Tag: Augusta Politics

Special Report: Heerily Missing

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Friday, July 6, 2012

Augusta, GA

By Lori Davis

The photo above shows the floor of the Harrison Building, the old brick building shell preserved as an entrance to the TEE Center. This picture was taken on June 7, 2012, during a TEE Center hardhat tour by Convention and Visitor’s Bureau chief Barry White and Heery International’s Jacques Ware.

Heery is the program manager for the City of Augusta’s hundreds of millions of dollars in sales tax funded building project and Jacques Ware is the Heery project manager over the TEE Center.

Below is a photo of the TEE Center Exhibition Hall, the enormous 38,000 square foot open room that is to house the trade shows and various TEE Center exhibitions.

At the time of the tour, the CVB folks excitedly made the point that the floor was going to be poured the next week. This was on June 7.

Interesting.

R.W. Allen LLC’s progress billing number 24, through March 29, 2012 (Page 4, Item 10) shows that two whole months earlier, an incredible 84% of the concrete walls and slabs

were complete!

How can this be? The main exhibit hall room is a staggeringly large percentage of the total concrete slabs on the project. How can 84% of the slabs and walls have been complete back in March when the main floor was still dirt?

Isn’t Augusta put at risk, when subcontractors are paid so far in advance of the work performed? Isn’t the previously noted issue of $1.4 million of kitchen equipment that was paid for a nonexistent kitchen proof that Heery is just rubber stamping contract payments?

Let me see now. The commission relies on Fred Russell, who relies on Heery, who apparently sees construction completed that just isn’t there.

Unreliable fits and this time, it will be set in concrete…….eventually.***

L.D.

Augusta Being ‘Swept’ for $67,260?

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Mr. Simon, Backcharge your Attorney $67,260 

Friday, July 6, 2012
Augusta, GA
By Kurt Huttar
Mr. Paul Simon of Augusta Riverfront, LLC dutifully submitted a 2012 Operating Budget and Capital Budget to the City of Augusta early in the year, as required by the proposed Reynolds Street Parking Deck Management agreement. Included was the cost of a parking deck sweeper.

Houston, we have a problem. You see, the proposed management agreement only allows capital expenditures under pretty limited circumstances. It reads like this – “Capital Improvements” (Capital expenditures) shall mean one or more items or project(s) – i) the cost of each of which totals $5,000.00 or more, ii) that becomes part of the RSPD, and iii) the cost of which is required or allowed to be capitalized under the accounting guidelines of Augusta, Georgia and GAAP.

Since the sweeper is a piece of mobile equipment, it cannot be “part of the RSPD,” can it?

Hopefully, Augusta Riverfront, LLC has not purchased this sweeper under its interim agreement, because if it has, some citizen might demand Augusta’s money back from this purchase, as it is not allowed.

Since taxes and freight of 14% were added to the $59,000 estimated cost, the total would be $67,260.

Since Augusta Riverfront lawyers missed this point, shouldn’t Mr. Simon bill them for this cost?

For another thing, won’t this sweeper be used over in the TEE Center Parking Deck, where Augusta Riverfront is leasing the parking deck? Doesn’t it create an accounting conflict to have 100% of the cost of the sweeper born by the Reynolds Street Parking Deck, which is totally funded by city taxpayers, instead of the TEE Center Deck?

Here is one analyst who wants answers.***

K.H.

RSPD Capital Equipment List

Commission Tables Parking Deck Management Contract

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June 29, 2012
Augusta, GA
By The Outsider


Augusta Commissioners wisely tabled the latest management proposal between the city and Augusta Riverfront, LLC for the $12 million taxpayer financed Reynolds Street Parking Deck at yesterday’s commission meeting. The nearly 100 pages of legal documents were dropped in commissioners’ laps at the last minute as they were coming back from a Georgia Municipal Conference in Savannah. Several commissioners said they needed much more time to review the documents before voting on them. At yesterday’s meeting, Commissioner Jerry Brigham made a motion to send the documents back to a Finance Committee work session for review. His motion was seconded and easily approved.

Lori Davis, a contributor to CityStink.net, had tried to get on yesterday’s meeting agenda to speak in opposition after learning last Friday that the parking deck contract would be up for approval; however, by that time the agenda had been conveniently closed out. Davis was at yesterday’s meeting nonetheless as a citizen observer. The citizen activists from Augusta Today, like Lori Davis, must consider yesterday’s vote as a delayed victory. Mrs. Davis and Al Gray urged commissioners to reject a similar agreement back on February 7th, but Commissioners went ahead and tentatively approved the parking management agreement with the proviso that the $7 million worth of liens would be released on the property that the deck sits on and the land would be transferred to the city’s Land Bank.

