Tag: Augusta Politics

The Costly Energy Bills from Hardie Davis

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This week Augusta radio talk show host Austin Rhodes of WGAC was heard being dismissive of the 7% increase in homeowner electric utility bills over the past five years from the controversial Georgia Senate Bill 31, which passed in 2009 with help from Senator Hardie Davis. SB 31 was heatedly debated because the bill guaranteed Georgia Power a separate 11.5% return on two new nuclear reactor units being constructed at Plant Vogtle on the Savannah River in Burke County, giving opportunity for all manner of cost-shifting hanky-panky. The law also came under fire for paying advance profits of over $1 billion over and above the costs of building the units. The Georgia Public Service Commission, who had the staff to evaluate the technical parts of the bill and who actually has the rate setting authority in the state, was bypassed by the legislature, prompted and cheered on by a flock of as many as 70 lobbyists clogging the aisles. Finally, the legislation exempted industry from the onerous special rate increases, meaning that the full burden falls on small businesses and residential payers.

Augusta’s Senator Hardie Davis was hardly alone in focusing on the jobs created for several thousand workers, many of them temporary construction craftsmen, while disregarding the costs to the millions of Georgians of the burgeoning rates.

Let’s take a look at the effects of SB 31 so far on a residential power bill. On top of the SB 31 costs, one must also add the additional 1% TIA 2010 or TSPLOST tax that Hardie also voted for. The Hardie Tax and Rate Increase Total is nearly 13%.

Now consider how much the wages to cover that 7% increase have increased since 2009 to the latest available in 2012. WHOA! The average Georgian has actually lost almost another percent because of wage reductions. (Now to be honest, the TSPLOST tax did not come in until 2013, but it certainly is in the mix now.)

The Hardie cost increases are compounding every year against falling wages and salaries.

To conclude, that is a power play Augustans cannot afford.

All the confirmation Austin and everyone else should need was said by fellow WGAC show host Clark Howard in the clip below.

Hardie Davis is Georgia Power’s best friend. Can Augusta afford him as its mayor with such disregard for the people?

(Editor’s Note: The above clip is included here under the terms of FAIR USE for journalistic and educational purposes. As part of the public record, this material is not available through non-archive means, and is hereby presented for the public good.)

Rick, You Forgot to Call

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

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

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

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

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

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

Good luck Rick. You are going to need it.

Enron Accounting Revisits DOT

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On February 5 of this year, the time of the groundbreaking for the Riverwatch Parkway Extension Project, WAGT TV26, WJBF Channel 6, and the Columbia County News-Times all incorrectly reported that the $34 million project was being funded wholly out of TIA-2010 funds, also known as TSPLOST.

The TIA funds for the project came out of the 75% funding level list approved by voters within the Constrained Projects List. There is a project cost estimate found in the details. That paints a truthful picture. Nearly $11 million for the project is reserved out of DOT highway and fuel taxes and there is a $3.3 million cost overrun already, leaving $20 million in TSPLOST funding.

You know there is something screwy when that many news outlets get it wrong and are all using the same number.

Well, it didn’t take long to find the source. It was DOT, who came into the TSPLOST debate tarnished and smarting from Governor Sonny Perdue accusing them of “Enron Accounting,” but seems back to their bad habits by putting out a webpage showing TIA spending that looks to be TIA, alright – Totally In-Accurate. A Lincoln County project is only $1 million of TIA funding, but DOT listed it as $4 million. Wrightsboro Road in Augusta is shown as $19 million TIA funding, but it is only $2 million.

If DOT wants to reestablish its credibility after its flirtation with Enron Accounting, they sure have a funny way of showing it.

How they are going to fund the huge cost increases with revenues collected so woefully low would make an Enron Accountant strain.

Video: Augusta Commission Committee Discusses Heery/Dukes Contract

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Tuesday, June 11, 2013
Augusta, GA
From CityStink.net Reports

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.

