Tag: Investigative Reports

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

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

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

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

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

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

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

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

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

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

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

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

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

Expensive Issues for Augusta:

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

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

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

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

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

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

More than one commissioner wants that question answered, too.

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

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

Lori Davis GORA Response 10262012 – Conference Center Lease

LD

Conference Center 2008 Schedule

Mayor Retreats from Locked and Loaded Commissioners on TEE Center

Video

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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:

Augusta Held Hostage: Day 24

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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.

 
 
 

Special Report: Augusta Catered to Death

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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

Special Report: Is it TEE Total Extortion?

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Originally posted on the now defunct CityStink.net site October 3, 2012

Wednesday, October 3rd, 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 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.

The Augusta Convention Center

·         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

TSPLOST Beneficiaries Boost Anderson Congressional Campaign

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Monday, August 6, 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.

Analysis of campaign disclosure reports submitted by the Lee Anderson for Congress campaign show an unsurprising result. Anderson, a Republican running for the 12th Congressional District Seat in the Congress of the United States, was an early and heavy beneficiary of political donations from area contractors, more specifically paving and site work contractors who stand to gain from the TSPLOST bill.

While Anderson was in the Georgia House of Representatives, he voted for House Bill 277, the Transportation Investment Act of 2010, which was quickly dubbed TSPLOST.

While voters in Columbia and Lincoln Counties who were former constituents of Anderson’s voted down TSPLOST in their respective counties, most were shocked to learn that they had been sold into subservience to the inner city entitlement crowd by Lee Anderson. Because it was a regional vote, Anderson and the gold dome crowd had eliminated home rule on the county level.

It is said that, “the path to hell is paved with good intentions,”  but for the pavers the path to riches is a river of cash to Lee Anderson.***

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

Special Report: Why is the Parking Deck Contract this Rigged?

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Wednesday, June 27, 2012
Augusta, GA
By Al Gray

Rule Number One in contracting, whether you are the Owner or the Contractor is this: Never, ever sign a contract drafted by the other side, as is.

Why on Earth is the Augusta Commission poised this week to ratify the Reynolds Street Parking Deck Contract when in the upper, right hand corner we find this notation?

Hull Barrett 5/16/12

Version 14

I thought Andrew McKenzie was the City Attorney and Jim Plunkett was serving as Special Counsel for the parking deck and Tee Center deals. Hull Barrett is the attorney for the other side to the RSPD contract, Augusta Riverfront, LLC (I will abbreviate this as ARFLLC in the article). So why is Augusta going to execute their contract?
Being in the asset protection business, I asked Augusta Today and CityStink.net Contributor, Al Gray, a semi-retired Cost Recovery Accounting specialist, to compare Hull Barrett’s contract with the one that the City suggested in its Parking Deck Management RFP as Appendix F . This contract was the one that Ampco Parking Systems tentatively agreed to on its way to becoming the Augusta-recommended parking deck manager, before being jilted by Fred Russell in favor of ARFLLC. The draft contract borrowed a lot of its language from the contract between Augusta and Republic Parking, management firm for the existing Conference Center Parking Deck before the TEE Center.
In this article I am going to dispense with triviality and call the RFP contract “the Ampco contract” because Ampco accepted it without significant reservations.

I wanted to see if the deal Augusta got was as good as the Ampco one Fred rejected. My unpaid consultant balked, saying he had done enough free work and there were powers given to ARFLLC that on their face meant this deal was a “blank check.” Others in our group chimed in and twisted his arm into doing a matrix comparing these contracts. You can view that matrix below.

Deck Contract Matrix 2

The RSPD contract is indeed a blank check. Listen to this:
“Manager shall have discretion and control, free from interference, interruption or disturbance, in all matters relating to management and operation of the RSPD, including, without limitation… and, in general, all activities necessary for operation of the RSPD.”
I was shocked to learn that.

It gets worse. ARFLLC gets appointment as Augusta’s agent, with powers that the Ampco contract denied it. It gives the ARFLLC Manager the right to purchase capital equipment and make capital expenditures, creating risk that Augusta will have unrecorded assets.

The majority of costs under the Deck management agreement is labor and fringe benefits. ARFLLC sets salaries, can assign folks with heavy vested benefits, can assign its own agents as RSPD employees, bill “shared” employees, assign Officers of their company at will, and even pay bonuses for Augusta to fund. The Ampco contract allows almost none of this stuff.

Ampco could have done nothing beyond the limits of the Annual Plan. If it exceeded the costs in the Plan, it would be denied payment. Only the exact same sorts of costs could be billed as were identified in the Plan. The ARFLLC contract that Fred proposes says the Plan is only a goal and gives ARFLLC full authority to exceed the Plan and incur costs to be passed to Augusta not in the Plan.

Ampco was only going to get 2 months to reverse its prepaid operating expenses to Augusta. With ARFLLC, the requirement is 90 days, the balance has to be maintained, and Augusta funds it without limit. (Normally the Plan would be a limit.)

Accounting controls are pathetic, too. Ampco would have had to deposit parking fees by the next business day into Augusta’s account. ARFLLC has no such requirement, with the contract actually looking like it lets that manager hold back funds! If the balance in the RSPD operating account at the end of a quarter dictates Augusta’s need to replenish the account, can’t this defect allow the Manager to withhold revenues then, thereby making Augusta pay up more money? ARFLLC gets to set up an account in Augusta’s name that it controls! It can even directly transfer its fee out of the account. The parking management RFP contract did not allow that.

The Parking Deck RFP that Augusta put out was adamant about having a policy and procedure manual. The ARFLLC  deal does not require any manual at all!

Insurance premiums were going to come out of Ampco’s fee. With this Hull Barrett contract liability insurance is billed to Augusta! Not only that, Ampco would have been required to furnish a $75,000 fidelity bond at its own costs that ARFLLC is allowed to welch on.

I thought the really terrible thing about audit rights and records kept is that most of the costs are in the RSPD payroll and there is a statement in there that the manager doesn’t have to make records available for its other operations – with the RSPD payroll looking to be part of those other operations. Get this – this Hull Barrett contract lets ARFLLC assign folks with high salaries to the RSPD and never show Augusta the actual payroll records!

ARFLLC even gets benefit of 23% of the costs, at nearly $45,000 a year, associated with its 150 parking spaces. The Hull Barrett contract says these are “incidental costs.”  Now this contract says that the “incidental” costs cannot be material to Augusta. I think $238,000 and 23% pretty material, don’t you?

The benefits of the Hull Barrett contract are more numerous than I can get to. ARFLLC can assign the contract without Augusta terminating it. Ampco couldn’t. It can set rates. Ampco couldn’t. ARFLLC can pay itself with Augusta supplying an unlimited funding stream. Ampco couldn’t.

I’ve got the picture. It is one of Augusta caught in a matrix of incompetence, no accounting controls, and powers given to folks outside of government with what looks to be an unlimited revenue stream courtesy of Augusta taxpayers. Thanks a lot, Fred.***

AG

* View the full Parking Deck Management Deal constructed by Hull Barrett below:

Reynolds Street Parking Deck Management Agreement (00412263-14) (2)

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?

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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.