Tag: Augusta Commission

TEE Center Update: Did Fred Fix the Kitchen But Fail to Execute?

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The Convention Center Agreement Today

Fred and Barry’s Unexecuted Fix?

Friday, Feb. 24, 2012

Augusta, GA

by Al Gray

In TEE Center Kitchen Costs Leave Taxpayers Burnt! , yesterday’s City Stink exclusive, this writer covered deficiencies in the City of Augusta’s TEE Center Term Sheet with its partner in the project, Augusta Riverfront, LLC, which was approved by the City Commission on August 21, 2007. This was the approved document recently cited by attorney Jim Plunkett’s resolution recounting the history of Commission votes ratifying TEE and Parking Deck Agreements. A formal agreement was belatedly drafted and conditionally approved for the Reynolds Street Parking Deck on February 7.

Despite references in Board of Commissioner meetings all through 2009, no formal contractual agreement has been found executing the final TEE (now Conference Center) operating agreement. The original operating agreement for the Convention Center was recorded in the office of the Clerk of Superior Court. There doesn’t seem to have been any modification nor has there been any action to define rights with respect to the .23 acre tract that the LLC owns under the TEE Center. Like the parking deck agreements, the formal agreement seems to have lagged negotiations by years.

Based upon a schedule obtained in an earlier open records request by City Stink contributor Lori Davis (See Modifications Sheet Document Here) and informational updates made since the August 21, 2007 approval of the original term sheet that was unfavorable to Augusta, as noted yesterday, it looks like Augusta City Administrator Fred Russell and City Convention and Visitor’s Bureau Chief Barry White actually may have done an exceptional job of renegotiating the deal so that it is dramatically more favorable to the City!

The proposed modifications put the City in control of the Center’s finances, gives it catering revenues, provides for a set fee rather than profits from operations, and provides that profits from operations go to Augusta. If this modification represents the final agreement, it is vastly superior to the original deal and is actually a very good deal for the City of Augusta.

From here it looks like the original Term Sheet stands as the only basis of an operating agreement actually approved by the Commission and that the final agreement has been mired in what have to be tremendous legal complexities of merging the TEE agreement with the existing Convention Center Agreement.

The final agreement should take care of the issue of the new kitchen equipment and replacements of that equipment going forward, but the Issue of how the new agreement relieved the LLC’s responsibilities going into this transaction, up to and until the combined TEE Center starts operations, still stands as does the issue of LLC responsibility for the proposed HVAC changes demanded by the Marriott.

Leaving issues like these, which should have been finalized before construction, hanging for 4 ½ years is a huge failure of administration, despite Fred Russell’s accomplishment of what looks to be a much, much better deal.

This story will be updated as new developments are known.***

A.G.

Related Stories:

Exclusive: TEE Center Kitchen Costs Leave Taxpayers Burnt!

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!!CityStink.net Exclusive!!

And Now, The Tee Kitchen Saga

A cost recovery opinion and perspective



Wednesday, Feb. 22, 2012
Augusta, GA
by Al Gray

 

In a very heated Augusta Richmond County Commission meeting last evening, February 21, 2012, a proposed change order totaling $836,288 for modifications to the TEE Center Contract with RW Allen was disapproved. The substantial price increase was really the aggregate of 13 different change orders combined for the purpose of gaining Commission approval, usually a rubber stamp. This time the Commission balked because of a stench boiling out of the unfinished TEE/Convention Center Kitchen. $399,823 of the increase was an HVAC upgrade to the kitchen area at the insistence of the city’s partner in this public-private partnership, Augusta Riverfront, LLC, operator of the Marriott hotel.

Neither side of the vote on the Commission was wrong. Augusta’s entire project management team had signed off on the change order four months ago, so disapproving it now was a moot point. Some commissioners accurately saw it that way and voted for approval, yet they all have serious questions. The rest missed the point about construction contract law and jumped to the real issue – are the Augusta Riverfront partners in this project controlling and expanding the scope to their benefit, yet totally at public expense?

The change order is a “done deal.”  A war appears imminent between the partners over financial responsibility for various areas of the project.

There is a powerful ODOR coming from the kitchen.