But our investigations revealed that has still not happened. The liens had not been removed and 933 Broad Investment, LLC (a sister company of Augusta Riverfront, LLC) had not transferred the land as promised… yet again. Commissioner Joe Bowles was particularly upset with these new revelations having these stern words for Augusta Riverfront, LLC in an interview with Chris Thomas of WRDW: “If they don’t go ahead and get this straightened out,” Bowles said, “I say it’s time to go ahead and bid the parking deck back out. If we don’t hurry up and get that property donated to the land bank, I would say it’s time to scrap the deal and start over.“

After Bowles’ remarks, Augusta Riverfront, LLC , their lawyers from Hull Barrett, and city administrator Fred Russell went into damage control mode. The lawyers quickly cobbled together nearly 100 pages of documents for a new management contract for the parking decks, and said that there was an agreement in place with Wells Fargo to release the liens. However, upon closer inspection, Wells Fargo was actually only agreeing to a partial release of the liens, maintaining a security interest in the $12 million taxpayer financed parking deck. What that means is that if 933 Broad Investment, LLC defaulted on their $7 million loan, Wells Fargo would become the operator of the deck, and would get all of the revenue from the 160 ground floor spaces.

Also, when we put the latest management agreement under the microscope, we found that the terms amounted to a blank check for Augusta Riverfront, LLC with no accounting controls and a nearly unlimited revenue stream to ARLLC courtesy of Augusta taxpayers. To put it in the simplest terms: It was a BAD Deal! But it should have been no surprise that this deal was so lopsided in favor of Augusta Riverfront, LLC, since it was crafted by their own attorneys from Hull Barrett. Where was city attorney Andrew Mckenzie and city-hired outside counsel Jim Plunkett in all of this looking out for the interests of the taxpayers? Why would a management agreement totally crafted by the attorneys for the other parties even be placed on the commission agenda by city administrator Fred Russell? And why was this all done in such haste giving commissioners little time to review the volumes of documents and denying the opportunity for citizens to speak out in opposition?

Cost Recovery Accounting Specialist Al Gray, who is also a contributor to CityStink.net, developed a matrix comparing the latest contract proposal with Augusta Riverfront, LLC with one that Ampco Parking Systems out of Houston, TX had agreed to earlier. You can view that matrix here–> Why is the Parking Deck Contract this Rigged? There was no comparison! The Ampco agreement was far superior to the one being submitted by Augusta Riverfront, LLC. So why did Fred Russell ignore this better deal and go for the one giving a “blank check” to Augusta Riverfront, LLC?

Augusta Commissioners deserve accolades for putting the brakes on this very bad management deal and sending it back to committee. Particularly we would like to recognize Commissioners Bill Lockett, Joe Bowles and Wayne Guilfoyle for showing leadership on this issue and providing assistance in our investigations.

How to Proceed
So  what happens next? Well obviously this bad contract should NOT be approved. This is not something that just needs a few tweaks… it needs a MAJOR overhaul. Here are 3 recommendations for Augusta Commissioners on how to proceed in regard to the management of the parking decks:

1. Let ARLLC keep running the decks temporarily as they have since October 2011 with the proviso that EVERYTHING is subject to audit and use the time to cure the issues with the TEE and Decks… or

2. Use the Ampco deal as a template and swap out the deck agreements. Put in strong audit rights. Get all capital purchases to be made by Augusta.

3. *Condemn the land under the decks because Augusta needs to get out from under paying 23% of the costs, then rebid the deck management out.

 
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Special Report: Hotel Transportation Tax Heist?

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Monday, June 25, 2012
Augusta, GA
By Lori Davis
On May 18, 2012, Augusta Today member Dean Klopotic submitted a Georgia Open Records Act Request to the City of Augusta for an accounting of the $1 ‘bed tax’, or hotel transportation tax, which was enacted in 2008 to fund the capital and operating budgets for the TEE Center, plus to fund the Laney Walker Improvement project. The City Law Department responded with accounting reports showing the requested information.
The Tax was enacted via Ordinance Number 7034  on February 19, 2008. Collections began March 1, 2008. The existing hotel tax comes under the framework of  Ordinance 7209.
 
