Dekefeating the Tyranny of Credentials

Aurelius Principle

A Multidisciplinary Approach
Works Wonders

“Let it be your constant method to look into the design
of people’s actions, and see what they would be at, as often as it is
practicable; and to make this custom the more significant, practice it first
upon yourself.”
– Marcus Aurelius

On Tuesday evening, September 17, 2013 Mayor Deke Copenhaver in an Augusta City Commission meeting challenged me to supply my “credentials.”  He cut me off and would not let me respond. Since he asked for it – here goes.

Fact of the matter is I don’t really have any credentials. I have something much more effective and powerful that I call the Aurelius Principle. What the principle stands for is looking at major transactions globally or taking a multidisciplinary approach. Clients get a whole lot of angles on a problem in one pass that just an accountant, lawyer, administrator, engineer, planner, procurement agent, or other professional cannot provide.

The Aurelius Principle works this way: it uses an opponent’s own power, authority, records, and documents against him. If you think about that, it is something that the very best attorneys use. If one does it really well, he might find himself with a new lucrative line of work. For example, the in depth study of the Augusta convention might lead to marketing the same strategies that the management company there used to secure $3 million a year taxpayer subsidy.

The Principle is time-tested and simply does not fail, because it works on all sides of valuable transactions. The technique has been leveraged up to ever higher planes. It worked well enough for me to hardly hit a lick at a snake and retire early. I don’t have a lot of references, but I do have the Mayor’s records. He will find those a lot more convincing than “Credentials”.

Let’s try to weave an aspect of the principle into the question that Deke Copenhaver asked. Marketing personally to Fortune Magazine listed company executives was nearly impossible but then I sent a letter to  them, with a great white shark eating their precious logos in a window envelopes! It worked! CFO’s whom I needed to spent $50,000 on to contact contacted me!

The renegade marketing added to an enquiry list from potential and eventual clients of Cost Recovery Works, Inc., its predecessors, and mine that included these names, which just might be impressive even to the Mayor.



Fort Sterling


Maryland Cup


Procter and Gamble




Hanes Brands


Sara Lee


Con Agra


National Gypsum


Georgia Pacific


Lilly Tulip








Johnson and Johnson


Fulghum Industries





Home Depot




Bass Pro




W.R. Grace


Eli Lilly


Bristol Myers Squibb




St Joseph Foods


Georgia Iron Works


Boise Cascade


Stone Container


Fort Howard






Packaging Company of America


Temple Inland




 Lenzing Fibers


 General Electric

 Hillshire Farms

 Fort James




Fulghum Fibres




 Duke Energy  Sweetheart Products  Hoku Corporation

 BCE Outdoor

 Control Plus  Arale Woods LLC

I performed work for 29 of those companies over the years as an employee, contractor, or subcontractor.

Leveraging up the Aurelius Principle in Augusta and Georgia has made for amazing findings and real results, especially during the Augusta Project since 2011.

To sum up, I knew I might be rusty and used Augusta like my very own laboratory to sharpen my skills. Not many rats escaped.



The author is President of Cost Recovery Works, Inc., a provider of multidisciplinary contract cost avoidance, cost recovery, and public policy services to industry and government.

Short Sheeted via Term Sheet

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


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.
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

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.

Video: TEE Center Management Contract is Riddled with Land Mines

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



Augusta Held Hostage: Day 18

Originally published on the defunct 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.
: Augusta Today and 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.

Hounded into Making a Splash

Al and Molly before a hunt

Being Molly

Sunday, September 30, 2012
By Al Gray

Rabbits probably laughed at Molly. A gray-headed, bow-legged old girl of a beagle just would not have filled their hearts with fear. Her voice at full cry was a moderate bawl. She didn’t have a fantastic cold trail nose that would detect where they had exited the sorghum field and tipped to their warrens hours before at dawn. Her legs were bowed, so speed wasn’t a threat.  Molly purely looked and sounded like what she was – a mostly worn out beagle bitch of about 7 years of age. She certainly wasn’t the ideal image of a dog around whom one would build a rabbit hunting pack.

Molly would have to do, as it turned out. We managed to aggregate a pack of dissimilar beagles into a rag-tag gang of hare-harassing noise makers.  Molly became the constant.  Jack and Dolly had superior noses, but tended to get caught up in trying to slowly extract the last scent rising from the trail. Queenie was a briar-busting runt of a jump dog, who had no nose at all. Back-track sometimes ran the trail backwards. Mabel was an even more aged relic, albeit a wise dog with experience. Of necessity, we rarely hunted pine thickets or open terrain. When we did, there was Molly to keep the clan functional.