The parties jumped into this agreement based upon a document entitled Management Agreement Term Sheet – Trade Center, Version 6 dated June 29, 2007, which the Commission approved on August 21, 2007. The purpose of the term sheet was to set forth that the “City of Augusta (“Augusta”) and Augusta Riverfront, LLC (“LLC”) are interested in entering into a joint venture to own, build and operate a Trade, Exhibit and Event Center (“Trade Center”).”

This controlling document failed to establish effective dates or define WHEN operations start and construction ends. It would appear to embrace start of operations before project completion because it requires the Convention and Visitors Bureau to expend City funds 18 months before the project is complete. Aside from this, the project itself was scheduled to accommodate ongoing operations.

Let’s see what the Term Sheet says about cost responsibility: “LLC has total responsibility to provide all operating cost of the Convention Center, including, but not limited to, labor cost, supply cost, insurance and all repair, maintenance, and replacement of equipment. These replacement costs include replacing kitchen equipment, laundry equipment, HVAC equipment, outside walls and roof.”

Then there is this section:

AUGUSTA AND LLC AGREE TO THE FOLLOWING TERMS TO OWN, BUILD AND OPERATE THE TRADE CENTER

5.  OPERATIONAL & CAPITAL FUNDING: It is anticipated that the new Trade Center’s rental revenues may not be sufficient to cover its operating expenses, particularly in the early years. The Trade Center will have capital needs for addition and replacement of various fixed assets. Augusta and LLC will participate in these Operational and Capital Funding needs as follows:

…

d. Augusta’s Capital Funds shall specifically not be used for items related to Kitchen Equipment, Laundry Equipment, and any Convention Center or Hotel capital cost.

Remember there are no dates given to establish when operations start because operations were ongoing and overlap construction activities. Even more confusing is what is “Convention Center” versus “TEE Center.” Indeed, by actions of Augusta Riverfront, LLC publicly acknowledging that BOTH are the “Convention Center” hasn’t that partner effectively agreed that its financial responsibilities for the combined total include those that previously existed for the Convention Center?

Interestingly, the Term Sheet provided that the kitchen for which Augusta Riverfront had equipment repair and replacement responsibilities would be consolidated with the TEE Center kitchen.

7. KITCHEN AND BACK-OF-HOUSE: LLC and Augusta will allow the necessary modifications to the Convention Center to provide for the combined use of the kitchen, laundry and back of the house areas. The modified kitchen and back of the house space will be designed for use for both the Convention Center and the Trade Center.

In so combining the “Convention Center” with the “TEE Center” did Augusta Riverfront’s existing financial responsibility for kitchen equipment disappear? Or did it carry over?

4. TERM OF AGREEMENT: Augusta and LLC agree to modify their agreement for the operation of the Convention Center to include the Trade Center.

The Term Sheet also clearly stated that catering revenues produced by the kitchen equipment do not result in any benefit for Augusta.

APPENDIX A: Definitions

For purposes of calculating the “Trade Center Operational Funding” described in Section 5., the Operating Revenues shall not include the following:…..

m. Trade Center Catering Revenues

2. Trade Center Catering Revenues: shall consist of those food and beverage revenues generated on formal, catered meal functions held in the Trade Center.

City Stink and Augusta Today contributor Lori Davis obtained the December 31, 2012 project billing from Construction Manager at Risk RW Allen to the city (See Document here: Attn to Kitchen Equipment Line Item Item 19 on Page 3). This billing includes a line item of $1,376,987 for Kitchen Equipment, $275,946 of which has already been billed and presumably paid, less the retainage. Examination of the supporting subcontractor invoice shows thousands of dollars to repair and clean existing equipment that would have apparently been the responsibility of the LLC under the previous agreement. The controversial HVAC change order to meet Marriott standards can be added to the total.

It is clear that the infrastructure and building costs for the kitchen are the responsibility of Augusta. These costs are included in the building mechanical, electrical, HVAC and other contracts. No potential issues are apparent there, other than cost issues that might be unearthed in the future by a construction auditor.

Adding the $1,376,987 of kitchen equipment to the Marriott-directed kitchen HVAC upgrade $399,083 means a total of $1,776,070 of kitchen equipment capital costs that are potentially disputable by the City of Augusta as costs to be born by Augusta Riverfront, LLC.

