Category: Augusta

Special Report: Heerily Missing

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Friday, July 6, 2012

Augusta, GA

By Lori Davis

The photo above shows the floor of the Harrison Building, the old brick building shell preserved as an entrance to the TEE Center. This picture was taken on June 7, 2012, during a TEE Center hardhat tour by Convention and Visitor’s Bureau chief Barry White and Heery International’s Jacques Ware.

Heery is the program manager for the City of Augusta’s hundreds of millions of dollars in sales tax funded building project and Jacques Ware is the Heery project manager over the TEE Center.

Below is a photo of the TEE Center Exhibition Hall, the enormous 38,000 square foot open room that is to house the trade shows and various TEE Center exhibitions.

At the time of the tour, the CVB folks excitedly made the point that the floor was going to be poured the next week. This was on June 7.

Interesting.

R.W. Allen LLC’s progress billing number 24, through March 29, 2012 (Page 4, Item 10) shows that two whole months earlier, an incredible 84% of the concrete walls and slabs

were complete!

How can this be? The main exhibit hall room is a staggeringly large percentage of the total concrete slabs on the project. How can 84% of the slabs and walls have been complete back in March when the main floor was still dirt?

Isn’t Augusta put at risk, when subcontractors are paid so far in advance of the work performed? Isn’t the previously noted issue of $1.4 million of kitchen equipment that was paid for a nonexistent kitchen proof that Heery is just rubber stamping contract payments?

Let me see now. The commission relies on Fred Russell, who relies on Heery, who apparently sees construction completed that just isn’t there.

Unreliable fits and this time, it will be set in concrete…….eventually.***

L.D.

Joe Bowles Plays Hardball with Augusta Riverfront, LLC Over Parking Deck

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Commissioner Joe Bowles is talking tough over the parking deck

Wednesday, June 20, 2012
Augusta, GA
By The Outsider

Mayor pro tem Joe Bowles has some tough talk for the operators of the new TEE Center parking deck on Reynolds Street: either abide by the terms of the management agreement approved back in February or the deal is off!

The agreement that was hatched at the last minute on February 7th stipulated that  the $7 million liens on the property under the deck must be removed and the property must be transferred from 933 Broad Investment, LLC (a subsidiary of Augusta Riverfront, LLC) to the city’s land bank.

However, we here at CityStink.net discovered that these conditions have still not been satisfied. As of today, the liens have still not been removed and the property has still not been deeded over to the land bank. You can read our full report here–> Exclusive: Fred Wrestles, Augusta Gets Decked.

For commissioners who voted for the management agreement with Augusta Riverfront, LLC, including Mayor pro tem Joe Bowles, this must seem like yet another in a long succession of broken promises, and it has to seem as though the last minute fix to approve the management agreement was little more than a stalling tactic to bide more time for ARLLC. And Joe Bowles seems none too pleased with this latest revelation. In a report by Chris Thomas of WRDW News 12 yesterday, the Mayor pro tem said, “The city is basically operating under an agreement with them that is not in effect,” and that, “It’s not good business practice. That is for sure.” 

Indeed. Since the basic stipulations of the management agreement have not been satisfied by Augusta Riverfront, LLC (who are also the owners of the Marriott Hotel), then the city is paying a $25,000 a year fee to deck operators based on a contract that is made of thin air, much like the city’s air rights for the $12 million parking deck.

And Joe Bowles’ patience seems to be wearing thin with Augusta Riverfront, LLC, saying, “If they don’t go ahead and get this straightened out, I say it’s time to go ahead and bid the parking deck back out. If we don’t hurry up and get that property donated to the land bank, I would say it’s time to scrap the deal and start over.”

When queried by Chris Thomas on this issue, city administrator Fred Russell could only say, “This is a long, complicated process.” 

