Originally published October 31, 2012 on the now defunct CityStink.net site.
Wednesday, October 31, 2012
Augusta, GA
From CityStink.net Reports
Locketted and Loaded was Commissioner Bill Lockett when the TEE Center was removed from Monday’s Augusta Commission Committee meeting. See our exclusive video below:
Originally posted by CityStink
Sunday, October 28, 2012
Augusta, GA
From CityStink.net Reports
On the eve of Mayor Deke Copenhaver forcing yet another TEE Center vote on balking commissioners, Augusta Today contributor Al Gray challenges cost controls after being silenced by Copenhaver a week earlier. See our video report below.
Originally posted on Citystink
Wednesday, October 24, 2012
Augusta, GA
From CityStink.net Reports
Augusta Commissioner Joe Bowles takes a stab at TEE Center Management Bonuses, but falls to Simon Says and ends up voting for them anyway. Watch Simon say the taxpayer is going to lose and his managers will be paid in the video below.
A Little White Lie?
Originally posted on CityStink
Tuesday, October 16, 2012
Augusta, GA
By Kurt Huttar
Here we go. It is now official. As my Augusta Today colleagues and fellow CityStink.net contributors, Lori Davis, Brad Owens and Al Gray have been saying for months, the Augusta TEE/Convention/Conference/Whatever-it-is- called-next-week is a TEETOTAL DISASTER. Yesterday the projected LOSSES came out for this already-extinct dinosaur –$911,000 plus in losses!
Since only $250,000 is going to be available from the dedicated funding source of the hotel transportation tax, Augusta Administrator Fred Russell has had to admit that the balance of the funding for this enormous albatross on city taxpayers will have to come out of the General Fund. One supposes that fire and police protection will take another hit.
Of course, accompanying the news of this debacle the Augusta Chronicle, who shares ownership with erstwhile TEE manager Augusta Riverfront, LLC, trotted out the usual wildly optimistic tourism revenue growth propaganda.
“As (Augusta Riverfront’s Paul S.) Simon and Augusta Convention and Visitors Bureau officials have said, the benefits to the city don’t come from revenue from the center but from visitor spending. Simon’s report includes a CVB (Convention and Visitors Bureau) chart estimating $8.7 million in visitor spending in the first year from 13 conventions.”
This statement rang a bell from a July 8, 2007 propaganda piece that Barry White, Director of the CVB, had published in the Chronicle. White wrote at the time: “Not only does Augusta Riverfront LLC bring proven expertise, it has offered to donate to the city downtown real estate valued at an estimated $1 million. The LLC also will pay annual center operating expenses over $250,000 and capital improvements over $100,000 a year.”
Wow!
How much more wrong can a bureaucrat be? The deal went from the LLC funding $350,000 a year being reported in Mr. Simon’s former newspaper to Augusta’s losses being capped at $350,000 annually a month later – an amazing $700,000 swing against Augusta taxpayers in one month! This looks like the first bait-and-switch. Now we have the second. Now the losses to Augusta are nearly $1 million!!
Who can believe anything coming out of CVB now? The free land had $7 millions in liens on it and now the city will lose millions instead of getting millions in contributions from its “partners.”
The 2007 Barry White piece in the Chronicle also reminds one of another little white lie that TEE Center supporters hawk – that the voters of Augusta approved the TEE Center in 2005. What they never bring up is that the voters approved this boondoggle after being told it would cost ‘only’ $20 million. Now the cost is over $50 million ($tens of millions more taking into account the existing Conference Center) and it looks like the operating losses for the first decade will easily exceed $20 million. Bear in mind that none of the projected losses include depreciation or debt service!
Little white lies got one huge white elephant constructed on Reynolds Street.
Reality trumps slanted projections and you can’t use “White Out”, either.
TEE Center under construction August 2012
Originally posted on CityStink
Thursday, October 4, 2012
Augusta, GA
By Bradley Owens
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article. Cost Recovery Works is no longer in business, as of December 31, 2020.
Houston, we have a problem. Rather the City of Augusta’s special counsel Jim Plunkett and his predecessors who created the TEE Center Agreements have a host of problems. Most of them center around “Conference Center” versus “Convention Center” but the TEE Center Catering Agreement is the lynchpin. Our Augusta Today and CityStink.net investigative team now seems prescient in our dogged pursuit of the elusive kitchen equipment.