An Augusta Commission committee gave no recommendation to proceed with the multi-million dollar contract with Heery International yesterday, deadlocking at 2 to 1. Marion Williams and Wayne Guilfoyle voted not to proceed with extending the contract as-is. Grady Smith and Corey Johnson voted in favor of extending the contract as-is. CityStink.net was there yesterday and got exclusive video of the meeting including where Cost Recovery Specialist Al Gray challenged Heery officials. You can watch that video below.

You can also see our most current investigative piece concerning the Heery saga:

Even an Overseer Needs Oversight

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Heeryly Absent

Originally posted on CityStink
June 9, 2013
Augusta, GA
by Lori Tabb Davis

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.

The entire hullabaloo over extension of Augusta’s Project Management contract with Heery International involving community liaison Butch Gallop, campaign contributions, gifts to county commissioners, and other hysteria, brings one repetitive thought. Where is the oversight over the Heery overseers?

Can I say totally absent? For certain it is stunningly absent. For now, I brand it Heeryly absent.

When our Augusta Today and Citystink.net team of contributors submitted Georgia Open Records Act requests regarding the Heery contract itself and various contract documents from projects that Heery is and was being paid to manage, control, and supervise for the City of Augusta, we found absurd contradictions with Heery’s role as overseer.

When we looked in the contract and elsewhere for the project procedures manual governing Heery’s performance of the work, we learned that Augusta had none. Our sources told us that an early effort to adopt one was squelched.

  1. Because there was no project procedure manual, perhaps that was the reason that there was no job progress photography protocol to provide us with date-stamped color photos, accompanied by delivery and storage details, of the infamous TEE Center Kitchen Equipment, only black and white pictures of boxes in an unidentified, undisclosed location.
  2. Because there was a lack of coordination of design documents for the TEE Center and already-operating Conference Center, perhaps that is why my open records request for the design of the HVAC for the TEE Center and Conference Center dating back to the days when the Marriott was a Radisson was met with a data disk with blank directories from the city. I fault Augusta for that, but if Heery is Augusta’s Program Manager, shouldn’t they make sure old and new documents are better coordinated?
  3. Because it looks like general contract limits on change orders do not appear to carry through to subcontracts, eye-popping amounts of Augusta’s funds could be in jeopardy.
  4. Heery, if I understand correctly, was paid rates up to and exceeding $200 per hour to provide such services!
  5. The new estimated costs Heery wants to extract from Augusta has been presented at an increase of $1.6 million, including a $149,000 increase/ overrun for the TEE Center, a project that was a total disaster from A to Z.

If Heery is kept, at least $350,000 needs to be cut from that 1.6 million dollar number! I think if all aspects of it were examined, the number that could be cut would be triple that.

How about oversight allowed to Augusta to oversee the overseer Heery by their contract? That was Heeryly absent, too.

  1. The contract cost was put on auto-pilot with 4% annual rate escalation built into the original 2004 Contract. This continued until 2011, when Heery billed slightly lower rates and continued to do so into 2013. The 4% escalation remains, with a consumer Price Index adjustment. With inflation likely to pick up, who knows what the rates will be with compounding like Augusta has seen.
  2. The 2004 contract allows confirmation of the direct cost classification of Heery’s employees without providing what the billing classifications are in terms of employee education, qualifications, certifications, and experience. It sure looks like the program manager Heery has wide latitude to assign people to this contract without Augusta really having the criteria set for their billing rates! (Does Butch Gallop ring a bell? What is a community liaison anyhow?)
  3.  The contract does not provide for proof of the direct costs of Dukes, Edward, Dukes or Gallop and Associates, who are not Heery employees, but Heery “sub consultants”. What are they?
  4.  Access is restricted to “accounting records”, when it is probably the Heery personnel files that would best be used to verify billing classifications.
  5.  There is a statement –  “Owner may only audit accounting records applicable to a cost reimbursable compensation.” This sure sounds like the negotiated rates are sacred and cannot be analyzed by Augusta. Such limitations must go. When paying millions of dollars for professional services, shouldn’t Augusta be able to audit anything that touches on what the city is getting?

