Category: Public Policy

Politics, public administration, law, regulation, banking, and property rights

TEE Parking Deck Exclusive: Augusta’s $714,357 “Incidental” Cost?

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May 31, 2012
Augusta, GA
By Al Gray

  

The story Fred Wrestles, Augusta Gets Decked?, published on Tuesday, May 29, 2012, offered a detailed and documented exploration of a story of rejected parking management bids, a questionable management firm selection, and a detailed comparison of Augusta’s bid contract with the administrations proposed contract. The questions and issues documented required a lengthy recitation to convey the magnitude of the subject. It was an epistle for those liking details.

Today’s key word is “incidental.” What is “incidental” within the Reynolds Street Parking Deck (RSPD) agreement? Can “incidental” be measured? Is “incidental” subject to debate?

What brought this subject to the fore was how the RSPD agreement deals with costs relating to the ground floor of the parking deck structure owned by designated manager Augusta Riverfront, LLC, specifically Article 3, Section 3.1 which includes this:

“The parties acknowledge that certain property and services paid for by Owner (Augusta) (editor’s unitalicized text) and required for the operation of the RSPD will also benefit Manager’s (LLC’s) (editor’s unitalicized text) ground level parking facilities located underneath and adjacent to the RSPD. Such property and services include, but are not limited to (editor’s emphasis), traffic control gates and related equipment, lighting, and services of a toll booth operator (the “Incidental Services”). The Incidental Services would be required for the operation of the RSPD whether or not the Manager owned the ground level parking facilities, and allowing Manager to benefit from these Incidental Services does not materially increase the costs to Owner. Accordingly, in further consideration of granting air rights and easements to Owner for the construction and operation of the RSPD, Manager shall have the right to utilize the Incidental Services for Manager’s ground level parking facilities located underneath and adjacent to the RSPD, so long as such use does not materially increase the cost to Owner.”

 

Whoa!

 

This caused a scurry to do some math on the RSPD 2012 Budget dated 8/29/2011  (see last page of linked documents). The budget totals $206,370. The deck structure (ground floor and floors above) has 650 spaces, of which 150 are property of the LLC, for 23% of the total spaces in the deck structure. The LLC percentage of the total deck structure, 23% times the total budget, is $714,358!!!! This is “incidental?” Is it not material?

To be clear, the legalese also essentially defines the “RSPD” as the ground floor parcels that Augusta bought, plus the structure above the ground floor. We laymen think the entire building structure from the foundations up as the “parking deck.” However, the annual budget didn’t restrict the numbers to the Augusta-owned portion,did it? Doesn’t the language of the agreement allow the LLC to bill Augusta for its fee and costs of the entire structure, including the ground floor it owns? The language allows the LLC to bill Augusta for the toll booth operator, while labor costs are the bulk of the budget. Shouldn’t there be language clearly prorating the costs instead of provisions that costs “are not limited to” those cited, which seems to open Augusta up to a cornucopia of costs?

 

With labor costs that are the vast majority of the agreement, the probable allocation of shared employee costs from the LLC’s hotel operations, further allocations between the RSPD and Conference Center deck, and, finally, the need to further allocate labor costs between levels of the RSPD, and only an annual audit allowed to verify the costs, aren’t the phrases “incidental,” “not limited to,” and “materially increase” plain dangerous to the taxpayer? Did the length of the agreement get reduced to five years, as indicated to the Augusta Commission in February?

It is a $714,358 question and then some. “Incidental” can be costly.***

 

— Al Gray

 

Related Stories:

 
 

Exclusive: 1120 Florence Street, A Nightingale Singing Questions

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Wednesday, May 16, 2012
Augusta, GA
By Al Gray
Within the last three years the Housing Department of the City of Augusta has contracted for the construction of multiple new housing units throughout the city, most prominently in the Laney-Walker Community. Questions in the community, city, and area abound. Are taxpayer funds being used wisely? Are the funds being disbursed according to governing regulations? How do costs compare with similar new homes in the city or in Columbia County?

The question of whether the home building funds were dispersed properly within the terms of the governing contracts and regulations has been reviewed. Augusta Today contributor Dee Mathis submitted a Georgia Open Records Request Act on February 23, 2012 to the Augusta Richmond County Law Department requesting:

“Plans and Specifications for the two units built under contract with the City of Augusta at 1120 and 1122 Florence Street; Payments made under the contract for the construction of these units, including invoices, payroll registers, and any other documents substantiating the costs reimbursed or paid to the contractor.”

As background, it is noted that Dee Mathis has exhibited keen interests in the real estate developments and revitalization efforts in the Laney-Walker neighborhood, having previously appeared before the city commission in opposition to the Laney-Walker overlay zoning ordinance.
The housing constructed was a duplex of two stories built by designated Laney Walker contractor J&B Construction and Services, Inc. The contract for it was dated June 22, 2010 and it was completed before, October 2011, when the final payment was made by the City of Augusta. J&B Construction is a designated Development Partner for the City’s Laney Walker Bethlehem improvement district. There are other development partners who have similar contracts and this review is not intended to single out this contractor but to address the City’s performance in administering similar contracts.

