R.W. Allen’s Guaranteed Money Pits

IMG_4374Owners like to use a contract delivery method called “Design Build” when they don’t know what the heck they are building, don’t want to take the time to design it before bidding it out, or have a site with too many unknown conditions.  Since they don’t know these things they put a fig leaf of protection against unlimited costs called a “Guaranteed Maximum Price” or GMP. Even in commercial or industrial construction, supposedly knowledgeable in cost controls and with fewer unknowns, GMP contracts are a challenge to administer, because the assumptions the contractor gives in quoting a GMP generally last only days or weeks. Owners would be better off with a pure cost-plus contract with great controls, but the owner’s internal politics command at least a fiction of a fixed price.

Imagine trying to catch a butterfly in a windstorm – that is how elusive the “guarantee” becomes.

In government there is no better money-hemorrhaging device than these contracts, hence perhaps GMP should automatically be understood by citizens as being “Guaranteed Money Pit.”

The City of Augusta, Georgia loves to squander money using GMP contracts, having thoroughly embarrassed itself with the things. Augusta  built a $30 million Convention Center across land the city didn’t own and then had to pay for it with Kitchen Equipment added by change order to a “guaranteed” price,  spent about $50 million on a Municipal Building Remodeling that was supposed to cost $20 million mostly covered by another GMP contract, and built houses in the Laney Walker district with maximum-price, not to exceed contracts that never were adjusted to actual cost.

There were only three finalists selected by Augusta for the Old Green Street Library remodeling, and two of the three had “Allen” in their name. The low bidder who didn’t have “Allen” in its name and who bid on the whole project in its bid, with a Guaranteed Price for all of the work, somehow didn’t get the award. RW Allen, LLC was awarded the work on a piecemeal basis, destroying any figment of a guarantee in this writer’s estimation.

John Allen, nephew and contributor to Congressman Richard W. Allen, is a principal in the Allen-Batchelor firm, which was also on the finalist listing.

District 8 Wayne Guilfoyle said it best “if all three firms are proposing this project the following including the proper scope, met the required schedule and fully capable of completing the RFP why are we selecting the highest bidder?” Then later Commissioner Guilfoyle said “So we’re approving something we don’t have a clue, only a partial.

It must be nice to be R.W. Allen LLC and to have Augusta push you into a yet another money pit where nothing is guaranteed but more profits.

 

Cooking Sinergy on Reynolds Street

Some like to use the phrase “God Don’t Like Ugly” to describe situations where extreme karma erupt, but isn’t it more apt that both God and Satan have senses of humor when mortal humans gore their own ox?

Readers will see the title and immediately think “Synergy isn’t spelled that way!” Correct they are. Synergy is the creation of a whole that is greater than the simple sum of its parts. “Sinergy” is creation of an offense that is greater than the simple sum of its ingredients. “Sinergy” has gotten cooked up in heaping batches in a Reynolds Street kitchen in the Augusta Convention Center.

After the management at Augusta-based Morris Communications decided to go all-in cheerleading their TEE Center caper, which saw a Morris Communications affiliated company awarded with the management agreement to operate that now-infamous convention center, they failed to warn their local government reporters about the legal minefield lying in wait. Hundreds of pages of Uniform Commercial Code filings, easements and cross-easements, and the existing Conference Center operating agreement directly were impacted by the construction of the TEE Center. Poor reporters hadn’t the time or expertise to read the huge volumes required to avoid embarrassing blunders.

Sinergy struck reporter Susan McCord hard, when she published an expose about Augusta Commissioner Alvin Mason, prominently focused upon the number $1500, which was reportedly the amount of each of the campaign contributions made to Mason and fellow commissioner Corey Johnson by Augusta contractor Heery International in 2009.

$1500.

