T-SPLOST Report: Don & Ron’s $87 Million Tax Give-Away

Just Dandy or Downright Irresponsible?
Originally posted on CityStink
Monday, July 23, 2012
Augusta, GA
By IndyInjun
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
A loose coalition of anti-tax and community activists has arisen locally to oppose T-Splost, which is the chosen acronym for a proposed new 1% sales tax dedicated to transportation. This measure is Referendum Item 1 on the July 31 Georgia primary election ballot. If passed, the sales tax rate in most counties in the Central Savannah River Area (CSRA) increase from 7% to 8%, for a whopping 14.3% sales tax increase.
The funds collected from the new 1% T-Splost in all of the 13 counties in the CSRA  region would be dispensed in two pots. 75% of the money goes into a designated, preapproved investment list projects, called the “Constrained Investment List.” Many, if not most, of these projects in the CSRA have long been on the Georgia Department of Transportation’s planned projects list to be built with motor fuel tax funds. For example, the extension of Riverwatch Parkway to Washington Road in Evans has been on the DOT planned list for a decade or more. Columbia and Richmond Counties are MPO’s (Metropolitan Planning Organizations) under the authorizing bill, the Transportation Investment Act of 2010, and will be empowered to use the new T-Splost funds largely without DOT involvement.
The horse trading with the other 11 counties was thorny. As best can be told, the trade-off was to build the large investment list projects in Augusta and Columbia County early in the 10 years of the T-Splost, while the Investment list projects for the rural counties are delayed largely to the last 3 years, carrying the risk that the funds will run out. The bill says that these projects are guaranteed to be built but provides no funds.
Dandy Don Loves Taxes
The other 11 counties are willing to be in this arrangement only by virtue of the 25% “Discretionary” Funds or Cash Pot. This 25% is set based upon a combination of road miles and population which vastly favors the rural counties.
How much money is Augusta and Columbia County giving up into the Cash Pot for the rural counties? An astounding $87.6 million!  Augusta gives up $63 million and Columbia County gives up $23 million in cash! Proof of this is found in the spreadsheet that the CSRA Regional Commission provided, although it required extending some of the data and calculations to divulge the truth of the matter.
Don Grantham, Commissioner of the Georgia Department of Transportation Board for the Augusta Region, and CSRA Regional Transportation Roundtable Chairman Ron Cross were extremely generous with the “cash pot” funds to be doled out from their counties!
Why aren’t these figures being publicized? ***

IJ

CSRA TSplost Revenue Gains and Losses by County

“Galloping” Away with Taxpayers’ Money

Augusta Stumbling Into a “Gallop”


Wednesday Feb. 15, 2012
Augusta, GA
*updated at 3:45pm
by IndyInjun
We were watching WRDW’s Chris Thomas on the latest Marriott hotel fiasco, a Tee Center change order of $396,000, when a familiar face appeared defending the hotel’s pricey standards that Augusta is being asked to fund. It was long-time Augusta political activist and Charles Walker acolyte, Wilbert “Butch” Gallop. Mr. Gallop was identified as a “project liaison,” whatever that is. 

At last count there were three oversight and management service companies, TVS Design, Heery International, and R.W. Allen charging well over $4 million to manage the Tee Center and Reynolds Street Parking Deck Projects. That’s a lot of overhead! Why are so many needed to administer these trouble-plagued jobs? Why is it so costly?
One reason is that Augusta is being charged $177.91 per hour for Butch Gallop’s services by program Manager Heery International for his work as “community liaison.”


We have a hint of what Butch Gallop’s “liaison” work for Heery International might entail from a June 17, 2009 article in the Augusta Chronicle by Johnny Edwards. In this article we learned that Gallop essentially worked as a “community organizer” to help drive out the vote by canvassing neighborhoods and supposedly dispelling “misinformation” to pass the SPLOST VI. Gallop worked alongside Janie Peel, Brenda Durandt, and Tricia Hughes on the “Yes to SPLOST  VI” campaign.