On March 6, 2012, Ms. Mathis received a two page response from Kenneth Bray of the Augusta Law Department accompanied by 60 pages of documents. This report summarizes the key points of the resulting review and commentary.
The nature of the contract is that it provides for construction costs to be reimbursable up to a Not-to-Exceed (Maximum) Price.
The stated amount of the contract was stated in Article 1, Section A, paragraph 1 as, “an amount not to exceed $272,681.00 shall be expended ….. from NSP Program funds for construction costs related to the development of an affordable multi-family housing unit as part of the Florence Street Project.”

Then the contract states in Article II, Section A, paragraph 2: “The method of payment shall be on a reimbursement basis… For invoicing, J&B Construction and Services, Inc. will include documentation showing proof of payment in the form of a canceled check or check register and completed reimbursement form that includes the amount requested, amount remaining and specific line items that relate to contract Budget…”

Article V, Section F. states that, “Requests for payment shall be accompanied by proper documentation… For purposes of this section, proper documentation includes: “Reimbursement Request Form supplied by HCD, copies of invoices, receipts, other evidence of indebtedness, budget itemization and description of specific activities undertaken.”

Article V, Section H, states, “Unexpended funds shall be retained by Augusta.” This supports the nature of the contract as being cost reimbursable because had the contract been a Lump Sum, the full contract price payment would have precluded the existence of any unexpended funds.

Appendix B, Reporting Requirements, contains this statement: “Report will contain actual/estimated costs/date, issues and concerns.”

**Payments were made based upon the Maximum Price, instead of reimbursable costs.

The progress payments made against the contract were based upon the original estimate, plus 3 change orders, and less contingency allowances, resulting in a total contract adjustment of $1,874.28, so that the total contract payments were $270,806.74. **(View Final Payments Document Here.)
In response to Ms. Mathis’ Georgia Open Records Request Act inquiry, The Augusta Housing Department provided no billing support that evidenced that the billed costs were actual costs as defined by check stubs, check registers, paid vendor and subcontractor invoices, or payroll registers for contractor employee-performed work.

When this writer contacted Mr. Shawn Edwards, Neighborhood Stabilization Program Manager for the City of Augusta to inquire about the required billing support, he initially indicated that the City was only getting the reimbursement form from the contractor and was making payments based upon the agreed-upon contract price, contending that the contract price was the proper basis for payment, not reimbursable costs. A follow up request is in process for Augusta to provide the actual cost back-up it might possess. This report will be updated if contradictory data is provided.

**The Federal Department of Housing and Urban Development has already cited Augusta for deficiencies like those in evidence for 1120 Florence Street.

James D. McKay, Regional Inspector General for Audit, Atlanta Region, issued an audit report in 2010 which included the following: During the review, we identified two concerns regarding internal controls and entering obligations before contracts were fully executed.

The City did not have internal controls in place to perform continuous and routine monitoring of its obligation process to ensure that its obligations were processed as intended and were valid. We discussed this matter with the City during the review, and the City agreed to develop monitoring procedures.

The City entered its NSP1 obligations into the DRGR database in June 2010 for its LH25 set-aside activities. At that time, the obligations were not valid because the contracts for those obligations had not been signed by all parties. However, the City obtained the required signatures and fully executed the contracts in August 2010, ahead of the September 5, 2010, deadline. We discussed this matter with the City, and it agreed that its obligations were not valid until the contracts were fully signed and executed by all parties.

The failure to secure evidence of reimbursable costs, while paying out contracts based upon the maximum price, would appear to be a 1120 Florence Street manifestation of the first exception that HUD  noted.

The second failure is definitely found to exist with the 1120 Florence Street units, as the contract was signed in June, 2011, three months after the initial contract payment.
The Office of Management and Budget circulars governing the NSP1 funds include the following.

OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments (05/10/2004) HTML or PDF (58 pages, 216 kb),

OMB Circular A-110, Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations (11/19/1993) (further amended 09/30/1999, Relocated to 2 CFR, Part 215

OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations

There are indications that the reimbursable cost could be materially less than the maximum price in the estimate and adjusted contract price.

The contract pricing detail on page 4 shows a charge for a central air system with a 15 Standard Energy Efficiency Rating (SEER). The unit installed was observed to be a Nutone Model  NT4BD. This model is shown by the manufacturer as a 13 SEER Heat pump, capable of reaching a 14 SEER if paired with a variable speed air handler.  The cost differential between a 13 SEER and 15 SEER is significant, because of the rigorous ductwork, blower, and air handler upgrades to achieve the higher rating. Having the HVAC contractor invoice, as required by this contract, and inspection of the installed system would settle this question.

The paid-out contract price included a line item entitled “Administration.”  In the absence of clarification, “Administration” would be an indirect cost which would be covered by the 15% Overhead and Profit allocation against all of the direct cost in the estimate, meaning that inclusion as a marked-up direct cost overstates “costs.” The overage would be $13,800, according to page 2 of the price estimate. This single factor would be 5% of the total contract value.

