Originally published October 31, 2012 on the now defunct CityStink.net site.
Wednesday, October 31, 2012
Augusta, GA
From CityStink.net Reports
Locketted and Loaded was Commissioner Bill Lockett when the TEE Center was removed from Monday’s Augusta Commission Committee meeting. See our exclusive video below:
Originally posted by CityStink
Sunday, October 28, 2012
Augusta, GA
From CityStink.net Reports
On the eve of Mayor Deke Copenhaver forcing yet another TEE Center vote on balking commissioners, Augusta Today contributor Al Gray challenges cost controls after being silenced by Copenhaver a week earlier. See our video report below.
Originally posted on Citystink
Wednesday, October 24, 2012
Augusta, GA
From CityStink.net Reports
Augusta Commissioner Joe Bowles takes a stab at TEE Center Management Bonuses, but falls to Simon Says and ends up voting for them anyway. Watch Simon say the taxpayer is going to lose and his managers will be paid in the video below.
A Little White Lie?
Originally posted on CityStink
Tuesday, October 16, 2012
Augusta, GA
By Kurt Huttar
Here we go. It is now official. As my Augusta Today colleagues and fellow CityStink.net contributors, Lori Davis, Brad Owens and Al Gray have been saying for months, the Augusta TEE/Convention/Conference/Whatever-it-is- called-next-week is a TEETOTAL DISASTER. Yesterday the projected LOSSES came out for this already-extinct dinosaur –$911,000 plus in losses!
Since only $250,000 is going to be available from the dedicated funding source of the hotel transportation tax, Augusta Administrator Fred Russell has had to admit that the balance of the funding for this enormous albatross on city taxpayers will have to come out of the General Fund. One supposes that fire and police protection will take another hit.
Of course, accompanying the news of this debacle the Augusta Chronicle, who shares ownership with erstwhile TEE manager Augusta Riverfront, LLC, trotted out the usual wildly optimistic tourism revenue growth propaganda.
“As (Augusta Riverfront’s Paul S.) Simon and Augusta Convention and Visitors Bureau officials have said, the benefits to the city don’t come from revenue from the center but from visitor spending. Simon’s report includes a CVB (Convention and Visitors Bureau) chart estimating $8.7 million in visitor spending in the first year from 13 conventions.”
This statement rang a bell from a July 8, 2007 propaganda piece that Barry White, Director of the CVB, had published in the Chronicle. White wrote at the time: “Not only does Augusta Riverfront LLC bring proven expertise, it has offered to donate to the city downtown real estate valued at an estimated $1 million. The LLC also will pay annual center operating expenses over $250,000 and capital improvements over $100,000 a year.”
Wow!
How much more wrong can a bureaucrat be? The deal went from the LLC funding $350,000 a year being reported in Mr. Simon’s former newspaper to Augusta’s losses being capped at $350,000 annually a month later – an amazing $700,000 swing against Augusta taxpayers in one month! This looks like the first bait-and-switch. Now we have the second. Now the losses to Augusta are nearly $1 million!!
Who can believe anything coming out of CVB now? The free land had $7 millions in liens on it and now the city will lose millions instead of getting millions in contributions from its “partners.”
The 2007 Barry White piece in the Chronicle also reminds one of another little white lie that TEE Center supporters hawk – that the voters of Augusta approved the TEE Center in 2005. What they never bring up is that the voters approved this boondoggle after being told it would cost ‘only’ $20 million. Now the cost is over $50 million ($tens of millions more taking into account the existing Conference Center) and it looks like the operating losses for the first decade will easily exceed $20 million. Bear in mind that none of the projected losses include depreciation or debt service!
Little white lies got one huge white elephant constructed on Reynolds Street.
Reality trumps slanted projections and you can’t use “White Out”, either.
TEE Center under construction August 2012
Originally posted on CityStink
Thursday, October 4, 2012
Augusta, GA
By Bradley Owens
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.
Houston, we have a problem. Rather the City of Augusta’s special counsel Jim Plunkett and his predecessors who created the TEE Center Agreements have a host of problems. Most of them center around “Conference Center” versus “Convention Center” but the TEE Center Catering Agreement is the lynchpin. Our Augusta Today and CityStink.net investigative team now seems prescient in our dogged pursuit of the elusive kitchen equipment.