Questions abound. Has the City backcharged the LLC for any of the $275,946 paid to date for kitchen equipment and repair or cleaning of existing equipment the LLC seems responsible for? Isn’t the full $1,776,070 capital expenditures for which the LLC is responsible under the existing agreement and the Term Sheet?  Was an intent to treat the capital expenditures for new kitchen equipment as an Augusta cost adequately stated in the term sheet? Are the provisions for the LLC to be a partner in the project mean it can claim one start date for its project start date, yet another as the start date of ‘operations’ under the same agreement when no dates are stated in that agreement? Hasn’t the LLC by announcing that the whole is now the “Convention Center” legally shot itself in the foot by in doing so embracing responsibility for kitchen capital expenditures? How many other costs of the Tee Center construction supplant existing LLC responsibilities for operating and capital costs from the existing Convention Center agreements? Where are the backcharges to the LLC?

Summary

To summarize, the Term Sheet establishing the relationship between the City of Augusta and the LLC for the TEE Center Project seems to be flawed in terms of effective dates; makes repeated statements that capital costs of kitchen equipment, which cost more than $1.7 million, and other capital costs are LLC responsibility; combines the existing “Convention Center” agreement with provisions making the LLC responsible for kitchen equipment with the new TEE Center construction and operations; and excludes Augusta from any apparent benefit from use of this capital equipment.

Somebody has a grand mess in their kitchen. This writer would be hard-pressed to decipher financial responsibilities under this informal, rushed, and incomplete Term Sheet “agreement.”

The lawyers are salivating because dividing this baby is going to take more than the wisdom and judgment of Solomon. The opinion from this quarter would be that it could be split 50-50. Given the size of these costs, that won’t be an easy pill to swallow.

The Commission is, yet again, in an impossible position with respect to this project. Can they get any more Tee’d off?

Stay tuned for more cost recovery analysis  as the TEE Center documents are dissected while the project nears completion.***

 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.

Related Stories:
TEE Update: Did Fred Fix the Kitchen But Fail to Execute?

** Below are pdf files of the documents referenced in the above article:

RWA December 2011 Pay App
TEE Term Sheet (1)

More Deception in Parking Gate?

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Once again a majority of commissioners have egg on their face

Monday, Feb. 13, 2012
Augusta, GA
By The Outsider

Well it appears that there may be no deal after all to release the liens on the property where the $12 million TEE Center Parking Deck sits, nor does there appear to be any deal in place for the property to be acquired by the city’s land bank.

So it looks like instead of coming up with a last ditch effort to solve Parking Gate, what we have is merely more subterfuge and deception. And the mission of the city’s land bank is to acquire blighted properties that are often delinquent in property taxes. The property where the TEE Center Parking Deck sits hardly qualifies. So it appears we are back to square one. But the question must be asked… what exactly happened at last Tuesday’s commission meeting? Were commissioners deceived yet again over this parking deck saga? It certainly appears that way.

Al Gray and Lori Davis presented compelling evidence at last Tuesday’s commission meeting as to why the motion to approve the parking deck management contract with Augusta Riverfront, LLC should be defeated. Mr Gray made the point that commissioners should use this as an opportunity to exercise some leverage to demand more transparency and the right to audit all of the city’s financial relationships with Augusta Riverfront, LLC. That demand sent Augusta Riverfront, LLC and their protectors on the commission into panic mode, and at the last minute in what seemed to be a Hail Mary Pass, commissioner Jerry Brigham said that he had an agreement with Augusta Riverfront, LLC, that Wells Fargo had agreed to release all liens and have the land transferred to the city’s land bank. It had appeared that a solution had been reached, and a majority of commissioners, splitting along racial lines approved the management agreement with Augusta Riverfront, LLC. The four black commissioners said that Tuesday’s commission meeting was the first that they had heard of this deal. But it appears this solution was all a ruse, and nothing but an attempt to thwart the efforts to open up the books to the other contracts the city has with Augusta Riverfront, LLC.

So What’s Really Going On Here?

Did Commissioner Brigham really have an agreement with Augusta Riverfront, LLC before last Tuesday’s commission meeting? Commissioner Bowles says it all came together the afternoon before Tuesday’s vote. It seems to us that Commissioner Brigham should be able to produce something in writing from the bank that they had agreed to release the liens and consulted with the land bank that they could take the property before presenting this as a solution to commissioners. Was there anything in writing from the bank confirming release of the liens? We also have to question the judgement of the other five commissioners who voted for this “deal” last Tuesday. Now they all have egg all over their faces. There is no documentation that shows the bank has agreed to release the liens. So we have to ask. What’s really going on here? Was this really a good faith effort to find a last minute solution to put the land under city ownership free of all liens or was this a ruse to rush a management agreement through to cover all of this up?***

CS

Related Stories:

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

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:

Parking Gate Providing a “Teachable Moment” for City Leaders

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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

Movement on Forensic Audit; Brigham Defiant

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Augusta Commissioner Jerry Brigham

Originally posted at CityStink
Friday, Feb. 3, 2012
Augusta, GA
By The Outsider

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.

