Analyzing the Aftermath of the Parking Deck Saga

Originally posted on CityStink
Tuesday, August 28, 2012
Augusta, GA
By The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.

After  the more than nine month long ordeal over the Reynolds Street Parking deck debacle, yesterday’s events at the Marble Palace that resulted in the approval of  the long beleaguered parking management contract may have seemed rather anti-climatic.Indeed, we got wind that approval of the contract was imminent — if certain conditions were met. Key to passing the agreement was the inclusion of safeguards for the city that specifically stated in clear language that Augusta Riverfront LLC (ARLLC) could not bill the city for their overhead expenses. Previous proposals were riddled with loopholes that ARLLC could exploit, amounting to a blank check from the taxpayers.
Also, included in yesterday’s contract was a clause giving the city the right to audit ARLLC’s books to verify their compliance. This was a crucial safeguard for the city and one that ARLLC’s lawyers were fighting all the way up until the final hours leading up to yesterday’s vote, but in the end they yielded and agreed to include the rights to audit.
Wayne Says Sell It!
Commissioner Wayne Guilfoyle (dist 8) deserves a large amount of the credit for these safeguards being included in the final contract. We understand that the lawyers were trying to twist Guilfoyle’s arm all the way up to the final hours to get him to bend under the pressure and approve the deal without these key safeguards, but the district 8 commissioner would not budge. He stood his ground and insisted that these conditions be met or his vote would be NO. Guilfoyle added the stipulations and to the agreement in his motion yesterday to approve the contract.
The citizens of of District 8 in South Richmond County can feel confident that they have someone like Wayne Guilfoyle representing them. Though a freshman commissioner, Guilfoyle has demonstrated leadership on a variety of important issues and continues to exhibit a willingness to study the details of these complex contracts, weigh all of the options, and play hardball when necessary to get the best deal for the taxpayers. Augusta could use more commissioners like him.
Not Gonna Be Bowled Over
Mayor Pro-tem Joe Bowles deserves credit for negotiating better terms in the contract that gives the city a much more favorable split of deck revenues at 70/30%. He also negotiated the inclusion of a pedestrian skywalk over Reynolds Street from the deck to the TEE Center that will enhance public safety and steer patrons to the city-owned parking spaces on the upper levels. Bowles even found the savings in the construction of the deck that will pay for the skywalk at no additional cost to the city. It’s this keen eye that makes Bowles a consistent leader on the commission.
The mayor pro-tem is also willing to admit when mistakes have been made and then work diligently to correct them. He also has a knack for forging compromise through the art of negotiation, but is willing to stand his ground when necessary to make sure the interests of the taxpayers are protected. His leadership will certainly be missed when his term expires at the end of this year, but Bowles will leave office with a nice legacy and he has certainly set the tone for all future mayor pro-tems.
Wise Man Lockett
From the very beginning, Commissioner Bill Lockett has been a vocal critic of the parking management deal with Augusta Riverfront LLC. This is probably why he voted against approving yesterday’s contract — as a protest of  the entire process. That is understandable. Time and time again, Lockett’s wise caution from his in-depth study and analysis of these complex matters has been proven right. Lockett doesn’t take anything at face value. He wants to see it in writing — he asks the right questions — he goes over every detail with a fine tooth comb. Some people may find this tiresome, but without Lockett’s determination to get to the truth and his attention to every detail, Augusta would have likely ended up with a much worse deal nine months ago locking the city into a 15 year contract with ARLLC instead of just 5.
Though ultimately unsuccessful in getting the forensic audit to probe the process that gave us this debacle, Lockett was right in asking for it, and we predict when all is said and done he will be vindicated on that issue as well. Augusta could use more commissioners like Bill Lockett who understand that their primary duty is in protecting the interests of the taxpayers of Augusta instead of bending to the whims of people like Paul S Simon. We suspect this is why Lockett does not face opposition for reelection.
Theater of the Absurd
On the opposite end of the spectrum is outgoing Commissioner Jerry Brigham, who fought vehemently against all attempts to give taxpayers a better deal over the parking deck. In what can be best described as a scene from the theater of absurdity, Brigham jumped at the opportunity yesterday to get in front of the cameras after the vote and tell a reporter for WJBF News that the final contract  is “.. financially more stable than what was originally proposed and I think the Commissioners feel better, in general, with this proposal.
It’s too bad the reporter did not retort by saying something along the lines of:
But Mr Brigham, weren’t you the one who wanted to rush this deal along and fought against these changes from the very beginning?
Indeed, if Brigham had of gotten his way, the parking deck contract would have been passed last Fall and it would have been for 15 years instead of 5 years and would have been riddled with loopholes that ARLLC could exploit as a blank check, using the taxpayers as their own personal piggy bank. Brigham’s contract had none of the safeguards and denied the city the rights to audit. And when these deficiencies were brought to his attention by government watchdogs, Brigham refused to budge and admit that errors were made. So maybe Mr. Brigham’s statement means he has had a change of heart? We doubt it — it’s probably more about saving face and trying to take the credit for the hard work of others who in the end forged the compromise that got a much better deal for the city.
Unlike his colleague Joe Bowles, Brigham will leave office with a cloud over his head. In every step of the process, Commissioner Brigham fought hard for the interests of Paul Simon and Augusta Riverfront LLC over those of the taxpayers in his district and the city as a whole. We can only hope that his successor will be someone more like Commissioner Guilfoyle, Bowles or Lockett. The voters certainly have a choice before them this Fall.
What Happens Next?
Though this closes the chapter on the nine month long saga over the parking deck contract, the issue is far from over. Now commissioners will have to decide how to hold the people accountable who created this mess in the first place. Why was the RFP (Requests for Proposals) process circumvented in favor of a hideously unfavorable deal with ARLLC — one for which they did not even submit a bid? Why were commissioners consistently mislead about the land under the deck being donated? Why were commissioners not informed of the $millions  worth of liens on the property until after government watchdogs discovered them? Why were commissioners not made aware of the results of  2009 Parking study that showed that a $12 million parking deck was not even necessary and a $1 million surface lot would have sufficed. Why did city-hired outside counsel agree to such atrocious terms under previous contract proposals that were written entirely by the lawyers for ARLLC?
Now that the contract terms have been settled these are the questions commissioners need to ask and find answers. This process did not happen by mistake. What should have been a simple and clear-cut process was intentionally made more complex and nearly incomprehensible to most commissioners, the media and the public in an effort to sneak through a contract riddled with loopholes, lacking controls and caps on expenses and absent safeguards like the rights to audit. The people responsible for this must be held accountable so that this does not happen again. This ordeal also demonstrates why the city needs consistent procedures and guidelines governing these kinds of contracts. What we currently have is a an ad-hoc process governed by whim. That must change or Augusta will keep repeating the same mistakes with future contracts.
As the agenda now moves on to the the much larger TEE Center contract there is much more at stake. If commissioners have learned anything form the parking deck saga, they  now know not to take anything at face value and to study every detail and spot every loop hole. Instead of rushing something through like commissioners did in December of 2009 that gave us this mess, they would be wise to yield to caution to insure that the interests of the taxpayers are protected above all else. If commissioners ask the right questions, study the details, and use good judgement and common sense, we don’t expect this process to drag out for nine months. But it’s entirely up to them.***