Using prices from Lowes in comparison to the estimate provides a mixed picture. The estimate prices for bricks and blocks would be a savings, but the prices of wallboard, lumber, mortar mix, concrete, roofing felt, and access doors seem to indicate losses. (These are current prices and can only be used as points of reference, as the actual contractor costs would govern.)

The contract estimate shows the “cost” per square foot on page 6 to be $79.73, exclusive of land costs. Review of the real estate transfer shows the lot to have cost Augusta $12,000, taking the total square foot “cost” to $83.24. By comparison the sales prices of new homes in Grovetown, which include the developers overhead and profit on top of construction costs,  are in the $76 to $82 range. This would indicate as much as 10% savings could be had by complying with the reimbursable cost standards of Augusta’s contracts.

KEY QUESTIONS – Since there are dozens of similar Augusta contracts within the Laney Walker Bethlehem development project, wouldn’t the savings from enforcing the contracts as written save between 5% and 10% of construction costs? Wouldn’t the cost savings justify obtaining comprehensive, detailed costs? Based upon the $37,500,000 committed by the city to these developments the savings would range from $1,875,000 to $3,750,000.

Isn’t Augusta in danger of having to repay hundreds of thousands of dollars, if HUD finds the City out of compliance with its payment of the Neighborhood Stabilization Program contracts?

If Augusta’s contractor’s can save money by changing suppliers and methods, isn’t it worthwhile to help them do so under the cost reimbursable contracts?

More to come.

– Al Gray

Below are the pdf documents referenced in this story:



Dee Mathis 1120 Florence GORA Request1120 Florence Street NTE Price Estimate1120 Florence Street Contract1120 Florence Signature Page1120 Florence Final Payment1120 Florence Draw 1

Breaking: Commission Agrees to Hire Outside Auditing Firm

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Originally posted on CityStink
Wednesday, March 28, 2012
Augusta, GA
From CityStink.net Reports

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 Commissioners voted 6-1 earlier this evening to hire an outside auditing firm to conduct the annual audit of city finances required under state law. For the past 13 years the contract has gone to the local accounting firm of Cherry, Bekaert and Holland. But now a Macon, GA based firm, Mauldin & Jenkins, will take a look at the city’s books. Some commissioners argued that a non-local firm would be more  independent and resistant to pressure from individual commissioners and local interests, and that it was good to rotate the contract among different firms instead of always giving it to the same local firm year after year.

The vote was not easy, though. It took 3 tries to get it passed. The first motion failed in a 4-4 tie. Then a second motion also failed in a 4-4 tie. Commissioner Joe Bowles says it was a “slap in the face” to local accounting firms to award the contract to an out of town firm. Commissioners were reminded that failure to choose an auditing firm could result in the city losing all state funding.

Then Commissioner Corey Johnson brought forth a 3rd motion near the end of the meeting at 7 pm. By this time Commissioners Alvin Mason and Matt Aitken had left the meeting. Commissioner J.R. Hatney was absent from today’s meeting. The third time was a charm and Commissioners passed Johnson’s substitute motion to award the auditing contract to Maulden Jenkins. This time the vote passed 6-1 with Grady Smith as the sole dissenting Commissioner.

It was a confusing display of political theater to say the least and we will have video up of the proceedings as soon as it becomes available. Stay tuned***

CS

Augusta’s Contract With Heery International Contains More Surprises

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Hear Ye, Heery is Here

More Overpriced Payees for the City?

Originally posted on CityStink
February 24, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

In 2003 the City of Augusta did a wise thing in a very foolish way. The administration saw an enormous upswing in capital spending that it lacked the staff and expertise to plan, engineer, procure, manage and control. A large, growing, and respected Atlanta-based firm, Heery International, was selected to perform these functions. The strategy was sound.

The execution was horrible.

This blanket order was executed with 4% annual rate increases mandated. Despite the downturn in construction and the overall economy, in which labor, overhead and profit have tended to fall, the compounding of Heery’s rates continued unabated. The rates established for next year are up an incredible 48% over the initial rates. A Principle in Charge then was $162.16 an hour, this year one is $230.81 and next year it would be $240.04. A project manager then was $87.32. Now one is $124.28, rising to $129.25 next year. An administrative assistant went from $42.41 to $62.78 an hour.

The cumulative effects are stunning. In July 2010 the contract was extended to 2013. At the time, the contract price was raised from $7,082,355 to $10,317,906.

Amazingly, the total overhead and fee in RW Allen’s contract to build and equip the entire TEE Center is $1.8 million, while Heery’s program management fees will top $1.2 million. There is another $1.3 million slated for the Webster Detention Center Phase II. The Reynolds Street Parking Deck is a surprising $549,390.

A defense can be made that division of duties between the construction management firms and Heery reduced the costs of the former. That is a valid point. The difference in rates probably negates a lot of this advantage, however.

