. Simon and Mr. Plunkett said that the decision to build the Tee Center had to come before an operating plan was completed. They said that these contracts have to be signed before there is a plan. Doesn’t these contracts make the plan only a guide with no authority at the same time it gives the Manager and Caterer absolute authority to assign personnel? Isn’t there a Convention Center website listing very highly compensated General Manager, Catering Manager, Security Director, Finance Manager, and about 6 or 7 more overhead staff? Are these the same 11 full time, permanent employees Mr. Simon mentioned last week?
  • At last week’s work session Mr. Plunkett, the city’s attorney said this The expense of the kitchen is an expense of the TEE Center. The maintenance of that facility, this equipment, is being shared basically between the Conference Center, the TEE Center and the hotels proportionate based on plates.If this is true, why do these agreements set it up so that all of the capital and maintenance costs of the Kitchen, which is now being referred to as the “Conference Center Annex” are born by the city? There is a separate fund for this in the Catering Agreement.
These agreements are so convoluted at this juncture, it is becoming apparent that no one understands them, including the attorneys. The commission would be wise to obtain the proposed plan, budget and procedure manual before agreement should be reached.
Update
: Augusta Today and CityStink.net contributor Brad Owens was invited to speak at the October 10, 2012 and was forceful in his presentation of many of the foregoing issues. A key point made was that the land given up by the Augusta Riverfront LLC could not be conceivably worth the $65 million that Augusta has spent constructing buildings that primarily benefit the LLC’s two Marriott hotels.
MORE TO COME!
AG

Special Report: Augusta Catered to Death

TEE Center under construction August 2012

Originally posted on CityStink
Thursday, October 4, 2012
Augusta, GA
By Bradley Owens
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
* Editor’s note: Please click on blue text to view documents referenced in this article*
Houston, we have a problem. Rather the City of Augusta’s special counsel Jim Plunkett and his predecessors who created the TeeCenteragreements have a host of problems. Most of them center around “ Conference Center” versus “Convention Center” but the Tee Center Catering Agreement is the lynchpin. Our Augusta Today and CityStink.net investigative team now seems prescient in our dogged pursuit of the elusive kitchen equipment.
The entire TeeCenter fiasco began with an unsigned, undated “Term Sheet” that became the only partnership agreement with Augusta Riverfront LLC that was approved by the Augustacity commission. This agreement refers repeatedly to the “ Conference Center” as being subject to the preexisting agreement between the partners. It says that Augusta and Riverfront agree to “ modify their agreement for the operation of the Convention Center to include the Trade Center. ” Trouble was, there was no agreement to operate any “Convention Center”, only the 1999 agreement for the operation of the “Conference Center.”
Since then there has been considerable publicity given that the entire Tee Center, Parking Decks, and existing Conference/Convention Center are now the “Convention Center,” which furthers the misconception that there ever was a “Convention Center” before, but all the while the lawyers reverted to labeling the existing facility as the “ Conference Center.” Was it deceit or wanton incompetence? Read on and you decide.
On September 24, 2012 Augusta Riverfront LLC’s Paul S. Simon appeared before the Augusta Commission with an ultimatum – Execute a plethora of contracts, assignments, releases, modifications and other legal documents within 22 days or face cancellation of Tee/Trade Center events.Augusta then knew it was being held hostage to the lawyer’s handiwork, efforts that Administrator Fred Russell promised were nearly complete 3 years ago.
Included was the catering agreement. This document spells out that the new kitchen built in the TeeCenter, but legally carved out as the “ Conference CenterAnnex”, is to serve both Marriott hotels and the existing Conference Center. Why is the term “ Conference Center” so important? Why, it is because if the existing Conference Center agreement was intended to continue – which it was – it means that the $1.4 million of kitchen equipment that Augusta bought under a controversial change order to the Tee Center Contract will mostly be used to generate revenues for the Marriotts and not Augusta. This is because the existing Conference Centeragreement pays Augusta 5% of the rental space revenues and nothing else, including catering.
TEE Center abuts The Marriott Hotel
Unless Riverfront has quietly reimbursed the city, Augusta paid $1.4 million for kitchen equipment that it will get almost NO USE OF, because the Trade Centerspace will be used primarily for exhibits, with attendees adjourning to meeting rooms in the freely-catered Conference Center for meals. So far, our Georgia Open Records request responses fromAugusta have not shown that the Commission ever agreed to relieve Riverfront of the LLC’s responsibilities for kitchen equipment.
Under the circumstances, it would be wildly irresponsible for Augusta’s Commissioners to agree to pay for any of the kitchen equipment, particularly since some of the charges on the vendor’s invoices was to repair Riverfront LLC equipment! (Under prior agreements Riverfront owned the equipment) Where is our $1.4 million? Is there any prohibition whatsoever barring Riverfront from running a commercial catering operation citywide out of the Conference Center portion of the Convention Center, using the $1.4 million ofAugustakitchen equipment?
Worst of all the catering agreement mentions in several places that services to the hotels, to the restaurants, and to the existing Conference Center will be provided by the kitchen. There is no operational procedure manual to set out controls over food and beverage procurement, use or inventory for theTeeCenter versus these other operations. Without controls and in the midst of all of these operations that consume food and beverage, how willAugustaavoid being looted from various parties on and off the premises? Will there be household with freezers of steaks, courtesy ofAugusta taxpayers?
How many of the Marriott’s existing catering staff will be assigned to theTeeCenter contract? Since the vast majority of the catering seems to be outside of theTeeCenter, why should management level employees be charged to theTeeCentercatering agreement?
In life, timing is everything. With the unsigned, undated Term sheet that began the Tee Center project in 2007, the seed was planted in the minds of the public and the commission that there was going to be a new  Convention Center agreement. After that the branding was changed to emphasize the  Convention Center labeling, including announcements at the opening of the Reynolds Street Parking Deck and at last month’s  meeting. Behind the scenes the legal wording, finally disclosed at the September 24 meeting, narrowly focused on the Conference Center and preserved the sparse 5% payout to the city for the existing center, with no provision for catering revenues. The wording of the catering agreement is that catering only applies to the Tee/Trade Center.
Meanwhile, the Amendment to the Core Agreement extends these agreements out 50 years. Never mind a reported reduction to 15 years.
Throughout these agreements, one thing is repeatedly clear. The hotels and these agreements, which in the hands of others not as civic in their mindset as Paul Simon and Billy Morris provide an UNLIMITED CONDUIT to taxpayer funds, can be SOLD! In the hands of money hungry financiers of Wall Street, these agreements are loaded guns aimed directly at the finances of we Augustans.
How much more can Mr.’s Morris and Simon get for their two Marriott Hotels with $70 million of dedicated Augusta buildings permanently and legally bound to them with an UNLIMITED conduit into the general revenues of Augusta Richmond County?
There you have it, reader. Augustans already find themselves facing a property tax increase. How many more tax increases will be coming to feed the Tee/Trade/Conference/Convention monster?
When the finances of Augusta crater it will be in no small part because of Catering.***
BO
**Cost Recovery Analyst Al GrayPresident of Cost Recovery Works, Inc. contributed to this report.

 

Tee Catering Definitions From 9-2012 Agreement1999 Core Agreement Conference Center – Revenues