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.

Austin Rhodes’ Challenge: Hire a Lawyer!

Augusta afternoon radio personality Austin Rhodes

Originally Posted By CityStink
Thursday, Feb. 2, 2012
Augusta, GA
By The Outsider
Contributions were made to this article by Al M. Gray, President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
Austin Rhodes started his radio program off yesterday by issuing a challenge to the members of the citizens local government watchdog group on Facebook called Augusta Today: Hire a lawyer! It’s not because that Augusta Today is in any sort of legal trouble, but rather Rhodes contends that ultimately it will take legal action for the citizens activist group to get real action on their goals of government reform at  the Marble Palace.
Augusta’s government is kind of like  a meth addict. Their behavior is often highly inappropriate, but  they don’t think they have a problem. They’ve been doing  things this way for so long that to them it’s just the normal way of operating. In addiction psychology, that’s known as DENIAL. You can’t just politely ask them to change their ways. Sometimes there has to be an INTERVENTION. And that’s where the lawyers come in. So far, members of Augusta Today have been presenting the evidence of the bad deal the city got suckered into over the TEE Center and Parking deck hoping that commissioners would “see the light,” and change course. But over the course of the 13 weeks since we broke the ParkingGate scandal, there’s been very little action from the commission. In fact, some of them have even tried to marginalize members of Augusta Today as just grumpy gadflies.
On December 20th, 2011 six commissioners did finally approve a forensic audit to examine any possible improprieties involved in land transactions involved in the TEE Center  Parking Deck, but since then there has been no further action on the audit and now at least a couple of commissioners are trying to torpedo it. But members of Augusta Today press on, believing that in the end they will be vindicated because the facts are on their side.
Legal counsel could be helpful to the group though, and it is an idea that has been discussed before.. even at the very beginning of its formation..which evolved out of ACAVE.  Citizen activists can make a lot of noise, get information out there before the public by getting the media involved; they can pack commission meetings, call commissioners, write letters and emails, send letters to the editors, request public records and even start their own political  news blog! But in the end the decisions are in the hands of the elected officials, and in the case of Augusta, the politicians have been in denial for so long that they often just ignore the public they are supposed to serve.. no matter how valid their arguments are or how loudly they make them.
Enter the lawyers. Legal counsel has the power of the courts at their disposal to force the commission’s hand, just like a court can order a repeat drug offender into rehab. It’s called a Writ of mandamus. It’s when a court forces a lower court or government officer to perform a duty. In the case of ParkingGate, it could be forcing the commission to move forward with the forensic audit……they did vote to approve it after all. A writ of mandamus could also possibly be used to force a public referendum on any new ballpark.. that some elected officials are doing their darndest to get around.
But some of you may say: “But Woody Merry and his group filed lawsuits against the city all of the time and that got no where.”
True. But Woody Merry would usually file a lawsuit about any and everything and he often didn’t have the evidence to back up his claims. That’s  counterproductive and in the end just costs the taxpayers more in legal fees.
Augusta Today is different; they do their homework. They’ve done exhaustive research on the parking deck and TEE Center, as well as the Laney-Walker/Bethlehem redevelopment overlay, submitting open records requests for hundreds of pages of public records. And that doesn’t come cheap. Individual members  have dug into their own pockets shelling out hundreds of dollars to get these records. Another appeal of retaining legal counsel would be that it would cover obtaining most of the necessary legal documents and public records to move forward on a particular project. It’s like killing two birds with one stone.
But lawyers don’t come cheap. And the one that Austin Rhodes is recommending, Robert Mullins, won’t likely work for peanuts. Mullins has a successful track record suing the city. In 2009 Mullins sued the city on behalf of the Association for Fair Government to force the city to release public records.  That suit involved the release of public records over construction bids that the city’s procurement department kept stonewalling  over. In the end, Mullins prevailed.
Mullins won a settlement from the city on behalf of Thomson Wrecking Company for a sum in excess of $200,000  in July of 2011 over claims that the city’s procurement department violated a 2007 order regarding the Disadvantaged Business Enterprise Program.
The upper echelon of Augusta Today tell City Stink that they are taking a serious look at Robert Mullins and his track record. But first the group has to raise the money. Austin Rhodes quickly pledged $100 to the effort on the air yesterday. Then former Augusta Commissioner Andy Cheek called in and pledged $100 of his own. Members of Augusta Today are telling us that work is being done now to file the right paperwork so that they can form a legal fund and begin taking donations and start the process of retaining an attorney.
Once that happens the group will add a donation button to their Facebook page. We will also add it to as well. Stay tuned.***
UPDATE: We just learned that the city’s procurement department has begun the process of issuing requests for proposals from forensic auditing firms.