The entire TEE Center fiasco began with an unsigned, undated “Term Sheet” that became the only partnership agreement with Augusta Riverfront, LLC that was approved by the Augusta City Commission. This agreement refers repeatedly to the “ Conference Center” as being subject to the preexisting agreement between the partners. It says that Augusta and Riverfront agree to “modify their agreement for the operation of the Convention Center to include the Trade Center.” Trouble was, there was no agreement to operate any “Convention Center”, only the 1999 agreement for the operation of the “Conference Center.”
Since then there has been considerable publicity given that the entire TEE Center, Parking Decks, and existing Conference/Convention Center are now the “Convention Center,” which furthers the misconception that there ever was a “Convention Center” before, but all the while the lawyers reverted to labeling the existing facility as the “Conference Center.” Was it deceit or wanton incompetence? Read on and you decide.
On September 24, 2012 Augusta Riverfront, LLC’s Paul S. Simon appeared before the Augusta Commission with an ultimatum – Execute a plethora of contracts, assignments, releases, modifications and other legal documents within 22 days or face cancellation of TEE/Trade Center events. Augusta then knew it was being held hostage to the lawyer’s handiwork, efforts that Administrator Fred Russell promised were nearly complete 3 years ago.
Included was the catering agreement. This document spells out that the new kitchen built in the TEE Center, but legally carved out as the “Conference Center Annex”, is to serve both Marriott hotels and the existing Conference Center. Why is the term “ Conference Center” so important? Why, it is because if the existing Conference Center agreement was intended to continue – which it was – it means that the $1.4 million of kitchen equipment that Augusta bought under a controversial change order to the TEE Center Contract will mostly be used to generate revenues for the Marriotts and not Augusta. This is because the existing Conference Center agreement pays Augusta 5% of the rental space revenues and nothing else, including catering.
 |
| TEE Center abuts The Marriott Hotel |
Unless Riverfront has quietly reimbursed the city, Augusta paid $1.4 million for kitchen equipment that it will get almost NO USE OF, because the Trade Center space will be used primarily for exhibits, with attendees adjourning to meeting rooms in the freely-catered Conference Center for meals. So far, our Georgia Open Records request responses from Augusta have not shown that the Commission ever agreed to relieve Riverfront of the LLC’s responsibilities for kitchen equipment.
Under the circumstances, it would be wildly irresponsible for Augusta’s Commissioners to agree to pay for any of the kitchen equipment, particularly since some of the charges on the vendor’s invoices was to repair Riverfront LLC equipment! (Under prior agreements Riverfront owned the equipment.) Where is our $1.4 million? Is there any prohibition whatsoever barring Riverfront from running a commercial catering operation citywide out of the Conference Center portion of the Convention Center, using the $1.4 million of Augusta kitchen equipment?
Worst of all, the catering agreement mentions in several places that services to the hotels, to the restaurants, and to the existing Conference Center will be provided by the kitchen. There is no operational procedure manual to set out controls over food and beverage procurement, use or inventory for the TEE Center versus these other operations. Without controls and in the midst of all of these operations that consume food and beverage, how will Augusta avoid being looted from various parties on and off the premises? Will there be household with freezers of steaks, courtesy of Augusta taxpayers?
How many of the Marriott’s existing catering staff will be assigned to the TEE Center contract? Since the vast majority of the catering seems to be outside of the TEE Center, why should management level employees be charged to the TEE Center Catering Agreement?
In life, timing is everything. With the unsigned, undated Term Sheet that began the TEE Center project in 2007, the seed was planted in the minds of the public and the commission that there was going to be a new Convention Center agreement. After that the branding was changed to emphasize the Convention Center labeling, including announcements at the opening of the Reynolds Street Parking Deck and at last month’s meeting. Behind the scenes, the legal wording, finally disclosed at the September 24 meeting, narrowly focused on the Conference Center and preserved the sparse 5% payout to the city for the existing center, with no provision for catering revenues. The wording of the catering agreement is that catering only applies to the TEE/Trade Center.
Meanwhile, the Amendment to the CORE Agreement extends these agreements out 50 years. Never mind a reported reduction to 15 years.
Throughout these agreements, one thing is repeatedly clear. The hotels and these agreements, which in the hands of others not as civic in their mindset as Paul Simon and Billy Morris provide an UNLIMITED CONDUIT to taxpayer funds, can be SOLD! In the hands of money hungry financiers of Wall Street, these agreements are loaded guns aimed directly at the finances of we Augustans.
How much more can Mr.’s Morris and Simon get for their two Marriott Hotels, with $70 million of dedicated Augusta buildings permanently and legally bound to them with an UNLIMITED conduit into the general revenues of Augusta Richmond County?