The entire TEE Center fiasco began with an unsigned, undated “Term Sheet” that became the only partnership agreement with Augusta Riverfront, LLC that was approved by the Augusta City Commission. This agreement refers repeatedly to the “ Conference Center” as being subject to the preexisting agreement between the partners. It says that Augusta and Riverfront agree to “modify their agreement for the operation of the Convention Center to include the Trade Center.” Trouble was, there was no agreement to operate any “Convention Center”, only the 1999 agreement for the operation of the “Conference Center.”
Since then there has been considerable publicity given that the entire TEE Center, Parking Decks, and existing Conference/Convention Center are now the “Convention Center,” which furthers the misconception that there ever was a “Convention Center” before, but all the while the lawyers reverted to labeling the existing facility as the “Conference Center.” Was it deceit or wanton incompetence? Read on and you decide.
On September 24, 2012 Augusta Riverfront, LLC’s Paul S. Simon appeared before the Augusta Commission with an ultimatum – Execute a plethora of contracts, assignments, releases, modifications and other legal documents within 22 days or face cancellation of TEE/Trade Center events. Augusta then knew it was being held hostage to the lawyer’s handiwork, efforts that Administrator Fred Russell promised were nearly complete 3 years ago.
Included was the catering agreement. This document spells out that the new kitchen built in the TEE Center, but legally carved out as the “Conference Center Annex”, is to serve both Marriott hotels and the existing Conference Center. Why is the term “ Conference Center” so important? Why, it is because if the existing Conference Center agreement was intended to continue – which it was – it means that the $1.4 million of kitchen equipment that Augusta bought under a controversial change order to the TEE Center Contract will mostly be used to generate revenues for the Marriotts and not Augusta. This is because the existing Conference Center agreement pays Augusta 5% of the rental space revenues and nothing else, including catering.
 |
| TEE Center abuts The Marriott Hotel |
Unless Riverfront has quietly reimbursed the city, Augusta paid $1.4 million for kitchen equipment that it will get almost NO USE OF, because the Trade Center space will be used primarily for exhibits, with attendees adjourning to meeting rooms in the freely-catered Conference Center for meals. So far, our Georgia Open Records request responses from Augusta have not shown that the Commission ever agreed to relieve Riverfront of the LLC’s responsibilities for kitchen equipment.
Under the circumstances, it would be wildly irresponsible for Augusta’s Commissioners to agree to pay for any of the kitchen equipment, particularly since some of the charges on the vendor’s invoices was to repair Riverfront LLC equipment! (Under prior agreements Riverfront owned the equipment.) Where is our $1.4 million? Is there any prohibition whatsoever barring Riverfront from running a commercial catering operation citywide out of the Conference Center portion of the Convention Center, using the $1.4 million of Augusta kitchen equipment?
Worst of all, the catering agreement mentions in several places that services to the hotels, to the restaurants, and to the existing Conference Center will be provided by the kitchen. There is no operational procedure manual to set out controls over food and beverage procurement, use or inventory for the TEE Center versus these other operations. Without controls and in the midst of all of these operations that consume food and beverage, how will Augusta avoid being looted from various parties on and off the premises? Will there be household with freezers of steaks, courtesy of Augusta taxpayers?
How many of the Marriott’s existing catering staff will be assigned to the TEE Center contract? Since the vast majority of the catering seems to be outside of the TEE Center, why should management level employees be charged to the TEE Center Catering Agreement?
In life, timing is everything. With the unsigned, undated Term Sheet that began the TEE Center project in 2007, the seed was planted in the minds of the public and the commission that there was going to be a new Convention Center agreement. After that the branding was changed to emphasize the Convention Center labeling, including announcements at the opening of the Reynolds Street Parking Deck and at last month’s meeting. Behind the scenes, the legal wording, finally disclosed at the September 24 meeting, narrowly focused on the Conference Center and preserved the sparse 5% payout to the city for the existing center, with no provision for catering revenues. The wording of the catering agreement is that catering only applies to the TEE/Trade Center.
Meanwhile, the Amendment to the CORE Agreement extends these agreements out 50 years. Never mind a reported reduction to 15 years.
Throughout these agreements, one thing is repeatedly clear. The hotels and these agreements, which in the hands of others not as civic in their mindset as Paul Simon and Billy Morris provide an UNLIMITED CONDUIT to taxpayer funds, can be SOLD! In the hands of money hungry financiers of Wall Street, these agreements are loaded guns aimed directly at the finances of we Augustans.
