CityStink Exclusive: The TEE Center LLC Trap

TEE Center under construction on Reynolds Street
**CityStink Exclusive!**

Originally posted on CityStink
Jan. 11, 2012
Augusta, GA
By Lori Davis

Al M. Gray, President of Cost Recovery Works, Inc., contributed multidisciplinary review techniques in support of this article. Cost Recovery Works is no longer in business, as of December 31, 2020.

On December 1, 2011, several weeks prior to the Augusta Commission’s vote to engage a forensic auditor to investigate the TEE Center Deck ownership fiasco, I submitted an Open Records request to the Augusta Law Department in an attempt to get to the bottom of  the confusing procession of statements coming from Administrator Fred Russell, Mayor Pro Tem Joe Bowles, and others. I received a response to this request from Staff Attorney Kenneth Bray on December 15, 2011.

Most of the information provided dealt with the Laney Walker Overlay. Most of the rest was missing any dates, including the negotiation term sheet and a schedule which was labeled as a modification. The total packet was about an inch and a half thick. After skimming the documents, I called upon Augusta Today and contributor and cost recovery analyst Al Gray to assist in completing my review.

What we found was stunning new information buried in the document pile. I will get to that later.

The first item requested was information relating to the land under the TEE Center Deck being security for any loans or bonds. Since the bonds were known to be general obligation bonds and were tied to the Laney Walker project funding, this was precautionary, with no documents necessarily expected to come back from the Law Department. They provided the bond package for the combined Laney Walker and TEE Center funding.

Emails and any other correspondence relating to the deck between any and all Augusta government parties were requested. None were returned. The Law Department cited pretty wide attorney-client privilege. I was very disappointed by that, given publicized remarks attributed to outside counsel Jim Plunkett about events surrounding the failure to have the various parcels under the parking deck donated by Augusta Riverfront, LLC. Much has been said of discussions of air rights. I hoped to get clarification of that. It looks like the forensic auditor might run into immediate stone walling, based upon the response to my inquiry.

Since Mayor Pro Tem Bowles has spoken on The Austin Rhodes Show and elsewhere of having saved the city $1.5 million due to the ownership and financing, I thought that the request would have at least produced the analysis upon which he was basing his claimed savings. I guessed wrong. Do you suppose the savings are the same place as Augusta taxpayers’ property rights with the deck, which is “up in the air?”

A really obscure document I requested was an insurance certificate from TEE Center and Deck contractor R.W. Allen to Augusta Riverfront, LLC, as an additional insured during construction. While this document is not one that Augusta would have in its possession, Augusta’s program manager Heery International probably should have it and it should have been accessible. Not having this insurance document suggests that R.W. Allen thought it was working on land owned by the Augusta government, not owned by Augusta Riverfront, LLC. It also suggests that program manager Heery was caught off guard, too.

I couldn’t form any conclusions as to whether the land under the decks owned by Augusta Riverfront, LLC was to be donated or not because the documents provided conflicted on this point and had no dates to tell me what the final word was. The dating is critical. There was an undated “modification” to the Augusta Riverfront Term Sheet in the package. It might have been created last week, for all the public knows.

The undated, unsigned “Management Agreement Term Sheet” between the City of Augusta and Augusta Riverfront, LLC in paragraph 6 states, “LLC will transfer to Augusta that portion of its property needed to develop the Trade Center and parking, adjacent to the Convention Center. This land transfer, which will not include air rights, will be at no cost to Augusta.” This term sheet seems to have been modified to reverse this part of the transaction. With no dates, it isn’t possible to tell the sequence of events.

What is clear is that Commissioner Johnny Hatney was told several times by Administrator Fred Russell that the land under the deck owned by the LLC was going to be donated at the December 7, 2009 meeting at which the TEE Center was approved by the Augusta Richmond County Commission. Russell did not clarify that only limited air rights were donated. I think most of the public thinks his talk of, “property that’s going to be donated,” means just that, not “air rights.” Besides, there are schedules that were presented to the commission that show the value of the “Donated Property,” $464,353, as being the assessed value, not plus or minus the “air rights.”

Amazingly, Parcel 037-3-047-00-0, land under the $38 million TEE Center itself, remains owned by Augusta Riverfront, LLC. There have been no recordings with the Clerk of Court Office documenting any changes in the ownership rights with this piece of land, including air rights. As precise as the legal documentation of land ownership and rights is, isn’t it wild that this could happen?

Augusta built $50 million of buildings, some costing nearly $200 per square foot, on land it only partially owns. The taxpayers might get the “air rights” to a parking deck they paid $12 million for. The LLC’s get guaranteed fees and to keep the property, which gives them dominance over the entire complex forever. (A)

“Donation” now means having your cake and getting paid to eat it, too.

Fred thinks this was a bargain.

A forensic audit cannot happen soon enough, and trust me, we will be watching every step of the way.

A. According to the detailed term sheet, the public was guaranteed not much more than that the LLC bears losses after the operations loses $250,000 of the public’s money, and that figure excludes depreciation and interest. The public would bear those in addition to the losses. According to the modification provided, this was changed to the LLC’s getting fees and the public taking the gains and losses from operations.

Augusta Tee Deck Open Record Request Response
Tee Land Acquisition Documents
TEE Center Term Sheet Document
Term Sheet Modifications Undated Current Tasks Including Deck Info

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