Subsequent to the enactment of this ordinance, on September 16, 2008 Ordinance 7083 was passed and executed. This ordinance added Code Section 2-2-33.7 which reads:
The effective date for this funding provision shall be the first calendar month following the latter of the execution of a contact for the construction of the TEE Center or the closing for the acquisition of the real property on which the TEE Center shall be constructed Until the effective date all Transportation Fees that were to be designated for TEE Center expenses including the Transportation fees collected prior to enactment of this subsection shall be allocated to fund Transportation services as provided in Paragraph 1.
Funds were collected and distributed to the Laney Walker Redevelopment Projects for the Fiscal Years 2008 through 2010, with the balance allocated to the Augusta Transportation Department. However, in Fiscal Year 2011, $350,000 was transferred to the TEE Center, Department 297061910, Account #5721110. Why? And who decided to blatantly go against the ordinance? If transportation suddenly stopped getting their allotment, did anyone in transportation question this? Did any of the money ever go for transportation?
The Ordinance does not allow the money to be transferred because the parcel that the Manager and TEE Center Partner, Augusta Riverfront, LLC owns under the TEE Center (parcel #037-3-047-00-0)  had not been deeded over to the city at the time that the funds were transferred for TEE Center use.
*see map aerial of parcel (yellow border) below*
In other words, the money should have continued to go to transportation even until this very day. This expenditure looks to me to have been a misappropriation of funds for a purpose other than allowed by Augusta’s governing ordinances.
Another issue is that  Ordinance Number 7034  allows the $350,000 to be spent on operation and maintenance costs for the Tee, while the tentative agreements with Augusta Riverfront, LLC, Manager of the TEE Center, say that $100,000 is to go to the TEE Center Capital Budget, while the remaining $250,000 goes to operations and maintenance.
Is our City government a renegade operation who ignores its own ordinances?
Summary
So let’s summarize what all happened here. In order to fund the Laney-Walker redevelopment project with the hotel-motel tax it had to be linked to promoting tourism. That was done by linking the $1 hotel bed tax to transit (which is considered a tourism related service). Between 2008 and 2010, Augusta Public Transit was receiving its $350,000 per year from the $1 per night hotel/motel tax. However, those payments ceased in 2011 and were diverted to the TEE Center. But under the guidelines of the ordinance that established the new hotel/motel tax, the TEE Center was not eligible to receive any of these funds in 2011 because Augusta Riverfront, LLC had not met key stipulations of the agreement, such as deeding over a parcel under the TEE center to the city. Augusta Public Transit should still be receiving that $350,000 per year from the $1 per night hotel bed tax that was diverted to TEE operations.
To make matters worse, we discovered that the $350,000 diverted from transit to the TEE Center all went towards marketing. The irony in all of this is that all of the other hotels in Richmond County are paying into this new hotel-motel tax which is essentially going to market a competitor hotel, the Augusta Riverfront, LLC owned Marriott, which has exclusive use of the TEE Center. The marketing program paid for by the Augusta CVB for the TEE Center with this $350,000 conspicuously mentions the convenience of the Marriott hotel being attached to the facility but gives short shrift to other Augusta hotels such as the Ramada Plaza, which is just a few blocks away. The fact of the matter is, none of this money should have gone to the TEE Center in 2011 nor currently, and Ordinance Number 7034 and the tentative agreements between the city and Augusta Riverfront, LLC conflict with one another.
Recently, I went on a tour of the TEE Center as provided by the Convention and Visitors Bureau. I asked the question,”How will convention attendees get here from other area hotels? Will there be a shuttle service provided?” The answer I received was a quick, “No. That simply is too costly.“
What if the money that should have been going to transportation all of this time had still been going to transportation as the ordinance had stipulated? Is any of this fair to the other hotel owners in Augusta who are being taxed to subsidize their competition? Why did the TEE Center receive $350,000 from the hotel/motel tax in 2011 when this was clearly a violation of the ordinance that established the tax? Who authorized this diversion of funds from the transit department?
Just imagine how much $350,000 could have helped improve the transit system. And shouldn’t some of it go towards providing transportation from the other area hotels to this new publicly funded convention center that they helped pay for via the hotel-motel tax? Why does everything go towards the benefit of Augusta Riverfront, LLC? These may be some questions other area hoteliers may want to start asking. Stay tuned for updates.**
LD

Below are the public documents cited in this article:

Hotel Tranport Tax GORAOrd 7034 Excise Tax Hotel Motel Amend City Code (1)

Ord 7209 Amend Arc Code Section 2-32 to Provuide for the Use of the Hotel m

Ord 7083 to Amend the Arc Code by Adding Subparagraph (a) to Paragraph 111 (1)

Tee Land Acquisition

Special Report: A TEE Total Mess!

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Making a Hash over $1.3 Million Kitchen Equipment

Originally posted on CityStink
Thursday, June 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.

In the waning weeks of Winter 2012, Augusta Today contributor Lori Davis submitted an exploratory, wide ranging Georgia Open Records Act Request.

for the City of Augusta’s payments under major contracts. The documents response was massive. Deep in the supporting subcontractor billings to the R.W. Allen, LLC contract for the TEE Center was a most intriguing invoice from Norvell Fixture and Equipment Company showing that $199,656.00 of kitchen equipment as work completed and an additional $76,289.25 worth was stored, for a total billed and paid of $275,845.32! (less 10% retainage). The contract total for kitchen equipment is a surprising $1,329,418.00.