A fairly common approach is for the hourly rate for such services to be based upon some verifiable figure, usually the salary rate of the employee divided by 2080 (52 weeks, 40 hours per week) times a multiplier that is negotiated. 2.0 to 2.3 is a normal range. The Heery contract does not accomplish this. The rates were firmly set on an unknown basis back in 2003 and 2004. Augusta did not negotiate controls over composition of rates.

Beyond this, generally there is a firm division in setting rates that only people directly engaged in the project or on site are billed. Principals, Project Directors, and home office administrative assistants, all of whom appear on Augusta’s contract, are included within the markup applied to the directly-engaged employees. Augusta’s Heery contract allows these employees to be billed in addition to the marked-up billing rates of the direct employees.

Augusta is only permitted to audit the hours billed and the employee classification. Augusta is not allowed access to payroll records to ascertain accuracy of the rate billed or upon what basis the rate is determined. The language is blunt: “OWNER may only audit accounting records applicable to a cost-reimbursable type compensation.”

What this says is that the public can never know how community liaison Butch Gallop‘s Heery billing rate got to be a whopping $177.91 an hour billed, with the potential of being billed at the $240.04 an hour on the rate sheet for next year!

The contract is nearly always advertised as a joint venture between Dukes Edwards Dukes and Heery International. Indeed, Dukes Edwards Dukes principal Winfred Dukes appears on the billing rate sheet at $240.04 an hour in 2013, up from the initial $162.16 an hour. For the sake of clarity and honesty, Dukes bills only about 4 hours a month. He is one of several Heery executives who Augusta should never have allowed to be billed, in this writer’s humble opinion, since they are at supervision levels above the Senior Project Managers and directly-engaged staff on Augusta’s projects.

To summarize, the Heery contract has been on auto-pilot with compounding rates, unverifiable rate bases, and apparent inadequate division of direct labor versus overhead. The fault lies with Augusta, not its contractor, in this case as in all of the others recently reviewed. Augusta is profligate with taxpayer money, in this case by not revisiting a blanket order for services, electing to extend it untouched for years.

Who is Winfred Dukes? Well we found him under the Gold Dome in Atlanta.

Who knew Augusta had another State Representative in the Georgia House?
Mysterious bodies abound in Augusta’s contracts. So far there are two in the Heery contract.

Stay tuned, there is more to come, as the deciphering of Augusta’s contracting continues.
Much more.***

A.G.
Related Stories:
“Galloping” Away With Taxpayers’ Money

**View Heery Document Below

Heery

Al Gray: TEE Center GMP Construction Contract Provides No “Guarantees”

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When A Guarantee Isn’t One

Originally posted on CityStink
Tuesday, Feb. 21, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Augusta Commissioners on February 21, 2012, today, face a thorny vote on whether to approve a very expensive Change Order to R.W. Allen, LLC’s Construction Manager at Risk Contract for construction of the TEE Center. The contract is structured as a cost-plus arrangement with a Guaranteed Maximum Price. Such deals are commonly called GMAX or GMP contracts.

Under a cost-plus GMP contract, the construction manager starts construction before the design and specifications are complete in an effort to accelerate project completion. Otherwise all of the design, specifications and plans must be complete in order to bid the job on a lump sum or fixed price basis. Under a GMP contract, the construction manager mobilizes, awards the early sitework, underground piping, and preliminary concrete work while the architects and engineers complete packages for the various construction disciplines (steel, electrical, HVAC) that occur in later stages. When the overall design reaches majority completion, in this case 65%, the construction manager has enough data to provide the owner with a Guaranteed Maximum Price.

RW Allen and Augusta agreed to a GMP of $27,900,000 in January 2011.

The public highly distrusts cost-plus contracts, even those capped by a maximum price “Guarantee.” In this instance, properly done, cost-plus should have saved money and been the best choice method of project delivery. RW Allen had to deal with a brownfield site (unknown underground obstacles and conditions), coordination with ongoing operations of the hotel and convention center, in a congested area, and in conjunction with new design. Trying to force fixed price contracting intended for a set design would have resulted in risk-loaded contract prices where the real risk remained with the owner, the City of Augusta. The unknowns and variables were too great. Because the Guaranteed Maximum Price assumes set design parameters at the time the price is set, every GMP contract allows for change orders in the event that the design changes in the later stages at the recommendation of the architect and engineers. A change order increases the guaranteed maximum price.

Change Order 2, totaling $836,228, is actually the aggregation of 13 component change orders, including a controversial $399,083 change to the HVAC system to increase air turns to 8 over the base design standard of 2.5. Augusta’s architect approved this change months ago.

Some Augusta commissioners are grumbling because they confused “Guaranteed Maximum Price” with “Lump Sum.” In either contracting method there still would be change orders and they would be legitimate. The commissioners reticence to accept price increases because there is a price “guarantee” is a misunderstanding of the deal.

When a change order like this one gets to the Board of Commissioners it generally is a fait accompli. This looks to be the case in this instance. Under the RW Allen contract, the city is already bound. Look at the dates and signatures on the change order. The master change order 2 is dated October 17, 2011 and is more than four months old! The component change orders have to be of even earlier vintage. RW Allen’s contract for the TEE Center spells out that change orders increase the contract price in Article 15.