Over time, Jack and Dolly discovered that their master was full of praise when they lifted their noses from back down the trail and went to Molly in the lead. Queenie found it was fun to stay with the gang and lend her squeaky voice in pursuit of those cottontails. Mabel kept pace and often straightened the pack out where Molly sometimes hesitated.  Back Track got left home and became a shot-deer tracking hound, as he confused the heck out of all the others, Molly included. By the second season, the group was a functional pack, just one devoid of speed.

Cottontails and swampers who survived a Molly chase were the ones who didn’t sit on their haunches laughing. Molly had grim determination. Molly purely LOVED to hunt rabbits. Had Br-er  Rabbit gotten close enough to see, he would have trembled with fear. The old gal had ears tattered and bleeding from dogged pursuit through blackberry briers. Sometimes one of those steel-tough green briers would have torn an ear. Her tail ended in a hairless tip, with only the peripheral hair left to offer when her tail was held high. The pads of her feet were like iron. Those bow legs might have lacked speed but made up with power to bulldoze through thickets.

In a hunt Molly was bold, audacious, relentless, and cunning. Without being encouraged or trained to do so, she took the initiative to find, defend, and retrieve a downed quarry. That the rabbit was a relatively huge burden for a 29 pound beagle carry never deterred our Molly. She had a heart seemingly as large as a whole rabbit.

Before the fourth season with Molly and company, life changes and the wear of time struck. Mabel passed away around Independence Day. Queenie had a severe back injury and had to be put to sleep by Dr. Garner. It was time to find replacements and to expand the pack with young blood.  Over in Grovetown, Mr. Stephenson found himself with his own health issues in the form of congestive heart failure which ended his beagling days just as his 8 month old litter of AKC-registered gun dog pups was ready to begin training. His five pups found a buyer eager to accommodate his wishes that the entire litter be kept intact to form a hunting pack.

Those pups were significantly faster than Jack, Dolly, Molly and Mr. Calvin Clem’s contributions to the pack, Lucy and Mack. Each sibling had a different temperament and style. Molly would bend them all to meet hers. She became their mentor. Sapphire, the only female, was the first to begin running rabbits and quickly became the leader of the pack, always adroitly and quickly handing the outs that the rabbits would throw at the pack. When she didn’t,  Jack and Dolly had learned to release the scent trail and go to where the leaders were, so they were there to work out the challenges Sapphire found more difficult. Brothers Louie, Andy, and Pete were quick learners and became excellent rabbit beagles.  Molly was there with them all.

The last hold-out amongst the Stephenson pups was Amos. The poor boy seemed befuddled and perhaps even afraid at all of the racket that the others made in pursuit. Amos stayed at Master’s feet. I could not shoot for fear of causing gun-shyness in Amos. This finally ended in a planted pine grove down below Girard, when a fleet cottontail that had far outdistanced the noisy pack darted across the fire break in front of us. Amos took off after him, barking in a high chop voice on the hot trail. From then on, Amos was a key member of the team that we released in open terrain and pine plantations. Alas, even a hot scent could not entice Amos into a brier patch. He would pace outside, hoping that the rabbit would play HIS game, not the rabbit’s.

The constant in the pups’ education in the field was old Molly. It was about the time that the naughty pups came into her hunts that she ‘learned’ to retrieve rabbits. Jack already had picked up on that as a way to gain his master’s praise. Jack was a burly enforcer, broad chested and 17 inches at the shoulder, which is large for a beagle. Molly had a lot of trouble because of her short legs. One can see the difficulty she had in this picture of Molly retrieving a rabbit.

I don’t know about you, but our pets at times have taught such powerful human lessons that it becomes humbling, poignant, and powerful all at the same time. Molly rarely led the pack any more. Sapphire and Pete seemed to have jumped to the fore. From the outset, they had more speed.  It might have hurt the old girl’s feelings, but Molly was all heart, with a smidgeon of cunning.