Joe Bowles is on the right track. It is time to re-bid this parking management contract and get a better deal for the city. In our May 29th investigative report, we discovered that there were bids from other companies on the table that were much more favorable to the city. The agreement that Fred Russell negotiated with Augusta Riverfront, LLC essentially amounts to a blank check, where the city assumes all of the expenses and risks, and ARLLC gets all of the benefits and most of the profits.

In fact, Richard Acree Jr, the Assistant Director of Augusta Facilities Management Division, recommended that the parking deck management contract be awarded to Ampco Parking Systems out of Houston, TX and not to Augusta Riverfront, LLC. However, it appears that city administrator Fred Russell simply ignored the better deal and instead favored a much more inferior management agreement with ARLLC… one that involves more expense, more risk and substantially less benefits for the city. Just why would Fred Russell do this if he is supposedly working for the city?

But it gets worse. In our May 31st investigative report, Augusta’s $714,357 ‘Incidental’ Cost,  we discovered that under Fred’s deal with Augusta Riverfront, LLC, the city was assuming ALL of the operating and maintenance costs for the deck even when 150 ground floor spaces would still be under the ownership and control of ARLLC. And that’s on top of the $25,000 management fee the city would be paying them. In fact, under Fred’s deal the city would even be on the hook for paying for the toll booth operator, when Ampco had agreed to assume those costs under their bid. So, just what benefit is the city getting out of this deal? Not much. In fact, over the course of the agreement, the city would end up paying $714,357 for these additional expenses that should be  the responsibility of Augusta Riverfront, LLC. Fred Russell called these expenses “incidental.”

So Joe Bowles has every reason to be upset, as should all Augusta taxpayers. We believe that the Mayor pro tem was probably giving Fred Russell and Augusta Riverfront, LLC the benefit of the doubt… that they would make good on their promise to transfer the land and that would provide an easy solution to what has become a complicated mess. But unfortunately, there are rarely easy fixes for fiascoes such as this, especially when you have a city administrator repeatedly withholding vital information from commissioners and a series of broken promises from Augusta Riverfront, LLC.

This is precisely why Al Gray and Lori Davis urged commissioners to hold off on approving a parking management agreement with Augusta Riverfront, LLC on February 7th. Al Gray and Lori Davis urged commissioners to put brakes on parking agreement.

But since then more has come out that shows just what a bad deal it was and, to be fair, commissioners were not aware of these new revelations when they voted for it. They probably thought, in good faith, that all the loose ends would be tied up with the land being transferred, but  investing more good faith now in the same people who have continually mislead you would be an act of folly even greater than the horribly bad parking management deal negotiated by Fred Russell.

We hope Mayor pro tem Joe Bowles stands firm in his resolve, and we would suggest for the commission to STOP any parking management agreement being executed between the city and Augusta Riverfront, LLC. We also suggest revisiting the bids from other companies like Ampco that were apparently ignored by Fred Russell that would yield more favorable terms and less expense for the city.

But we will have even more coming out within the next few weeks on the much larger TEE Center management deal between the city and Augusta Riverfront, LLC that will make ParkingGate look pale by comparison. We told you in our Special Report: No Way to Treat a Partner, that a CORE agreement does not exist between the city and Augusta Riverfront, LLC for the management of the much more expensive TEE Center that was built adjacent to the ARLLC owned Marriott hotel. That’s right, the city built a $38 million facility without an executed agreement… and once again, on parcels of land still owned by Augusta Riverfront, LLC. And under the provisions of the original 1999 CORE agreement for the existing conference center, the only agreement that seems to exist that would currently govern the TEE Center operations, Augusta Riverfront, LLC should have been responsible for the nearly $400,000 change order for a more expensive HVAC system they demanded the city pay because of more stringent Marriott corporate standards.

The pattern here seems to be quite clear. Under all of these deals between the city and Augusta Riverfront, LLC, the taxpayers get stuck paying all of the bills and ARLLC reaps all of the rewards.. including having a $38 million new convention center built adjacent to their hotel giving them not only exclusive use of the facility but also substantially raising the value of their property.  Please stay tuned to our upcoming investigative reports into more waste and bad deals in regard to the TEE Center.