How much more can Mr.’s Morris and Simon get for their two Marriott Hotels, with $70 million of dedicated Augusta buildings permanently and legally bound to them with an UNLIMITED conduit into the general revenues of Augusta Richmond County?
There you have it, reader. Augustans already find themselves facing a property tax increase. How many more tax increases will be coming to feed the TEE/Trade/Conference/Convention monster?
When the finances of Augusta crater it will be in no small part because of Catering.***
BO
**Cost Recovery Analyst Al Gray, President of Cost Recovery Works, Inc. contributed to this report. Cost Recovery Works is no longer in business, as of December 31, 2020.
Tee Catering Definitions From 9-2012 Agreement1999 Core Agreement Conference Center – Revenues
Originally posted on the now defunct CityStink.net site October 3, 2012
The author, Al M. Gray was President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns. Cost Recovery Works is no longer in business, as of December 31, 2020.
In the five-year twisting tale of Augusta’s TEE Center project, we who have observed the events and decisions as they happened, learned to expect the unexpected. This didn’t keep reporter Susan McCord’s tweet from the September 24, 2012 Augusta Commission meeting from astounding me.
“Paul Simon: If documents aren’t approved by Oct. 15, (we) will have to cancel January police chiefs convention at TEE center,” she typed. My jaw dropped at the audacity of the city’s TEE Center partner suddenly resorting to what looks like a shakedown to get a management deal approved.
Simon’s Augusta Riverfront, LLC is getting a $2 million a year subsidy courtesy of an unsigned, undated proposal from 2007, and that isn’t enough for him and his partners at Augusta Riverfront, LLC? Augusta has been held hostage since then. What is worse is that the City Administrator, legal counsel, and Augusta Convention and Visitors Bureau might be the source of this clumsy, heavy handed way of extorting an agreement out of a suddenly reluctant Commission.
Augusta Held Hostage
It is impossible for me to accept this assault by Management Agreement on the city’s finances in silence.
· Augusta built at least $50 million in new buildings across multiple parcels owned by this Riverfront organization and probably $20 million of existing buildings, yet now is held hostage to liens on some of them?
· There will be hundreds of pages of recorded easements, cross easements, assignments, and agreements on these lands, meaning that Augusta has all of the costs of land ownership, but few of the packages of rights that come with land ownership. Can’t we at least get a fee in lieu of taxes?
· The unsigned, undated partnership agreement from 2007 says throughout that Riverfront is responsible for kitchen equipment while saying that Augusta is responsible for the kitchen space. Augusta has not been able to show where its City Commission has ever voted to change the partnership agreement, only that Augusta approved the change order to add $1.4 million of equipment to a project that Riverfront agreed to participate in as a builder and operator. Where is Augusta’s money?
· The September 24 meeting was the first the Commission as a body had seen of the catering or management agreements and they were presented with an ultimatum that the documents have to be approved within 22 days! Five years of dithering and now the people of Augusta are presented with a manufactured emergency? Why? Keep reading!
· Can we say there might be C-O-N-S-P-I-R-A-C-Y within Augusta government? Darryl Leech was the General Manager of the Augusta Marriott. On September 24, Paul Simon announced the TEE Center is now the AUGUSTA CONVENTION CENTER. The agreements that Augusta has been commanded to execute are now with an entity called the Augusta Convention Center Management, LLC. This is where things get really get good. Darryl Leech is now the General Manager of the Augusta Convention Center. In fact, it seems nearly all of the former Marriott Augusta Staff, Don Fuller, Janet Pierce, Greg DeSandy and Sharon Koon, are now on the Augusta Convention Center Team!
The Augusta Convention Center
Who gets to decide if all, any or part of these employees – whose salaries and fringe benefits likely exceed a million dollars – who used to be Marriott costs become Augusta costs? The Management Agreement says the Augusta Convention Center Management, LLC, “… shall have discretion and control, free from interference, interruption or disturbance, in all matters relating to management and operation of the TEE Center,” and, “Manager shall select, employ, promote, terminate where appropriate, supervise, direct, train, and assign the duties of all personnel which Manager reasonably determines to be necessary or appropriate for the operation of the TEE Center.” This Management agreement and the catering agreement provide capability for 100% of former Marriott employees to shift onto the Augusta payroll! It sure looks like Augusta will have no rights to contest this cost shift once this agreement is executed.