Most of the pups early training was in open terrain and planted pine plantations, but by late in the season, the hunting party had to resort to unconventional habitat.  One of the toughest venues for rabbit hunts were the brier choked drainage ditches for fields with center pivot irrigation. Down by Highway 301, near Rubin Oliver’s place, there was such a place. At the rear was a water filled canal that was too wide for us to leap. The water was too deep to wade.

A rabbit jumped up along one of the center ditches, exploited a gap in our containment to the sound of three desperate shots from Cousin Hugh, and dashed to the rear of the field and into the dense blackberry patch there. Pete and Sapphire led the pack in pursuit.  When the beagles reached the ditch, all noise stopped. The rabbit had swum the ditch. Five young beagle gun dogs were left clueless and whining at the edge of that canal. Suddenly, there was a graying blur as this bow legged doyenne of a wizened huntress barged through the youngsters and leapt into the water with no hesitation. The five whiners quickly followed her example and swam to the other side, where a furious pursuit of Mr. Rabbit resumed that lasted until dark.

The sight of Molly’s charge into the canal became more than a fixed memory; It became an inspiration for her masters. Molly took charge and plunged into what looked to her companions like a well of doom. Despite her age, aching bow legs, and the coldness of the water, Molly knew her duty and did not shrink from it. She inspired the youngsters around her and taught them with leadership in action.

We should all do the same in these times of encountering vast moats of troubles.

Be Molly.