So, commissioners may also want to hold off on finalizing any agreements with Augusta Riverfront, LLC over the TEE Center as well… especially after our upcoming reports. As we’ve mentioned, no CORE agreement seems to exist, and like the parking deck, perhaps the city can negotiate a much better deal by putting this out to bid as well.

Also, it should be obvious now that Fred Russell cannot be trusted to look after the city’s interests in negotiating these deals. In every aspect of the TEE Center and parking deck deals, Russell has consistently favored Augusta Riverfront, LLC over the city for which he works. And not only that, Russell has withheld important information from commissioners that could have affected key votes over these arrangements. Can Augusta afford any more of Fred? Perhaps it’s also time to heed Lori Davis’ advice from that February 7th commission meeting and relieve Fred Russell of his duties as city administrator before he costs the taxpayers any more money, because at this rate, keeping him is becoming far more expensive than firing him. Stay tuned, more to come.***
OS

Related Stories:

Maybe it’s time to call the whole thing off!

Forensic Audit Subcommittee Making Progress

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Tuesday, June 19, 2012
Augusta, GA
 

The Forensic Audit Subcommittee chaired by Commissioner Bill Lockett met today for the second time, to discuss the scope of work necessary for launching a Forensic Audit concerning the TEE Center Parking Deck. As previously discussed in this committee, the first RFP (Request for Proposals), was released for bid with a scope of work that was far too broad. Firms who showed an interest in bidding on the audit were asking for more clarification and direction.

It seems that forensic audits can become quite pricey when looking for criminal wrong doing. As I left this meeting today, I knew I had to tell what took place. The only media present were two regular writers for the Augusta Chronicle: Susan McCord and Sylvia Cooper. As I rode down the elevator with Mrs. Cooper, we exchanged pleasantries and talked about what had taken place in the meeting. I said to her,” I have got to get an article out for City Stink on this… You do know that we named our blog in your honor.” She acknowledged that she knew that, and said to me,”Your job will be easy.” I said, “I know it will, because I will be able to write exactly what happened in that room.” We left it at that. Here is what happened:

Commissioner Lockett called the meeting to order and began to lay out his reasoning, a second time, for the need of a forensic audit. As he began his remarks, he talked about the fact that a good portion of the scope of the work in question had already been done by a group called Augusta Today, and through a blog called, CityStink.net. He went on to say that this citizen’s group had given of their own time, and spent their own money to ask for documents in open records requests, to uncover the truth associated with the TEE Center parking deck. He revealed that the articles published by City Stink were all well researched and had supporting documents to accompany them. He presented to the group four such articles in the form of, “links,” for review. The CityStink.net articles he referenced were the following:

Committee members agreed to look at the articles researched and written by the, “citizen’s group,” without discussion… The first shocking moment of the meeting!! I expected there to be some objection from General Counsel… “Can’t believe those citizens“…  Maybe just the name, “City Stink,” was beginning to get some respect. I began to listen closer.

Commissioner Lockett brought back up the fact that they had been told that all of the land under the parking deck would be donated. He questioned the way in which property was acquired under the parking deck, with some being purchased by the city and other parcels remaining with Augusta Riverfront, LLC. Seems that a parcel owned by State Senator Bill Jackson (The old gas station at 9th and Reynolds) had been traded for property at 13th and Reynolds adjoining Mr. Jackson’s tile business. Why was it important to make this deal, but not with any of the rest of the parcels?  Another good question that brought Commissioner Guilfoyle, a new committee member, out of hibernation. He couldn’t understand why we all just didn’t believe Senator Jackson’s son, as he explained on the Austin Rhode’s Show, exactly what the truth was concerning this property trade, when it was uncovered by members of Augusta Today.