OS

Special Report: Key Conditions Must Met for Parking Agreement to Pass Today

Originally posted on CityStink
Monday, August 27, 2012
Augusta, GA

By The Outsider

Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
The Augusta Commission will once again take up the controversial Reynolds Street Parking Deck at another special called meeting at noon today. Last Tuesday, at another special called meeting, Paul S Simon, president of Augusta Riverfront LLC, made his case for approving a parking contract between his company and the city. Representatives of Augusta Today and CityStink.net were there and challenged Mr. Simon on key points of the contract. You can see that video here–> The Day City Stink Took Over the Marble Palace.
To listen to Paul Simon talk, you’d think it was just a bunch “bloggers delaying progress,”  but perhaps Mr Simon should look in the mirror to see who has really been stalling things. The commission conditionally approved a parking management agreement back in February. As the key word suggests, this agreement was contingent on certain key conditions being met, but we found that after months had passed, Augusta Riverfront LLC had not satisfied them, including deeding the land to the city’s land bank free of all liens.
This led to commissioners wanting to renegotiate the contract, but Paul Simon and Augusta Riverfront LLC have been obstinate, refusing to agree to contract controls and rights of audit and a more equitable sharing of  profits and expenses with the city. Just this past week though, Commissioner Joe Bowles presented a plan that would give the city a more favorable share of any deck profits in exchange for adding a pedestrian skywalk over Reynolds Street to the TEE Center. This seems reasonable, and Simon has supposedly agreed to these terms.
However, the most important elements of the contract that must be included are the controls and caps on Labor Costs/Burden and materials costs and  a rights of audit. These key provisions are vital because they will close any loopholes that Augusta Riverfront LLC could exploit at the detriment of the taxpayers. In regards to the rights of audit, as President Ronald Reagan famously said, “Trust, but verify,” and we know with the history of dealing with Augusta Riverfront LLC that everything must be verified on paper. This is why the rights of audit language being added to the contract is so important.
We have listed below the provisions that need to be included in the parking management contract in order for it to be approved today. If Mr Simon agrees to all of them, then we do not see a reason why it should not proceed. Commissioners have been made aware of these key provisions and we believe that majority of them will stand firm and see to it that they are included or once again there will be no deal. The ball is Mr. Simon’s court today. He is hoping he can strong-arm commissioners into agreeing to another last-minute lopsided deal that has been neutered of the necessary controls and rights of audit. He is hoping to ram this through in another special called meeting denying government watchdogs the right to speak out.
The most important provisions that must be added to the agreement are the rights of audit and capping overhead costs. The Rights of Audit clause will allow the city of Augusta to audit ARLLC’s books to verify their compliance with the contract. Also, it is imperative that none of ARLLC’s actual overhead costs can be billed to the city. If these key provisions are included in the contract it will go a long way towards improving the city’s leverage and giving assurances that the city cannot be billed for potentially unlimited overhead costs.
We hope the commissioners will ask that these key provisions be included in the actual language of the contract and not as footnotes or parentheses. These provisions must have the force of law. If Paul S Simon will agree to include these provisions then the contract should be able to move forward; it’s up to him.
Below are the  provisions we suggest be included in the Parking Management Contract for approval:
AUDIT RIGHTS:
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 and any other Manager records to the extent necessary to adequately permit evaluation and verification of Manager compliance with contract requirements,
Owner’s authorized representative or designee shall have reasonable access to the Manager’s facilities, shall be allowed to interview all current or former employees to discuss matters pertinent to the performance of this contract and shall be provided adequate and appropriate work space, in order to conduct audits in compliance with this article.
LABOR COST DEFINED:
Cost to be reimbursed will be the actual wages paid to the individuals performing the work and the actual wages will be subject to wage maximums which shall be subject to the approval of the Owner.
The Manager is authorized to station a Parking Facility Manager and parking deck cashiers to man 3 shifts,either full-time or part-time at the job site. Charges by these personnel will be authorized only when performing their job related duties at the job-site location. (If it is intended that the wages or salaries of certain personnel stationed at the Manager’s principal or other offices shall be included in the Cost of the Work, identify separately the personnel to be included and whether for all or only part of their time, and the rates at which their time will be charged to the Work.)
No Manager personnel stationed at the Manager’s home or branch offices shall be charged to the Cost of the Work unless the Owner approves such charges in advance. Overtime wages paid to salaried personnel (if approved in advance in writing by the Owner) will be reimbursed at the actual rate of overtime pay paid to the individual. No time charges for overtime hours worked on the project will be allowed if the individual is not paid for the overtime worked. Any overtime premium or shift differential expense to be incurred by Manager for hourly workers shall require Owner’s advance written approval before the incremental cost of the overtime premium or shift differential will be considered a reimbursable cost.
LABOR BURDEN DEFINED:
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.
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.
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. 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. Adjustments will be made no less frequently than annually to account for actual costs which may be less than the provisional maximum costs previously billed.
MATERIAL COSTS DEFINED:
Material costs shall reflect the Manager’s net actual cost for the purchase of the materials, supplies and other items. Material costs shall reflect cost reductions available to the Manager due to trade discounts, free material credits, and/or volume rebates. “Cash” discounts (i.e. prompt payment discounts of 2% or less) available on material purchased shall be credited to Owner if the Manager is provided Owner funds in time for Manager to take advantage of any such cash discounts. Price quotations from material suppliers must be itemized with unit prices for each specific item to be purchased. “Lot pricing” quotations will not be considered sufficient substantiating detail.***

 

 

Breaking: Special Meeting Called Tomorrow to Discuss Parking Deck Agreement

Originally posted on CityStink
Monday, August 20, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Heads Up Augustans!!  The Commissioners are up to their old dirty tricks, or at least a few of them are. CityStink.net has received word that a special called  meeting requested by Legal Counsel will be held tomorrow August 21,2012 at 4:30 in Commission Chambers (see document at end of article). The one and only item slated for the agenda is —-You guessed it—-The Reynolds St. Parking Deck Management Agreement.. Mr. Paul Simon, partner in Augusta Riverfront LLC., will be presenting to the Commissioners.
Our question is, how can they do this when this item has been on the floor of the Commission several times already and has even been through a committee workshop.  Also, in the last Commission  meeting, another public workshop was called for on the very same item making the public quite aware of the problems associated with it? Commissioner Joe Bowles even railed against the lease agreement drawn up for  the city as being one-sided;  leaning toward the best Interests of Augusta Riverfront LLC, and not the tax payers. Why haven’t the citizen’s been properly notified of this called meeting? Why is the normal process for placing items on the commission’s agenda being circumvented to benefit Paul Simon and Augusta Riverfront LLC? Why did Mayor Copenhaver sign off on this?
 A closed door legal session has been requested after Mr. Simon gives his presentation in commission chambers. Commissioner will have to vote on whether to approve going into legal session.  What will be discussed that should be off-limits to the public and the media? Is this an effort to ram this lop-sided management contract through behind closed doors and keep it away from public scrutiny?
Word has it that Commissioner Brigham is the one who got this little meeting put together. It seems that Mr. Simon was to present before the full Commission as a delegation at the regularly scheduled 5:00 Commission meeting concerning the parking deck agreement, however, for some reason, his item did not make it on the agenda in time. Hmmm..  Wonder how that happened?
The broader question is, Why the rush? What is in this for Commissioner Brigham and the others who are agreeing to this called meeting? Those of us who follow the actions of government in this city know that all things are done for a reason. We also know that something stinks here. We are counting on our Commissioners who are tired of the way business is done in this city to take a stand.  Tomorrow is the day.  Who will break ranks and go the right way??? Anyone, anyone at all?  Or shall we say,”Business as usual?”***
LD
21august12 Called Mtg.