Molly in Action

The Bounty Trace to Magnolia Trace

Originally posted on CityStink
Friday, September 21, 2012
Evans, 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.
The fury in and surrounding the Columbia County Commission Chambers on December 6, 2011 sizzled and seethed. Citizens packed the room and the overflow could have surrounded the building. An incongruous and unwelcome subsidized housing development, to be known as Magnolia Trace, was coming to their midst. The county commission had invited the intruder in. The Georgia Department of Community Affairs (DCA)was funding it. The only notice had been the real estate closing and starting of the building permit process. Revelations that the project’s limited partner, Affordable Equity Partners(AEP) of Columbia, Missouri, had – through subsidiaries, related entities, and PAC’s – liberally provided campaign donations to Georgia’s governor, lieutenant governor, speaker of the house and local state legislators added to the combustible mix. Capping it off later was the discovery that the county attorney also had worn the hat of closing attorney for the developers.
Inside, the commission chairman, three commissioners, and that county attorney were stoic, but their white faces and knuckles spoke fear.  Their position was one of relative comfort juxtaposed to the District Three commissioner, a man inopportunely appointed to the offending Department of Community Affairs board (albeit after DCA had approved the tax credit funding to AEP) and who had voted for the county’s resolution to endorse the project. His business had been picketed, his phone ceaselessly chattered, a local talk radio show with 60,000 listeners was hostile, and real pressure was on. He was beet red and seemed to be near break down.
An epic meeting ensued that concluded an hour and a half later with the commission engaging an outside attorney charged with seeing whether there were avenues to void the deal.  It was a fig leaf and seen that way. The project was too carefully planned and orchestrated for citizens to have a realistic chance of canceling it. After all, Affordable Equity Partners boasts of its long history of doing tax credit projects in multiple states and its role in encouraging states to provide the tax credits.  From the company website: “By forging strong relationships with key government entities, AEP ensures a secure and favorable investment environment for our investor partners.”
Who Done It?
The first stage in the development and investment process for a Low Income Housing Tax Credit project is said by AEP to be this: “A developer of an affordable property will admit AEP as its limited partner..” This portrays the circumstance of a group of local property developers gaining control of land, then engaging the AEP companies to structure the deal as a LIHTC financing. Who are the principals behind Magnolia Trace? They are hidden by the LLP structure, so that remains a mystery.
The birth pangs for this project came when an AEP entity named Peach Way Holdings LLC obtained an option on March 24, 2010 to purchase the land. Later the option would be exercised by Magnolia Trace LLP. Immediately the process began to submit an application to DCA for tax credits used to finance the project. Peach Way Holdings was the first entity publicly involved out of an AEP interconnected stable of companies who are very adept at carving out a lucrative niche.
Extraordinarily High Costs Meet a Stunning Reversal
The Magnolia Trace project was so astonishingly lucrative that the DCA staff initially refused to approve the application on December 14, 2010 (click link to view document) based on that fact and a host of other financial criteria. “Total development costs for this project are over $10 million dollars which translates into almost $141.24 (author used round numbers) per square foot. A similar project had total development costs of only $7,561,982. This translates to almost $2.5 million more of total development costs.”, DCA wrote. Despite having slammed the numbers as entirely too high and the applicant being barred from updating or modifying anything upon appeal, DCA  approved the credits for MagnoliaTrace in a letter dated March 14, 2011 (click link to view approval document) .Incredibly the approval notification letter has a DCA documents date stamp of January 7, 2011, 66 days before the document was dated!
A need to call upon AEP’s “strong relationships” within government to gain approval before December 31, 2010 lay in the expiration of a key contract with Peach Way Financial Services. The vaunted “genuine advocacy for both developers and investors” worked wonders to speed approval, evidenced by what looks like an obvious post dating episode, over a period interrupted by Christmas and New Years.