Commissioner Lockett was quick to respond that all associated property could have been condemned and taken for city use. Commissioner Guilfoyle responded, “I believe this would have been a tough process.” Touche… In any event, the land under the tax payer funded parking deck still has a 6 million dollar lien on it. There is no disputing that fact. Also, the plan on the table is to turn the land under the deck, over to the land bank, let Augusta Riverfront, LLC (Billy Morris and Paul Simon) own the bottom floor parking spaces and the tax payers get the air rights. General Counsel Andrew MacKenzie responded with a blank stare. Not one comment from committee members, either. I believe Jim Plunkett, outside Counsel for the city called this, “Complicated.“

Finally, After much discussion, Commissioner Lockett revealed the following items that he believed would be a narrow enough scope to put in an RFP to get to the bottom of all of this .  They are as follows:

 
Parking Decks
*Obtain and review the CORE and management agreements for the Reynolds Street Parking Deck RSPD and the TEE Center Parking Decks. Identify controls deficiencies, if any, that might arise by having different agreements with potential cost-shifting exposures.

 

*Obtain and review lien documents filed against ARLLC or 933 Broad, LLC properties situate under the RSPD and ascertain that the parcels can be transferred free of said liens to the City.
 
 
*Evaluate and determine whether City management and contracted legal counsel acted properly in allowing the RSPD to be constructed without executed agreements between the parties.
 
 
*Obtain and evaluate parking deck management Requests for Quotation covering subject parking decks, if any exist, to determine whether ARLLC or 933 Broad, LLC ownership of underlying properties and subsequent ownership of ground floor parking spaces were disclosed to bidders  and whether bids were properly solicited, received, and evaluated.

 

 
*If there were alternative bids taken, determine whether the combined RSPD and TEE Center deck agreements allow costs materially in excess of those bids.

 

 
*Evaluate whether contracting out the operation of the RSPD to an operator not related to ARLLC or 933 Broad, LLC would have been practical or will be be practical in the future given the relationships between the parties.

 

 
*Obtain CORE and management agreements to evaluate whether there are adequate controls in place to protect the city’s interests and finances from waste, abuse, fraud, or mismanagement by the Manager, including extensive rights of audit allowing continuous capabilities to audit these agreements.
 
 
 
As committee members began to cast their votes in approval of the new scope, Commissioner Guilfoyle took exception with the way the consolidated government has operated, revisiting the Grand Jury investigation of 1996 into city government. Recommendations were made to the commissioners of what needed to be done to rectify the problems that were uncovered.
 
Guilfoyle commented that nothing ever happened. Commissioner Lockett countered, “Someone has put us in this predicament right now that we are in, and it is up to us to make the necessary changes when we know what is required. This is what our citizens expect, and this is what we will have to do.” 
 
We at Augusta Today and City Stink will continue to pay attention to all that goes on with this forensic audit and all that will go uncovered by the local media. We are getting somewhere, and it feels good!***
 
 
LD
 

TEE Center Special Report: No Way to Treat a “Partner”

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“Howdy, partner! Can you spare a few $million?”

Thursday, June 7, 2012
Augusta, GA
By Lori Davis

Our Augusta Today and CityStink.net group had limited representation at the January 30, 2012 meeting of the City of Augusta’s Finance Committee when several commissioners roasted the City’s outside lawyer, Jim Plunkett over the TEE Center parking deck agreements with manager Augusta Riverfront, LLC. However, one comment reported by WJBF’s George Eskola struck home. “We’re supposed to be in a partnership but I’ve never seen partners treated as we’ve been treated in these issues accusing people of doing things wrong we don’t operate like that,” said Paul Simon, whose company Augusta Riverfront, LLC owns the Marriott.

The comment sent me looking for the partnership agreement for the TEE Center that Mr. Simon was talking about.

Here is what was found. Better said, here is what I didn’t find.