There appears to be some traction on the forensic audit for the questionable land deals involved in the controversial new $12 million TEE Center Parking Deck. It was reported yesterday that the city’s procurement department has issued a request for bid proposals for the audit. That’s the first step towards choosing a forensic auditing firm and putting a price tag on the effort. The motion that the commission approved on Dec. 20, 2011 was to begin the process of looking for an auditing firm. Once bids are submitted, commissioners would still need to approve allocating the money. And that’s where Commissioner and Finance Committee Chairman Jerry Brigham vows to fight it.

A defiant Brigham told Chris Thomas of WRDW that, “People are just muddying the water with a forensic audit.” (Editor’s Note: Full article no longer available online.)

Assuming that all the controversy surrounding the parking deck is much ado about nothing, Brigham says, “Why waste $30,000 on something where there is nothing to it?”

It’s interesting that Brigham is so concerned with saving money on the audit, which is peanuts when compared to the millions of dollars that the city may have been duped out of on the parking deck and TEE Center.

Brigham’s defiance against the audit also gives the impression that he may have something to hide. If you remember, back in the fall of 2009 when the entire TEE Center project was at a stalemate over increasing funding, Brigham’s name got caught up in a scandal where local attorney David Fry attempted to bribe Commissioners Alvin Mason and Corey Johnson to switch their votes on the project to get it passed. Brigham admitted back then that he had contact with Fry and was made aware of his intentions; however, he neglected to go to the police with that information. Brigham says that at the time, “I did not think that this was nothing more than talk.”

Commissioners Mason and Johnson ended up contacting police over the incident and Fry was arrested on charges of attempted bribery of public officials. Allegedly, Fry was offering special management concessions to the commissioners in the TEE Center parking deck, the same one at the center of the current controversy. Some people laughed that off as ludicrous at the time; that Fry had no authority to make such an offer, but many people believe that Fry was a go-between for more powerful figures who could deliver on the promise.

And just in time as the management agreement for the parking deck goes back before the commission on Tuesday, Fry’s bribery trial will begin the day before on Monday, February 6th: Talk about timing!

There is a March 16th deadline for bids on the forensic audit, and despite how it may appear politically for Brigham, he contends he will fight against its approval anyway. Brigham told Chris Thomas that if there is an audit on the parking deck then it should also include the Laney-Walker redevelopment. Actually, that is a good idea. The bond financing for the Laney-Walker/Bethlehem redevelopment project is inextricably tied to the TEE Center and parking deck. However, Brigham’s suggestion seems to be more about “muddying the waters” to direct attention away from the parking deck where there is more funny smoke than inside Willy Nelson’s tour bus. And Brigham should be reminded that he opposed Commissioner Bill Lockett’s request for an omnibus forensic audit that would have covered the Laney-Walker/Bethlehem Redevelopment.

Scrutiny of the Laney-Walker project will happen in due time. In fact, we here at City Stink have already raised many questions in the past several months over the Laney-Walker Overlay District, which Brigham supported.

But as this forensic audit proceeds, commissioners must make certain that a few things  happen:

  1. City Administrator Fred Russell should have absolutely NO involvement in the process of choosing the auditing firm to conduct the investigation. Russell is up to his eyeballs in this scandal, and there is ample evidence to suggest that he purposefully misled commissioners on multiple occasions.
  2. The audit should include both the TEE Center Parking Deck AND The TEE Center. The stench over this deal wafts over both sides of Reynolds Street. We already told you about parcels under the TEE Center that were supposed to be deeded to the city that never were. A forensic audit of the entire TEE Center project would likely need to occur anyway based on what is uncovered in the investigation over the deck, so why not kill two birds with one stone, instead of having to go back and pay for a separate audit on the TEE Center?
  3. The primary  criterion for selecting the forensic auditing firm should be thoroughness and not just who is the cheapest. It is imperative to choose a firm with a stellar professional reputation in investigating these sorts of cases with no connection to Augusta’s “Good-ole-Boy Network.” That means it’s likely best to go outside of Augusta.