· Consultation with the Georgia Secretary of State Corporations Division does not show Augusta Convention Center Management, LLC as being registered to do business in Georgia. Augusta is being demanded to execute an agreement with an entity that does not yet exist?
· Augusta is forced to deposit $250,000 at the beginning of the year into the operating account, but if the balance in that account falls below the amount to fund that account for the next 90 days, Augusta is required to contribute from GENERAL REVENUES enough funding to meet those expenses without regard to how soon the next $250,000 funds injection is required!!!!! The original partnership agreement limits Augusta funding requirements to $250,000 for operations and $100,000 for capital, yet this management agreement calls for an unlimited pipeline of funding from Augusta? Who authorized or negotiated that?
· The unlimited ability of this Augusta Convention Center Management, LLC to establish what costs are is not limited by the Annual Plan that the Augusta Commission approves, because “the Annual Plan will be only a planning tool.” Also, shouldn’t references to any Annual Plan limits be clearly defined not just as the types of costs to be included, but the amounts as well?
· The management agreement provides for annual audits only, with no real-time or even monthly reporting. How can Augusta monitor these cost reimbursable agreements without continuous reporting and the strongest of audit rights? Shouldn’t these agreements be made subject to open records requests? Maybe the Augusta Chronicle can help us! No?
· The management agreement called for the CVB to begin marketing for the Convention Center with execution of the construction contract to the tune of $350,000. However, the use of these funds by the CVB to market the Center before it opens was against the city’s own ordinance.
Summary
The TEE Center management agreement looks to have morphed into an agreement that allows most of the administrative staff of the Augusta Marriott to be shifted to Augusta’s Conference Center expense. There are unexpected liens on some of the property under the Center, and a parcel that was not liened was never conveyed prior to construction. The Augusta Administrator promised the agreement was nearly complete over 3 years ago and now has provided the City Commission with just 22 days to review and approve the contracts. The entity that Augusta is contracting with may not exist yet. The operating expenses, capped by the 2007 partnership agreement, are now unlimited conduits to the general funds of the city. The contracts fail to provide real-time program management and accounting.
***************
The Augusta Commission should walk away from these agreements and put the management and catering agreements out for bid. Otherwise outside counsel from far outside of Augusta needs to be brought in to renegotiate the management agreement to conform to model contracts from other cities.
Beyond this, it looks to me that Commissioner Bill Lockett’s idea of a forensic audit or a county-funded investigation of these transactions needs to be revisited. The project was funded by sales taxes, there are ample unused sales tax revenues in the coffers of Augusta, and legal costs are legitimate uses of sales tax money.
Can all of these issues and the progression toward the renaming of the TEE Center as the Augusta Conference Center be just incompetence?
Can Augusta afford an unlimited pipeline to its general revenues?
I don’t think so.***
AG
Originally posted on CityStink
Tuesday, August 28, 2012
Augusta, GA
By The Outsider
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article. Cost Recovery Works is no longer in business, as of December 31, 2012.
After the more than nine month long ordeal over the Reynolds Street Parking deck debacle, yesterday’s events at the Marble Palace that resulted in the approval of the long beleaguered parking management contract may have seemed rather anti-climatic. Indeed, we got wind that approval of the contract was imminent — if certain conditions were met. Key to passing the agreement was the inclusion of safeguards for the city that specifically stated in clear language that Augusta Riverfront, LLC (ARLLC) could not bill the city for their overhead expenses. Previous proposals were riddled with loopholes that ARLLC could exploit, amounting to a blank check from the taxpayers.
Also, included in yesterday’s contract was a clause giving the city the right to audit ARLLC’s books to verify their compliance. This was a crucial safeguard for the city and one that ARLLC’s lawyers were fighting all the way up until the final hours leading up to yesterday’s vote, but in the end they yielded and agreed to include the rights to audit.
Wayne Says Sell It!
Commissioner Wayne Guilfoyle deserves a large amount of the credit for these safeguards being included in the final contract. We understand that the lawyers were trying to twist Guilfoyle’s arm all the way up to the final hours to get him to bend under the pressure and approve the deal without these key safeguards, but the District 8 commissioner would not budge. He stood his ground and insisted that these conditions be met or his vote would be NO. Guilfoyle added the stipulations and to the agreement in his motion yesterday to approve the contract.