 

Government Watchdogs Meet with D.A. Over ParkingGate

Friday, July 27, 2012
Augusta, GA
From CityStink.net Reports


Government watchdogs and CityStink.net contributors Lori Davis and Al Gray will meet with District attorney Ashley Wright at 3:00pm today to discuss the evidence they have uncovered in the TEE Center Parking deck debacle. Davis spoke at the July 17 Augusta commission meeting and urged city leaders to halt a management contract with Augusta Riverfront LLC for the $12 million publicly financed parking deck at 9th and Reynolds Streets. The contract was tabled because there were not a sufficient number of votes for it to proceed.

After Ms Davis’ presentation before commissioners, Mayor Deke Copenhaver sarcastically suggested that she needed to take this matter to the District Attorney and it was time for her to “put up or shut up.” Cost Recovery Specialist Al Gray, who has done much of the analysis on the transactions and deals concerning the parking deck for Augusta Today and CityStink.net, said the mayor’s statements were strange considering  all of the reports they have released concerning the parking deck have been backed up by the city’s own documents. At this same July 27th commission meeting a forensic audit looking into the parking deck deals was voted down and a substitute motion by Joe Jackson to forward the matter the the District Attorney and GBI passed.

Gray says that government watchdogs have had to go through an unwieldy, expensive and time consuming process to obtain public records to uncover the truth, and they have encountered stonewalling from some government officials in this process. Gray says “I would hope that between the Mayor and DA, we gain access to all information to answer our issues or that the DA takes action to investigate with a promise to address them with supporting documents.”

Lori Davis says that she is confident that the evidence and truth is on their side and they already have hundreds of pages of documents to prove it. Al Gray says that a comparison matrix  he was asked to put together shows that the management contract under consideration with Augusta Riverfront LLC amounted to a “blank check” and did not meet the city’s own RFP guidelines. In fact, he says that Augusta Riverfront LLC never even submitted a bid, whereas other companies did, like Aampco Parking Systems, that met the city’s RFP guidelines. But city administrator Fred Russell ignored the RFP guidelines and ignored the bids from the companies who  had agreed to the city’s terms  in favor of the “blank check” contract with Augusta Riverfront LLC. This shows a wanton disregard for the interests of the taxpayers.

But some political observers believe that the DA is a dead end and point to the handling of the David Fry case as an example, citing that the District Attorney was too eager to accept an Alford Plea by Fry’s defense attorney to keep the matter from going to trial. They also question whether she can remain unbiased on the matter since she is running for re-election this year, and her boyfriend, Donnie Smith is running for the District 7 commission seat being vacated by Jerry Brigham. Donnie Smith was the first to suggest the matter be forwarded to the D.A. he has also stated on the record that he doesn’t believe there is any “smoking gun” in the case to warrant further investigation.

Lori Davis says she is not quite sure what will come out of the meeting today but says, “I hope that the DA will provide citizen support  that we have not been getting from our Mayor and some of the commissioners. I also hope she can remain unbiased because I am sure that she will be getting a lot of pressure from outside sources.”

**We will have an update after their meeting with the Distrtict Attorney.***
CS

Related:

Fox 54 Swallows Deke Bait

Friday, July 20, 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.
George Eskola should be proud. In the run-up to the Augusta Commission meeting this Tuesday, there was a last-minute interjection of an accounting analysis by a party in the midst of the Tee Center Parking Decks controversy. George knew about it early. His wise years of experience said take the new gambit with a grain or two of salt.
George wrote:
But this comparison is coming from Paul Simon of Augusta Riverfront LLC the company that owns the Marriott not the city’s attorney who worked on the deal. ”
Precisely.
+100 for George.
Then there was this report by Jake Wallace of Augusta Fox affiliate WFXG.
Wallace seemed impressed by Mayor Deke Copenhaver’s cheap trick of having the city’s external auditor from the firm of Maulden Jenkins put on the agenda to give a positive report on the annual city FINANCIAL AUDIT soon after Augusta Today activist and City Stink contributor Lori Davis’ presentation in favor of a forensic audit of the Tee Center Parking Decks agreements and against approval the proposed parking deck management agreement that would have been the subject of the forensic audit. Wallace wrote –
“Mayor Deke Copenhaver agrees, saying the finance team received high praise at tonight’s meeting by an auditor for the 2011 audit, is the same team who worked the finances of the TEE Center deal.
“They applauded our finance folks for doing such a great job with fiscal management,” Copenhaver says. “That’s the same team that put this deal together. Why would they do something different on the parking deck and the TEE Center than they did with the city finances?”
Wallace totally blew it.
A city financial audit only attests that generally accepted accounting principles have been met with respect to the city’s transactions. It does not extend to the point of questioning HOW the transactions come about or whether a contract is totally stacked against the city’s interests. That is the role of a forensic audit. After a flawed deck deal is executed, a financial audit will find everything to be just wonderful versus the standard of the flawed contract. A forensic audit would derive the answers of whether there are material controls deficiencies in contract administration and would seek to identify fraud in the execution and application of the management agreement.
Deke trotted out a financial auditor and Fox obliged his clever subterfuge by equating the annual city auditor’s report about finances with one about a much more in-depth audit of only a couple of complex transactions.
For another thing, the city’s finance team has had practically nothing to do with the deck agreements, as Augusta is using outside legal counsel, bond counsel,and even has gone to the extent of excluding the Convention and Visitor’s Bureau chief, Barry White, a figure who was integral to the early Tee Center presentations to the city commission and the city executive most attuned to the contract needs to be negotiated.
Wallace did not know that, or at least, did not report it.
Fox 54 came up short and looked amateurish in rising to the bait.
We are sure that they will get better, given a few more years around Augusta politics. It truly is a world all to its own.
This writer remembers George when he was an amateur, too.***

A.G.

Simon Says He is Cheaper; Watchdogs Say “CAP It!”

Friday, July 20, 2012
Augusta, GA
By Bradley Owens

Elections have had October surprises but lately anytime the Augusta Richmond County meets with a parking deck agreement on the agenda, watch for the wild, woolly, and unexpected.