Who might Magnolia Trace LLP/Affordable Equity Partners have called upon for help in this time of emergency? Lt. Governor Casey Cagle’s campaign got $882.50 from AEP going back to 2008. Sister company Capital Health Management Inc. gave Cagle another $10, 453.50.Capital Health Management in October 2006 had given $40,000 out of the $40,500 total of The Fund for Georgia’s Future (Filer # NC2006000414 ) who gave Cagle another $10,000 that same month. Capital Health Management in 2008 gave a whopping $100,000 to The Fund for Georgia’s Future, who dispersed it to a raft of legislators. and the Republican Party.
Capital Health had also given the campaigns of Speaker David Ralston $5,000, Senate Majority Leader Chip Rogers $5,500 and Nathan Deal $6,300. Another PAC that AEP contributes to, albeit not as the dominant contributor, is the Committee for Affordable Workforce Housing (GAHC-PAC – Filer NC2008000070). This PAC gave another $6,100 to the Deal campaign in September 2010, $1000 to Ralston in December 2010, $5,973 for Deal in December 2011,  and $3,000 for Cagle in March, 2012.
Nearly $200,000 in campaign funds wins friends. In this case did it reverse a project rejection and move a date?
Magnolia Trace under construction
 A Masked Partner?
The DCA application process requires disclosure of all related and controlled entities. Peach Way Financial Services, LLC , the Development Consultant, seems to fall within this category, as William A. Markel, Executive Vice President of AEP, is listed as Peach Way’s Agent for its business registration with the Georgia Secretary of State with the listed mailing address in Missouri coinciding with AEP’s office address. However, in the tax credit application filed with DCA, Peach Way Financial, the project Developer Consultant, was listed with an Atlanta address and was reported to  “not have an identity of interest with any other entity in this chart.”  *(Click here to view Magnolia Trace parties document). It is noted that the “identity of interest” question applied to each and every entity in the chart.
A side note is that Peach Way Financial Services, LLC  is shown to have filed its business registration with the Secretary of State for 2011, when the application process remained in play, but is reported to be in a state of noncompliance for 2012. According to its contract, Peach Way Financial Services gets fee payments in 2012 from Magnolia Trace.
“Inefficient financial structure”
Before Magnolia Trace LLP’s sudden change in fortune, DCA had written this about the project: “….the financial structure is not an effective or efficient use of DCA resources.” What might be the reason that the “financial structure is not an effective use…?” Could it be that multiple layers of AEP affiliated companies produced the $2.5 million more in costs cited by DCA?
Arguably the largest money tree in the AEP stable is that the tax credit financing process allows “AEP’s ability to insert an experienced affiliate into every step of the tax credit process provides added security to AEP’s investors.” With Magnolia Trace, Peach Way Holdings secured the land option. Magnolia Trace LLP became the owner.  MACO Development Company, LLC is the Developer. AEP itself is the State and Federal Limited Partner. MACO Properties, LLC is the Managing Partner. Peach Way Financial Services LLC is the Development consultant. Fairway Construction Co. Inc. is the General Contractor. Fairway Management is the management company. All are related and most stood to gain fees, directly or indirectly.
How much  of the $2.5 million excess cost that DCA objected to might be found in having so many AEP companies involved? The land acquisition and construction ‘costs’ totaled $6,986,826, or a whopping $100 per square foot. The total development  ‘costs’ of $10,152,634 were $145.45 per square foot. Of the roughly $3.2 million difference, fees, overhead, and profit of the AEP stable of companies were about $2.1 million, or 66%.
A Lot More than A Trace of Money
Once a subdivision is complete, the AEP companies begin to draw management fees from leasing operations. Magnolia Trace will join 17 previous AEP company developments in Georgia. Projected management fees to be generated from the Martinez complex are estimated at $1,160,885.
The approved tax credits were $1,065,849. If the DCA’s figures and objections ifrom December 2010 are correct, the excess of tax credits over the norms would be about 25% or more than $250,000.
Magical Words to an Auditor’s Ears
The application contained the language “Certification of Actual Cost” and the authorizing provisions in Chapter 42 of the tax code preserve the rights and capabilities of audit before the tax credits are issued. This could prove providential in protecting state and federal tax revenues, as there are new homes for sale in similar neighborhoods for sales prices in the low $70’s per square foot. Upon audit can the $145 per square foot price supplied by the AEP companies be sustained?
The larger question is whether anyone will ever be allowed to audit this transaction.