Butch Gallop is quoted in the article: “The team that was put together — Brenda Durant, Janie Peel and Tricia Hughes — put something together to really educate the community…The naysayers always have something negative to say, but they didn’t know why they were negative. All they kept talking about was pork-barrel projects.”


All this while he was on the payroll of Heery International, which manages Augusta’s sales tax projects. So does that mean taxpayers are indirectly paying Butch Gallop to be a lobbyist and community organizer to help push thru these SPLOSTs, which greatly benefit Heery International? It sure appears that way.
Casting the net beyond the Tee Center and Deck projects we found Butch Gallop in the pay of ESG Operations, Inc., operator of the Messerly Waste Water Treatment Plant at the rate of $2,500.00 per month. While whether Gallop was charged as a reimbursable cost under the waste water treatment plant contract or is absorbed in the overhead cost of the contractor’s services is immaterial. Augusta paid.
Just how many other Augusta contractors feel compelled to engage Butch Gallop’s services? What is going on here?

What exactly does a “liaison” do?

In these times of tough budget decisions, employee pay and benefit reductions, and aggressive cost-cutting, how will city leaders defend this galloping cost?
Augusta is squandering millions of dollars, while its commissioners dawdle and play the most unfortunate of political games. Stay tuned.***

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***Do you have a story idea, a tip, or would you like to write for City Stink? Then please contact us at: citystink@gmail.com***
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TEE Center and Parking Deck: A Grand Deception?

The TEE Center and Parking Deck are tainted with deception

Billy’s Best Bud?

Originally posted by CityStink
February 6, 2012
Augusta, GA
By Indy Injun
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.
Mr. Paul S. Simon has been a successful Augusta business leader, civic-minded patron and is a proud founder of one of the best banks in the area, Savannah River Banking Company. He is admired far an wide. His partner in Augusta real estate ventures, newspaper publisher emeritus Billy Morris, has been a man of similar high regard here from his history of generosity and benevolence.
Admiration stops when it comes to the activities of these men with respect to the Tee Center and Deck controversies. In an article in Morris’ Augusta Chronicle in 2007 it was clearly stated that “Augusta Riverfront’s land would be deeded to the city”Subsequent articles told of the land “donation.” The land never got deeded and the donation turned into air. Barry White,of the Augusta Convention and Visitors Bureau wrote July8, 2007, “Not only does Augusta Riverfront LLC bring proven expertise, it has offered to donate to the city downtown real estate valued at an estimated $1 million.” The “land valued at $1 million” looks to be underwater because of $7 million in liens. Despite these things these gentlemen never set the record straight, with the assertion that land would be donated continuing to the commission meeting in December 2009 in which the Tee Center was approved. Setting the notion of the grand donation in print and never retracting it certainly looks like deception from this vantage point. See the timeline in one our earlier stories on the matter here —> Deeds and Misdeeds: A “Chronicle” of Promises to Donate Land for TEE Center/Parking Deck.
If someone can show otherwise, please do so and a retraction can be issued.
The deception of the LLC mavens may have been simply neglecting to correct misdirected glowing praise they had first basked in. Indeed there are no documents known to be in the public domain that have their signatures or even business letterhead on to prove anything. Most of the versions of the Term Sheet used in the negotiations even state that the LLC’s would retain the land. If there are ways to tie the Term Sheets back to the LLC mavens, then can’t one conclude that deception was there because they represented to the public one thing while expressing the opposite in private?
The actions of the County Administrator and attorneys look far worse. They represent the greatest malfeasance in office of any public officials that most of us engaged in this matter have ever seen. Their deception of the county commission, the media, and the public looks to have been continuous. Their actions to cater to the financial needs of the LLC’s look to have overridden the public interest that they have been paid to protect. A forensic audit like the one that the County Commission has approved is an appropriate response. The circumstances demand it.
Both county administrator and county attorneys admit to knowing about the Wachovia Bank (now Wells Fargo) liens very early on. They failed to tell the County Commission that the valuable “land donations” were really enormous liabilities. They allowed the $12 million Reynolds Street Parking Deck to be built on land the city mostly doesn’t own and the Tee Center to be built over a parcel the city doesn’t own. Now the city is being forced into retroactively approving contracts that the administrator promised commissioners would be in place up front. The commission is being told “approve it first and then you get to use the building you constructed.” These are grounds for dismissal in this writer’s opinion.
Attorney Jim Plunkett‘s assertion Monday that the buildings “had to be built” before the necessary easements could be established flies in the face of the public’s experience with real estate transactions.
The $1.8 million claimed financing savings from using air rights, the Jackson land swap, and the WAGT purchase to reduce the LLC ownership interest appear bogus. Examination of the situation shows that the only reason higher cost taxable bond financing would have ever been necessary was because the LLC’s were retaining too much ownership. In other words, the interest ‘savings’ came from not losing tax exempt financing on that which would have otherwise been eligible. Isn’t this like setting a neighbor’s house afire, then rushing in with fire extinguishers pretending to be a hero?
The new wrinkle in the TEE story – Assignment of Rents