Whether it came through divine or demonic device is uncertain, but $1500 is the cost born by Augusta to refurbish existing kitchen equipment found in the TEE Center invoicing. According to the legalese in the documents recorded in the Office of the Augusta Richmond County Superior Court Clerk the equipment items were likely the asset of Augusta Riverfront LLC, the Morris affiliate. Under the ongoing 50 year Conference Center agreement, extended by the TEE Center agreement, kitchen equipment was the responsibility of the Augusta Riverfront entity, therefore any “existing” kitchen equipment in the complex would not have been the property of Augusta.

Did Morris’ newspaper slam Commissioner Mason for a $1500 ethical lapse when their affiliate enjoyed exactly $1500 Augusta funds to rebuild its equipment?

In Augusta a $1500 kettle whistles steam that Al Mason’s $1500 pot is black and the laughing imps who once hid out in the press room found their sinergy brewing in the $2 million taxpayer funded kitchen on Reynolds Street.

In the words of Bea Arthur……

When this writer spoke before the Augusta Commission against the SPLOST vote back in April, a heartfelt recommendation was expressed to have a “Truth Commission” empaneled in Augusta. South Africa found greater peace after Bishop Desmond Tutu and Nelson Mandela insisted on holding Truth Commissions after apartheid ended. Only when Augusta’s media giant comes to the table in a spirit of truth toward all communities and all people in your city will Augusta’s apartheid end.

That is how it looks from up here in the Lincoln County pine woods across the lake.

AG

Basenji’s Don’t Roar on Reynolds Street

Morris Communications has a new online venture it has branded as ROAR.us, but its three year case of lockjaw over the scandal-wracked TEE Center and Parking Decks doesn’t show any sign of soon loosening into ear shattering howls.

Morris wasn’t so quiet in the run up to approval of the $50 million boondoggle. In fact it published a piece stating that the land its affiliate owned was to be deeded over to the city. It published guest columns from Convention and Bureau chairman Barry White, saying that the Morris affiliate would donate $1 million of land and cover costs over the $350,000 funded by the hotel/motel tax, and another from the CVB’s Abram Serotta promising that the funding would be covered by hotel/motel tax.

The noisy cheerleading promising no cost to the taxpayer over the $350,000 motel tax support is one bookend. The other bookend came in late 2012, when the Augusta Commission admitted that the operating costs could drain nearly $900,000 from the property tax supported general fund. The losses narrowed to $535,000 after the books for 2013 were closed, but did not receive rigorous questioning from a plaint Augusta Commission.

Between the bookends came a bribery trial arising from the Convention Center parking deck agreement, revelations that the land promised for donation for the parking deck by the Morris affiliate had $7 million in liens on it, the shocker that Augusta had bought $2 million of kitchen equipment that was the Morris affiliate’s responsibility, the stalemate of the management agreement that provided no accounting control over comingled food and beverages, comingled electrical costs that were supposed to be separately metered, and other snafus got virtually no attention from the Augusta Chronicle (Dare we now call it the Augusta Scamical?) other than meek postscripts noting that there are “ties” between the Morris affiliate Augusta Riverfront LLC and the Chronicle.

The Basenji breed of dog is bark-less because its voice box is muted. The Morris’ Augusta Chronicle and sister publications have been reported to be muted by senior management by the best of all sources – their ex-employees.

The attention given to Augusta’s General Fund during the month of August revived attention to Morris caper and the surprise reversal of assurances that no general funds would be touched by the Convention Center Operations. The public was roaring its anger in the Commission Chamber on August 28, but the sound from Morris Communications sounded more like a basenji’s muffled, whiney grunt from a corner of that empty taxpayer-money-hemorrhaging parking deck on Reynolds Street.

Rick, You Forgot to Call

In 2012 when you made a run for the Republican nomination for the 12th Congressional seat, the radio talker Austin Rhodes immediately attacked you for a long-ago donation to the infamous Champ Walker, a Democrat. I called in that day to defend you, recalling your teen years as a Republican.

Then Brad Owens of the Augusta Today group wrote a City Stink piece questioning added overhead charges on RW Allen LLC’s partial bill to Augusta for the Tee Center y’all were building. The contract said those costs were capped. You were incensed and maybe with justification because it wasn’t the final bill.