Why was this invoice noteworthy? There was no detailed partnership agreement executed between the City and its TEE Center Partner and Manager, Augusta Riverfront, LLC going into the contracts for construction, leaving the last word on the partnership being the unsigned, undated August 2007 Term Sheet. Repeated references to kitchen equipment are pretty clear that such equipment are the responsibility of the LLC, including this: “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.” Similar language making the LLC responsible for Kitchen Equipment remain within the executed 1999 Core Agreement of record in the Offices of the Clerk of Augusta Richmond County Superior Court.

No Augusta Funds are to be used to procure kitchen equipment, when $1.3 million of it is under contract?

During negotiations that have not yet produced a signed partnership agreement there was certainly a commitment for Augusta to construct new kitchen space within the TEE Center and relocate the combined kitchen from the existing Convention Center. That had no impact upon equipment ownership. Real property improvements and tangible personal property, such as equipment, are different.

In order to advance the investigation, Augusta Today member Dean Klopotic submitted a follow-up GORA request seeking the most recent R.W. Allen LLC billings under the Tee Center Contract. The City responded with Progress Billing Number 24, covering costs through March 24, 2012, including Kitchen Equipment Invoice Number 6, through March 20, 2012.

The details show $792,984.52 equipment work completed, materials stored of $162,544.34 and a total billed of $955,528.86, less 10% retainage. The R.W. Allen monthly invoice shows no additional kitchen equipment stored. Both Construction Manager and Subcontractor show most of the kitchen equipment as work completed.

At 11:00 AM on Thursday, June 7, Barry White of the Convention and Visitors Bureau conducted a TEE Center tour, which was attended by Ms. Davis and this writer. Project Manager Jacques Ware of Program Management firm Heery International would not permit the use of a video camera, suggesting that we come back for the Media Tour to be held Thursday June 14.

When the entourage reached the second floor of the TEE Center, the empty space was pointed out where the kitchen is to be located. At that juncture, an inquiry was made about the kitchen equipment invoiced back in December. Mr. Ware said that he didn’t authorize payment for a kitchen equipment invoice, asking what kind of equipment was on it. This writer responded, “A number of tilting kettles and ranges,” then pondering out loud if they might be stored. Mr. Ware said the only kitchen equipment there would have to have been, “for the Marriott.” (The Marriott is owned and operated by Augusta Riverfront, LLC.)

An email request to Mr. Barry White to be included in the Media Tour on the 14th received no response. Other attempts were made to get a separate tour along with one or a group of commissioners to investigate the matter. Commissioner Joe Jackson had just returned from vacation and could not schedule a tour in the next week. Commissioner Bill Lockett managed to get the Heery project liaison to get permission to join another June 14 tour, only to see it canceled after several hours.

Commissioner Wayne Guilfoyle was provided with a copy of Kitchen Equipment Invoice on the morning of June 20, whereupon he sought explanation of where the kitchen equipment is from Program Manager Heery International, receiving assurance that the materials were, “either stored or installed.”

It is fairly common practice to bill stored materials. There is clear language on billing documents that they are, “Materials Stored on Job Site (Invoices if Required).”

Where does the situation stand? What are the issues?

Issues and Questions

  • Where is the equipment that Augusta paid for?

  • Has Augusta Riverfront, LLC been relieved of its responsibility for the purchase of kitchen equipment? If so, where? If not, is Augusta being reimbursed for the $1.3 million cost?

  • If the Kitchen Equipment was delivered and used in Conference Center operations and events ($955,528.86 having been delivered, installed or stored prior to the Masters upswing in events) where is the accounting for the revenues?

  • Without an Effective Date having been established for the successor catering agreement, where does accountability lie, especially since Augusta Riverfront, LLC’s Paul Simon having declared the TEE and Conference Center merged months ago?

  • Why do both the R.W. Allen and Norvell Fixture and Equipment Company invoicing show the equipment as “Work Completed” if the equipment is “Stored?”

  • Should Augusta have paid for nearly a $million of equipment months before it is installed in the new kitchen?

  • Why does the invoicing include future charges for repairing Augusta Riverfront, LLC equipment? Whose equipment will it be after Augusta repairs it?

———–

Commissioners Joe Bowles, Joe Jackson, Wayne Guilfoyle, and Bill Lockett have provided Augusta Today and CityStink.net with substantial cooperation in this investigation and report. The public can feel confident that these gentlemen will pursue this matter to a conclusion.

Several of them need to participate in a tour and inspection of the paid-for kitchen equipment. Perhaps the city’s internal auditor can vouch for the accountability of the equipment, including verification of delivery documents to a storage facility before the dates that the invoicing was submitted.

It is hoped that all will aggressively protect the interests of the citizens of Augusta and seek wise counsel as they deal with the aftermath of the total mess that the TEE Center currently represents.*** Stay tuned, more to come.