The Augusta Commission has only approved one document that might be seen as a “partnership agreement” for the TEE Center in the form of the Management Agreement Term Sheet. It is UNSIGNED AND UNDATED, but was included in the package of documents when the TEE Center was approved by the Commission on August 21, 2007.

After the August 2007 meeting, the only later action was at the called meeting of the Board of Commissioners in early December 2009 where the Commissioners authorized the Mayor to execute the TEE Center Construction Operating and Reciprocal Easement (CORE) Agreement in anticipation of beginning construction.

Seeing that as being the partnership agreement I submitted a Georgia Open Records Request to the Augusta Law Department for the executed agreement. They didn’t have it.

Deke Copenhaver NEVER signed a CORE agreement. It doesn’t exist.

Yes, you read that correctly. The partnership for the $50 million TEE Center and Parking Deck complex does not exist! What does exist has some really shocking provisions that I think should have Augusta demanding big money from Mr. Simon’s LLC!

What does exist is the CORE agreement on the existing Conference Center dated June 21, 1999 recorded in the records of the Clerk of the Augusta Richmond County Superior Court in Deed Book 648 on page 45.

The existing CORE agreement was not canceled or superseded by a more recent partnership deal as far as we can tell. What does this signed and executed agreement say? Page 13 has a whole bunch of wording that makes Augusta Riverfront, LLC responsible for all manner of construction and maintenance cost throughout the term of the agreement.

Page 16 says this: “Developer (Augusta Riverfront, LLC) in operating the air conditioning and heating system for the Hotels and the Expanded Conference Center shall operate such systems in a manner which will not unduly drain heat, ventilation or air conditioning from the Improvements of any other party.”

Nowhere in the unsigned, undated Term Sheet is there change in duties as they relate to HVAC or the existing Conference Center. The Term Sheet even says, “Augusta’s capital funds shall specifically not be used for items related to any Convention Center and/or Hotel capital cost.”

The Augusta Chronicle reported about a controversial change order for an expensive HVAC (heating, ventilation, and air conditioning) upgrade requested by Augusta Riverfront, LLC, owners of the Marriott, writing, “The changes being requested include $399,083 for upgrades to the smoke exhaust system, increasing the number of air changes at the convention center from the Georgia minimum standard of about 2.5 per hour to eight per hour, as requested by Marriott.”

Questions

If the signed and executed CORE agreement for the Convention Center puts responsibility for HVAC operations within the hotel upon the hotel owners, and the 2007 Term Sheet does the same for Hotel capital costs, why hasn’t the Commission, Mayor and Fred Russell demanded that Augusta’s partners pay these costs? Where is our $399,083?

Where is the partnership agreement? Does Fred Russell mean to tell us that they built a $50 million complex using public funds with no partnership agreement?

How can it be legal to build a publicly funded project like this on unsigned, undated documents?

Shouldn’t all Augusta be channeling Mr. Simon’s objection -“I’ve never seen partners treated as we’ve been treated ” -right back at him?***

-Lori Davis


(*Below are pdfs of some of the public documents cited in this article)
2009 CORE GORA Request – Lori Davis
1999 Core – Radisson Hotel Conference Center (1)
1999 CORE – Radisson P. 13
1999 CORE – Radisson P. 16

Can Augusta Media Mimic Copperfield and Make Parking Deck Vanish?

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Friday, June 1, 2012

Augusta, GA
By Al Gray
Augusta’s $715,000 “Incidental” Gift1

David Copperfield’s illusion of making the Statue of Liberty disappear is listed by the Guinness Book of World Records as, “the largest disappearance ever performed by a magician.” In the closed-loop, incestuous world of Augusta media, similar miracles have been performed over the years, mostly by using the tactic of blowing up small incidents of monetary losses, – be they by graft, fraud, or plain stupidity – to divert attention from the elephants in the room. Grandma used to call this, “Straining gnats while swallowing camels.” The Reynolds Street Parking Deck doesn’t have tusks or a hump, but some folks who know better have camel hair on their bibs.