You and I had a lot of discussions during the 2012 primary season, but there is one worthy of recounting. We reminisced about our frequent childhood gatherings at Uncle Land and Aunt Carols’. I told you that, despite having created constructionaudits.com, I stayed out of Augusta because RW Allen had such a presence there that your company was unavoidable. A warning was that RWA operated in a cloistered environment of Augusta for decades, building complacency. Rising to executive status as you did meant not really knowing what was in the contracts RWA signed, but those would become campaign issues. We talked about the one Augusta project that my firm did at Reid Church, where RWA was contractor, doing an admirable job under tough circumstances. Finally, we got to how the epidemic of financial corruption decimating my retirement savings forced me to use Augusta as a lab to see if the old skills were still good enough to produce.

After 2 years of stunning results, that question has been answered.

Before that call concluded, this was said and is still meant. You are a very fine man, Rick Allen, and America and Georgia need fine men to step forward. There was an offer to work with you to develop positions that the people truly need, not the old tired Republican Party rhetoric. Finally there was an offer to prepare you for greater things -a run for the US Senate.

The words of warning remain the same. You have long alliances with people in whom you trust, but the people don’t. There is a record of commitments in those RWA contracts that you are oblivious to, but the two Johns, Stone and Barrow, won’t be. You have major contributors with interests in the Augusta Tee Center scam that the Augusta Chronicle can’t hide much longer. You are tied to banking in a state that was and is the epicenter of global bank fraud decimating responsible people. Perhaps the entire 12th is reluctant to yield representation and their children’s futures to the Augusta bluebloods, perhaps the most aggressively greedy plutocrats on earth
.
My promise was to help you understand and rectify those things. We last talked just before the Tee Center budget meeting in February of last year. You said the political future was undecided. You were going to call before launching another run at the 12th. That call never came.

Good luck Rick. You are going to need it.

Short Sheeted via Term Sheet


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

AG

Enslaved Forever on the TEE Plantation


Monday, November 12, 2012
Augusta, GA
By The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article
Now all Augustans lie prostrate to Massa Billy and Massa Paul, thanks to the 6-3 vote of the Augusta Commission to pass the TEE Center deal last Thursday, November 8, 2012. White, black, Mexican, Korean, Chinese or Indian, the entire City of Augusta is now enslaved to Billy Morris and Paul Simon or, if you believe Augusta radio talker Austin Rhodes at WGAC, the Morris children.
No one can really tell who the owners of the new TEE Center management company are because it didn’t even exist until last month and it was registered by an intermediary to keep the ownership hidden, something Augusta’s procurement policies seem to prohibit. It will just have to suffice that the person’s listed on various documents for the original Morris/Simon LLC suggest that the Morris family are the principal owners. Even the Augusta Chronicle, who has acted throughout the TEE escapades as a front for these shadowy LLC’s, has been forced to weakly acknowledge that there are ties with Morris Communications.
The place where they put the permanent shackles on the people was originally supposed to be Augusta’s wonderful new TEE Center, but the massas had confiscated the building before the last concrete set up. They weren’t content to just stick spurs in horses over there in their Hippodrome in Aiken County, now the children all across Richmond County find themselves bound to a plantation and they didn’t have to move to Morris’ Creek Plantation, Wade Plantation, Butterfield Plantation or Millhaven Plantation to do it.
When you are in Augusta, you don’t move to the plantation, the plantation comes to you. Worse of all, the legalese says you and your descendants are slaves to the Morris massa’s TEE House FOREVER!!!
Yes. You read that right.
Mayor Deke Copenhaver and Administrator Fred Russell cheered as Commissioner Corey Johnson, Commissioner Matt Aitken and four other commissioners voted for this:
“Term of this Agreement” shall mean the period of time commencing on the date of this Agreement and continuing in perpetuity for so long as the TEE Center is in existence and shall include the period of time following any casualty with respect to the TEE Center for so long as City has the right to rebuild the TEE Center.
Now reader, you are just about to read the last part of that and tell me it is a way out of the Tee Center for Augusta because it ends when the TEE no longer exists.  Well, it is like the old tale of Dem Bones – “Toe bone connected to the foot bone: Foot bone connected to the leg bone: Leg bone connected to the knee bone…..” You just have to make the connections to get the whole body of facts.
Reading on:
During the Term of this Agreement (perpetuity), City shall, at its sole cost and expense, maintain the TEE Center to the Standard for so long as the TEE Center shall exist.
Getting a better picture now, reader? The “Standard” is whatever Billy and Paul’s interpretation of what their Marriott Hotel says it is and Augusta has to pay whatever it takes to meet their ‘Standard.’ That sounds expensive already, doesn’t it?
Now you Doubting Thomases who are left thinking that this pay-out to Morris and Simon isn’t FOREVER, get with the program. “The knee bone is connected to the thigh bone, and the thigh bone is connected to the hip bone.” And so it goes with the Tee Center. You follow the boneyard and find out it is the TEE Center. Now a Doubting Thomas would say “Well, if Augusta decides to contract with someone else or close down the Tee Center, we can stop paying them or stop paying costs on their behalf, right?”
This isn’t exactly true, according to the contract:
The parties acknowledge that Developer has an important interest in insuring that the TEE Center is maintained in accordance with the Standard, whether or not Developer serves as the Manager or Caterer. Accordingly, this Agreement, and particularly this section of this Agreement, may be enforced by Developer. (Developer is the Morris/Simon)
 