Our team’s investigative efforts have born amazing results for Augusta and it is a shame to see them stymied by restrictions on audit rights. We saw that the Messerly waste water contract with ESG mandates that Georgia Open Records access be extended to every significant subcontractor. Subcontracts and major supply orders under Heery-managed general contracts need to be brought in line with that standard too. We cannot help if we are stonewalled by contractors and the administration.

After the numerous controversies and fiasco’s involving Augusta projects, Butch Gallop and Associates, the TEE Center, and TEE Center parking decks, it is clear – the overseer needs oversight and the Augusta Administrator, starting with George Kolb and continuing under Fred Russell,  has not provided it, he has avoided it. Heery, understandably aiming to please the client, looks like it became a rubber stamp.

If the Augusta Commission extends this contract, citizens should expect better controls, refunds of any miscalculated rate overcharges (if any exist), and lowering of rates to reflect known factors favorable to Augusta. Augusta needs to ditch Butch Gallop now, too.

Our Augusta reformers love old movies and I used to get all into being Lois Lane. Here is a segment that came to mind as I pondered all of this.

“You…you’ve got me, who’s got you?”

Harrisburg in Augusta is in free fall. Deke Copenhaver might be an Ironman, but he is no man of steel. Heery has him, but who has Heery?  Looks to me nothing but hot, stagnant city air.

Somehow I think both would just as soon see me, go splat. Augusta too, if there is a dime involved for them to get.

–    LD

Enslaved Forever on the TEE Plantation

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Monday, November 12, 2012
Augusta, GA
By The Outsider

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

Now all Augustans lie prostrate to Massa Billy and Massa Paul, thanks to the 6-3 vote of the Augusta Commission to pass the TEE Center deal last Thursday, November 8, 2012. White, black, Mexican, Korean, Chinese or Indian, the entire City of Augusta is now enslaved to Billy Morris and Paul Simon or, if you believe Augusta radio talker Austin Rhodes at WGAC, the Morris children.

No one can really tell who the owners of the new TEE Center management company are because it didn’t even exist until last month and it was registered by an intermediary to keep the ownership hidden, something Augusta’s procurement policies seem to prohibit. It will just have to suffice that the person’s listed on various documents for the original Morris/Simon LLC suggest that the Morris family are the principal owners. Even the Augusta Chronicle, who has acted throughout the TEE escapades as a front for these shadowy LLC’s, has been forced to weakly acknowledge that there are ties with Morris Communications.

The place where they put the permanent shackles on the people was originally supposed to be Augusta’s wonderful new TEE Center, but the massas had confiscated the building before the last concrete set up. They weren’t content to just stick spurs in horses over there in their Hippodrome in Aiken County, now the children all across Richmond County find themselves bound to a plantation and they didn’t have to move to Morris’ Creek Plantation, Wade Plantation, Butterfield Plantation or Millhaven Plantation to do it.

When you are in Augusta, you don’t move to the plantation, the plantation comes to you. Worse of all, the legalese says you and your descendants are slaves to the Morris massa’s TEE House FOREVER!!!

Yes. You read that right.

Mayor Deke Copenhaver and Administrator Fred Russell cheered as Commissioner Corey Johnson, Commissioner Matt Aitken and four other commissioners voted for this:

“Term of this Agreement” shall mean the period of time commencing on the date of this Agreement and continuing in perpetuity for so long as the TEE Center is in existence and shall include the period of time following any casualty with respect to the TEE Center for so long as City has the right to rebuild the TEE Center.

Now reader, you are just about to read the last part of that and tell me it is a way out of the Tee Center for Augusta because it ends when the TEE no longer exists.  Well, it is like the old tale of Dem Bones – “Toe bone connected to the foot bone: Foot bone connected to the leg bone: Leg bone connected to the knee bone…..” You just have to make the connections to get the whole body of facts.
Reading on:

During the Term of this Agreement (perpetuity), City shall, at its sole cost and expense, maintain the TEE Center to the Standard for so long as the TEE Center shall exist.