Citizens of suburban, Republican Martinez, Georgia got an unwelcome subsidized housing project courtesy of unknown developers. If there is solace in this story it is that Martinez county commissioner Trey Allen got the Department of Community Affairs to reform its policy so that future locales will be notified beforehand of low income projects. The politicians got nearly $200,000 of campaign donations. The AEP stable of companies look to have secured a backdated approval of a project that DCA deemed excessive on the way to winning more than $1.5 million in development fees, $1.1 million in tax credits, and $1.1 million in management fees. Along the way, one entity looks to have been undisclosed as a related party and has fallen into noncompliance with Georgia’s business registration unit.
The identities of the parties who launched this controversial project will be hidden behind opaque partnership structures, while a cash-strapped state government sees its revenues drained, not only by very lucrative tax give-aways, but also by layered on costs that the state agency found to be excessive.
Can this really be government by and for the people?***
Al Gray

A Bad Hare Day?

The Jaws of Penny

Originally posted on CityStink
September 9, 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.
Red and Georgette were the plug-eared rabbit’s nemeses out on Owens Road in Evans. It was an age in which there was no Rhineharts on one end of the road and an Academy Sports on the other. Only 5 years separated those days from the time Owens road was dirt. Beyond  the by-then-abandoned old Owens Place, the families along that stretch were folks named  Strickland, Fleming, Thompson,  and Cone.  The term “Brandon Wild(e)” might have been figured as some punk rich kid from the Augusta hill throwing a drunken party brawl at the American Legion lodge over by Reed Creek.  There were plenty of those.
Sometime in mid-1968 a red and white rag top Ford Bronco pulled down the drive to a new home for the beagles and their aging mentor, Penny. One can sense the wonderment of those three, because the trip was not in hunting season and the beagles never went hunting with Penny, as much as she might have fancied herself a rabbit huntress. Moist noses would have been held high, trying to get a olfactory clue of where they were. Maybe they detected fresh asphalt, a smell alien to their former abode down on Stevens Creek Road. Perhaps it was the fragrance from all of the broomstraw and blackberry vines across the road. Whatever it was, it spoke of a new life in a new place.
As happy-go-lucky and adventuresome as beagles are, Red and Georgette were soon poking noses in brush piles, trying to roust out a cottontail for a chase. Old Penny was another case. Penny was a lemon and white English pointer who had roamed free alongside her siblings for nearly a decade. The move was traumatic. Penny slept every night for two months under her reliable companion, the Bronco. It was her security blanket – one supposes she figured that when that wagon left, she was going with it.
Eventually she decided to get as close to the family as possible which meant a position in the garage near the kitchen door. That garage opened to the rear of the house onto a large parking area which also served as the neighborhood basketball court. Alongside the home were the obligatory shrubs of hated holly (trimming was torture), pittosporum,  ligustrum,  sasanqua, azalea, gardenia, and boxwood. In places they were several tiers deep. Snakes, lizards, and birds loved the habitat.
The first time the plug eared rabbit was seen he was tipping around a pile of freshly-cut saplings from clearing the yard. Later it would be found that the brush pile was one of his hide-outs. Curiously, that particular brush pile was closest to the dog pens. It was almost like Plug Ear had his very own sense of daring. Most of the time the beagles ran free, but that rabbit did not know when those times were.
There is no substitute for experience and those beagles got plenty of it chasing Plug Ear and his relatives.  The next winter Red and Georgette would team up with Jinks and Blue for some sizzling races down below Girard, Georgia. Practice on their home boy rabbit might not have made perfect, but it made for very fast beagles.  The poor rabbits down there in Burke County paid dearly for trying to escape over some hill. Unlike Plug Ear back home, they didn’t have ponds to swim or culverts to run into when the chase found the bugling beagle foursome nipping at their heels.  The teamwork between the hounds in pursuit of an open field quarry was stunning in speed and effectiveness.
At heart, old Penny was a rabbit dog, too.  Our family of quail hunters had to be greatly disciplined with her rabbit pointing.  One could tell when it was a rabbit that she had pointed, for her tail would have a pronounced crook in it. If it was really, really twisted, that meant “snake,” not “rabbit.” One didn’t dare reward Penny by shooting a rabbit she had pointed, especially early in the day, for if you did, she would spend most of the day pointing rabbits instead of quail.
Back home, Plug Ear was getting more inventive with his escapes. Red and Georgette had started strategies to cut off his pond swims, runs on smelly asphalt to hide his scent and bolts through Mr. Cartledge’s hog wire fencing.  He came to run up to the house, slip and weave among the shrubs, and hug the foundation. He got by with that one day.
The next day he didn’t.
The hounds struck Plug’s trail down where he got a sip of water coming out of the Cartledges’ pond overflow. He shook them for a moment at the fence, allowing time to scoot into our pond’s far side. From there he jumped in, swam to the dam, crossed over, and ran a flanking trail down the cane break. Plug doubled back on his trail and leaped over the creek. After crossing the dam again on the near side, he made a run up to the house and tipped along the base of the wall. Then he stopped in an opening to listen for Red and Georgette.
It was in front of the garage.
A lemon and white energized bundle named Penny lunged at Plug Ear from his blind side, but the combination of pointer toenails on asphalt and one intact bunny ear provided salvation.  The gaping maw of Penny’s mouth snapped at Plug’s head, but caught his fleeing tail instead.
It was a shame that Red and Georgette were still down by the pond when Penny made her charging lunge. They would have screamed approval. Plug Ear survived.  If he were seen after that day, one would have branded such a species as a Plug  Earred Nothingtail.
There is a human moral to this tail.
 Sitting on your haunches gloating is not Penny wise.
Originally posted on City Stink.