There is little doubt that RW Allen was given the authority to proceed. The City of Augusta’s architect/engineer, program manager, and city administrator have all signed the authorization. Under the TEE Center contract, the commissioners have no real options.

Augusta commissioners really should not want a lump sum at this point, because a lump sum contract has fewer options for cost reductions and cost recoveries as the contractors have born the risks and have earned the rewards of bearing those risks. (This doesn’t mean that lump sum contracts do not bear auditing, though!).

Commissioners can look forward to reductions in the Guaranteed Maximum Price as the TEE Center is completed. Allowances will be adjusted to actual cost both in the construction manager contract and in the component subcontracted packages. Contingency in this contract was $566,000 and that will be adjusted, too. Adjustments of ‘costs’ may or may not happen, depending on diligence.

Augusta Commissioners should be happy with the contract that they have and not yearn for a counterproductive fixed price that never would have been a lump sum. Just because a contract and change orders to it set a contract price, that does not mean that an evaluation of the scope documents cannot later reduce that price.

The administration and Board of Commissioners need to take prudent steps to verify the costs at completion. In fact, this needs to be performed for all of the various cost-plus GMP contracts the city has done in the last 3 years. Based upon the volume of these contracts, this writer projects that the costs recaptured by a comprehensive effort would range from $1.25 million to $5 million.

Nothing much is “guaranteed” in a GMP contract, just that the contractor keeps the change. Rarely is the change of the loose pocket variety. Augusta has let its contractors keep $millions in change by fruitlessly grumbling about change orders, then closing out “completed” contracts with nary a care.

That does guarantee a price.

Not if Augusta commissioners get wise.***

Al Gray

Editor’s note: City Stink contributor Al Gray is President of Cost Recovery Works, Inc., a Lincoln County, Georgia-based firm focused on construction, public administration, policy and cost recovery reviews on a guaranteed results basis. Cost Recovery Works is no longer in business, as of December 31, 2020.

Below are the documents referenced in this story:

r w Allen Gmp G-1 Tee Center
RWA – Tee Contract

Al Gray: Liening on a Stacked Deck

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Augusta Deckgate: More Subterfuge?

 

Originally posted by CityStink
Thursday, Feb. 9, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

The substitute motion that passed at last Tuesday’s Augusta Richmond County Commission Meeting to approve the Reynolds Street Parking Deck agreement pending lien-free donation of the land took this incredible saga to a new level of absurdity.

Beyond the criticism that the city didn’t own the land, there was no other impetus for doing such a thing. Opponents of the agreement were not questioning the efficacy of the previous air rights transaction in preserving tax exempt financing. To a lesser extent they were questioning a promised donation never made, which this ‘solution’ would meet. Yesterday’s Augusta Chronicle article spends a great deal of time on what looks to be a misdirection play. Air rights were not the major issue, the liens were.

The motion still applies to property with liens on it that have not been addressed or satisfied. Worse, it passed in the face of entreaties to institute rights of audit up front for this agreement and also to implement the capabilities to audit the existing Augusta Riverfront, LLC and Augusta partnership arrangements. City hired attorney Jim Plunkett expressed a willingness to do that on future contracts and perhaps include more provisions in the deck agreement itself, but studiously avoided the issue of auditing the existing partnership arrangements over the last 3 years.

The deck agreement is essentially a cost-plus fixed fee arrangement with the LLC’s controlling “costs.” The operations budget has to be funded on a 90 day reserve basis. If revenues fall short of expenses the City has to make up the difference. The capital budget is kept at the lesser of $250,000 or the annual plan capital reserve level. Since the PLAN is largely determinant, have the commissioners seen it?

What is really strange is the juxtaposition of what is said and what the evidence is about the release of those liens. From the Chronicle article we get this: Paul Simon, the president of 933 Broad, said he has had a letter from the bank holding the lien agreeing to release it when the deal is final since as far back as July 2010. He said he expected no problems in transferring the real estate to the land bank.

The proposed Consent and Subordination Agreement supplied to the Engineering Services Committee Monday, January 30, as an attachment (Page 15) to the CORE agreement, says that Wells Fargo Bank, “…consents to the foregoing agreement and subordinates the Security Deed to the foregoing agreement. Otherwise the Security Deed shall remain in full force and effect.” How can there be a, “letter from the bank holding the lien agreeing to release it,” from 2010 when the Consent and Subordination attachment, prepared by the City’s attorney and submitted just last week, clearly states that the Security Deed (lien), “…shall remain in full force and effect.” Doesn’t this just mean that the City is put in the same position as the Developer if the latter goes away via default? The liens would stand.