The citizens of of District 8 in South Richmond County can feel confident that they have someone like Wayne Guilfoyle representing them. Though a freshman commissioner, Guilfoyle has demonstrated leadership on a variety of important issues and continues to exhibit a willingness to study the details of these complex contracts, weigh all of the options, and play hardball when necessary to get the best deal for the taxpayers. Augusta could use more commissioners like him.
Not Gonna Be Bowled Over
Mayor Pro-tem Joe Bowles deserves credit for negotiating better terms in the contract that gives the city a much more favorable split of deck revenues at 70/30%. He also negotiated the inclusion of a pedestrian skywalk over Reynolds Street from the deck to the TEE Center that will enhance public safety and steer patrons to the city-owned parking spaces on the upper levels. Bowles even found the savings in the construction of the deck that will pay for the skywalk at no additional cost to the city. It’s this keen eye that makes Bowles a consistent leader on the commission.
The mayor pro-tem is also willing to admit when mistakes have been made and then work diligently to correct them. He also has a knack for forging compromise through the art of negotiation, but is willing to stand his ground when necessary to make sure the interests of the taxpayers are protected. His leadership will certainly be missed when his term expires at the end of this year, but Bowles will leave office with a nice legacy and he has certainly set the tone for all future mayor pro-tems.
Wise Man Lockett
From the very beginning, Commissioner Bill Lockett has been a vocal critic of the parking management deal with Augusta Riverfront, LLC. This is probably why he voted against approving yesterday’s contract — as a protest of the entire process. That is understandable. Time and time again, Lockett’s wise caution from his in-depth study and analysis of these complex matters has been proven right. Lockett doesn’t take anything at face value. He wants to see it in writing — he asks the right questions — he goes over every detail with a fine tooth comb. Some people may find this tiresome, but without Lockett’s determination to get to the truth and his attention to every detail, Augusta would have likely ended up with a much worse deal nine months ago, locking the city into a 15 year contract with ARLLC instead of just 5.
Though ultimately unsuccessful in getting the forensic audit to probe the process that gave us this debacle, Lockett was right in asking for it, and we predict when all is said and done he will be vindicated on that issue as well. Augusta could use more commissioners like Bill Lockett, who understand that their primary duty is in protecting the interests of the taxpayers of Augusta instead of bending to the whims of people like Paul S Simon. We suspect this is why Lockett does not face opposition for reelection.
Theater of the Absurd
On the opposite end of the spectrum is outgoing Commissioner Jerry Brigham, who fought vehemently against all attempts to give taxpayers a better deal over the parking deck. In what can be best described as a scene from the theater of absurdity, Brigham jumped at the opportunity yesterday to get in front of the cameras after the vote and tell a reporter for WJBF News that the final contract is, “… financially more stable than what was originally proposed and I think the Commissioners feel better, in general, with this proposal.”
It’s too bad the reporter did not retort by saying something along the lines of:
“But Mr Brigham, weren’t you the one who wanted to rush this deal along and fought against these changes from the very beginning?”
Indeed, if Brigham had gotten his way, the parking deck contract would have been passed last fall and it would have been for 15 years instead of 5 years and would have been riddled with loopholes that ARLLC could exploit as a blank check, using the taxpayers as their own personal piggy bank. Brigham’s contract had none of the safeguards and denied the city the rights to audit. And when these deficiencies were brought to his attention by government watchdogs, Brigham refused to budge and admit that errors were made. So maybe Mr. Brigham’s statement means he has had a change of heart? We doubt it — it’s probably more about saving face and trying to take the credit for the hard work of others who in the end forged the compromise that got a much better deal for the city.
Unlike his colleague Joe Bowles, Brigham will leave office with a cloud over his head. In every step of the process, Commissioner Brigham fought hard for the interests of Paul Simon and Augusta Riverfront, LLC over those of the taxpayers in his district and the city as a whole. We can only hope that his successor will be someone more like Commissioner Guilfoyle, Bowles or Lockett. The voters certainly have a choice before them this fall.
What Happens Next?
Though this closes the chapter on the nine month long saga over the parking deck contract, the issue is far from over. Now commissioners will have to decide how to hold the people accountable who created this mess in the first place. Why was the RFP (Requests For Proposals) process circumvented in favor of a hideously unfavorable deal with ARLLC — one for which they did not even submit a bid? Why were commissioners consistently mislead about the land under the deck being donated? Why were commissioners not informed of the $millions worth of liens on the property until after government watchdogs discovered them? Why were commissioners not made aware of the results of a 2009 parking study that showed that a $12 million parking deck was not even necessary and a $1 million surface lot would have sufficed. Why did city-hired outside counsel agree to such atrocious terms under previous contract proposals that were written entirely by the lawyers for ARLLC?