Getting a better picture now, reader? The “Standard” is whatever Billy and Paul’s interpretation of what their Marriott Hotel says it is and Augusta has to pay whatever it takes to meet their ‘Standard.’ That sounds expensive already, doesn’t it?

Now you Doubting Thomases who are left thinking that this pay-out to Morris and Simon isn’t FOREVER, get with the program. “The knee bone is connected to the thigh bone, and the thigh bone is connected to the hip bone.” And so it goes with the Tee Center. You follow the boneyard and find out it is the TEE Center. Now a Doubting Thomas would say “Well, if Augusta decides to contract with someone else or close down the Tee Center, we can stop paying them or stop paying costs on their behalf, right?”

This isn’t exactly true, according to the contract:

The parties acknowledge that Developer has an important interest in insuring that the TEE Center is maintained in accordance with the Standard, whether or not Developer serves as the Manager or Caterer. Accordingly, this Agreement, and particularly this section of this Agreement, may be enforced by Developer. (Developer is the Morris/Simon.)

In other words the Morris/Simon massa still has the power over the taxpayer, even if their contract is lifted.

Are you getting a queasy feeling in your stomach, Hephzibah? So you on Warren Road think that the TEE plantation you are on will meet an emancipation proclamation that sets you and all your descendants free from PERPETUAL bondage? Dear readers might still not be convinced that the TEE Center is their massa FOREVER. It’s time to read some more:

During the Term of this Agreement (PERPETUITY, remember?), City shall, at its sole cost and expense, procure and keep in effect fire and extended coverage for the TEE Center and all personal property located thereon, including rent loss or business interruption …, in amounts at no time less than the total replacement cost therefor. Such policy referred to above shall name City and Developer as loss payee and additional insureds, as their interest may appear.

So, there you have it. Augusta has to pay for the TEE Plantation in PERPETUITY and pay to insure that it is replaced in PERPETUITY. If it is destroyed, the Morris/Simon hotels are almost certain to be destroyed too, so replacement would be driven more by the Morris/Simon decision on what to do with their hotel complex than anything Augusta decides.

How great is the claim on Augusta’s tax system to pay for the TEE Plantation? On the financing side, the project was built using general obligation sales tax bonds, as certifications by the Construction Manager, R.W. Allen attest. General obligation bonds are backed by the fullest ability of Augusta to tax people out of their homes and businesses out into the street. On the operations side of the TEE Plantation, hoteliers get looted for the first $250,000 (another $100,000 goes into capital spending), but then the rest of the TEE Center losses come out of the General Fund, which also is fed by the power to tax folks into poverty. When a contract like the TEE contract gets executed, that obligation comes before paying for essential city services, like fire and police protection.

Now that the whole skeleton of bones has been assembled, the full picture of the TEE Center deal is this – All of the people of Augusta-Richmond County, their children, and descendants are now under double general obligations to the extent of the value of all of their property to the Morris children and descendants in PERPETUITY.

Get used to the shackles and chains that Mayor Deke put you into.  Only death or getting out of Augusta will give relief.

Can you say that you’ve been TEE-totally subjugated?

It sure looks this way to an Outsider.***
OS

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

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TEE-Totally Fried Circuits

A $2.6 Million Cover Up?

Originally Posted on CityStink
Thursday, November 8, 2012
Augusta, GA
By Lori Davis

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

In $15 Million Augusta Conference Center Pays $25,000 a Year to City, this writer brought up the issue of the enormous electrical power costs that were evident in an earlier Georgia Open Records Request in which the accounting for Augusta Conference Center lease payments was obtained. Those records suggested that the Conference Center Manager, Augusta Riverfront, LLC (owner and operator of the Marriott hotels), was using estimates to separate power used by the Marriotts from that charged to Augusta’s Conference Center rather than precise separate metering.