In other words the Morris/Simon massa still has the power over the taxpayer, even if their contract is lifted.
Are you getting a queasy feeling in your stomach, Hephzibah? So you on Warren Road think that the TEE plantation you are on will meet an emancipation proclamation that sets you and all your descendants free from PERPETUAL bondage? Dear readers might still not be convinced that the TEE Center is their massa FOREVER. It’s time to read some more:
During the Term of this Agreement (PERPETUITY, remember?), City shall, at its sole cost and expense, procure and keep in effect fire and extended coverage for the TEE Center and all personal property located thereon, including rent loss or business interruption …, in amounts at no time less than the total replacement cost therefor. Such policy referred to above shall name City and Developer as loss payee and additional insureds, as their interest may appear.
 
So, there you have it. Augusta has to pay for the TEE Plantation in PERPETUITY and pay to insure that it is replaced in PERPETUITY. If it is destroyed, the Morris/Simon hotels are almost certain to be destroyed too, so replacement would be driven more by the Morris/Simon decision on what to do with their hotel complex than anything Augusta decides.
How great is the claim on Augusta’s tax system to pay for the TEE Plantation? On the financing side, the project was built using general obligation sales tax bonds, as certifications by the Construction Manager, R.W. Allen attest. General obligation bonds are backed by the fullest ability of Augusta to tax people out of their homes and businesses out into the street. On the operations side of the TEE Plantation, hoteliers get looted for the first $250,000 (another $100,000 goes into capital spending), but then the rest of the TEE Center losses come out of the General Fund, which also is fed by the power to tax folks into poverty. When a contract like the TEE contract gets executed, that obligation comes before paying for essential city services, like fire and police protection.
Now that the whole skeleton of bones has been assembled, the full picture of the TEE Center deal is this – All of the people of Augusta-Richmond County, their children, and descendants are now under double general obligations to the extent of the value of all of their property to the Morris children and descendants in PERPETUITY.
Get used to the shackles and chains that Mayor Deke put you into.  Only death or getting out of Augusta will give relief.
Can you say that you’ve been TEE-totally subjugated?
It sure looks this way to an Outsider.***
OS

Special Report: Out of Line Asking for a Single Line?