There you have it, reader. Augustans already find themselves facing a property tax increase. How many more tax increases will be coming to feed the TEE/Trade/Conference/Convention monster?
When the finances of Augusta crater it will be in no small part because of Catering.***
BO
**Cost Recovery Analyst Al Gray, President of Cost Recovery Works, Inc. contributed to this report. Cost Recovery Works is no longer in business, as of December 31, 2020.
Tee Catering Definitions From 9-2012 Agreement1999 Core Agreement Conference Center – Revenues
Originally posted on the now defunct CityStink.net site October 3, 2012
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 the five-year twisting tale of Augusta’s TEE Center project, we who have observed the events and decisions as they happened, learned to expect the unexpected. This didn’t keep reporter Susan McCord’s tweet from the September 24, 2012 Augusta Commission meeting from astounding me.
“Paul Simon: If documents aren’t approved by Oct. 15, (we) will have to cancel January police chiefs convention at TEE center,” she typed. My jaw dropped at the audacity of the city’s TEE Center partner suddenly resorting to what looks like a shakedown to get a management deal approved.
Simon’s Augusta Riverfront, LLC is getting a $2 million a year subsidy courtesy of an unsigned, undated proposal from 2007, and that isn’t enough for him and his partners at Augusta Riverfront, LLC? Augusta has been held hostage since then. What is worse is that the City Administrator, legal counsel, and Augusta Convention and Visitors Bureau might be the source of this clumsy, heavy handed way of extorting an agreement out of a suddenly reluctant Commission.
Augusta Held Hostage
It is impossible for me to accept this assault by Management Agreement on the city’s finances in silence.
· Augusta built at least $50 million in new buildings across multiple parcels owned by this Riverfront organization and probably $20 million of existing buildings, yet now is held hostage to liens on some of them?
· There will be hundreds of pages of recorded easements, cross easements, assignments, and agreements on these lands, meaning that Augusta has all of the costs of land ownership, but few of the packages of rights that come with land ownership. Can’t we at least get a fee in lieu of taxes?
· The unsigned, undated partnership agreement from 2007 says throughout that Riverfront is responsible for kitchen equipment while saying that Augusta is responsible for the kitchen space. Augusta has not been able to show where its City Commission has ever voted to change the partnership agreement, only that Augusta approved the change order to add $1.4 million of equipment to a project that Riverfront agreed to participate in as a builder and operator. Where is Augusta’s money?
· The September 24 meeting was the first the Commission as a body had seen of the catering or management agreements and they were presented with an ultimatum that the documents have to be approved within 22 days! Five years of dithering and now the people of Augusta are presented with a manufactured emergency? Why? Keep reading!
· Can we say there might be C-O-N-S-P-I-R-A-C-Y within Augusta government? Darryl Leech was the General Manager of the Augusta Marriott. On September 24, Paul Simon announced the TEE Center is now the AUGUSTA CONVENTION CENTER. The agreements that Augusta has been commanded to execute are now with an entity called the Augusta Convention Center Management, LLC. This is where things get really get good. Darryl Leech is now the General Manager of the Augusta Convention Center. In fact, it seems nearly all of the former Marriott Augusta Staff, Don Fuller, Janet Pierce, Greg DeSandy and Sharon Koon, are now on the Augusta Convention Center Team!
The Augusta Convention Center
Who gets to decide if all, any or part of these employees – whose salaries and fringe benefits likely exceed a million dollars – who used to be Marriott costs become Augusta costs? The Management Agreement says the Augusta Convention Center Management, LLC, “… shall have discretion and control, free from interference, interruption or disturbance, in all matters relating to management and operation of the TEE Center,” and, “Manager shall select, employ, promote, terminate where appropriate, supervise, direct, train, and assign the duties of all personnel which Manager reasonably determines to be necessary or appropriate for the operation of the TEE Center.” This Management agreement and the catering agreement provide capability for 100% of former Marriott employees to shift onto the Augusta payroll! It sure looks like Augusta will have no rights to contest this cost shift once this agreement is executed.
· Consultation with the Georgia Secretary of State Corporations Division does not show Augusta Convention Center Management, LLC as being registered to do business in Georgia. Augusta is being demanded to execute an agreement with an entity that does not yet exist?