Now that the contract terms have been settled these are the questions commissioners need to ask and find answers. This process did not happen by mistake. What should have been a simple and clear-cut process was intentionally made more complex and nearly incomprehensible to most commissioners, the media and the public in an effort to sneak through a contract riddled with loopholes, lacking controls and caps on expenses and absent safeguards like the rights to audit. The people responsible for this must be held accountable so that this does not happen again. This ordeal also demonstrates why the city needs consistent procedures and guidelines governing these kinds of contracts. What we currently have is a an ad-hoc process governed by whim. That must change or Augusta will keep repeating the same mistakes with future contracts.
As the agenda now moves on to the the much larger TEE Center contract there is much more at stake. If commissioners have learned anything from the parking deck saga, they now know not to take anything at face value and to study every detail and spot every loop hole. Instead of rushing something through like commissioners did in December of 2009 that gave us this mess, they would be wise to yield to caution to insure that the interests of the taxpayers are protected above all else. If commissioners ask the right questions, study the details, and use good judgement and common sense, we don’t expect this process to drag out for nine months. But it’s entirely up to them.***
OS
Originally posted on CityStink
Thursday, Augusta 23, 2012
Augusta, GA
From CityStink.net Reports
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article. Cost Recovery Works is no longer in business, as of December 31, 2020.
Amid all of the hullabaloo of Tuesday’s runoff elections, something remarkable happened at The Marble Palace. Paul S. Simon, president of Augusta Riverfront, LLC, was on the agenda to give a presentation before the Augusta Commission about the Reynolds Street parking deck management contract in a special called meeting at 4:30pm. Representatives from CityStink.net and Augusta Today were also there including Al Gray, Lori Davis, Brad Owens and former Augusta commissioner Andy Cheek. After Simon’s presentation, commissioners adjourned into a closed door legal session to discuss personnel matters. That’s when members of CityStink.net and Augusta Today took over the commission chambers. Al Gray went to the front of the chambers and began to address the gallery and questioned Simon about key points in the management contract. We have the video of that exchange below:
The speaker in the video is Al M. Gray, President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns, which is no longer in business, as of December 31, 2020.
Originally posted on CityStink
Tuesday, August 7, 2012
Augusta, GA
By Lori Tabb 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.
We at Augusta Today and CityStink.net have waited for the hullabaloo over last Tuesday’s election to subside to respond to the cry of a panicked Augusta Commission and Mayor to -paraphrasing here – “Let the District Attorney investigate the TEE Center Parking Deck and bring in the Georgia Bureau of Investigation if there is fraud.”
What a total joke. That motion carried 7:1 but it was a plaintive cry for someone, anyone, to rescue the city from its many failures – be they criminal or just incompetence.
You could almost see the fear and desperation in the air. Matt Aitken wailed that Augusta “is becoming a laughingstock” while Joe Jackson moaned to the media about opening “Pandora’s box.”
Now we are getting somewhere! We agree with the angst and terror. Attempting to throw the hot potato of the TEE debacle into D.A . Ashley Wright’s lap was never going to work. Mayor Deke Copenhaver instructed that we should “present” our evidence to Ms. Wright. He obviously missed a very key point – The evidence is in his possession and custody. We have gotten where we are with slow, diligent investigation of limited facts based upon the laborious Georgia Open Records Act request process.
Deke, you have the records. Why not throw all of them open to Augusta Today and CityStink.net? We welcome your new found candor, but you just are not sincere, you are desperate to shake us off the trail.
You almost sound as if you are wailing “We are not criminal, we are just Stupid!” You won’t get any argument here.
Augusta Today and CityStink.net contributor Al Gray and I went to Ashley Wright’s office on Friday, July 27 to relieve her of the hot potato and toss it back to you and the commission. Your motion was plain stupid. Of course, we don’t have evidence of criminality – that takes LAW ENFORCEMENT with a capability and DESIRE to investigate. The D.A. doesn’t have the resources. In Augusta these days there is no desire to investigate either, only to engage in endless cover up of very serious issues and FACTS – YOUR FACTS – that we discovered. They include:
You celebrated killing a forensic audit that might have answered some of these questions. You threw it over to a D.A. Who you knew could not and would not do anything.