TEE-Totally Fried Circuits
A $2.6 million Cover Up?
Originally Posted on CityStink
Thursday, November 8, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article
In $15 Million Augusta CONference Center Pays$25,000 a Year to City  this writer brought up the issue of the enormous electrical power costs that were evident in an earlier Georgia Open Records Request in which the accounting for Augusta Conference Center lease payments was obtained. Those records suggested that the Conference Center Manager, Augusta Riverfront LLC (owner and operator of the Marriott hotels), was using estimates to separate power used by the Marriotts from that charged to Augusta’s Conference Center rather than precise separate metering.
That got me to thinking. If they are estimating for the Conference Center, where they are responsible for the power bill, are they going to estimate again for the TEE Center power? Will there be separate metering for the bill that the taxpayer has to pay out of the General Fund of Augusta-Richmond County?
In a Georgia Open Records Act Request submitted on October 31, 2012 an official inquiry was made to access the simple single line diagram that would answer my question. A single line diagram looks like this:
 It doesn’t show locations, specifications, or details, it just shows how power enters a development or building and the uses to which it is directed. Imagine the shock when the response from Augusta’s Law Department was a refusal to provide an answer to my request based upon” considerations that disclosure “would compromise security.”
Why is Fred Russell’s and Deke Copenhaver’s Law Department engaged in this cover up? Russell flits about, dismissing public watchdogs’ efforts as being concerned over nickles and dimes, when he hides the truth about the legitimacy of a $5.2 million ($350,000 for 15 years) Tee Center Cost? Proposed Management company executive Paul S. Simon thinks that ” this is a very expensive building to operate”, while citing a $350,000 annual power bill as a reason, so a key player doesn’t see this Fred’s way.
Sources tell me that the way the TEE Center electricity was routed was such that the Tee Center, where Augusta pays the bill, is on the same incoming circuit as the Conference Center, where Augusta Riverfront LLC pays the bill.  They say that, in the aftermath of last Friday’s meeting between three Augusta Commissioners with Augusta’s contracted counsel and an Augusta Riverfront LLC attorney efforts are underway to accomplish separate metering.
The watchdogs want to see proof of developments on the issue. We want to see savings.
At just one-half the costs indicated by Mr. Simon, this is a $2.6 million question. It is good to see a team of Augusta Commissioners looking for answers that Fred Russell and the Law Department intend to hide.
-LD

Catering May Crater Augusta Finances

TEE Catering Delivers Sweets To Whom?
Originally posted on CityStink
Thursday, November 8, 2012
Augusta, GA
By Al Gray
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
Part 2 of Reviewing Augusta’s Tee Center Contracts
When Augusta’s Trade, Exhibition, and Event (TEE) Center was officially presented as a concept for approval in August 2007, what stood as the partnership agreement was an unsigned, undated document entitled  “Term Sheet.” between the city and Marriott Hotel Franchisee Augusta Riverfront LLC. Under that agreement, Augusta was not in the catering business and was not slated to furnish $1.4 million in kitchen equipment, or if it was, that detail was not spelled out for the Augusta City Commission.
Much has been written on this blog about the saga of the Tee Center Kitchen Equipment and that tale is not one to be retold now.
What is now germane is  that the Augusta Commission has been presented with a raft of contract and legal documents to be approved and executed that clearly should have been in place by late 2009, having been repeatedly promised as being “finalized” by City Administrator Fred Russell in the last half of that year. Now the Commission is being asked to whisk these complicated deals through in an expedited fashion lest Tee Center events face cancellation.
After the Management Agreement, the Tee Center Catering Agreement has the greatest impact upon TEE Center operations, as Augusta Riverfront LLC is already the Manager of Augusta’s Conference Center and Caterer for events there. Augusta is paid no share of catering from its Conference Center under previous deals.
The following represents a summary of the primary Catering Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form,  write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.
Solutions were designed to be the product of meeting participants and were not suggested in the summary.
The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.
 Primary Issues
  1. Since most of the language in the Catering Agreement mirrors the language of the previously-reviewed and annotated Management Agreement, this document will only be annotated with comments and questions unique to this agreement.
  2. Phantom legal documents (see “ Conference Center Management Agreement dated____, 2012”) should not be referenced.
  3. ARLLC (Augusta Riverfront LLC) is both Conference Center operator and Caterer with a captive LLC (TEE Center Manager Augusta Convention Center Management LLC) between them. Isn’t this just a fiction to eliminate a conflict of interest as alluded to in the Catering Agreement?
  4. Controls over inventories of food and beverage (to prevent co-mingling of Augusta, Hotel and Conference Center purchases) being in place before contract execution should be mandatory.
  5. If Kitchen doesn’t serve Hotels (as has been publicly stated by the Marriott General Manager), can’t that reference be taken out?
  6. Cross over events into the Conference Center will deprive the Tee Center of catering revenues, while the agreements relieve the Conference Center of costs.
As with the Management Agreement, time will tell how many of the above issues are addressed, handled, and rectified.
 -AG
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns. He is a frequent contributor to CityStink.net.

