Originally posted by CityStink
Thursday, November 1, 2012
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.
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!***