We are hoping that Brigham is alone on the commission now in continuing to oppose the forensic audit. Commissioners Aitken, Bowles, and Jackson also voted along with Brigham in opposing the audit at the December 20th, 2011 commission meeting. But we hope that most of them have now changed their tune with all of the new information that has come out in the last two weeks and is expected to come out next week.

This is one issue where commissioners probably are going to want to be on the right side. If this thing continues to get much worse than it already has, then any commissioner who continues to oppose the progress of the investigation is going to look mighty foolish and suspect in the eyes of the public.***

Stay tuned, more to come.

Related Story

Breaking News!: Committee Fails to Pass Parking Deck Agreement

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Originally posted on CityStink
Mon. Jan. 30, 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.

!Breaking News!

This just in. The revised management agreement for the new $12 million Reynolds Street Parking Deck has failed to win approval in committee. In a 2-2 tie vote, the motion to send the deck agreement to the full commission with committee recommendation failed by default. Committee members Jerry Brigham and Wayne Guilfoyle voted in favor of sending the deck management agreement forward without a recommendation. Commissioners Alvin Mason and William Lockett were opposed. It takes at least 3 votes to pass a motion. Ties cannot be broken in committee and thus the motion fails by default.

This vote comes amid a new controversy that City Stink broke last week revealing that there are liens on the property under the deck held by Wells Fargo Bank (formerly Wachovia) as collateral for a loan to prospective deck operator Augusta Riverfront, LLC for more than $7,000,000.

Commissioner Bill Lockett wanted to hold off on the vote altogether to proceed with the management agreement until after a forensic audit of the land transactions and financing of the parking deck is completed. Brigham asked if the forensic audit was germane to the discussion over the management agreement. General counsel Andrew McKenzie said that it was.

Lockett’s motion to delay the agreement pending the outcome of the forensic audit failed 2-2 with Guilfoyle and Brigham opposed.

The attorney who handled most of the legal transactions for the city over the parking deck, Jim Plunkett, was in the hot seat at today’s committee meeting. As we told you last Friday, commissioners were never told about the liens by Plunkett or city administrator Fred Russell, nor were they told that a parcel under the TEE Center itself was never deeded over to the city by Augusta Riverfront, LLC as it was promised on multiple occasions. That took most commissioners by complete surprise. Some commissioners were calling for Plunkett to be removed as the attorney overseeing the project on behalf of the city. That sparked Fred Russell to jump to Plunkett’s defense. Committee chairman Jerry Brigham shouted over everyone that he had heard enough.

Attorney Jim Plunkett told commissioners that he had an agreement from Wachovia (now Wells Fargo) for release from the liens prior to construction of the deck. Plunkett also told commissioners that easements could not be established until after construction of the deck was completed. From the expressions on the faces of commissioners and others in the chambers, it was obvious not many people were buying that line. Bill Lockett asked about the timing and the release of information and why commissioners were consistently left out of the loop.

Commissioner Lockett told Plunkett, “This body has been misled over and over…”

Commissioner Aitken, who is not on the committee but was present in the chambers for other business, urged committee members to forward the parking deck on to the full commission for approval saying that he was proud that Augusta Riverfront, LLC gave things up in the new agreement. But the revised agreement only had minor tweaks and did not address deeding the land to the city as commissioners were originally told it would be at the Dec. 9th, 2009 commission meeting where the TEE Center and deck were approved.

Aitken said, “Sometimes when votes are cast we have to deal with it and move forward.”

But for now, the management agreement is stalled until commissioners get more information. But the city finds itself in a real pickle. According to Jim Plunkett, an agreement between the city and Augusta Riverfront, LLC must occur before the air rights will be released.

Now the big question is: What happens next?