Why did the attorney’s have to maintain the same number of parking spaces for the LLC’s? The truth is probably found in the Assignment of Rents that the LLC’s had also executed with Wachovia Bank.(See The Assignments of Rents Leases Document for 933 Broad Investment LLC Here). Since the property is entailed and also liened by the Assignment of Rents, that had to be accommodated by going to the air rights package.
The attorneys did not notify the commission about the Assignment of Rents nor did they notify about the Security deeds on the property. They failed to do this even though the security deed says that any buildings or structures “hereafter erected” also come under the security deed. (See the Security Deed Here). How does an attorney let his client build on land under such language without clearing that up first?
Billy Morris got another sweetheart deal at our expense
In the background, coincidentally or otherwise, the LLC’s interests were being sublimely served. The banking crisis that exploded in 2008 spilled over into commercial property markets in 2009 and 2010. Across the nation and especially in Georgia, the epicenter of bank failures, borrowers were being faced with crushing demands by banks, when loans came up for refinancing. Banks increased the amount of equity required and also reappraised properties which were falling in value, generally increasing the amount of new equity required to refinance. Morris Communications announced its bankruptcy filing in March 2009, just as the Tee Center cost estimates were being prepared. The security deed against the deck parcels owned by 933 Broad showed a final payment date of June 30,2009, (See the  933 Security Deed 2nd modification here) only a week before the July 2009 commission meeting where the commissioners were first confronted with the terminology about air rights instead of land donation. Did the LLC’s have demands or needs to come up with more collateral like everyone else?
The appraised value of the parcels was $552,000, far less than the loan amount cited in the security deed of $7 million, Now to clear up one misconception, the $7 million loan seems to have been secured by additional properties, not just the deck land. This being said, commercial property values fell by 20 to 40% locally, which likely prompted action or concern with respect to the LLC loans. Please see the land acquisitions document here—> TEE Center Land Acquisitions. Pay close attention to Page 2.
The Jackson land swap and hot dog stand buy-out must have looked like manna from heaven to those LLC’s. It gave any bank real estate appraiser a comp value of $2.2 million an acre! This would not only have applied to the deck parcels, but the parcel under the Tee Center, and the lands of affiliated Morris Simon entities. It would have relieved the pressure from the reappraisal process.
There is no way of knowing the magnitude of the cash outlays the Jackson swap averted for the LLC’s except that the relative values before and after the swap transaction had to have been huge.
Fred Russell has been less than honest over this deal
Then there is the matter of the effects of Augusta’s Administrator and attorneys hiding the loans and liens from the Augusta Richmond County commission. Approval of the Tee Center was a close thing, with the term sheet initially failing a vote on August 21, 2007, only to be revived and approved later in the meeting. The disclosure of security deeds for a $7 million loan would have been disastrous. Approval would have been impossible. As it was, the commissioners were under the impression that $1 million in land would be donated, not $552,000 of land with $7 million in liens.
Get the picture? Morris Communications announced a restructuring in March 2009 that ended up writing down its debt by more than $100 million. About the same time, or sometime well before construction by the city began on land it doesn’t own, administrator Fred Russell and attorneys had to have been aware of the liens and Assignment of Rents on the Morris LLC property, yet they did nothing to inform the commission! The conclusion is that they had a determination to see the Tee Center built no matter what, even to the extent of hiding material facts from their employers. What kind of discipline or censure is the Commission going to respond to that with?
The commission is in a box of these peoples’ making. It has to approve the Conference center and Reynolds Street Parking Deck Agreements first, before there is any relief from the bank liens. There is no option but to approve the deals. In any other environment couldn’t this be seen as extortion by the county’s own employees?
Why did they do these things?
Forensic Audit Would be Impotent
Despite our call for a forensic audit in the past, this new information would makes the exercise a farce. First of all, Administrator Russell and attorney Plunkett admitted last Monday to knowing about the liens and not telling the commission. Second, the forensic auditor would likely run into the same stonewall of claimed attorney-client privilege and unsigned, undated documents that citizen Lori Davis met in her open records request. Mayor Copenhaver and Finance Chairman Brigham are right that a forensic audit in the face of such pronounced and determined refusal to disclose anything of a material nature would be a fruitless exercise.Commissioner Johnny Hatney very correctly pointed to the need for all agreements with these LLC’s to be audited. It is noted that the two new agreements call for financial audits. Those would be even more worthless than a forensic audit. Those things are rubber stamps.
Serious reforms have to be in place before the Commission votes to approve the new agreements with the LLC’s.
Commissioners have allowed themselves to be trapped in a box