Has there really ever been a deal to release the liens? Will there be? It surely doesn’t look that way from these documents. How the new land bank deeding strategy answers this is unclear. “The lawyers are handling it,” doesn’t sound very reassuring, but we are being asked to bank upon it.***

AG

Al Gray: Attention Mr. Mayor

  By , ,

Mayor Deke Copenhaver

Originally posted by CityStink
Wednesday, Feb. 8, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Attention Mr. Mayor:

Look… I am approaching 60. I was/am semi-retired. I quit doing formal audit work YEARS ago unless it is an existing client. I like doing COST RECOVERY WORK on a percentage basis – no results and you don’t pay. When I do one of those the deal is basically this…

Mr. CLIENT, old Al will do his best to get your money back and only gets paid for results. You ain’t suing him and you are gonna sign up that way. If you INSIST on being able to sue old Al and want all of those fancy formal audit programs done, the rate is $525 an hour and old Al will take his sweet time being real particular. For all the stalkers out there, that is the deal. And NO, old Al AIN’T a Certified Forensic Auditor – his late friend Mike Hall was. This being said, Old Al got off the couch and dusted off his skills and is finding – to the politicians’ pain – that his old skills are pretty darned good, and the new ones the Colco so-and-so’s made him learn are just plain DY-NO-MITE. Thank you much for the new line of work. Hugs and kisses – the Arrowflinger.

Mr. Mayor Copenhaver, I will give you a discount, but only if it goes to the Salvation Army or some such. It don’t take many arrows for old Al to make it and he don’t need to recover them what’s stickin outta your hide.

Mr Plunk-it ain’t writin’ the contract neither.

While we’s at it….. old Al, after Randy Oliver figured that contractors own Augusta, went and done sumthin real radical….. He spent $1200 on some of them big winder envelopes likin them banks started usin in about 2000 or so….. you know dem that made you LOOK….. well old Al used Photoshop to cram the corporate logo of them fancy Fortune 500 companies NOBODY could get in the door of widout spending $10 grand into the maw of that big old great white shark like that’n in Jaws….. yep old Al sent dem letters all over the USA to all them corporate execs….. yep, sho nuff that worked….. Old Al’s renegade marketing got the attention of HUGE great big old companies like Corning, Home Depot, Lowes, Carmike, 3M, Intel, Bristol Myers, Eli Lilly, Duke Power, Bass Pro and great big old heap of others….. Mind you old Al AIN’T STUPID so he is listing these folks because he ain’t got no bidness wid dem….. hahahahaha….. when old Al started jumping on politicians they weren’t gonna be NO WAY IN HELL he was gonna leave some client list on LinkedIn or other such bizzybody places so’s y’all could ruin him….. Hahahahaha….. when old Al ‘gets you’ you done been GOT WID YOUR OWN RECORDS….. so there ya got it, iffn you can catch Old Al’s drift.

Sincerely,
The ArrowFlinger Al Gray

Video from Yesterday’s Augusta Commission Meeting

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Originally posted by CityStink
February 8, 2012
Augusta, GA
By Al Gray
With Lori Davis

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

We have video from yesterday’s Augusta Commission meeting.
AgrayNation would like to thank Kurt Huttar for providing the video.

Video of Al Gray and Lori Davis Speaking before the Commission:

Al Gray’s Remarks to the Augusta Commission

  By , ,

The ArrowFlinger Al Gray

Originally posted by CityStink
Wednesday, Feb. 8, 2012
Augusta, GA
By Al Gray

The author, Al M. Gray, was 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Below is the text of the remarks by Al Gray at yesterday’s Augusta Commission meeting. We will have video of both Al Gray and Lori Davis’ remarks soon.

***********************************************

Mayor Copenhaver and Gentlemen of the Commission, thank you for allowing me to speak tonight.

Mr. Mayor, I like you have always loved the economic development that comes with mega projects, having served for a quarter century on manufacturing sites from California, Washington, Florida, to Pennsylvania. I say this to offer that my focus is not anti-development, just anti irresponsible spending and fraud.

I rise before you tonight to speak in opposition to two agreements for the conference center and Reynolds Street Parking Deck. This comes from having spent years in crisis management mode for companies whose projects went horribly wrong, but it comes even more from Augusta experiences. I once proposed doing a cost recovery review to administrator Randy Oliver that might have reformed Augusta. He was interested, but then he hit a patch of turbulence and concluded it wasn’t possible in Augusta – the influence of the connected was too great. I went on to gain new corporate clients, just not in Augusta.

The saga of the TEE Center over the last 5 years has been a twisting, turning affair from its start. The last chapter should not be written tonight. The irregularities, the failures, and evidence which are legion scream, “STOP!”

We in the 12 counties destined to be coupled with you by the TSPLOST are a watching, nervous, and perhaps unwilling bride. We see $50 million in buildings built on land you don’t own, undisclosed liens of various description, land to be donated turned into air, a bribery trial involving this very project, controversy going back to 1998 with this partnership, and finally that you find yourselves hostages tonight to threats of those liens. These things pose a dire warning for associating ourselves with you.

While these are strong words they are directed in a sense of hope, a profound desire to make this the night that everyone of you can recall with enormous pride, the night 10 men and a mayor who have feuded relentlessly came together and started accomplishing that which predecessors of the last 40 years could not. I would be proud to help.