Mr. Mayor, why are you engaged in this massive cover-up?
To the Commissioners inexplicably remaining in denial – How are you going to remain in this community when the truth comes out – IT WILL – showing you failed in your fiduciary duty to the public?
Is claiming utter stupidity – since criminality is off the table – your final defense?
Augusta is rapidly acquiring a reputation as the most CORRUPT city in Georgia. Your actions in refusing to consider the evidence at hand are adding fuel to the fire.***
I agree with Commissioner Aitken that our government is a laughingstock.
You and the Russell Administration are in full panic mode. Some commissioners are now wide awake and the rest have to be getting antsy.
We will not be dissuaded by your cover up.***
Stay tuned. More to come.
Lori Davis
Originally posted on CityStink
July 25, 2012
Augusta, GA
By Bradley E. 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.
Augusta Today member Dean Klopotic submitted a Georgia Open Records Request seeking the RW Allen, LLC (RWA) billings for the TEE Center related contracts they are performing. The Law Department of the city of Augusta issued a response which included RWA invoice number 24 representing costs through March 31, 2012. Our investigating team has since obtained RWA invoice number 26 from other sources in city government and turned the documents over to cost recovery accounting specialist Al Gray for analysis and review.
RWA boasts of having an “Open Books Policy” but their TEE Center project manager Jim Cely declined to allow us to visit their offices to view supporting documents to the billings obtained through the Georgia Open Records Request. RWA CEO Rick W. Allen, currently a candidate for Georgia’s 12th Congressional District, had previously pledged to allow Mr. Gray access to the billing detail records. Despite being assured they would cooperate, we were not allowed to see the documents, and instead, Cely gave instructions to direct inquiries to Augusta Administrator Fred Russell… the same Fred Russell who has displayed a pattern of withholding VITAL information from Augusta Commissioners on the TEE Center and its companion parking deck across the street.
The TEE Center Contract with RW Allen, LLC is a Construction Manager at Risk guaranteed maximum price (GMP) contract. Under a fast track, a cost plus contract with a GMP, the Construction Manager sets its fee, general conditions (overhead) expenses, and other costs necessary to construct a total facility. These contracts are or can be comprised of multiple subcontracts and work with the CM (RWA in this case), self-performing portions as if they had been subcontracted. In other words, they can hire themselves to do certain parts of the job as the Construction Manager.
Once the drawings and design work is 75% complete the GMP was officially set at a price of $29,700,000 and accepted by the Augusta Commission. There have been two change orders (“change orders” are contract modifications which usually are increases in the cost of the fixed price cap due to unforeseen “changes” that affect the construction itself) executed which bring the total price to $30,113,215. So as you can see, the agreed upon price of the TEE Center construction was $29,700,000.00 but due to the two “change orders” the final projected price tag (there could be more change orders before it is completed, so I say “projected”) is now a cool $30,113,215.
Since the more detailed supporting documents for RWA’s invoices (which are pretty vague) are not likely to be in the possession of the Augusta government and therefore open records accessible and the honcho over at RWA, 12th District candidate R.W. Allen, has already broken his pledge to allow us access to the documents (a politician breaking a pledge to the tax payer? SAY IT ISN’T SO!); here are the questions we would pose to Mr. Russell and to Program Manager Heery International to find out the details of these invoices for us, the lowly tax payer footing the entire bill of $30mil and change.
Has There Been Double Billing of General Conditions Costs?
Let’s be clear here, these are complicated contracts, but the billing is not if you are willing to bear with me and see the questions we are asking.
Article 7.4.1 sets out the components of the contract price and these are repeated in Exhibit A in the contract. to be paid by Augusta, so a cost has to fall into one of those two categories and be authorized by the terms of the contract to be billed. To cover the contractor’s overhead costs, called “General Conditions” in construction language, RWA put in a General Conditions Guaranteed Maximum cost of $1,082,670 in the contract and in Exhibit G.
The capped GC cost is described this way on page 56: Items that are included within the General Conditions Costs for which the Construction Manager is entitled to no additional compensation include without limitation:.. viii. “That portion of insurance GL and Auto Builders Risk and P&P bond premiums that can be directly attributed to this Contract for Construction”… ix. Fees and assessments for the building permit and for other permits, licenses, and inspections for which the Construction Manager is required by the Contract for Construction to pay.