· Augusta is forced to deposit $250,000 at the beginning of the year into the operating account, but if the balance in that account falls below the amount to fund that account for the next 90 days, Augusta is required to contribute from GENERAL REVENUES enough funding to meet those expenses without regard to how soon the next $250,000 funds injection is required!!!!! The original partnership agreement limits Augusta funding requirements to $250,000 for operations and $100,000 for capital, yet this management agreement calls for an unlimited pipeline of funding from Augusta? Who authorized or negotiated that?
· The unlimited ability of this Augusta Convention Center Management, LLC to establish what costs are is not limited by the Annual Plan that the Augusta Commission approves, because “the Annual Plan will be only a planning tool.” Also, shouldn’t references to any Annual Plan limits be clearly defined not just as the types of costs to be included, but the amounts as well?
· The management agreement provides for annual audits only, with no real-time or even monthly reporting. How can Augusta monitor these cost reimbursable agreements without continuous reporting and the strongest of audit rights? Shouldn’t these agreements be made subject to open records requests? Maybe the Augusta Chronicle can help us! No?
· The management agreement called for the CVB to begin marketing for the Convention Center with execution of the construction contract to the tune of $350,000. However, the use of these funds by the CVB to market the Center before it opens was against the city’s own ordinance.
Summary
The TEE Center management agreement looks to have morphed into an agreement that allows most of the administrative staff of the Augusta Marriott to be shifted to Augusta’s Conference Center expense. There are unexpected liens on some of the property under the Center, and a parcel that was not liened was never conveyed prior to construction. The Augusta Administrator promised the agreement was nearly complete over 3 years ago and now has provided the City Commission with just 22 days to review and approve the contracts. The entity that Augusta is contracting with may not exist yet. The operating expenses, capped by the 2007 partnership agreement, are now unlimited conduits to the general funds of the city. The contracts fail to provide real-time program management and accounting.
***************
The Augusta Commission should walk away from these agreements and put the management and catering agreements out for bid. Otherwise outside counsel from far outside of Augusta needs to be brought in to renegotiate the management agreement to conform to model contracts from other cities.
Beyond this, it looks to me that Commissioner Bill Lockett’s idea of a forensic audit or a county-funded investigation of these transactions needs to be revisited. The project was funded by sales taxes, there are ample unused sales tax revenues in the coffers of Augusta, and legal costs are legitimate uses of sales tax money.
Can all of these issues and the progression toward the renaming of the TEE Center as the Augusta Conference Center be just incompetence?
Can Augusta afford an unlimited pipeline to its general revenues?
I don’t think so.***
AG
Originally posted on CityStink
Tuesday, August 28, 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, 2012.
After the more than nine month long ordeal over the Reynolds Street Parking deck debacle, yesterday’s events at the Marble Palace that resulted in the approval of the long beleaguered parking management contract may have seemed rather anti-climatic. Indeed, we got wind that approval of the contract was imminent — if certain conditions were met. Key to passing the agreement was the inclusion of safeguards for the city that specifically stated in clear language that Augusta Riverfront, LLC (ARLLC) could not bill the city for their overhead expenses. Previous proposals were riddled with loopholes that ARLLC could exploit, amounting to a blank check from the taxpayers.
Also, included in yesterday’s contract was a clause giving the city the right to audit ARLLC’s books to verify their compliance. This was a crucial safeguard for the city and one that ARLLC’s lawyers were fighting all the way up until the final hours leading up to yesterday’s vote, but in the end they yielded and agreed to include the rights to audit.
Wayne Says Sell It!
Commissioner Wayne Guilfoyle deserves a large amount of the credit for these safeguards being included in the final contract. We understand that the lawyers were trying to twist Guilfoyle’s arm all the way up to the final hours to get him to bend under the pressure and approve the deal without these key safeguards, but the District 8 commissioner would not budge. He stood his ground and insisted that these conditions be met or his vote would be NO. Guilfoyle added the stipulations and to the agreement in his motion yesterday to approve the contract.
The citizens of of District 8 in South Richmond County can feel confident that they have someone like Wayne Guilfoyle representing them. Though a freshman commissioner, Guilfoyle has demonstrated leadership on a variety of important issues and continues to exhibit a willingness to study the details of these complex contracts, weigh all of the options, and play hardball when necessary to get the best deal for the taxpayers. Augusta could use more commissioners like him.