Can Augusta Avoid Outsized Tee Center Costs?

Augusta’s Tee Shot Hits Rough
Originally posted on CityStink
Wednesday, November 7, 2012
Augusta, GA
By Al Gray
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
Part One – The Management Agreement
When Augusta’s Trade, Exhibition and Event (TEE) center was approved in 2007, prudence might have suggested that one of the first steps in the process of building the facility might have been to execute the Management Agreement in advance.  This being Augusta, Georgia, where almost nothing is done in accordance with normal business practices, the building has gotten within weeks of being used before a management agreement was even submitted to Augusta commissioners for approval. Worse, the management agreement was one of a covey of documents to flush out for approval.
A very rapid assessment of the provisions of the contracts was needed, because the proposed Manager immediately began hawking the loss of events that might result if the Augusta Commission has the temerity to actually deliberate on the terms and conditions of the entire contract documents.
The following represents a summary of the primary Management Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form,  write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.
Solutions were designed to be the product of meeting participants and were not suggested in the summary.
The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.
Tee Management Agreement Major Issues at 11/2/2012
  1. Differences in 2007 and 2009 Commission Approvals and these Documents. No cost cap. Unlimited conduit to Augusta General Fund.
  2. Cost shifting between agreements. Electric utility example. Beer inventory example. $300,000 a year for 50 years = $15,000,000( Augusta’s Laney Walker Improvement cost calculation method)
  3. Kitchen built under Tee Agreement where ARLLC supplies equipment switches to 50 year Conference Agreement where Augusta supplies and repairs kitchen equipment with no revenue from Conference Center.
  4.  No accounting provisions for backcharged labor to Hotels or any other credits, refunds, rebates, or other benefits going to Augusta.
  5. Cross indemnification between Tee and Conference Center – sever-ability issues. WHO IS LIABLE?
  6.  Too many ways to circumvent Annual Plan, including that an unknown, unknowable “Standard” trumps everything, including Annual Plan.
  7.  Fringe benefits and bonuses, including for LLC PRINCIPALS, are unlimited.
  8. Accounting and auditing envision most of the accounting off TEE Center books, without rights of audit to ALL HOTEL ACCOUNTING records on a real time basis.
  9. Conventions can be booked using Tee Exhibition Hall while using Conference Center where Augusta gets no revenues.
  10. When Augusta signs these contracts, it assumes extraordinary indemnity provisions immediately so that it would have to advance payments to the Manager to defend the Manager from actions by Augusta
Time will tell how many of the above issues are addressed, handled, and rectified.
-AG