The bit players in the Augusta illusion are officials like Tax Commissioner Stephen Kendrick, who was still being hounded by the Augusta Chronicle a year later over a missing $25,000, and former city commissioner Betty  Beard’s $20,000 supposed misappropriation of funds.

What Fred Russell made go away looked like this:

What Fred reappeared wasn’t an elephant, it was much larger:

 

If you are Augusta Riverfront, LLC, Fred relieved you of an ugly, unattended surface lot. What he came back with appears to be an enclosed, lighted, secure, landscaped, and operated lot at no capital or operating cost.

Sweet. It must be nice to be a principal partner of Augusta Riverfront, LLC and the publisher of the only daily newspaper in the city, The Augusta Chronicle, where you can use your  influence in the media to create illusions through the art of distraction, just like David Copperfield.

Everyone should be so lucky as to negotiate a deal with Fred Russell like this.***

A.G.

1 Based upon the RSPD agreement submitted to the Board of Commissioners 1/30/2012

Related Stories:

TEE Parking Deck Exclusive: Fred Wrestles, Augusta Gets Decked?

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Augusta, GA

May 29, 2012

By Al Gray
 

Our team of community watchdogs at Augusta Today and CityStink.net have not let sleeping dogs lie with the TEE Center and Reynolds Street Parking deck deals that were conditionally approved by the Augusta Richmond County last February 7. Readers might recall that the Augusta Commission then approved a deal for Augusta Riverfront, LLC to manage the new Reynolds Street Parking Deck, contingent upon the land for the parking deck being deeded to the city land bank and being cleared of all liens. The decision was reached in a last-minute panic to get something passed to relieve the Commission of what was a very hot potato of an issue – how a $12 million parking deck got built on land the city didn’t own.

 

Has the land been deeded to the Land Bank and have the liens been released by Wells Fargo, the bank that holds the liens on the land under the Reynolds Street Parking Deck (RSPD)?

The answer is NO, according to review of the Augusta Richmond County Clerk of Court deeds of record for the property as reported on the Georgia Superior Court Clerk’s Cooperative Authority. The deeds on the GSCCA site are certified to be county-good through May 23, 2012.

Augusta Today and CityStink.net contributors, armed with documents secured via Georgia Open Records Act Requests, the city’s excellent on-line document archives, and the help of several officials inside Augusta government, have taken scrutiny of the proposed parking deck deals to unusual lengths to get the answers to more questions.

Were the contracts for management of the decks put out for bid? Yes.

The City Procurement Director issued Request for Proposals RFP Item #11-087, Managing Augusta Parking Facilities, in January 2011 with a due date for bids to be opened on Friday, February 18, 2011. That the RFP covers the RSPD and the Parking Deck at the Augusta Marriott is established in the Introduction Section I on page 10 of the RFP with, “The Procurement Department… is soliciting proposals to manage and operate the Augusta owned parking facilities located on Reynolds Street in Augusta to include the Parking Deck at the Augusta Marriott and the new Reynolds Street Parking Deck currently under construction.”

Was Augusta Riverfront, LLC the low-bidder? The LLC did not place a bid in response to RFP #11-087, covering the two Augusta owned parking decks between 9th and 10th streets in Augusta.

Augusta Riverfront did not appear as a party on the Pre-Proposal Conference Sign In Sheet of January 28, 2011. It does not appear on the Cumulative Evaluation Sheet. There is no indication that Augusta Riverfront, LLC submitted a bid of any type in response to RFP #11-08.

If another firm offered an acceptable bid, was it recommended and its proposal accepted? The bid of Ampco Parking Systems of Houston, Texas was recommended for acceptance, but all bids were rejected with the knowledge of the City Administrator. 