That got me to thinking. If they are estimating for the Conference Center, where they are responsible for the power bill, are they going to estimate again for the TEE Center power? Will there be separate metering for the bill that the taxpayer has to pay out of the General Fund of Augusta-Richmond County?

In a Georgia Open Records Act Request submitted on October 31, 2012 an official inquiry was made to access the simple single line diagram that would answer my question. A single line diagram looks like this:

It doesn’t show locations, specifications, or details, it just shows how power enters a development or building and the uses to which it is directed. Imagine the shock when the response from Augusta’s Law Department was a refusal to provide an answer to my request based upon considerations that disclosure, “would compromise security.”

Why is Fred Russell’s and Deke Copenhaver’s Law Department engaged in this cover up? Russell flits about, dismissing public watchdogs’ efforts as being concerned over nickles and dimes, when he hides the truth about the legitimacy of a $5.2 million ($350,000 for 15 years) TEE Center Cost? Proposed Management company executive Paul S. Simon thinks that, “this is a very expensive building to operate,” while citing a $350,000 annual power bill as a reason, so a key player doesn’t see this Fred’s way.

Sources tell me that the way the TEE Center electricity was routed was such that the TEE Center, where Augusta pays the bill, is on the same incoming circuit as the Conference Center, where Augusta Riverfront, LLC pays the bill.  They say that, in the aftermath of last Friday’s meeting between three Augusta Commissioners with Augusta’s contracted counsel and an Augusta Riverfront, LLC attorney efforts are underway to accomplish separate metering.

The watchdogs want to see proof of developments on the issue. We want to see savings.

At just one-half the costs indicated by Mr. Simon, this is a $2.6 million question. It is good to see a team of Augusta commissioners looking for answers that Fred Russell and the Law Department intend to hide.

-LD

Catering May Crater Augusta Finances

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TEE Catering Delivers Sweets To Whom?

Originally posted on CityStink
Thursday, November 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.

Part Two – Reviewing Augusta’s TEE Center Contracts

When Augusta’s Trade, Exhibition, and Event (TEE) Center was officially presented as a concept for approval in August 2007, what stood as the partnership agreement was an unsigned, undated document entitled  “Term Sheet” between the city and Marriott Hotel Franchisee Augusta Riverfront, LLC. Under that agreement, Augusta was not in the catering business and was not slated to furnish $1.4 million in kitchen equipment, or if it was, that detail was not spelled out for the Augusta City Commission.

Much has been written on this blog about the saga of the TEE Center Kitchen Equipment and that tale is not one to be retold now.

What is now germane is that the Augusta Commission has been presented with a raft of contract and legal documents to be approved and executed that clearly should have been in place by late 2009, having been repeatedly promised as being “finalized” by City Administrator Fred Russell in the last half of that year. Now the Commission is being asked to whisk these complicated deals through in an expedited fashion lest TEE Center events face cancellation.

After the Management Agreement, the TEE Center Catering Agreement has the greatest impact upon TEE Center operations, as Augusta Riverfront, LLC is already the Manager of Augusta’s Conference Center and Caterer for events there. Augusta is paid no share of catering from its Conference Center under previous deals.

The following represents a summary of the primary Catering Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form, write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.

Solutions were designed to be the product of meeting participants and were not suggested in the summary.

The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.

Primary Issues

  1. Since most of the language in the Catering Agreement mirrors the language of the previously-reviewed and annotated Management Agreement, this document will only be annotated with comments and questions unique to this agreement.
  2. Phantom legal documents (see “ Conference Center Management Agreement dated____, 2012”) should not be referenced.
  3. ARLLC (Augusta Riverfront, LLC) is both Conference Center operator and Caterer with a captive LLC (TEE Center Manager Augusta Convention Center Management, LLC) between them. Isn’t this just a fiction to eliminate a conflict of interest as alluded to in the Catering Agreement?
  4. Controls over inventories of food and beverage (to prevent co-mingling of Augusta, Hotel and Conference Center purchases) being in place before contract execution should be mandatory.
  5. If Kitchen doesn’t serve Hotels (as has been publicly stated by the Marriott General Manager), can’t that reference be taken out?
  6. Crossover events into the Conference Center will deprive the TEE Center of catering revenues, while the agreements relieve the Conference Center of costs.