$15 Million Augusta CONference Center Pays $25,000 a Year to City

Originally posted by CityStink
Thursday, November 1, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
Augusta Riverfront LLC is the proposed caterer for the City of Augusta’s new Tee Center and a sister company is slated to be the Tee Center Manager. On Tuesday Augusta Riverfront’s Darryl Leach appeared on the Austin Rhodes show on WGAC to defend the controversial contracts for catering and management presented to the Augusta Commission.  During the show Leech brought up the fact that the existing Augusta Conference Center had cost Augusta about $14 to $15 million to build.
Since I just got back a response to my Georgia Open Records Act Request for Conference Center lease payments last week it was surprising to hear that those buildings cost $15 million 11 years ago. What was more surprising is that Augusta only sees about $25,000 a year in lease payments on that $15 million complex!
Yes, you read that right. Augusta’s return on the Augusta Conference Center   is 0.17% a year!
Scanning the accounting I got from Augusta’s legal department was interesting, to say the least.
In the Tee Center Workshop on October 10, 2012, Augusta Riverfront LLC President Paul Simon said this regarding the Conference Center  lease : “However, we get in that case we get all of the profits from the center except we give the city 5% of the room rents, not just catering .” Maybe he meant to say  “just not catering”, but then Augusta attorney Jim Plunkett earlier in the same meeting referred to Conference Center profits/ losses being shared by the city.
Wait a minute. The records that I got from the records request show that the leases were figured at 5% of the greater of Center expenses or Center revenues, with Augusta getting $23,395 in 2003, $21,493 in 2004, $25,137 in 2005, $24,381 in 2006, $27,559 in 2007, $14,828 in 2008, $26,277 in 2009, $26,434 in 2010 and $25,992 in 2011! The revenue figures were room rentals alone with NO CATERING REVENUES INCLUDED!
The 1999 Agreement that covers this says that “miscellaneous revenue” is supposed to be included in the base for the annual lease payment calculations. Isn’t catering an item of “miscellaneous” revenue, when it was not excluded from the contract language for the lease payment calculation?
The Conference Center lease says that the annual lease payment and reporting is supposed to be submitted by Riverfront’s “certified public accountant”, but  we could not find the name of the Riverfront  controller on the roster of Georgia CPA’s.
Expensive Issues for Augusta:
In 2008, Riverfront deducted $13,164 from Augusta’s payment for resurfacing the hotel parking lot. This sort of expenditure doesn’t seem covered as an Augusta cost because hotel parking lots are hardly this city’s responsibility, although it might be covered under the separate parking lease referenced in the agreement. It looks like Riverfront arbitrarily reduced Augusta’s payment to cover an expense that they felt entitled to.
If Augusta gives them a bank account that is an open pipeline to taxpayer general funds, like Finance Director Jerry Brigham told us two weeks ago will be the case,  will Riverfront feel ENTITLED to make deductions from payments to Augusta like this?
The next thing I saw that was surprising is that Riverfront figures ½ the electrical utility costs for the entire complex of hotels and conference center go to the conference center! How was this percentage arrived at? For the Tee Center, is this how the $350,000 Paul Simon suggests as the estimated Tee Center Power bill will be figured – a ballpark guesstimate? Should not there be separate metering for the conference center? Is there separate metering to make damned sure that the $350,000 power bill all goes to the Tee Center and not the hotel/conference center complex?
I have submitted an Open Records Request for the electrical design drawings for the Tee Center, in the hope of getting answers to these question from the Augusta Today membership, which now provides access to engineers who now join the Augusta Today and CityStink.net of investigators and watch dogs.
More than one commissioner is sniffing around this one, too.
Even bigger an issue is whether the Convention and Visitor’s Bureau is actively marketing events that cross over from the Tee Center where Augusta gets the costs, into the Conference Center, where Augusta gets no revenue – all revenue goes to Augusta Riverfront LLC.
More than one commissioner wants that question answered too.
It is wonderful to have a clear majority of Augusta commissioners now working for the people. I never thought I would see the day. Most frightening to those wanting to drain Augusta’s general fund should be this – These guys are showing real signs of UNITY!
When do we go the other way and start getting our money back? In the case of the TEE Center,  a power shift is overdue. From the looks of how aggressively Riverfront pursues Augusta’s money, the taxpayers need this commission to show backbone!***
Lori Davis GORA Response 10262012 – Conference Center Lease
LD
Conference Center 2008 Schedule