 

Mr. Richard Acree, Jr., Assistant Director of the Augusta Facilities Management Division wrote, “It is… my recommendation that we award the contract for Bid Item 11-087 to Ampco Parking Systems.” After an exchange of emails on August 5, 2011 between Augusta’s then Recreation Director Tom Beck, Procurement Specialist Nancy Williams, and Administrator Fred Russell, Mr. Beck wrote a letter to Ms. Williams on August 8 directing her to reject all bids associated with RFP #11-087.

 

Are there costly inconsistencies between the sample contract included in the RFP that Ampco Parking System accepted and the one with Augusta Riverfront, LLC that was recommended by the City Administrator for adoption by the City Commission? Apparently. They include:

1. Management Fee.

Ampco quoted a fee for the TWO Decks in the amount of $17,964.00. The fee in the management agreement in 3.1(see page 6) for the Reynolds Street Deck alone with the LLC is $25,000.00. After recovery of the $50,000 rental fee paid to Augusta under the Conference Center Deck agreement on page 3, the LLC gets another $25,000.00 fee.

There is a recommended contract in the RFP which appears to be largely based upon the previous conference center contract with Republic Parking. To be fair, the RFP agreement would have given the management company an incentive fee of 25% (up to 45% based upon increments of $100,000) of net revenues over $150,000 for both decks (page 33), while Augusta gets 100% of the RSPD net revenues, if there are any, with Augusta and the LLC management group sharing net revenues after the rental sum and $25,000.00 fee on the Conference Center Deck.

Why did the City Administrator agree to pay more fee on the RSPD than its recommended bidder quoted for TWO decks? 

2. Liability Insurance

The Deck RFP Addendum 1 stated, “Liability Insurance is to be paid out of the management fee.” However, the RSPD agreement in 9.4 on page 17 states, “Insurance premiums and any cost or expenses with respect to the insurance described in this Article shall be an Operating Expense of the RSPD.” Liability insurance is listed in the Article at 9.1.

Why did the conditionally awarded agreement with the LLC shift the liability insurance costs from the management firm to the city?

3. Operating Expense Limitations

The designated contract within Augusta’s RFP 11-087, page 32 of the RFP package, limits operating expenses to enumerated expenses and, “other expenses as authorized and included in an operating budget approved in advance by AUGUSTA.” This provision was accepted by Ampco. The agreement conditionally accepted by Augusta with the LLC contains no such requirement, broadly defining “operating expenses” outside of the Annual Plan to include, “any other expenses incurred in the operation of the RSPD that would be considered operating expenses under GAAP.” GAAP means Generally Accepted Accounting Principles.

Why doesn’t the agreement with the LLC limit what can be considered an operating expense to those expenses enumerated in the Annual Plan and authorized by Augusta?

4. Expenses Allowed Under the Annual Plan

Ampco submitted a bid compliant with Augusta requirements that included an annual budget. This budget shows expenses of $21,557. The management fee of $17,964.00 was added to this balance to arrive at total expenses of $39,521.00. Since the Ampco proposal covers both parking decks, adjusting the expenses to a factor of 0.54 (the ratio of RSPD parking spaces to total parking spaces in both decks) produces $21,341.43 in total non-labor operating expenses for the RSPD for the first year.

South Augusta community activist Juanita Burney submitted a Georgia Open Records Act Request to the city’s Law Department seeking the annual plan for the RSPD as submitted by selected management firm Augusta Riverfront, LLC. After some delay and a follow-up request, she received documents including undated cover letters from Augusta Riverfront, LLC, accompanying one 12 month budget for 2012 dated August 29, 2011 and an 11 month budget dated January 26, 2012.

The August 2011 budget was used for comparison purposes, as it covered 12 months and was closer in timing to the Ampco budget. The LLC budget for expenses totaled $83,818.00, but $29,505.00 related to Augusta-provided utility costs and credit card fees which were outside of those listed within the RFP. This brought the total costs down to $54,113.00, which were higher than the Ampco adjusted total by $32,771.66. Bear in mind that the Ampco agreement only limited the manager to the specific types of expenses listed, but not totals, so actual costs may have exceeded the budget for Ampco.