The February meeting saw a last minute compromise whereby proposed parking deck manager Augusta Riverfront LLC (ARLLC) was conditionally awarded a management agreement with the condition that the land they own under the Reynolds Street Parking Deck (all but a small parcel) being transferred free of the almost $7,000,000.00 in liens that bedeck the title to the land bank

The Augusta-Richmond County commission meeting on Tuesday, July 17, 2012, saw a morning pre-meeting surprise, when ARLLC’s Paul Simon offered a cost comparison between numbers he suddenly provided and those submitted by Ampco Parking, who had been recommended for award of the management contract for the parking deck based upon its competitive low bid. (It is noted that Administrator Fred Russell directed the award to ARLLC, who was not part of the bid process, after notifying Ampco that its bid was rejected.)

There is no surprise that Simon says his numbers were $14,000 lower, I mean what did you expect him to say, “We are bilking you?”

The surprise was that he took the risk of putting numbers to a combination of two dissimilar deck agreements, one cost-reimbursable and the other a net lease deal, with the gamble that the commission would take his last-minute, arguably improperly-disseminated (through Fred Russell) gambit at face value and approve the management agreement.  All of this happened despite ARLLC’s failure to get the liens released hence clearing the title for the land bank and doing as they promised.

The public needs to take his bet and counter with one of its own.

Open Challenge to Paul Simon

Dear Paul,

Since you are pleased to present such a reasonable budget, let’s cap it at the numbers shown. We agree that you really don’t need the following to make this a profitable deal, so let’s drop these items from your earlier proposal;

·        $250,000 referenced in the capital budget section,

·        The liability insurance cost reimbursement that would have been covered by the Ampco fee

·        Overarching power to expend Augusta’s money as you see fit

·        The ability to define “costs” in whatever manner you deem expedient

·        Latitude to assign high-priced employees to the deck deal

·        Two fees totaling $50,000 (Ampco’s was less than $18,000)

·        The ability to exceed the budget with impunity (Ampco was prohibited from doing that, weren’t they?)

Those of us in the community have read repeatedly in ARLLC partner Billy Morris’ newspaper for the need to have sound financial policies in government operations.  That being the stated position of the “Big Boss” we are quite sure you will see the need for a procedures manual by which Augusta’s auditors can judge compliance with some contract mandated standards, won’t you? Such a manual was going to be required of Ampco so certainly you are prepared to give us one, right?

Yes, Paul, we are pleased that you have put forth these solid numbers and are sure that you would be willing to share those for the Conference Center Deck, so we can see about how the second $25,000 fee is accounted for. We are also interested to know about how the costs relating to the 150 ground level spaces in the Reynolds Street Deck that you own, subject to liens, are treated. Our “back-of-the envelope” calculations brought that cost, based upon your numbers, to about $47,000 or so a year.

Mr. Simon, if you are willing to cap the costs at the numbers shown, eliminate all of the provisions in the management deal that make it a blank check to your LLC and dispense with those pesky liens, I think we can make a deal.

Because then, and only then, you just might be on the same footing as Ampco.***

B.O.


**View Paul Simon’s “comparison” below**

ARLLC – Budget Comparison

The Hotel That Never Was

Artist’s rendering of the proposed Hyatt Place hotel

Tuesday, Feb. 14, 2012
Augusta, GA

Donated land was not the only promise broken in the TEE Center and Parking deck debacle. Some people may remember that the promise of  a $25,000,000 Hyatt Place Hotel was a major selling  point more than 2 and half years ago to force commissioners to act on approving the TEE Center and parking deck deal. We have this Augusta Chronicle article from August 11, 2009 that shows how Julian Osbon and Courtland Dusseau were essentially issuing an ultimatum to commissioners: Approve the TEE Center and parking deck or the city loses the hotel. The TEE Center and deck were eventually approved on Dec. 9, 2009.

It is very clear that the hotel was being used as a bargaining chip to get the TEE Center agreement passed, which in August of 2009 was at an impasse. In the article, Julian Osbon, who owned the land where the hotel was to be built said: ““I don’t think all the people understand the consequences. I wanted to make sure that if we did lose the hotel, that everyone had an opportunity to consider the possibilities. 

Osbon, also sent a letter to commissioners and the Mayor that expressed this same sentiment, urging them to approve the TEE Center or they would lose the hotel and lose what he estimated being a $215,000,000 25 year economic impact to the city. You can read that memorandum here: Osbon August 10, 2009 Memorandum to commissioners. (see pdf file at end of this article). Osbon also sent out an URGENT COMMUNITY ALERT (see 2nd pdf at end of article) to elected officials and business leaders essentially telling them that the only thing holding back construction on a new $25 million hotel was an agreement over the TEE Center. He also goes into a lengthy diatribe excoriating the black commissioners who he believes were holding up progress on the TEE Center, reserving most of his venom for Dist. 1 commissioner Betty Beard: “Perhaps Commissioner Beard does not understand that revenue producing venues such as a successful convention center is where the money will come from to revitalize the Laney-Walker and Bethlehem neighborhoods which are her pet projects, but are unfortunately in another Commissioner’s district.   It appears that District One voters have been ignored by our elected representative.”  

You must remember that 2009 was an election year and Beard’s seat was coming up for reelection. It appears as an obvious political threat towards Beard:  Vote for the TEE Center or pay a political price for not doing so. Shortly after this URGENT COMMUNITY ALERT went out, Beard decided not to run for reelection. Ultimately, Matt Aitken, a pro TEE Center candidate defeated Bill Fennoy in a run-off and took office. After his election win, the TEE Center agreement was approved just days later.
Osbon also issued a deadline of August 31, 2009 to commissioners to approve the TEE Center agreement saying in his Community Alert: “But August 31st is an important date for me. It represents the time to “draw a line in the sand,” I invested in my property at a time when it was very questionable as to whether or not it was a wise thing to do. As mentioned above I have held the property for more than a decade primarily to insure the best use of it by the community. Yes, I will make money if the hotel closes on it. And probably I will make more money if they do not. My property is the key piece in any development in the Common area and will easily increase in value. But nothing will bring more value to Augusta than the proposed Hyatt Place Hotel.