As with the Management Agreement, time will tell how many of the above issues are addressed, handled, and rectified.

-AG

Can Augusta Avoid Outsized TEE Center Costs?

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Augusta’s Tee Shot Hits Rough

Originally posted on CityStink
Wednesday, November 7, 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.

Part One – The Management Agreement

When Augusta’s Trade, Exhibition and Event (TEE) center was approved in 2007, prudence might have suggested that one of the first steps in the process of building the facility might have been to execute the Management Agreement in advance.  This being Augusta, Georgia, where almost nothing is done in accordance with normal business practices, the building has gotten within weeks of being used before a management agreement was even submitted to Augusta commissioners for approval. Worse, the management agreement was one of a covey of documents to flush out for approval.

A very rapid assessment of the provisions of the contracts was needed, because the proposed Manager immediately began hawking the loss of events that might result if the Augusta Commission has the temerity to actually deliberate on the terms and conditions of the entire contract documents.

The following represents a summary of the primary Management Agreement issues compiled from a review of the contract documents. This list has been provided to Commissioners and has become the basis of discussion and attempts toward a speedy resolution of major issues. The approach was to review the agreements in PDF form,  write comments, apply sticky notes that Adobe Acrobat provides to annotate documents, and then to provide a summary from the compiled sticky notes.

Solutions were designed to be the product of meeting participants and were not suggested in the summary.

The author is not a licensed attorney, auditor, or public accountant. This analysis was provided from a multidisciplinary perspective in the manner that accountants, attorneys, administrators, owners, policy makers, and media might find useful in trying to decipher the pitfalls and dangers in the agreements.

TEE Management Agreement Major Issues at 11/2/2012
  1. Differences in 2007 and 2009 Commission Approvals and these Documents. No cost cap. Unlimited conduit to Augusta General Fund.
  2. Cost shifting between agreements. Electric utility example. Beer inventory example. $300,000 a year for 50 years = $15,000,000 (Augusta’s Laney Walker Improvement cost calculation method)
  3. Kitchen built under TEE Agreement where ARLLC supplies equipment switches to 50 year Conference Agreement where Augusta supplies and repairs kitchen equipment with no revenue from Conference Center.
  4.  No accounting provisions for backcharged labor to Hotels or any other credits, refunds, rebates, or other benefits going to Augusta.
  5. Cross indemnification between TEE and Conference Center – sever-ability issues. WHO IS LIABLE?
  6.  Too many ways to circumvent Annual Plan, including that an unknown, unknowable “Standard” trumps everything, including Annual Plan.
  7.  Fringe benefits and bonuses, including for LLC PRINCIPALS, are unlimited.
  8. Accounting and auditing envision most of the accounting off TEE Center books, without rights of audit to ALL HOTEL ACCOUNTING records on a real time basis.
  9. Conventions can be booked using TEE Exhibition Hall while using Conference Center where Augusta gets no revenues.
  10. When Augusta signs these contracts, it assumes extraordinary indemnity provisions immediately so that it would have to advance payments to the Manager to defend the Manager from actions by Augusta

Time will tell how many of the above issues are addressed, handled, and rectified.

-AG

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

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Originally posted by CityStink
Thursday, November 1, 2012
Augusta, GA
By Lori Davis

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

Augusta Riverfront, LLC is the proposed caterer for the City of Augusta’s new TEE Center and a sister company is slated to be the TEE Center Manager. On Tuesday Augusta Riverfront’s Darryl Leach appeared on the Austin Rhodes show on WGAC to defend the controversial contracts for catering and management presented to the Augusta Commission.  During the show Leech brought up the fact that the existing Augusta Conference Center had cost Augusta about $14 to $15 million to build.