Did the Augusta Administrator consider the budgeted expense differential between the rejected, but deemed compliant Ampco proposal and the much higher Augusta Riverfront budget? If not, why not?

5. Labor Costs Under the Annual Budget

Ampco’s labor budget was $212,225.00, plus labor burden of $44,444.00 for a total of $256,669.00, with the RSPD portion (0.54) totaling $138,601.26. Augusta Riverfront LLC’s labor budget was $95,150.00, plus labor burden of $27,402.00, for a total of $122, 552.00, or $16,049.26 less. Most of the extra cost from Ampco was the inclusion of a Supervisor and from unusually high worker compensation costs.

As noted above, Ampco would seem to have been limited to the costs enumerated in its budget by the terms of the proposed agreement. The LLC can add costs that fall under GAAP (Generally Accepted Accounting Principles). Also, the language of 5.3 on page 8, of the RSPD Management Agreement states that the Manager determines the personnel necessary to operate the RSPD and in paragraph (f) on page 9 states that the Manager can assign, “shared employees.”

Are there sufficient contract controls over the assignment of additional staff and shared employees for Augusta when the Manager has this level of discretion? 

6. Operating Cost Advance 

The terms of the RFP, and accepted by Ampco, states in Article 3, paragraph 4, “The Operator shall be granted an operating fund advance equivalent to 2 months operating expenses, to be credited against the first two months of operation.” The terms of the LLC agreement on page 11, in 6.2, provides for an ongoing 90 day operation expense fund balance.

Is the fund balance sufficiently offset by the LLC’s funding of the other deck agreement? 

7. Capital Budget

 

The RFP and Ampco proposal contained no separate capital budget. The LLC budget included a schedule entitled, “Equipment – Startup Cost,” which included a Riding Sweeper at an estimated cost of $59,000. The schedule also included additional cost of Freight and Tax. The Conference Center Deck Agreement in Paragraph 4 (page 5) states, “With respect to any equipment owned by by Landlord but used for both the RSPD and the Demised Premises, Tenant shall pay a fair rental rate for the use of said equipment, as set forth in the Annual Plan in effect for the RSPD Management Agreement.” No credit was found in the proposed RSPD budget for that sweeper, so perhaps it will be used only in the RSPD.

If the capital equipment was purchased via an Augusta bank account with Augusta funds, wouldn’t the purchase be exempt from (sales) tax? Will the prorated fair rental costs for RSPD capital equipment be included in the Annual Plan?

8. Credit Card Fees 

The initial Annual Budget for 2012 proposed by the LLC includes an expense item for credit card fees. However, “Operating Revenues” includes discounts for credit card fees, which is consistent with the RFP sample contract.

 

**Could this give rise to double reimbursement of credit card fees?

 

Summary 
 

Augusta had a long running contract with Republic Parking that seems to have been the basis for its sample RFP contract. Ampco Parking did not find this contract objectionable and accepted large portions of it. In general, why are the agreements the City Administrator recommended so much more flexible in terms of internal controls? Will the relative infrequency of reporting and manager control over revenues and expenses provide Augusta with sufficient information to assure that potential conflicts of interest, alluded to in Article 5.1.b of the RSPD Management Agreement, have not arisen? Did the Administrator use the Ampco bid terms, conditions, and costs to negotiate the best deal possible for Augusta?

Questions abound with these deck arrangements. We could ask questions approaching the number of parking spaces in these parking decks. The Augusta Commission should have asked them before rushing to approve the parking deck agreements, too. ***

– Bradley Owens
 
*Contributing to this report were Cost Recovery Specialist Al Gray, with South Augusta Community activist Juanita Burney and Harrisburg Community activist Lori Davis.