Osbon’s self-imposed August 31st deadline for an agreement on the TEE Center was extended when things got even more complicated when revelations emerged that two commissioners were allegedly offered bribes by local attorney David Fry. That news came out about the same time as Mr. Osbon’s date for “drawing a line in the sand.“. And complicating matters further is that one of the commissioners who was approached in the alleged bribery attempt, Alvin Mason, revealed that he was receiving political threats back in May of that year  from a prominent local businessman, Joe Edge,  the President of Sherman and Hemstreet Real Estate Company, who ironically was handling the sale of the land for the proposed Hyatt Place hotel. This Sept. 15th, 2009 article by Johnny Edwards  that appeared in the Augusta Chronicle gives more details about this political threat.
Alvin Mason released excerpts of the email he received from Mr. Edge. Here is one of the more interesting lines: “I own real estate in your district, and I will do everything I can to ensure you don’t get re-elected if the commission does not change their mind.” (referencing the stalled vote on the TEE Center). The May 28th email references the proposed Hyatt Place hotel, which was not made public until August of that year when Osbon began issuing his ultimatums to commissioners.
The hotel had now become a focal point in the debate over the TEE Center and commissioners were being urged and in some cases politically threatened to change their votes on it based on the promise of this Hyatt Place hotel and its supposed  $215 million 25 year economic impact on the city.
The First Signs of Trouble
So now let’s fast forward a few months to January of 2010. The TEE Center and its companion parking deck have been approved and plans are underway to begin construction. We have this  January 20, 2010 article in The Augusta Chronicle by Tim Rausch that seems to indicate that the hotel was moving forward. Courtland Dusseau, a managing partner of Alabama based Legacy Hospitality LLC, the developers of the hotel said: “We’re working on budgets today. We’ll have the business plan, financial plan put together by tomorrow and start meeting with bankers. We were concerned about when the TEE Center was starting. As long as it’s gonna happen, we’re fine.” It was even expected that the hotel would be open a year before the TEE Center. But here we are in 2012 just six months from the expected opening of the TEE Center and there has not even been a ground breaking for the hotel.
But in that same January 20th Augusta Chronicle article we had our first warning that this hotel may not ever happen. In the article, Dusseau admitted that he had no time line in place for ground breaking and had still not secured financing for the project. He was hoping that a grant from the OneGeorgia Foundation would help him secure other financing from local banks. So now, something that seemed like a sure thing once the commissioners signed the dotted line approving the TEE Center was up in the air. And it was a little more than ironic that Mr. Dusseau could not give the public a date for groundbreaking when commissioners were being issued a deadline just a few months prior to approve the TEE Center, based on this hotel. We have to ask, Did commissioners ever bother to get anything in writing from Mr Dusseau prior to voting to approve the TEE Center project on Dec. 9, 2009, that he did indeed have guarantees for financing the hotel  if the TEE center project was approved and built? Just like the supposed promise to release the liens on the property where the parking deck sits, getting things in writing before voting on something is always the smart course of action. But it does not appear that commissioners have learned from past mistakes.
Time Goes By
Months and months passed and still there were no announcements of when there would be groundbreaking for this Hyatt Place hotel. Then we have this Augusta Chronicle article from October 5 2010 telling us that the project was indefinitely delayed because of issues of securing financing. Mr Dusseau told Augusta Chronicle reporter Tracey McManus: “In today’s economic climate, it’s just really hard to get hotel financing. It’s just a matter of time.” A matter of time? Like the next century? While commissioners were being rushed by Mr Dusseau and Julian Osbon just a year earlier to approve the TEE Center project because of the immediacy of this hotel… now he was taking his own sweet time to secure financing. We have to ask…. shouldn’t the guarantees for financing have been secured before Mr Osbon started issuing ultimatums to commissioners over this hotel?
Then, in December of 2010, Dusseau was coming to city leaders with his hands out. He was hoping the city would lend its credit to help him with financing his 139 room Hyatt Place hotel. This Dec. 13, 2010 Augusta Chronicle article by Susan McCord gives more details. City administrator Fred Russell declined the request saying that the city didn’t need to be in the hotel business, but two new levels to the TEE Center parking deck were added around this time. It is not clear if that was motivated to help Mr Dusseau secure financing for the hotel.

A 2009 parking study did reference possible future development as one of the justifications for building a parking deck rather than less expensive surface parking. In that study, which was released in October of 2009, two options were recommended to satisfy expanded parking needs for the TEE Center. Option 1  was a much cheaper surface parking lot along 9th street at The Riverwalk. The second option was building a 400 space parking deck across Reynolds Street. Were city leaders compelled to go with the more expensive deck option because of the promises being made by Mr Dusseau and Osbon of another hotel being built directly across the street? We will have more on this in an upcoming article.

But my how things had changed. What was being presented as a $25 million gift to the city of Augusta by private developers just little more than a year earlier was now being pitched as something that the city should go into millions of dollars in debt to get built.
In a 2009 Letter to the Editor in The Augusta Chronicle, Julian Osbon called approving the TEE Center a “no-brainer”.. and he once again referenced this hotel saying.. “Does anyone really think the Hyatt Hotel Group would put a new $25 million facility in downtown Augusta without doing their due diligence?

Due diligence? Like securing financing upfront? Perhaps Mr Osbon should have done his due diligence by getting assurances from Mr. Dusseau that this hotel was a sure thing as long as the TEE Center was approved before he started issuing ultimatums and deadlines to commissioners and  firing off snarky letters to the editor and issuing his URGENT COMMUNITY ALERT.

Commissioners were pressured to approve the TEE Center partly because of this hotel and it appears by all accounts, that the hotel was pure fantasy…. merely a proposal and not a shovel ready project that simply awaited their approval. But this is not the first time commissioners have been  mislead over the TEE Center. They were told land would be donated and it never was. And let’s not forget that we have a trial about to get underway involving the alleged attempted bribery of two commissioners over The TEE Center and parking deck.

But here we are two and a half years after Julian Osbon issued his first ultimatum over the TEE Center based on this hotel which it appears will never be built. Blame the bad credit market… but the fact remains that this hotel project should have been presented as a mere proposal that still required securing financing.. instead of a sure thing to get commissioners to change their votes on the TEE Center. It appears that commissioners lived up to their end of the bargain. They approved the TEE Center project. The parking deck is open for business and the convention center is just months away from opening. Like the land that was promised to be donated to the city for the parking deck, it appears that this hotel has also turned into thin air.***

Below are pdf files of the Augusta 10, 2009 Memorandum and the Community Alert  that Julian Osbon sent out:
OsbonMemorandum

Below is the Urgent Community Alert
OsbonCommunityAlert
***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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ParkingGate: Lockett Denied Forensic Audit Again.