Since I just got back a response to my Georgia Open Records Act Request for Conference Center lease payments last week, it was surprising to hear that those buildings cost $15 million 11 years ago. What was more surprising is that Augusta only sees about $25,000 a year in lease payments on that $15 million complex!

Yes, you read that right. Augusta’s return on the Augusta Conference Center is 0.17% a year!

Scanning the accounting I got from Augusta’s legal department was interesting, to say the least.

In the TEE Center Workshop on October 10, 2012, Augusta Riverfront, LLC President Paul Simon said this regarding the Conference Center lease:

“However, we get in that case we get all of the profits from the center except we give the city 5% of the room rents, not just catering.”

Maybe he meant to say  “just not catering”, but then Augusta attorney Jim Plunkett earlier in the same meeting referred to Conference Center profits/ losses being shared by the city.

Wait a minute. The records that I got from the records request show that the leases were figured at 5% of the greater of Center expenses or Center revenues, with Augusta getting $23,395 in 2003, $21,493 in 2004, $25,137 in 2005, $24,381 in 2006, $27,559 in 2007, $14,828 in 2008, $26,277 in 2009, $26,434 in 2010 and $25,992 in 2011! The revenue figures were room rentals alone with NO CATERING REVENUES INCLUDED!

The 1999 Agreement that covers this says that “miscellaneous revenue” is supposed to be included in the base for the annual lease payment calculations. Isn’t catering an item of “miscellaneous” revenue, when it was not excluded from the contract language for the lease payment calculation?

The Conference Center lease says that the annual lease payment and reporting is supposed to be submitted by Riverfront’s “certified public accountant”, but  we could not find the name of the Riverfront controller on the roster of Georgia CPA’s.

Expensive Issues for Augusta:

In 2008, Riverfront deducted $13,164 from Augusta’s payment for resurfacing the hotel parking lot. This sort of expenditure doesn’t seem covered as an Augusta cost because hotel parking lots are hardly this city’s responsibility, although it might be covered under the separate parking lease referenced in the agreement. It looks like Riverfront arbitrarily reduced Augusta’s payment to cover an expense that they felt entitled to.

If Augusta gives them a bank account that is an open pipeline to taxpayer general funds, like Finance Director Jerry Brigham told us two weeks ago will be the case, will Riverfront feel ENTITLED to make deductions from payments to Augusta like this?

The next thing I saw that was surprising is that Riverfront figures ½ the electrical utility costs for the entire complex of hotels and conference center go to the conference center! How was this percentage arrived at? For the TEE Center, is this how the $350,000 Paul Simon suggests as the estimated TEE Center Power bill will be figured – a ballpark guesstimate? Should not there be separate metering for the conference center? Is there separate metering to make damned sure that the $350,000 power bill all goes to the TEE Center and not the hotel/conference center complex?

I have submitted an Open Records Request for the electrical design drawings for the TEE Center, in the hope of getting answers to these question from the Augusta Today membership, which now provides access to engineers who now join the Augusta Today and CityStink.net of investigators and watch dogs.

More than one commissioner is sniffing around this one, too.

Even bigger an issue is whether the Convention and Visitor’s Bureau is actively marketing events that cross over from the TEE Center, where Augusta gets the costs, into the Conference Center, where Augusta gets no revenue – all revenue goes to Augusta Riverfront, LLC.

More than one commissioner wants that question answered, too.

It is wonderful to have a clear majority of Augusta commissioners now working for the people. I never thought I would see the day. Most frightening to those wanting to drain Augusta’s general fund should be this – These guys are showing real signs of UNITY!

When do we go the other way and start getting our money back? In the case of the TEE Center,  a power shift is overdue. From the looks of how aggressively Riverfront pursues Augusta’s money, the taxpayers need this commission to show backbone!***

Lori Davis GORA Response 10262012 – Conference Center Lease

LD

Conference Center 2008 Schedule