Not Gonna Be Bowled Over
Mayor Pro-tem Joe Bowles deserves credit for negotiating better terms in the contract that gives the city a much more favorable split of deck revenues at 70/30%. He also negotiated the inclusion of a pedestrian skywalk over Reynolds Street from the deck to the TEE Center that will enhance public safety and steer patrons to the city-owned parking spaces on the upper levels. Bowles even found the savings in the construction of the deck that will pay for the skywalk at no additional cost to the city. It’s this keen eye that makes Bowles a consistent leader on the commission.
The mayor pro-tem is also willing to admit when mistakes have been made and then work diligently to correct them. He also has a knack for forging compromise through the art of negotiation, but is willing to stand his ground when necessary to make sure the interests of the taxpayers are protected. His leadership will certainly be missed when his term expires at the end of this year, but Bowles will leave office with a nice legacy and he has certainly set the tone for all future mayor pro-tems.
Wise Man Lockett
From the very beginning, Commissioner Bill Lockett has been a vocal critic of the parking management deal with Augusta Riverfront, LLC. This is probably why he voted against approving yesterday’s contract — as a protest of the entire process. That is understandable. Time and time again, Lockett’s wise caution from his in-depth study and analysis of these complex matters has been proven right. Lockett doesn’t take anything at face value. He wants to see it in writing — he asks the right questions — he goes over every detail with a fine tooth comb. Some people may find this tiresome, but without Lockett’s determination to get to the truth and his attention to every detail, Augusta would have likely ended up with a much worse deal nine months ago, locking the city into a 15 year contract with ARLLC instead of just 5.
Though ultimately unsuccessful in getting the forensic audit to probe the process that gave us this debacle, Lockett was right in asking for it, and we predict when all is said and done he will be vindicated on that issue as well. Augusta could use more commissioners like Bill Lockett, who understand that their primary duty is in protecting the interests of the taxpayers of Augusta instead of bending to the whims of people like Paul S Simon. We suspect this is why Lockett does not face opposition for reelection.
Theater of the Absurd
On the opposite end of the spectrum is outgoing Commissioner Jerry Brigham, who fought vehemently against all attempts to give taxpayers a better deal over the parking deck. In what can be best described as a scene from the theater of absurdity, Brigham jumped at the opportunity yesterday to get in front of the cameras after the vote and tell a reporter for WJBF News that the final contract is, “… financially more stable than what was originally proposed and I think the Commissioners feel better, in general, with this proposal.”
It’s too bad the reporter did not retort by saying something along the lines of:
“But Mr Brigham, weren’t you the one who wanted to rush this deal along and fought against these changes from the very beginning?”
Indeed, if Brigham had gotten his way, the parking deck contract would have been passed last fall and it would have been for 15 years instead of 5 years and would have been riddled with loopholes that ARLLC could exploit as a blank check, using the taxpayers as their own personal piggy bank. Brigham’s contract had none of the safeguards and denied the city the rights to audit. And when these deficiencies were brought to his attention by government watchdogs, Brigham refused to budge and admit that errors were made. So maybe Mr. Brigham’s statement means he has had a change of heart? We doubt it — it’s probably more about saving face and trying to take the credit for the hard work of others who in the end forged the compromise that got a much better deal for the city.
Unlike his colleague Joe Bowles, Brigham will leave office with a cloud over his head. In every step of the process, Commissioner Brigham fought hard for the interests of Paul Simon and Augusta Riverfront, LLC over those of the taxpayers in his district and the city as a whole. We can only hope that his successor will be someone more like Commissioner Guilfoyle, Bowles or Lockett. The voters certainly have a choice before them this fall.
What Happens Next?
Though this closes the chapter on the nine month long saga over the parking deck contract, the issue is far from over. Now commissioners will have to decide how to hold the people accountable who created this mess in the first place. Why was the RFP (Requests For Proposals) process circumvented in favor of a hideously unfavorable deal with ARLLC — one for which they did not even submit a bid? Why were commissioners consistently mislead about the land under the deck being donated? Why were commissioners not informed of the $millions worth of liens on the property until after government watchdogs discovered them? Why were commissioners not made aware of the results of a 2009 parking study that showed that a $12 million parking deck was not even necessary and a $1 million surface lot would have sufficed. Why did city-hired outside counsel agree to such atrocious terms under previous contract proposals that were written entirely by the lawyers for ARLLC?