Augusta Commissioner Bill Lockett

Originally posted by CityStink
Tuesday, Dec. 13, 2011
Augusta, GA
By Jill Peterson
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Commissioner Bill Lockett brought up again at Monday’s committee meetings his desire to have forensic audits conducted in the Augusta-Richmond County government.  The wording on the agenda was as follows:
Task the Administrator with utilizing the procurement process to solicit the services of an  outside forensic auditing firm to perform an audit of the city’s finances and contractual  obligations.  The audit must include but not be limited to the following: (a) TEE Center  Parking Garage/ Land Acquisition/ Associated Leases/ Financing, (b) Utility Department  Water Rates for Golf Courses/ Other Special Agreements, (c) Environmental Services  Division, (d) Augusta Transit Department Privatization, (e) Augusta Municipal Golf  Course Privatization, (f) Retroactive Pay Increases, (g) SPLOST Fund Projects, and (h)  Land Bank. 
In Lockett’s explanation of his request, he explains that he’s uncomfortable with the way the Commission was told land would be donated for the parking deck and how the contract for operating the deck is being awarded.  The land in fact was not donated leaving the city’s deck to sit on land owned by a private entity headed by the same individual who heads the entity in line for a no-bid operating contract of the deck.  He also mentions the strange deals in obtaining other bits of land to do with the deck which seem to have cost the city more than they should, especially strange in light of the fact that the city did not obtain the majority of the land.
Lockett: There are so many unanswered questionswith the TEE center parking deck that it  calls out for an investigation. I’m not suggesting that any illegal actions occurred, but I do  know for a fact that lots of citizens of Augusta-Richmond County to include others from  outside the county are concerned about what has gone on utilizing the taxpayers’ money.   I’m concerned when we have outside attorneys doing real estate  transactions and at the  same time representing parties from both sides.  Now how can you get a good deal out of  that?   It doesn’t make  sense.  I’m not a lawyer, but I did teach business  law.  There are  just too many things.  I’m concerned when this body is informed about the possible  transfer of property and given a reason that a resolution  wasn’t necessary because the  Attorney General or someone had indicated that there was a  new  law that you didn’t have to do that, but nothing was provided to this body showing  that that was  indeed the case.
I’m also concerned when outside counsel representing this government  was asked for  a document and indicated he knew he had it but could not find it because it  was in a stack of papers.  And I do believe this document does not exist.
This is part of what I feel that a forensic audit should do.  Sure, we have internal audits  every year, but the internal audits don’t look for this sort of thing.  We need to look and  see, and I would hope that if this body allows this government to employ a forensic  auditing firm, I would hope that nothing is found, but I have seen so many things that I  feel that would not be the case.
The land bank I also questioned.  We need information on the past five years.  How much  land has been purchased by the city and at what cost?  What is the process used by the  city used to transfer land to the land bank and why?  When city property is transferred to  the land bank, is verification of sale required?
***
(He goes on with more questions about the land bank and with his questions for the other issues he wants looked into.  Video of the entire speech will be available here in the next day or so.)
For this to get to the full Commission meeting, three of the four members of this, the Administrative Services Committe, would have to vote yes.  Bill Lockett voted yes, Alvin Mason voted yes, Matt Aitken was absent (and has not returned our call as of this writing), and Jerry Brigham voted no.
Commissioner Jerry Brigham
City Stink called Jerry Brigham to ask him why he voted against this measure.  Commissioner Brigham says a forensic audit would cost too much, it would be truth seeking and implies a criminal violation, and that the proper channel for Lockett to take would be to go to the District Attorney if he thinks there’s something criminal.  He also said that, “in reality Lockett wants to put somebody in jail.  I’m not paying someone to investigate me.”
Mayor Deke Copenhaver was quoted in the Urban Pro Weekly this week on the same topic and takes the same stance as Brigham.  Copenhaver: “A forensic audit implies that there’s been a crime committed and it is something that would cost a tremendous amount of money and take a tremendous amount of time.  I’m not in support of that.”
City Stink then called Commissioner Lockett for his response.  Lockett says that a forensic audit costs no more than an internal audit and that the D.A. or GBI would expect a forensic audit before getting involved.  He also said someone going to jail is the last thing he wants; he wants a government that complies with the law.
So we seem to have differences of opinion as to whether looking for something criminal is desirable or not and how much a forensic audit would cost and whether or not it would be worth it.  Calls to the the accounting firm Cherry, Bekaert & Holland for cost comparisons between internal and forensic audits have not yet been returned, but price comparisons are definitely in order and will be followed up on by City Stink.

JP

The Ghost of David Fry

The ghost of David Fry spotted near the new parking deck

 

Originally posted on CityStink
November 3, 2011
Augusta, GA
The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Well Halloween may be officially over but the ghost of David Fry is still lurking the streets of downtown Augusta. No, not down at 5th and Broad streets by the Haunted Pillar, but instead his specter has been seen haunting another cursed Augusta landmark: the new TEE Center parking deck by 9th and Reynolds streets.
It seems that the recent revelation that the city of Augusta doesn’t actually own the land where the new $12 million city owned deck sits and an impending trial over the attempted bribery of two Augusta commissioners involving this same parking deck has resurrected the restless spirit of David Fry.
Some of you may remember the name “David Fry” from two years ago. In August of 2009, the TEE Center and parking deck were in limbo because the commission had split along racial lines over whether to issue more revenue bonds because it was learned that the convention center was actually going to cost nearly double than the $20 million voters had  approved in a 2005 SPLOST referendum. Also, the addition of a parking deck across the street had some commissioners also crying foul, saying that the project had become too bloated and no longer resembled what voters approved and suggestions were floated to put in back on a ballot or redirect the SPLOST funds entirely. But that presented problems, because the TEE Center was inextricably tied to  a $37 million redevelopment project for Laney-Walker/Bethlehem. So if the TEE Center didn’t get approved with the extra money needed to build it, some white commissioners were threatening to pull the plug on the $1 per night hotel/motel surcharge and pull the plug on redevelopment of Laney-Walker/Bethlehem. The situation was at a stalemate, and no one seemed eager to give up ground.