First we have serious issues to address. Gentlemen, you simply cannot ratify this proposal tonight, offered under duress and a myriad of questions, without the most serious of consequences for this community. This outpouring of the people bears witness to that. Yes, the building is built and no, no one wants this mess during the Masters, but you must stop and make sure that these people are protected by the strongest of audit rights, open record access to, and an immediate review of the past, current, and future operations under the management of these private partners.

I cannot imagine the consequences if you proceed. I would not want to be in your shoes should you vote, “Yes.”

You see, if this body in its wisdom does not embrace a comprehensive program of reform, sound financial controls, and contract enforcement, beginning tonight, the sledgehammer blows from revelations of stunning irresponsibility, indeed, fraud will rip apart this community. I do not refer to the transaction currently at issue, but others that we have identified throughout this government in recent months. Mr. Brigham was concerned about spending $30,000 on an audit. Well, we can get that much back with two phone calls. There might be millions salvageable, based upon my preliminary review.

Mr. Jackson and others seem to have bought the administrator’s assurances that there is security in the work of $500 an hour bond attorneys. Is there? In Jefferson County Alabama the county administrator and 4 county commissioners are now in the penitentiary because of the spawn of bond attorneys. There is a national scandal unfolding around the municipal bond market. It pays to keep up with these trends, lest you become the next victims.

Several of the people in this room may have made some the biggest misjudgments or miscalculations of their lives. You have a vote to make. I hope it is not one in which you join them.***

AG

Parking Gate Providing a “Teachable Moment” for City Leaders

  By , ,

The controversial new $12 million TEE Center parking deck

Originally Posted on CityStink.net
Tuesday, Feb. 7, 2012
Augusta, GA

Contributions were made to this article by Al M. Gray, 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. Cost Recovery Works is no longer in business, as of December 31, 2020.

Today, Augusta Commissioners will decide whether to push ahead with a 15 year management contract with Augusta Riverfront, LLC over the controversial new $12,000,000 TEE Center parking deck, or to put the brakes on the deal because of recent revelations that we helped uncover showing that not only does the city not own the land under the deck, but that it has liens on it to secure more than $7,000,000 in debt. Citizen activists Lori Davis and Al Gray, representing the group Augusta Today, who uncovered the information about the land ownership and liens will speak before the commission today to explain why the management agreement should be voted down.

Some people will argue that we just need to move on and approve the deal;  that, yes this ordeal is a mess and there were lots of mistakes made, but that they cannot be undone now and so the best course is to just minimize our losses. But that argument is based on faulty logic. Is this really the best deal the city can negotiate with Augusta Riverfront, LLC? Let’s remember who negotiated it on behalf of the city: Administrator Fred Russell, the same Fred Russell who mislead commissioners on multiple occasions about the land being donated and kept information from them about the liens. Can we really believe that Fred Russell negotiated the best deal possible? It is only slightly better than the one the commissioners voted down a few months ago, and this current proposal has been only slightly improved with what Russell has described as, “minor tweaks.” With the information uncovered in the last couple weeks, is that really good enough? We don’t think so. The fact that this current deal has Russell’s fingerprints all over it is all the justification needed to defeat it.

Commissioner Grady Smith has a better idea. In an interview with WJBF’s George Eskola yesterday, Commissioner Smith said, “I think we should get into the room with the other side, let’s get all the facts on the table.” He is right. The Commissioners themselves should go back to the negotiating table with Paul S Simon of Augusta Riverfront, LLC and see if a better deal can be made, instead of trusting the one that Fred Russell crafted is in the best interest of the taxpayers. Commissioner Smith went on to say, “When you’re dealing with the taxpayers’ money, let’s make sure everything is on the table. A lot of times… where there’s smoke, there’s fire, innuendo’s. Let’s get them clear.” We could not agree more with Commissioner Grady Smith on that point.

Mayor Pro-tem Joe Bowles told Chris Thomas of WRDW that he would “absolutely not” support the current management agreement on the table saying, “It needs to be five years.” It appears to us that our elected officials may be able to do a much better job than Fred Russell in negotiating new terms over the management contract for the TEE Center parking decks.

The Mayor’s Misdirected Outrage

Mayor Deke Copenhaver

It’s not often that Mayor Deke Copenhaver speaks out on an issue of controversy but he finally weighed in on the debate over the TEE Center parking deck and the calls for a deeper investigation. But the Mayor appears to have directed his outrage towards the citizen watchdogs who uncovered the misdeeds rather than the people responsible for the mess. In a lengthy guest column that appeared in this past Sunday’s Augusta Chronicle, the Mayor wrote:

“I also have shared that those individuals and families who are the foundation of my support generally are not the people who grouse and complain through websites, blogs and silly Facebook pages where adults behaving in the most childish manner possible actually invest hours out of each day in trafficking in rumor, innuendo and misinformation while seeing who can act the most absurd.”