Now that the contract terms have been settled these are the questions commissioners need to ask and find answers. This process did not happen by mistake. What should have been a simple and clear-cut process was intentionally made more complex and nearly incomprehensible to most commissioners, the media and the public in an effort to sneak through a contract riddled with loopholes, lacking controls and caps on expenses and absent safeguards like the rights to audit. The people responsible for this must be held accountable so that this does not happen again. This ordeal also demonstrates why the city needs consistent procedures and guidelines governing these kinds of contracts. What we currently have is a an ad-hoc process governed by whim. That must change or Augusta will keep repeating the same mistakes with future contracts.
As the agenda now moves on to the the much larger TEE Center contract there is much more at stake. If commissioners have learned anything from the parking deck saga, they now know not to take anything at face value and to study every detail and spot every loop hole. Instead of rushing something through like commissioners did in December of 2009 that gave us this mess, they would be wise to yield to caution to insure that the interests of the taxpayers are protected above all else. If commissioners ask the right questions, study the details, and use good judgement and common sense, we don’t expect this process to drag out for nine months. But it’s entirely up to them.***
OS
Originally posted on CityStink
Thursday, Augusta 23, 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.
Amid all of the hullabaloo of Tuesday’s runoff elections, something remarkable happened at The Marble Palace. Paul S. Simon, president of Augusta Riverfront, LLC, was on the agenda to give a presentation before the Augusta Commission about the Reynolds Street parking deck management contract in a special called meeting at 4:30pm. Representatives from CityStink.net and Augusta Today were also there including Al Gray, Lori Davis, Brad Owens and former Augusta commissioner Andy Cheek. After Simon’s presentation, commissioners adjourned into a closed door legal session to discuss personnel matters. That’s when members of CityStink.net and Augusta Today took over the commission chambers. Al Gray went to the front of the chambers and began to address the gallery and questioned Simon about key points in the management contract. We have the video of that exchange below:
The speaker in the video is 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, which is no longer in business, as of December 31, 2020.
Originally posted on CityStink
Tuesday, August 21, 2012
Augusta, GA
From CityStink.net
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.
As we told you yesterday, a special called meeting of the Augusta Commission is scheduled today at 4:30pm to once again try to approve the Reynolds Street Parking Deck management agreement between the city and Augusta Marriott hotel owners, Augusta Riverfront, LLC. A closed door legal session has also been requested by Augusta General Counsel to discuss the deck deal. Representatives from Augusta Today and CityStink.net will be in commission chambers today to observe these proceedings. Of course, if commissioners vote to go into a legal session, those proceedings will be off limits to the public and the media.
Al Gray, a cost-recovery specialist and a contributor to CityStink.net (now defunct) site, who has done extensive analysis of the deck contracts, plans to be at today’s meeting. Al Gray cautions commissioners from once again rushing into approving any last minute deal and he left the following remarks on why this contract needs to be tabled and what MUST be included for any contract to be approved:
******
The Mayor, Administrator, and Commissioner Jerry Brigham are set to RAM THROUGH disastrous Parking Deck Management and lease agreements that, at last review, contain the following flaws.
1) The Annual Plan was only a guide. The REAL AUTHORITY is the contract language defining costs that are allowed. The Annual Plan is a SMOKESCREEN. They are putting out the total and utter B.S. that the Commission will have approval for overages or costs beyond the Plan, but the CONTRACT LANGUAGE WILL FORCE PAYMENT!
Like the Jefferson County Alabama deals with Wall Street that bankrupted that county, unless this agreement has been amended SUBSTANTIALLY, it is an OPEN CONDUIT of UNLIMITED Augusta funds. The Manager can SELL THIS AGREEMENT and the agreement allows the Manager to set its own budget, like this agreement did the last time the public saw it. An agreement that allows unlimited billings would have unlimited value! LET US SEE THE AMENDMENT THAT ELIMINATES THIS!
Then there is the matter of the LLC getting 100% of the income for 150 spaces while Augusta gets 100% of the expenses. The LLC is being compensated with a like # of spaces, but didn’t the LLC pay the COSTS of the old spaces? Taxes, lighting, etc.?
Here are the rights of Audit I recommended that Augusta is apparently rejecting:
WHY NEEDED? TO DETERMINE THAT COSTS ARE ACTUAL COSTS traceable to the Managers records, that all discounts come back to the OWNER. The “Financial Audit” now in there is a RUBBER STAMP snapshot at the end of the year.
INSPECTION AND AUDIT – Manager’s “records” shall upon reasonable notice be open to inspection and subject to audit and/or reproduction during normal business working hours. Such audits may be performed by an Owner’s representative or an outside representative engaged by Owner.