Commissioners Cautioned Against Approving Deck Contract Today

Originally posted on CityStink
Tuesday, August 21, 2012
Augusta, GA
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
As we told you yesterday, a special called meeting of the Augusta Commission is scheduled today at 4:30pm to once again try to approve the Reynolds Street Parking Deck management agreement between the city and Augusta Marriott hotel owners, Augusta Riverfront LLC. A closed door legal session has also been requested by Augusta General Counsel to discuss the deck deal. Representatives from Augusta Today and will be in commission chambers today to observe these proceedings. Of course if commissioners vote to go into a legal session, those proceeding will be off limits to the public and the media.
Al Gray, a cost-recovery specialist and a contributor to ( now defunct) site, who has done extensive analysis of the deck contracts, plans to be at today’s meeting. Al Gray cautions commissioners from once again rushing into approving any last minute deal and he left the following remarks on why this contract needs to be tabled and what MUST be included for any  contract to be approved:
The Mayor, Administrator, and Commissioner Jerry Brigham are set to RAM THROUGH disastrous Parking Deck Management and lease agreements that, at last review, contain the following flaws.
1) The Annual plan was only a guide. The REAL AUTHORITY is the contract language defining costs that are allowed. The Annual plan is a SMOKESCREEN. They are putting out the total and utter B.S. that the Commission will have approval for overages or costs beyond the Plan, but the CONTRACT LANGUAGE WILL FORCE PAYMENT!
Like the Jefferson County Alabama deals with Wall Street that bankrupted that county, unless this agreement has been amended SUBSTANTIALLY, it is an OPEN CONDUIT of UNLIMITED Augusta Funds. The Manager can SELL THIS AGREEMENT and if the agreement allows the Manager to set its own budget, like this agreement did the last time the public saw it. An agreement that allows unlimited billings would have unlimited value! LET US SEE THE AMENDMENT THAT ELIMINATES THIS!
Then there is the matter of the LLC getting 100% of the income for 150 spaces while Augusta gets 100% of the expenses. The LLC is being compensated with a like # of spaces, but didn’t the LLC pay the COSTS of the old spaces? Taxes,  lighting, etc.?
Here are the rights of Audit I recommended that Augusta is apparently rejecting:
WHY NEEDED? TO DETERMINE THAT COSTS ARE ACTUAL COSTS traceable to the Managers records, that all discounts come back to the OWNER. The “Financial Audit” now in
there is a RUBBER STAMP snapshot at the end of the year.
INSPECTION AND AUDIT – Manager’s “records” shall upon reasonable notice be open to inspection and subject to audit and/or reproduction during normal business working hours. Such audits may be performed by an Owner’s representative or an outside representative engaged by Owner.
The Owner or its designee may conduct such audits or inspections throughout the term of this contract and for a period of three years after final payment or longer if required by law. Manager’s records as referred to in this contract shall include any and all information, materials and data of every kind and character, including without limitation, records, books, documents, subscriptions, recordings, agreements, purchase orders, leases, contracts, commitments, arrangements, notes, daily diaries, management reports, drawings, receipts, vouchers and memoranda, and any and all other agreements, sources of information and matters that may in Owner’s judgment have any bearing on or pertain to any matters, rights, duties or obligations under or covered by any Contract Document.
Such records shall include (hard copy, as well as computer readable data if it can be made available), written policies and procedures; time sheets; payroll registers; payroll records; cancelled payroll checks; subcontract files (including proposals of successful and unsuccessful bidders, bid recaps, etc.); original estimates; estimating worksheets; correspondence; change order files (including documentation covering negotiated settlements); backcharge logs and supporting documentation; invoices and related payment documentation; general ledger entries detailing cash and trade discounts earned, insurance rebates and dividends; and any other Manager records which may have a bearing on matters of interest to the Owner in connection with the Manager’s dealings with the Owner (all foregoing hereinafter referred to as “records”) to the extent necessary to adequately permit evaluation and verification of:
(a) Manager compliance with contract requirements,
(b) compliance with Owner’s business ethics policies
Contractors get away with ENORMOUS overbillings from misapplied labor burdens. I got back $millions from this source
Insert – When computing actual costs chargeable to the Cost of the Work for payroll taxes, the Manager shall give proper consideration to the annual limitations of the wages subject to certain payroll taxes. The Manager may accomplish this through the use of an accounting system which computes actual costs for payroll taxes when incurred up to the wage limit cut-off and allocated same to all jobs by individual based on the time worked on each job by the individual. Alternatively the Manager may use an estimated net effective payroll tax percentage to allocate payroll tax costs during the year and make appropriate adjustments at the end of the year or at the end of the project (whichever is more appropriate) to adjust the costs to actual net payroll tax cost. Using the latter approach, if 50% of the wages paid to an employee during the year were chargeable to the Cost of the Work, then only 50% of the actual annual costs of payroll taxes would be allocable to the Cost of the Work, etc.
Insert – Cost of the Work shall include the actual net cost to the Manager for worker’s compensation insurance attributable to the wages chargeable to the Cost of the Work per this agreement. The actual net cost of worker’s compensation shall take into consideration all cost adjustments due to experience modifiers, premium discounts, policy dividends, retrospective rating plan premium adjustments, assigned risk pool rebates, etc. The Manager may charge an estimated amount for worker’s compensation insurance costs, but will make appropriate cost adjustments to actual costs within 30 days of receipt of actual cost adjustments from the insurance carrier.
Insert – Any payroll burden related costs to be reimbursed which are not required by law shall be subject to advance written approval by Owner to be considered reimbursable. Fringe benefit costs typically falling into this category include but are not limited to pension, employee stock option plans, bonuses, medical and dental benefits, life and accident insurance, etc. The Manager shall be required to submit a detailed breakdown of all such payroll burden costs along with all representation as to how the proposed actual billable cost will be computed. Such information must be reviewed and approved in writing by Owner before Manager may include such items as reimbursable costs.
All such payroll burden costs shall be billable as reimbursable costs at actual verifiable cost subject to provisional maximums agreed upon in writing in advance by both parties. It should be noted that certain fringe benefit costs such as funding of pension or profit sharing funds in excess of the minimum amounts required by law may not be considered reimbursable payroll burden costs by Owner, and those fringe benefit items which are not approved in advance in writing by Owner will be considered as nonreimbursable overhead cost to be covered by the Manager’s Fee. During the job and prior to contract close-out, adjustments will be made to account for actual costs which may be less than the provisional maximum costs previously billed.**************