A.G.

Joe Bowles Plays Hardball with Augusta Riverfront, LLC Over Parking Deck

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Commissioner Joe Bowles is talking tough over the parking deck

Wednesday, June 20, 2012
Augusta, GA
By The Outsider

Mayor pro tem Joe Bowles has some tough talk for the operators of the new TEE Center parking deck on Reynolds Street: either abide by the terms of the management agreement approved back in February or the deal is off!

The agreement that was hatched at the last minute on February 7th stipulated that  the $7 million liens on the property under the deck must be removed and the property must be transferred from 933 Broad Investment, LLC (a subsidiary of Augusta Riverfront, LLC) to the city’s land bank.

However, we here at CityStink.net discovered that these conditions have still not been satisfied. As of today, the liens have still not been removed and the property has still not been deeded over to the land bank. You can read our full report here–> Exclusive: Fred Wrestles, Augusta Gets Decked.

For commissioners who voted for the management agreement with Augusta Riverfront, LLC, including Mayor pro tem Joe Bowles, this must seem like yet another in a long succession of broken promises, and it has to seem as though the last minute fix to approve the management agreement was little more than a stalling tactic to bide more time for ARLLC. And Joe Bowles seems none too pleased with this latest revelation. In a report by Chris Thomas of WRDW News 12 yesterday, the Mayor pro tem said, “The city is basically operating under an agreement with them that is not in effect,” and that, “It’s not good business practice. That is for sure.” 

Indeed. Since the basic stipulations of the management agreement have not been satisfied by Augusta Riverfront, LLC (who are also the owners of the Marriott Hotel), then the city is paying a $25,000 a year fee to deck operators based on a contract that is made of thin air, much like the city’s air rights for the $12 million parking deck.

And Joe Bowles’ patience seems to be wearing thin with Augusta Riverfront, LLC, saying, “If they don’t go ahead and get this straightened out, I say it’s time to go ahead and bid the parking deck back out. If we don’t hurry up and get that property donated to the land bank, I would say it’s time to scrap the deal and start over.”

When queried by Chris Thomas on this issue, city administrator Fred Russell could only say, “This is a long, complicated process.” 

Joe Bowles is on the right track. It is time to re-bid this parking management contract and get a better deal for the city. In our May 29th investigative report, we discovered that there were bids from other companies on the table that were much more favorable to the city. The agreement that Fred Russell negotiated with Augusta Riverfront, LLC essentially amounts to a blank check, where the city assumes all of the expenses and risks, and ARLLC gets all of the benefits and most of the profits.

In fact, Richard Acree Jr, the Assistant Director of Augusta Facilities Management Division, recommended that the parking deck management contract be awarded to Ampco Parking Systems out of Houston, TX and not to Augusta Riverfront, LLC. However, it appears that city administrator Fred Russell simply ignored the better deal and instead favored a much more inferior management agreement with ARLLC… one that involves more expense, more risk and substantially less benefits for the city. Just why would Fred Russell do this if he is supposedly working for the city?

But it gets worse. In our May 31st investigative report, Augusta’s $714,357 ‘Incidental’ Cost,  we discovered that under Fred’s deal with Augusta Riverfront, LLC, the city was assuming ALL of the operating and maintenance costs for the deck even when 150 ground floor spaces would still be under the ownership and control of ARLLC. And that’s on top of the $25,000 management fee the city would be paying them. In fact, under Fred’s deal the city would even be on the hook for paying for the toll booth operator, when Ampco had agreed to assume those costs under their bid. So, just what benefit is the city getting out of this deal? Not much. In fact, over the course of the agreement, the city would end up paying $714,357 for these additional expenses that should be  the responsibility of Augusta Riverfront, LLC. Fred Russell called these expenses “incidental.”

So Joe Bowles has every reason to be upset, as should all Augusta taxpayers. We believe that the Mayor pro tem was probably giving Fred Russell and Augusta Riverfront, LLC the benefit of the doubt… that they would make good on their promise to transfer the land and that would provide an easy solution to what has become a complicated mess. But unfortunately, there are rarely easy fixes for fiascoes such as this, especially when you have a city administrator repeatedly withholding vital information from commissioners and a series of broken promises from Augusta Riverfront, LLC.

This is precisely why Al Gray and Lori Davis urged commissioners to hold off on approving a parking management agreement with Augusta Riverfront, LLC on February 7th. Al Gray and Lori Davis urged commissioners to put brakes on parking agreement.

But since then more has come out that shows just what a bad deal it was and, to be fair, commissioners were not aware of these new revelations when they voted for it. They probably thought, in good faith, that all the loose ends would be tied up with the land being transferred, but  investing more good faith now in the same people who have continually mislead you would be an act of folly even greater than the horribly bad parking management deal negotiated by Fred Russell.