The Owner or its designee may conduct such audits or inspections throughout the term of this contract and for a period of three years after final payment or longer if required by law. Manager’s records as referred to in this contract shall include any and all information, materials and data of every kind and character, including without limitation, records, books, documents, subscriptions, recordings, agreements, purchase orders, leases, contracts, commitments, arrangements, notes, daily diaries, management reports, drawings, receipts, vouchers and memoranda, and any and all other agreements, sources of information and matters that may in Owner’s judgment have any bearing on or pertain to any matters, rights, duties or obligations under or covered by any Contract Document.
Such records shall include (hard copy, as well as computer readable data if it can be made available), written policies and procedures; time sheets; payroll registers; payroll records; cancelled payroll checks; subcontract files (including proposals of successful and unsuccessful bidders, bid recaps, etc.); original estimates; estimating worksheets; correspondence; change order files (including documentation covering negotiated settlements); backcharge logs and supporting documentation; invoices and related payment documentation; general ledger entries detailing cash and trade discounts earned, insurance rebates and dividends; and any other Manager records which may have a bearing on matters of interest to the Owner in connection with the Manager’s dealings with the Owner (all foregoing hereinafter referred to as “records”) to the extent necessary to adequately permit evaluation and verification of:
(a) Manager compliance with contract requirements,
(b) compliance with Owner’s business ethics policies.
Contractors get away with ENORMOUS overbillings from misapplied labor burdens. I got back $millions from this source.
NEED LABOR BURDEN DEFINED LIKE THIS:
Insert – When computing actual costs chargeable to the Cost of the Work for payroll taxes, the Manager shall give proper consideration to the annual limitations of the wages subject to certain payroll taxes. The Manager may accomplish this through the use of an accounting system which computes actual costs for payroll taxes when incurred up to the wage limit cut-off and allocated same to all jobs by individual based on the time worked on each job by the individual. Alternatively the Manager may use an estimated net effective payroll tax percentage to allocate payroll tax costs during the year and make appropriate adjustments at the end of the year or at the end of the project (whichever is more appropriate) to adjust the costs to actual net payroll tax cost. Using the latter approach, if 50% of the wages paid to an employee during the year were chargeable to the Cost of the Work, then only 50% of the actual annual costs of payroll taxes would be allocated to the Cost of the Work, etc.
Insert – Cost of the Work shall include the actual net cost to the Manager for worker’s compensation insurance attributable to the wages chargeable to the Cost of the Work per this agreement. The actual net cost of worker’s compensation shall take into consideration all cost adjustments due to experience modifiers, premium discounts, policy dividends, retrospective rating plan premium adjustments, assigned risk pool rebates, etc. The Manager may charge an estimated amount for worker’s compensation insurance costs, but will make appropriate cost adjustments to actual costs within 30 days of receipt of actual cost adjustments from the insurance carrier.
Insert – Any payroll burden related costs to be reimbursed which are not required by law shall be subject to advance written approval by Owner to be considered reimbursable. Fringe benefit costs typically falling into this category include but are not limited to pension, employee stock option plans, bonuses, medical and dental benefits, life and accident insurance, etc. The Manager shall be required to submit a detailed breakdown of all such payroll burden costs along with all representation as to how the proposed actual billable cost will be computed. Such information must be reviewed and approved in writing by Owner before Manager may include such items as reimbursable costs.
All such payroll burden costs shall be billable as reimbursable costs at actual verifiable cost subject to provisional maximums agreed upon in writing in advance by both parties. It should be noted that certain fringe benefit costs such as funding of pension or profit sharing funds in excess of the minimum amounts required by law may not be considered reimbursable payroll burden costs by Owner, and those fringe benefit items which are not approved in advance in writing by Owner will be considered as nonreimbursable overhead cost to be covered by the Manager’s Fee. During the job and prior to contract close-out, adjustments will be made to account for actual costs which may be less than the provisional maximum costs previously billed.**************
Originally posted by CityStink
Tuesday, August 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.
A perfect storm has struck the ossified, corrupt political power structure in Augusta, the CSRA, and Georgia. The first harbinger of the maelstrom emerged a year ago when Augusta Mayor Deke Copenhaver attempted to bring a publicly funded baseball stadium to the Riverfront, prompting the formation of a loose coalition of Augustans, area residents, and former citizens. This is Augusta Today.
The opening pitch for that stadium by Mayor Deke was in the dirt.
Then came the Laney Walker Overlay debacle, where the Mayor was eager to run all over city ordinances and the constitutional property rights of the poorest people to get on the cover of Southern Living.