 

The public simply won’t stand for anything less.
Meanwhile. Mr. Morris is so happy with Administrator Fred Russell that his Augusta Chronicle feted Russell with a tribute piece.
The people of Augusta-Richmond County might have a different tribute in mind.
Commissioners find themselves in a box canyon not of their making. They cannot be happy.***
AG

Magnolia Trace: Money Trail Traces to the Gold Dome

**City Stink Exclusive!**

Magnolia Traces to the Gold Dome

 

Originally posted by CityStink
December 8, 2011
Augusta, GA
By IndyInjun

The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s well-known companies, businesses and governments desiring Superior Returns.

Old Gomer Pyle used to say “ Surprise, Surprise, SURPRIZE!!!” Well, the money trail from Magnolia Trace , LLC to Affordable Equity Partners of Columbia Missouri, might fork, meander, double back, and double CROSS, but the sleuth hounds of Augusta Today and CityStink.net are rarely shaken or even stirred in pursuit. The quarry was found in the bowels of a gold-domed lair in Atlanta.
Does this surprise anyone? It shouldn’t.
Affordable Equity Partners, Inc. boasts a leadership team headed by Jeffery Smith of parent JES Holdings, with affiliated companies named ES Dev Co, Inc., Fairway Construction Co., Inc., Fairway Management, Inc., and Capital Health Management, Inc. An article on StLouisToday.com exposes how Smith and his companies have played the campaign contribution and lobbying game very well in Missouri to the tune of capturing $26 million for low-income housing projects into 2009.
Has AEP played the same game in Georgia? Their own words suffice to provide our answer. “AEP has been involved in Georgia since the initial introduction of the state tax credit and was instrumental in formulating the revisions to the statutes in 2001.”
At this juncture, the process of following all of the related parties, employees, PAC’s and agents is not complete. There will be more to come.
What is revealed so far by researching these entities’ contributions via the Georgia Ethics Commission Campaign Contributor database?
Lt. Governor Casey Cagle got $882.50 from AEP going back to 2008. Sister company Capital Health Management Inc. gave Cagle another $10, 453.50 and gave House Speaker David Ralston $5000 in 2011, this nonelection year.
Then there are the PAC’s.
At this juncture, the Augusta Today and CityStink.net team is investigating another Missouri based entity that was noted to be working in conjunction with the AEP affiliate Capital Health Management to fund one of these PAC’s. The company has contributed many thousands of dollars to Georgia’s Legislators.
Was it coincidence that Ron Cross, a Nathan Deal supporter, and Trey Allen, Nathan Deal’s Columbia County Campaign Chairman, scurried to meet with Magnolia Trace developers in County Attorney Doug Batchelor’s office?
Or did they get calls from Casey Cagle, Nathan Deal, David Ralston, Ben Harbin, and Lee Anderson “encouraging” the meeting and their subsequent resolution in support of this unwanted public housing development?
Only the unforeseen and unpredicted are surprises.
Even a Gomer Pyle knows the score on this one.***
More to come.
Below is a a link showing the State of Georgia Housing tax  plan that AEP helped write for itself into law. It’s heavy reading for those of you with some time to kill.
AEPtaxcredits
 