We hope Mayor pro tem Joe Bowles stands firm in his resolve, and we would suggest for the commission to STOP any parking management agreement being executed between the city and Augusta Riverfront, LLC. We also suggest revisiting the bids from other companies like Ampco that were apparently ignored by Fred Russell that would yield more favorable terms and less expense for the city.

But we will have even more coming out within the next few weeks on the much larger TEE Center management deal between the city and Augusta Riverfront, LLC that will make ParkingGate look pale by comparison. We told you in our Special Report: No Way to Treat a Partner, that a CORE agreement does not exist between the city and Augusta Riverfront, LLC for the management of the much more expensive TEE Center that was built adjacent to the ARLLC owned Marriott hotel. That’s right, the city built a $38 million facility without an executed agreement… and once again, on parcels of land still owned by Augusta Riverfront, LLC. And under the provisions of the original 1999 CORE agreement for the existing conference center, the only agreement that seems to exist that would currently govern the TEE Center operations, Augusta Riverfront, LLC should have been responsible for the nearly $400,000 change order for a more expensive HVAC system they demanded the city pay because of more stringent Marriott corporate standards.

The pattern here seems to be quite clear. Under all of these deals between the city and Augusta Riverfront, LLC, the taxpayers get stuck paying all of the bills and ARLLC reaps all of the rewards.. including having a $38 million new convention center built adjacent to their hotel giving them not only exclusive use of the facility but also substantially raising the value of their property.  Please stay tuned to our upcoming investigative reports into more waste and bad deals in regard to the TEE Center.

So, commissioners may also want to hold off on finalizing any agreements with Augusta Riverfront, LLC over the TEE Center as well… especially after our upcoming reports. As we’ve mentioned, no CORE agreement seems to exist, and like the parking deck, perhaps the city can negotiate a much better deal by putting this out to bid as well.

Also, it should be obvious now that Fred Russell cannot be trusted to look after the city’s interests in negotiating these deals. In every aspect of the TEE Center and parking deck deals, Russell has consistently favored Augusta Riverfront, LLC over the city for which he works. And not only that, Russell has withheld important information from commissioners that could have affected key votes over these arrangements. Can Augusta afford any more of Fred? Perhaps it’s also time to heed Lori Davis’ advice from that February 7th commission meeting and relieve Fred Russell of his duties as city administrator before he costs the taxpayers any more money, because at this rate, keeping him is becoming far more expensive than firing him. Stay tuned, more to come.***
OS

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Maybe it’s time to call the whole thing off!

Forensic Audit Subcommittee Making Progress

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Tuesday, June 19, 2012
Augusta, GA
 

The Forensic Audit Subcommittee chaired by Commissioner Bill Lockett met today for the second time, to discuss the scope of work necessary for launching a Forensic Audit concerning the TEE Center Parking Deck. As previously discussed in this committee, the first RFP (Request for Proposals), was released for bid with a scope of work that was far too broad. Firms who showed an interest in bidding on the audit were asking for more clarification and direction.

It seems that forensic audits can become quite pricey when looking for criminal wrong doing. As I left this meeting today, I knew I had to tell what took place. The only media present were two regular writers for the Augusta Chronicle: Susan McCord and Sylvia Cooper. As I rode down the elevator with Mrs. Cooper, we exchanged pleasantries and talked about what had taken place in the meeting. I said to her,” I have got to get an article out for City Stink on this… You do know that we named our blog in your honor.” She acknowledged that she knew that, and said to me,”Your job will be easy.” I said, “I know it will, because I will be able to write exactly what happened in that room.” We left it at that. Here is what happened:

Commissioner Lockett called the meeting to order and began to lay out his reasoning, a second time, for the need of a forensic audit. As he began his remarks, he talked about the fact that a good portion of the scope of the work in question had already been done by a group called Augusta Today, and through a blog called, CityStink.net. He went on to say that this citizen’s group had given of their own time, and spent their own money to ask for documents in open records requests, to uncover the truth associated with the TEE Center parking deck. He revealed that the articles published by City Stink were all well researched and had supporting documents to accompany them. He presented to the group four such articles in the form of, “links,” for review. The CityStink.net articles he referenced were the following:

Committee members agreed to look at the articles researched and written by the, “citizen’s group,” without discussion… The first shocking moment of the meeting!! I expected there to be some objection from General Counsel… “Can’t believe those citizens“…  Maybe just the name, “City Stink,” was beginning to get some respect. I began to listen closer.