Now enter David Fry. He was an Augusta attorney and former nightclub owner. In late August 2009, commissioners Alvin Mason and Corey Johnson contact Augusta law enforcement that David Fry approached them with an offer of a bribe “if” they changed their votes on the TEE Center deal. Both Mason and Johnson had been voting consistently against increased funding for the TEE Center. The story didn’t hit the news until early September 2009. What was particularly interesting is what Fry was offering the commissioners. According to Mason and Johnson, Fry told them that he could land them lucrative concessions in the new parking deck that would be built along with the TEE center (This is the same parking deck involved in the current “ParkingGate” saga).
WRDW’s Chris Thomas  reported on the bribe in this story: WRDW coverage of TEE center bribe scandal
Chris Thomas also reports that Fry contacted commissioners Jerry Brigham and Don Grantham about a week after commissioners Mason and Johnson came forward to law enforcement about Fry’s attempted bribe. Don Grantham says that he remembers being contacted by Fry on August 31st, one day before a vote on the TEE Center. Both Grantham and Brigham said they didn’t report the incident because they thought the whole thing was “ridiculous.” And it would have been ridiculous to try and get Grantham  and Brigham to switch their votes. Grantham had been the biggest proponent of the TEE Center on the commission and  Brigham had voted in support of it as well. WJBF also covered the breaking story of the bribery attempt here: Attorney arrested for trying to bribe 2 Augusta commissioners.
The fact that Fry was offering concessions in the parking deck was quite interesting. What authority did he have to make such a deal? And why the parking deck? It seemed very odd because in all of the TEE Center drama that was taking place, the parking deck was not mentioned very much.
A local afternoon radio talk-show personality tried to quickly explain it all away as much ado about nothing. He said that Fry was just an overly zealous lone gunman type who was extremely enthusiastic about the TEE Center and was upset with commissioners Mason and Johnson for holding it up. According to the talk-show host, Fry was particularly livid at Mason, whom he had donated money to in his campaign against Bernard Harper. According to this same talk-show host, many wealthy West Augusta types supported Mason in his first campaign, and that Fry felt “betrayed” by Mason. Don’t forget that Mason also received what he called a “threat” from a West Augusta “millionaire” over his votes on the TEE Center: details emerge on Tee Center “millionaire” threat.
The radio talk-show host explains the bribe as a way for Fry to get back at Mason and Johnson. He would offer them something he knew he could not deliver, get them to change their votes, get the TEE Center passed, and then leave them high and dry when it came time to collect on the bribe. Well that’s the theory of the talk-show host.
The problem was that the bribery attempt backfired and nearly sank the TEE Center.
But let’s really think about this. If David Fry knew that he was throwing out a canard for the commissioners, then why not offer something more grandiose and more sexy than a parking deck contract? I mean why not offer a lucrative concession in the TEE Center itself or in one of the hotels? Why not throw in a condo in Palm Beach, Florida and lifetime badges to The Masters? I mean if he had no ability to deliver on any of this, then why not promise the moon? Why did he choose to offer a deal in this parking deck? And why was an attorney willing to commit a felony to get the TEE Center and parking deck passed if he had absolutely no connection to it or anything to gain from it? Many people didn’t buy the story that David Fry was just some lone-gunman type and questions still linger if  perhaps more were involved and whether Fry was just a fixer for much bigger fish.
After Matt Aitken defeated Bill Fennoy in a run-off election for the Dist 1 commission seat, the approval of the TEE center was a forgone conclusion. His campaign had almost been entirely predicated on approving the TEE Center. So on December 7th, 2009, the commission quickly agreed to approve the TEE Center and parking deck along with the Laney-Walker/Bethlehem redevelopment. This also happens to be the same meeting when Fred Russell told commissioners that Augusta Riverfront LLC (or its subsidiary) had AGREED to donate the land for the parking deck.
The David Fry story disappeared about as fast as a sitcom on The CW network. The parking deck is finished and open and the TEE center is under construction. David Fry was indicted by a grand jury in June of 2010. An almost forgettable snippet of a story brought that news in the Augusta Chronicle: Chronicle: Fry indicted over bribe. And not much has been heard since then of David Fry. But now it is  being reported  that David Fry will now stand trial for the bribery attempt, more than a YEAR AFTER he was indicted. Apparently a plea-deal fell through at the last minute.Chronicle: Fry case to go to trial . We have to wonder  if the same attorneys involved in the Fry case are also the ones involved in the chronically postponed Scott Dean child molestation trial. But with the new information swirling around ParkingGate, the timing of the trial of David Fry couldn’t be any better, or worse (if you are Augusta Riverfront LLC)
So now it has become known that 933 Broad Investment Co LLC (a shell company of Augusta Riverfront LLC)
has owned the land where the new parking deck sits since 2003. That means they essentially own the ground floor of the parking deck. Augusta Riverfront LLC owns the Marriott hotel and will manage the new TEE Center. They want the management contract to run the new Reynolds street parking deck for a fee of $25,000 a year and they want to lease hundreds of city owned spaces at another deck adjacent to the Marriott for $50,000, which could net Augusta Riverfront LLC 10 times what they would pay the city for the lease. But either way, since Augusta Riverfront LLC owns the land where the new deck sits, they have control over those ground floor spaces.. and the ground floor of any parking deck is the most lucrative.
All of this new information prompts more questions. Did David Fry know  that Augusta Riverfront LLC would have a lock on the ground floor of the new parking deck and was that the concession he was offering in his bribe?  And is there a connection between David Fry and Augusta Riverfront LLC or one of their subsidiaries such as 933 Broad Investment Co LLC? Fry so far has has not been talking. Will he be willing to take the fall in exchange for something far more lucrative than a small “slice” of the parking deck? Or will Fry start to sing like a canary in his upcoming trial? And in light of the new turn of events and information learned over the past couple of weeks perhaps the FBI should take a second look at this case to see if Fry was merely an agent for someone else who could have delivered on the parking deck management contract concession. Would it be prudent to postpone Fry’s trial so that this case can be investigated further?
The Tee Center and parking deck has involved some of the most powerful players in Augusta, and the attempted bribery of two sitting commissioners of Georgia’s 2nd largest city.  Perhaps the upcoming bribery trial will  finally put the ghost of David Fry to rest once and for all, or it might expose a whole lot more skeletons in Augusta’s closet.