 

 

 

Magnolia Trace: No Trace of Trey

Columbia County Commissioner Trey Allen
Originally posted on CityStink
December1, 2011
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.
The saga of the hotly-protested Magnolia Trace development on Old Ferry Road in Martinez Georgia is incomplete without an examination of the role of  Trey Allen, Second District Commissioner on the Columbia County Board of Commissioners. Magnolia Trace is within Commissioner Allen’s District. The project is funded by the Georgia Department of Community Affairs (DCA), upon whose board of directors Commissioner Allen sits, representing the 10th District.
This seems at this juncture to be mostly unpleasant circumstance for Commissioner Allen, as his appointment to the DCA board by Governor Deal in March of this year came 9 months after he, county attorney Doug Batchelor, and County Commission Chairman Ron Cross met with representatives of Magnolia Trace Limited Partnership in preparation of ushering through a resolution endorsing the project during the June 15, 2010 Commission Meeting.
At the time of approval of this resolution, which references “affordable single-family home subdivision of up to 50 homes” on 15 acres. Commissioner Allen was serving as Columbia County Chairman for Nathan Deal’s gubernatorial campaign.  What looked then to be a reward to a faithful supporter by Deal now looks to be a curse as the DCA is at the epicenter of one of the most furiously-opposed residential developments to be initiated in Columbia County in years.
Fueling Commissioner Allen’s current hot seat even more is his prolonged and furious opposition earlier this year to stadium lights for Augusta Preparatory Day School which will illuminate Springlakes Subdivision, where he resides.  Old Ferry and the Pass opponents of the Magnolia Trace subsidized housing have been disappointed so far that a similar degree of indignation for theirdiscomfiture doesn’t seem to be forthcoming from their 2nd district commissioner.
Will this most unfortunate combination of a bad deal, coincidence, and location of the latest Columbia County NIMBY (not-in-my-backyard)eruption taint, even doom, what was only yesterday the brightest political career out of Martinez in this century?
Memories run long there. Ask former Commissioner Frank Spears, who has carried the stigma of being “Mr. Rain Tax” for almost a decade. Only now does Spears seem likely to be rehabilitated enough for a come-back.
Now the bloom is off of  Trey Allen’s magnolia as the harsh lights illuminate his Springlakes home.
It will be interesting to see how he Deals with that.
***************************************************************************
Video: See the video Segment from the June 15, 2010 Columbia County Commmission Meeting where the the resolution was approved supporting the Magnolia Trace Development below:

Meeting to approve Magnolia Trace Project

Below is a copy of the Columbia County Commission resolution from June 15th, 2010 giving the county’s support for the Magnolia Trace development accompanied by an informational packet about the development. It clearly states “affordable housing.” The resolution green-lighted the Georgia Department of Community Affairs (a board which Comm Trey Allen now sits on, as he was appointed by Gov Nathan Deal) to begin the process of issuing tax subsidies for the development.

Magnolia Trace Information Packet