Commissioner Lockett brought back up the fact that they had been told that all of the land under the parking deck would be donated. He questioned the way in which property was acquired under the parking deck, with some being purchased by the city and other parcels remaining with Augusta Riverfront, LLC. Seems that a parcel owned by State Senator Bill Jackson (The old gas station at 9th and Reynolds) had been traded for property at 13th and Reynolds adjoining Mr. Jackson’s tile business. Why was it important to make this deal, but not with any of the rest of the parcels?  Another good question that brought Commissioner Guilfoyle, a new committee member, out of hibernation. He couldn’t understand why we all just didn’t believe Senator Jackson’s son, as he explained on the Austin Rhode’s Show, exactly what the truth was concerning this property trade, when it was uncovered by members of Augusta Today.

Commissioner Lockett was quick to respond that all associated property could have been condemned and taken for city use. Commissioner Guilfoyle responded, “I believe this would have been a tough process.” Touche… In any event, the land under the tax payer funded parking deck still has a 6 million dollar lien on it. There is no disputing that fact. Also, the plan on the table is to turn the land under the deck, over to the land bank, let Augusta Riverfront, LLC (Billy Morris and Paul Simon) own the bottom floor parking spaces and the tax payers get the air rights. General Counsel Andrew MacKenzie responded with a blank stare. Not one comment from committee members, either. I believe Jim Plunkett, outside Counsel for the city called this, “Complicated.“

Finally, After much discussion, Commissioner Lockett revealed the following items that he believed would be a narrow enough scope to put in an RFP to get to the bottom of all of this .  They are as follows:

 
Parking Decks
*Obtain and review the CORE and management agreements for the Reynolds Street Parking Deck RSPD and the TEE Center Parking Decks. Identify controls deficiencies, if any, that might arise by having different agreements with potential cost-shifting exposures.

 

*Obtain and review lien documents filed against ARLLC or 933 Broad, LLC properties situate under the RSPD and ascertain that the parcels can be transferred free of said liens to the City.
 
 
*Evaluate and determine whether City management and contracted legal counsel acted properly in allowing the RSPD to be constructed without executed agreements between the parties.
 
 
*Obtain and evaluate parking deck management Requests for Quotation covering subject parking decks, if any exist, to determine whether ARLLC or 933 Broad, LLC ownership of underlying properties and subsequent ownership of ground floor parking spaces were disclosed to bidders  and whether bids were properly solicited, received, and evaluated.

 

 
*If there were alternative bids taken, determine whether the combined RSPD and TEE Center deck agreements allow costs materially in excess of those bids.

 

 
*Evaluate whether contracting out the operation of the RSPD to an operator not related to ARLLC or 933 Broad, LLC would have been practical or will be be practical in the future given the relationships between the parties.

 

 
*Obtain CORE and management agreements to evaluate whether there are adequate controls in place to protect the city’s interests and finances from waste, abuse, fraud, or mismanagement by the Manager, including extensive rights of audit allowing continuous capabilities to audit these agreements.
 
 
 
As committee members began to cast their votes in approval of the new scope, Commissioner Guilfoyle took exception with the way the consolidated government has operated, revisiting the Grand Jury investigation of 1996 into city government. Recommendations were made to the commissioners of what needed to be done to rectify the problems that were uncovered.
 
Guilfoyle commented that nothing ever happened. Commissioner Lockett countered, “Someone has put us in this predicament right now that we are in, and it is up to us to make the necessary changes when we know what is required. This is what our citizens expect, and this is what we will have to do.” 
 
We at Augusta Today and City Stink will continue to pay attention to all that goes on with this forensic audit and all that will go uncovered by the local media. We are getting somewhere, and it feels good!***
 
 
LD
 

TEE Center Special Report: No Way to Treat a “Partner”

  By , ,
“Howdy, partner! Can you spare a few $million?”

Thursday, June 7, 2012
Augusta, GA
By Lori Davis

Our Augusta Today and CityStink.net group had limited representation at the January 30, 2012 meeting of the City of Augusta’s Finance Committee when several commissioners roasted the City’s outside lawyer, Jim Plunkett over the TEE Center parking deck agreements with manager Augusta Riverfront, LLC. However, one comment reported by WJBF’s George Eskola struck home. “We’re supposed to be in a partnership but I’ve never seen partners treated as we’ve been treated in these issues accusing people of doing things wrong we don’t operate like that,” said Paul Simon, whose company Augusta Riverfront, LLC owns the Marriott.

The comment sent me looking for the partnership agreement for the TEE Center that Mr. Simon was talking about.

Here is what was found. Better said, here is what I didn’t find.

The Augusta Commission has only approved one document that might be seen as a “partnership agreement” for the TEE Center in the form of the Management Agreement Term Sheet. It is UNSIGNED AND UNDATED, but was included in the package of documents when the TEE Center was approved by the Commission on August 21, 2007.

After the August 2007 meeting, the only later action was at the called meeting of the Board of Commissioners in early December 2009 where the Commissioners authorized the Mayor to execute the TEE Center Construction Operating and Reciprocal Easement (CORE) Agreement in anticipation of beginning construction.