 

Land Swaps, Bonds and Air Rights: The Parking Deck Saga Continued

The parking deck at 9th and Reynolds Streets
Originally published October 30, 2011 in the defunct CityStink blog
October 30, 2011
Augusta, GA
Dustin Goads
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article
Since City Stink first ran the story this past Wednesday on the Reynolds Street parking deck saga, the proverbial fecal matter has hit the fan. Unfortunately many people in the media are still missing the big story and some have chosen to divert attention away from the main issues and  toward State Sen Bill Jackson, implying that City Stink was accusing him of wrong doing and “dragging his name through the mud.”  Nothing could be further from the truth.
Sen. Jackson’s name only came up because public property records show he was involved in a land swap with the city so that a small 0.07 acre parcel that he had owned with a  business associate for decades could be secured for the new parking deck at 9th  and Reynold’s Street. The real issue that is being ignored is the inflated price the city ended up paying for that 0.07 parcel and its implications for 933 Broad Investment Co LLC (aka Augusta Riverfront, LLC), NOT that Sen. Jackson walked away with any huge pay-off or was somehow tipped off by someone to hit it big in land speculation. If you go back and read the article you will find that City Stink never made any such accusations.
Explaining the Land Swap Transaction
State Sen. Bill Jackson and a long time business associate, who is now deceased, had owned a 0.07 acre parcel at the corner of 9th and Reynold’s Street since 1969. It just so happens it was right where the city of Augusta needed to build a new parking deck. Instead of an outright sale of the property to the city, an arrangement was set up called a  1031 Exchange. When you hear the term “Land Swap”, this is what they are referring to. These are quite common in the business world, though not quite as common for municipal governments to be a party to. But it made good business sense for Sen Jackson to want to avoid paying capital gains on the outright sale of the property, since he says he was not particularly interested in selling. No one faults Sen Jackson for making a sound business decision. The 1031 allowed him to defer any capital gains. It also allowed for more purchasing power for the two parcels he wanted in the exchange, since capital gains would have gobbled up 15% of the profit from the sale.
However, the city didn’t just swap out land with Sen Jackson that it already owned. The state Senator was interested in two small parcels at the corner of 13th street and Reynolds street adjacent to his Tile Center business. Those parcels were owned by K&W Investment Co. You can view the property records here: 1311 Reynolds St parcel and 35 13th St parcel. But the thing is, to acquire these two parcels, the city paid out $119,000. And that is the main point. Sen Jackson just got the land.. no money. The $119,000 was held in escrow by a 3rd party intermediary while the transactions were being finalized. Even though Sen Jackson didn’t walk away with a big fat check in the deal, he did get a larger parcel that was of considerable more value to his business than the tiny 0.07 acre orphaned parcel he transferred to the city at 9th and Reynolds Streets.
Now a particular talk radio personality was making it sound like the land swap was at the very best a “wash” for Jackson or that he may have even lost money on the deal. Not quite. Acquiring the crucial corner parcel at 13th St and Reynolds St gave Jackson increased visibility and access for his Tile Center business and thus increased the value of all of  his land there. So Jackson made quite a good deal for himself, not faulting him with that, any good businessman would do the same thing. The question here is, in all of this, did the taxpayers make a good deal?
How Augusta Riverfront, LLC is the MAIN Beneficiary of the Land Swap
As we have said before the main player in the parking deck, aside from the city of Augusta, is Augusta Riverfront, LLC. This is  the company who will manage not only the new parking deck, but the new TEE Center. They also own the Marriott hotel adjacent to the new TEE center. As we first told you, the land where the TEE center parking deck now sits is owned by a company called 933 Broad Investment Co, LLC, which we found is a shell company of Augusta Riverfront, LLC. This means that the company who wants to manage the parking deck (at a yearly fee of $25,000) actually owns the land where the deck sits, EXCEPT for that one 0.07 acre parcel involved in the land swap with State Sen Bill Jackson.
As we just told you, the city paid out $119,000 in that exchange. What that did was essentially inflate the land values where the parking deck sits, establishing a price point of $1.7 million per acre! And who owns most of that land? 933 Broad Investment Co LLC (aka Augusta Riverfront, LLC). So that puts them in a pretty sweet position over this deck. They already own the ground floor of the deck, which means they get the revenue generated from the spaces on the first level, and now they want a $25,000 contract to manage the rest of the deck. Many city leaders are crying foul and saying they were mislead and want ALL of the land where the deck sits under city ownership. But not so fast. Augusta Riverfront, LLC can now assert that their land is worth $1.7 million per acre if the city wants to buy them out. That could also be used as powerful leverage in negotiating a sweet heart management contract for managing the  new Reynolds’s street deck and the one adjacent to the Marriott.
What Exactly Were Commissioners Told?
When several commissioners were told that the city did not own the land where they just built a $12 million parking deck, they were dumbfounded. It seems as though just about everyone on the commission was of the belief that Augusta Riverfront, LLC or its subsidiary had already donated their parcels of  land for the deck. But that never happened. Commission meeting minutes from 2009 clearly show that city administrator Fred Russell told commissioners on multiple occasions that Augusta Riverfront, LLC or its subsidiary had AGREED to donate the land to make way for the parking deck. You can view those commission meeting minutes on the City of Augusta website.
It makes sense that Augusta Riverfront, LLC would agree to donate the land for parking deck. They were getting a sweetheart deal on the TEE Center and the management contract to operate it with no risk to them. In fact they were getting a $350,000 per year subsidy from taxpayers to run the facility. And the hotels owned by Augusta Riverfront, LLC are adjacent to the TEE Center and thus will get exclusive access to the facility. And don’t forget that the city forgave Augusta Riverfront, LLC of a $7.5 million UDAG loan that the city had acquired on their behalf back in the early 1990s for construction of the Radisson, now Marriott. So it is very plausible that commissioners would expect that Augusta Riverfront, LLC would “do the right thing” and donate the land for the parking deck.
The Deal was Changed but Someone Forgot to Tell the Commissioners
December 7, 2009 was when the crucial vote was taken that approved the deal over the TEE Center and parking deck. The meeting minutes show that once again commissioners were told by Fred Russell that Augusta Riverfront, LLC had agreed to donate the land and that the city would only need to acquire two other parcels, one from a “private individual” (that was State Sen Bill Jackson) and WAGT (though none of the actual parking deck sits on the former WAGT parcel). Commissioners voted to approve the deal based on this information. But somewhere along the way things changed, but commissioners were never told. It also was revealed that a much cheaper option for surface parking instead of a costly deck was rejected by Fred Russell without the knowledge of commissioners. Commissioners were not even aware of a parking study that proposed the cheaper surface lot option. Chris Thomas of WDRW reported on it.
So somewhere along the line the deal was changed  to where the city only acquired air rights above the ground floor of  the $12 million parking deck. But apparently commissioners were never told that the deal had changed. And was the parking deck even necessary in the first place? There is now a push among at least one Augusta Commissioner to clamp down on downtown parking to hopefully steer people to the new deck. So why was this deck needed? And who told the city it was absolutely necessary to build this deck?
Follow the Bonds, Follow the Money and Connect the Dots
The reason given now by city attorneys as to why the land was not donated by Augusta Riverfront, LLC is so that tax free bonds could be used for construction. But that begs the question: Why did the city need to purchase the 0.07 acre corner parcel from Sen Bill Jackson for the deck? If keeping the land under the control of Augusta Riverfront, LLC allowed for tax free bonds to be used for construction, then shouldn’t they have purchased that land from Sen Jackson instead of the city to consolidate ownership? But as we previously told you, the lopsided land swap with the city valued that parcel at $119,000, which then inflated the surrounding land values (owned by Augusta Riverfront, LLC) to $1.7 million per acre. How convenient.
The other question that begs to be asked is why The DDA (Downtown Development Authority) was taken out of the process over the issuance of the bonds for the parking deck? The DDA is a governmental authority whose original purpose was issuing and servicing bonds for downtown parking decks.. but NOT this particular downtown parking deck. Why?
Brad Owens, the founder of Augusta Today and a former member of the DDA and a frequent critic brings up the following points regarding the bonds:
“FOLLOW THE MONEY!
The key here has been said a few times but folks have missed it. Let me put the two together here for everyone:
1.) City lawyers say the deal was changed so tax-free bonds could be used for construction.
2.) His (Mayor Copenhaver) comment was the bond attorneys would have never let matters stand if there were something wrong with the deal.
Now, here are a few bones that need to be dug up on this based on the excuse that has been given;
  1.  WHO issued the bonds?
  2. WHO is servicing the bonds?
  3. WHICH attorney is handling this and what are the fees being charged?
  4.  ARE these “double barrel” bonds?
  5. WHICH bank is holding the money for these deals?
  6. WHAT interest rate/fee/surcharge is being charged by the bank?
Incompetence or Collusion?
It appears that many mistakes were made in this process involving the parking deck by the city and each one of those mistakes were to the great benefit of Augusta Riverfront, LLC. So that begs yet another question: Was this just yet another case of incompetence by city officials, or was this collusion among some key people on the city payroll and Augusta Riverfront, LLC to orchestrate a very lop-sided deal that now leaves the taxpayers with a $12 million parking deck on land they don’t even own? Also, was someone at the city involved with the inflation of the value of the land where the deck now sits to benefit Augusta Riverfront, LLC and to the detriment of the taxpayers? Why were commissioners told by Fred Russell on multiple occasions, that Augusta Riverfront, LLC had agreed to donate the land only for that to change without the commissioners being made aware of the change?
Why didn’t the DDA issue the bonds, especially when financing parking decks is the original reason it was created by the state in the first place? Was this done in an effort to remove scrutiny and oversight from the bonds?
And why isn’t Mayor Copenhaver more outraged over this whole sordid affair? He seems to be more mad at the messengers for exposing the meeting minutes that show that commissioners were mislead over ownership of the parking deck land. The mayor had this to say: “Why do some people always want to look back at matters? We should be looking ahead.”
We could not disagree more with mayor Copenhaver. Public officials should be outraged over this. The mayor may want all of this to just go away but we will most certainly not just look the other way on this when millions of dollars in public money are involved and especially not when it appears the process may have been rigged from the very beginning. We would hope that mayor Copenhaver would share the concerns of the public over this.
You can be assured there is more to come on this parking deck scandal… so stay tuned.
**Update** The connection between 933 Broad Investment Co LLC and Augusta Riverfront LLC:
933 Broad Investment Co LLC
Augusta Riverfront LLC
IDENTICAL!

* Al Gray and Kurt Huttar of contributed to the Reynolds Street Parking Deck series by searching land titles through the Augusta, Georgia GIS map site.