After that has been a blizzard of revelations, sourced in the city’s own documents, that shows a pattern of deception, mismanagement, incompetence, and probably rampant fraud centered in Augusta’s contracts.
Then along came TSPLOST, supposedly a regional collaboration, which instead has blown the CSRA apart and separated it from the 75% of the state that rejected the tax.
Augusta is a renegade government that endangers its citizens. In the parlance of former Defense Secretary Rumsfeld, this is a known known. Things will never be the same again in Augusta and beyond.
The Republican Party in the 12th Congressional District of Georgia is in the midst of reform, too.
This spring the Liberty Movement seized control of the Richmond County GOP convention. They nearly did it at the district convention.
The Columbia County GOP is in pure turmoil from years of shenanigans, deposed chairmen, party establishment ruin, and is totally irrelevant.
A core cadre of GOP legislators named Barbara Sims, Ben Harbin, Lee Anderson, Bill Jackson, and Tom McCall joined together behind beleaguered Nathan Deal to foist TSPLOST, the largest tax increase in Georgia history, on the voters. The GOP havens Columbia County and Lincoln County rejected them and it.
This same cadre of GOP legislators is wrapped all up in the ASU name change to GRU fiasco. Deal’s Board of Regents Chairman Ben Tarbutton has contributed to Lee Anderson’s congressional campaign and Sims has been supportive of the detested Georgia Regents University name.
John Barrow, the last blue dog Democrat in the South, looms with a war chest that will probably exceed $2 million. Barrow has shown a streak of independence from the Obama Administration and his voting record in terms of fiscal conservatism is on a par with GOP Vice Presidential candidate Paul Ryan. His office has rock solid constituent service.
Reform is about to be visited upon the GOP. The party establishment hates it, but now knows it stands before an avalanche of public revulsion, anger, and determination. TSPLOST is about to be stopped cold. CSRA politicos will find themselves in a totally untenable position if they don’t reverse course and join this action.
With respect to the 12th District race, the path to reform is either going to be aboard a bullet train or it is going to occur on an even greater scale over 2 years. The former will come with a Rick Allen victory. The later will come with a Lee Anderson victory.
Some might see Allen’s alliances with the mavens of Morris Communications, the Augusta blueblood elites, the Copenhaver-Russell administration, and his own ties to the party establishment all the way to Washington, DC as diametrically opposed to reform. It won’t work that way. Precisely because of those alliances and the many contracts that his business has had with government, Rick Allen will have absolutely no choice but to embrace openness and reform. There simply will be no way to dodge questions. Instead of reform activists having to laboriously go through open records requests, questions will have to be quickly answered and issues resolved. The key to taking Augusta from worst to first lies in its contracting. Rick Allen knows this. Rick Allen will bring the reformers to the table because John Barrow will force him to.
Beyond the things that will force the issue, there is the knowledge that Rick Allen has the intelligence, openness, curiosity, financial background and moral code to bring back the rule of law, the Constitution, and fiscal responsibility to government. He knows the score with far better acumen than most. He knows that the people who send him to Washington won’t be those connected folks.
It was said that only Nixon could have gone to China. Maybe only Allen can visit reform on Augusta.
Reform will come in slower, broader, plainer, and yet more spectacular style if Lee Anderson is the GOP nominee. Then the party will be pinned hopelessly to a candidate with a record hostile to the hurting, threatened, middle class. Barrow will pounce all over it. Anderson went along to get along in the most unethical state government in America. He has pushed sales taxes on groceries, both with the ridiculous GREAT “tax reform” of the disgraced Georgia Speaker Glenn Richardson and with TSPLOST. Anderson’s TSPLOST did away with home rule, subverting Columbia Countians votes to those of welfare statists in neighboring Augusta. His subservience to Nathan Deal brings its own baggage. Then, there is the matter of his willingness to read and comprehend legislation. It just isn’t there. Neither is there substantial debating skill.
Lee is relying on four things to sweep him into office after Tuesday, while he disappears into a cocoon of silence.
It might happen. Obamaphobia very well may mean an Anderson seat in Congress. That would be the sum of all fears for the GOP. It would mean that the party openly supported a known-to-be flawed candidate into the US House of Representatives, one who might deliver more embarrassment and bad policy than a John Deere tractor can haul.
Reform now, GOP. You can pay a nominal price now or a capitol one later.
Tractor pulls are dangerous.***
Al Gray