Seeing that as being the partnership agreement I submitted a Georgia Open Records Request to the Augusta Law Department for the executed agreement. They didn’t have it.

Deke Copenhaver NEVER signed a CORE agreement. It doesn’t exist.

Yes, you read that correctly. The partnership for the $50 million TEE Center and Parking Deck complex does not exist! What does exist has some really shocking provisions that I think should have Augusta demanding big money from Mr. Simon’s LLC!

What does exist is the CORE agreement on the existing Conference Center dated June 21, 1999 recorded in the records of the Clerk of the Augusta Richmond County Superior Court in Deed Book 648 on page 45.

The existing CORE agreement was not canceled or superseded by a more recent partnership deal as far as we can tell. What does this signed and executed agreement say? Page 13 has a whole bunch of wording that makes Augusta Riverfront, LLC responsible for all manner of construction and maintenance cost throughout the term of the agreement.

Page 16 says this: “Developer (Augusta Riverfront, LLC) in operating the air conditioning and heating system for the Hotels and the Expanded Conference Center shall operate such systems in a manner which will not unduly drain heat, ventilation or air conditioning from the Improvements of any other party.”

Nowhere in the unsigned, undated Term Sheet is there change in duties as they relate to HVAC or the existing Conference Center. The Term Sheet even says, “Augusta’s capital funds shall specifically not be used for items related to any Convention Center and/or Hotel capital cost.”

The Augusta Chronicle reported about a controversial change order for an expensive HVAC (heating, ventilation, and air conditioning) upgrade requested by Augusta Riverfront, LLC, owners of the Marriott, writing, “The changes being requested include $399,083 for upgrades to the smoke exhaust system, increasing the number of air changes at the convention center from the Georgia minimum standard of about 2.5 per hour to eight per hour, as requested by Marriott.”

Questions

If the signed and executed CORE agreement for the Convention Center puts responsibility for HVAC operations within the hotel upon the hotel owners, and the 2007 Term Sheet does the same for Hotel capital costs, why hasn’t the Commission, Mayor and Fred Russell demanded that Augusta’s partners pay these costs? Where is our $399,083?

Where is the partnership agreement? Does Fred Russell mean to tell us that they built a $50 million complex using public funds with no partnership agreement?

How can it be legal to build a publicly funded project like this on unsigned, undated documents?

Shouldn’t all Augusta be channeling Mr. Simon’s objection -“I’ve never seen partners treated as we’ve been treated ” -right back at him?***

-Lori Davis


(*Below are pdfs of some of the public documents cited in this article)
2009 CORE GORA Request – Lori Davis
1999 Core – Radisson Hotel Conference Center (1)
1999 CORE – Radisson P. 13
1999 CORE – Radisson P. 16

Can Augusta Media Mimic Copperfield and Make Parking Deck Vanish?

  By , ,

Friday, June 1, 2012

Augusta, GA
By Al Gray
Augusta’s $715,000 “Incidental” Gift1

David Copperfield’s illusion of making the Statue of Liberty disappear is listed by the Guinness Book of World Records as, “the largest disappearance ever performed by a magician.” In the closed-loop, incestuous world of Augusta media, similar miracles have been performed over the years, mostly by using the tactic of blowing up small incidents of monetary losses, – be they by graft, fraud, or plain stupidity – to divert attention from the elephants in the room. Grandma used to call this, “Straining gnats while swallowing camels.” The Reynolds Street Parking Deck doesn’t have tusks or a hump, but some folks who know better have camel hair on their bibs.

The bit players in the Augusta illusion are officials like Tax Commissioner Stephen Kendrick, who was still being hounded by the Augusta Chronicle a year later over a missing $25,000, and former city commissioner Betty  Beard’s $20,000 supposed misappropriation of funds.

What Fred Russell made go away looked like this:

What Fred reappeared wasn’t an elephant, it was much larger:

 

If you are Augusta Riverfront, LLC, Fred relieved you of an ugly, unattended surface lot. What he came back with appears to be an enclosed, lighted, secure, landscaped, and operated lot at no capital or operating cost.

Sweet. It must be nice to be a principal partner of Augusta Riverfront, LLC and the publisher of the only daily newspaper in the city, The Augusta Chronicle, where you can use your  influence in the media to create illusions through the art of distraction, just like David Copperfield.

Everyone should be so lucky as to negotiate a deal with Fred Russell like this.***

A.G.

1 Based upon the RSPD agreement submitted to the Board of Commissioners 1/30/2012

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

  By , ,


May 31, 2012
Augusta, GA
By Al Gray

  

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

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

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

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

 

Whoa!

 

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

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

 

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

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

 

— Al Gray

 

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