We assume that the Mayor is talking about us and Augusta Today.  That’s OK, we don’t mind being called names. And I guess it does mean that the Mayor is paying attention to what we are doing, so that’s a good thing. But, “trafficking rumor, innuendo, and misinformation?” We’re not exactly sure what the Mayor is referring to unless he believes that the city’s own public records contain “misinformation” on the parking deck deal, because that is where we have found most of our evidence thus far. And we would think that the Mayor would also be outraged to learn that there was a pattern of deception to mislead the public and public officials over the TEE Center parking deck: First learning that the land was never donated as promised and then to learn that it has liens on it jeopardizing the city’s air rights. But the Mayor seems to think there’s nothing to it all.

The Mayor also took the time to blast the call for a forensic audit, calling it a, “waste of money.” Actually, we now agree with the Mayor that a forensic audit may be unnecessary, but not because there is not impropriety involved over the TEE Center and parking deck, but rather because we have already proven a pattern of deception found in the public documents that we were able to obtain as well as through newspaper articles going back over 5 years. So in a sense we have already done the forensic audit for the city for free. Now, it all depends on what authorities choose to do with the information we uncovered.

And whereas we appreciate The Mayor’s concern for not “wasting” any more of the taxpayers’ money, that argument does seem to be a bit disingenuous coming from him. The Mayor didn’t seem so concerned about taxpayer money being wasted on huge severance packages going to fired incompetent department heads because Administrator Fred Russell could not keep accurate employee evaluations. The Mayor also did not seem too concerned about tax money being wasted on continuing to fight a loosing lawsuit against the video X-Mart. The Mayor also didn’t speak out when the city’s procurement department was costing taxpayers hundreds of thousands of tax dollars in lawsuits. And just recently, The Mayor asked and received $100,000 in tax money for what is essentially a fancy conference room in the middle of Broad Street. This, amid one of the tightest city budgets in years that included layoffs and cuts to nearly every department, including public safety.  But now all of a sudden when it comes to investigating the irregularities over the TEE Center and parking deck, the Mayor is concerned about what he calls, “government waste.”

But in a broader sense what is most troubling is the Mayor’s attitude that all of this should  just be swept under the rug because he thinks it makes the city look bad to outside companies. We agree with the Mayor, yes, building $50,000,000 worth of taxpayer financed facilities on privately owned land with liens attached to it, does indeed make the city look very foolish. But what would make the city look even worse in the eyes of outsiders is to blatantly try to cover it all up and suggest there’s nothing to it all. You see, that’s the dismissive attitude that lead to the financial collapse of 2008. A culture of corruption thrived in the financial sector because of a lack of oversight. Real estate was over valued with our tax dollars, and the folks with the creative accountants and lawyers made out like bandits with the taxpayers bailing them out in the end. We believe that outside companies would be far more concerned with obvious efforts by city officials to try and cover up deception, corruption and the blatant misuse of tax dollars, after all they would be paying large sums in taxes to this city if they chose to locate here.

Albert Einstein once said that, “insanity is doing the same thing over and over, expecting different results.” Well, this is certainly not the first time Augusta has found itself in a bad situation over one of these  real estate deals. We would like to remind the Mayor that the the city forgave a $7,500,000 UDAG loan to Augusta Riverfront, LLC back in 1998 over the construction of the Marriott over the objections of then City Administrator Randy Oliver. We have to wonder how this current situation would have been handled differently with someone like Oliver at the helm instead of Russell. Back then, Oliver received some heavy criticism from some very powerful local special interests for raising objections over forgiving the loan. But, then Oliver knew who he worked for, the taxpayers, not the special interests.

The question now before Augusta leaders is, “Will you learn from this error and make sure that it doesn’t happen again?” It is very clear that a lack of oversight contributed to this. We now need our elected officials to be more engaged in the process and not simply trust Fred Russell or the lawyers to provide all of the answers, because it is apparent that the commissioners had extremely important information held from them by the city administrator and the lawyers; and these are people who are supposedly working on behalf of the city and being paid with our tax dollars.

In his Sunday guest column, the Mayor chided certain elected officials (without naming names) for “bullying” certain city employees. We certainly agree with the Mayor that  it is important to maintain decorum at commission meetings and there is certainly no place for insults and name-calling. But we must say that the timing of his column was quite odd. What about the taxpayers who have been “bullied” over this bad deal over the parking deck? It seems that the Mayor could have found the space to address that issue, but instead he seems to think that any criticism of the public employees who are partly responsible for this debacle should be off limits. We could not disagree with him more. We need our commissioners asking more tough questions and holding employees accountable. That’s what we elected them to do. In fact, perhaps if commissioners and the Mayor had been more engaged in the process from the beginning, all of these could have been averted  years ago.

What the Mayor is suggesting is that Appearances should trump The Truth. We could not disagree more. And besides, public officials look the most foolish and suspect in the eyes of the public when they are trying to cover up the truth. It’s always best to get the truth out in the open, admit mistakes were made,  and then learn from them so that the same mistakes cannot be made over and over.  In the case of Parking Gate, we have a teachable moment, how our elected officials choose to learn from it is up to them.***

CS