Bowles was absent from the committee meetings today. His position on the matter is crucial. Now the agreement moves on to the full commission next week without any action or recommendation from the committee. All eyes will be watching Bowles. He could be the wild card in all of this.
Stay tuned, we will bring you more updates.***

ParkingGate: Lockett Denied Forensic Audit Again

  By , ,

Augusta Commissioner Bill Lockett

Originally posted by CityStink
Tuesday, Dec. 13, 2011
Augusta, GA
By Jill Peterson

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

Commissioner Bill Lockett brought up again at Monday’s committee meetings his desire to have forensic audits conducted in the Augusta-Richmond County government. The wording on the agenda was as follows:

Task the Administrator with utilizing the procurement process to solicit the services of an outside forensic auditing firm to perform an audit of the city’s finances and contractual obligations. The audit must include but not be limited to the following: (a) TEE Center Parking Garage/ Land Acquisition/ Associated Leases/ Financing, (b) Utility Department Water Rates for Golf Courses/ Other Special Agreements, (c) Environmental Services  Division, (d) Augusta Transit Department Privatization, (e) Augusta Municipal Golf Course Privatization, (f) Retroactive Pay Increases, (g) SPLOST Fund Projects, and (h) Land Bank. 

In Lockett’s explanation of his request, he explains that he’s uncomfortable with the way the Commission was told land would be donated for the parking deck and how the contract for operating the deck is being awarded. The land in fact was not donated leaving the city’s deck to sit on land owned by a private entity headed by the same individual who heads the entity in line for a no-bid operating contract of the deck. He also mentions the strange deals in obtaining other bits of land to do with the deck which seem to have cost the city more than they should, especially strange in light of the fact that the city did not obtain the majority of the land.

Lockett: There are so many unanswered questions with the TEE Center parking deck that it  calls out for an investigation. I’m not suggesting that any illegal actions occurred, but I do  know for a fact that lots of citizens of Augusta-Richmond County to include others from  outside the county are concerned about what has gone on utilizing the taxpayers’ money. I’m concerned when we have outside attorneys doing real estate transactions and at the  same time representing parties from both sides. Now how can you get a good deal out of  that? It doesn’t make  sense. I’m not a lawyer, but I did teach business law. There are  just too many things. I’m concerned when this body is informed about the possible  transfer of property and given a reason that a resolution wasn’t necessary because the Attorney General or someone had indicated that there was a  new law that you didn’t have to do that, but nothing was provided to this body showing that that was indeed the case.

I’m also concerned when outside counsel representing this government was asked for a document and indicated he knew he had it but could not find it because it  was in a stack of papers. And I do believe this document does not exist.

This is part of what I feel that a forensic audit should do. Sure, we have internal audits  every year, but the internal audits don’t look for this sort of thing. We need to look and  see, and I would hope that if this body allows this government to employ a forensic auditing firm, I would hope that nothing is found, but I have seen so many things that I  feel that would not be the case.

The land bank I also questioned. We need information on the past five years. How much land has been purchased by the city and at what cost?  What is the process used by the city used to transfer land to the land bank and why? When city property is transferred to the land bank, is verification of sale required?

***
(He goes on with more questions about the land bank and with his questions for the other issues he wants looked into. Video of the entire speech will be available here in the next day or so.)

For this to get to the full Commission meeting, three of the four members of this, the Administrative Services Committee, would have to vote yes. Bill Lockett voted yes, Alvin Mason voted yes, Matt Aitken was absent (and has not returned our call as of this writing), and Jerry Brigham voted no.

Commissioner Jerry Brigham

City Stink called Jerry Brigham to ask him why he voted against this measure. Commissioner Brigham says a forensic audit would cost too much, it would be truth seeking and implies a criminal violation, and that the proper channel for Lockett to take would be to go to the District Attorney if he thinks there’s something criminal. He also said that, “In reality Lockett wants to put somebody in jail. I’m not paying someone to investigate me.”

Mayor Deke Copenhaver was quoted in the Urban Pro Weekly this week on the same topic and takes the same stance as Brigham. Copenhaver: “A forensic audit implies that there’s been a crime committed and it is something that would cost a tremendous amount of money and take a tremendous amount of time. I’m not in support of that.”

City Stink then called Commissioner Lockett for his response.  Lockett says that a forensic audit costs no more than an internal audit and that the D.A. or GBI would expect a forensic audit before getting involved. He also said someone going to jail is the last thing he wants; he wants a government that complies with the law.

So we seem to have differences of opinion as to whether looking for something criminal is desirable or not and how much a forensic audit would cost and whether or not it would be worth it. Calls to the accounting firm Cherry, Bekaert & Holland for cost comparisons between internal and forensic audits have not yet been returned, but price comparisons are definitely in order and will be followed up on by City Stink.

JP