Looking at the latest payment application available, on line 2 of the Form G703 appearing on page 2, we find an amount listed for General Conditions costs of $1,082,475, which is only $195 less than the stated limit in the contract. Augusta is making progress payments, which total $697,917 (less 5% retained by Augusta) through this invoice, based upon component invoicing and RWA labor charges. In addition to the GC costs, we found $167,585 charged on page 2, line 19 of the G703 schedule for P&P Bonds.
Based upon the contract having capped GC costs to INCLUDE the P&P bonds, separate invoicing in this manner appears to be a duplicate charge, especially since the contract also says this: “The overhead and profit component for any change includes the cost of bonds and insurance”, which seems to preclude the additional billing of P&P bonds separately in this manner. The P&P bonds for the subcontractors are in their OWN costs.
Besides the P&P bond issue, there is the same issue with the $48,961 of permit costs on line 18 of the payment request.
These two issues relating to costs billed separately that appear to be already covered by capped General Conditions total $216,546. It is recommended that these costs be reallocated against the capped GC costs of $1,082,670, or line 2 on the G703 billing schedule of values.
Extension of General Conditions without Required Change Order?
Accompanying payment request number 24 was a document entitled, “Augusta TEE Center Contingency Log”, which includes a $16,393 item labeled, “extended builders risk cost due to delays.” There was an invoice supplied showing the builder’s risk policy was being extended to October, 2012. The contract says this, “All adjustments in compensation or extensions of time shall be by change order (page 38).”
No change order was found to extend the duration of the project, so shouldn’t this charge be covered by the capped General Conditions that includes builder’s risk insurance?
A much more important and broader issue is whether RWA intends to collect extended general conditions for the approximately 6 months greater time until completion of the project, to include the more costly GC costs, like supervision. The project duration in the contract was set at 24 months, yet the project is on the 26th monthly billing.
Does the charging of builder’s risk premiums for project delays mean that there will be a costly claim for extended General Conditions at the end of the project? Will extension costs be continued to be charged against the contract contingency, instead of being authorized by change order, as the contract apparently requires?
Lack of Pricing Details Limits Change Order Price Analysis?
Augusta Today and City Stink contributor Lori Davis submitted a Georgia Open Records Request on another matter concerning the TEE Center kitchen equipment that was added to the RWA contract as Change Order 1, to increase the Contract Price to a total of $29,276,987. Included in the information provided was the pricing from the subcontractor, itemized by equipment price, but unsupported by cost versus overhead and profit analysis of the pricing.
The contract says this in Article 15: “If and to the extent the change involves work of one or more subcontractors, the overhead and profit component for subcontractors shall be fifteen percent, and the overhead and profit component for the Construction Manager shall be seven percent 7 of the amount allocable for subcontracted work.”
Unless there is additional analysis not presented with the City’s response to the GORA request, how can RWA tell whether the 15% limitation on overhead and profit has been met with respect to Change Order 1? Is sufficient cost information being obtained on other project changes to meet the contract limitations on combined overhead and profit?
Construction Equipment Rentals in Steel Costs?
Within the supporting backup for Payment Application 24 for the steel cost category was an invoice to RWA for construction equipment rental. The contract has this inclusion within the definition of General Conditions costs: “xviii. Rental charges for temporary facilities and for machinery equipment and tools not customarily owned by construction workers.”
Since the equipment rentals seem to be within General Conditions (Overhead), wouldn’t such costs be covered by the allowed 15% overhead and profit markup allowed on work self-performed by the Contractor?
Summary
Aren’t $216,546 of bond and permit costs separately billed also within the capped General Conditions expense in this contract?
Did the billing of $16,393 for extending insurance coverage to October 2012 presage a claim for an additional number of months of general conditions expense, including Contractor Supervisory labor, and unforeseen costs? Without a change order, should this item have been charged to contingency?
Is there sufficient cost detail provided by subcontractors to assure that contract limitations on maximum, combined overhead and profit can be verified?
Are construction equipment rentals separately billable from overhead and profit markups?
Will Augusta review the contract to assure that all contingency and allowances are recaptured by the city at project completion on this major contract? Others?
We expect that the Mayor and the City Commission will assure that these questions are answered.***
B.O.
**Augusta Today members Al Gray, Lori Davis, and Dean Klopotik also contributed to this report**
**Below is the GMP Construction Contract between RW Allen Construction on the city of Augusta for the TEE Center: