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

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.***


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

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

Special Report: Hotel Transportation Tax Heist?

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?
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.**

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

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

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.***

Related Stories:

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

Forensic Audit Subcommittee Making Progress

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!***

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

“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.”


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?

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.***


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

Related Stories:

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

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.”




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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In Defense of Jim Plunkett

Augusta Attorney Jim Plunkett

May, 30, 2012

Augusta, GA

By Al Gray

Veteran Augusta attorney Jim Plunkett has found himself at the epicenter of the controversy over the City of Augusta’s TEE Center and Parking Deck contracts since January. Commissioners blasted him with suggestions that he be fired, questions about his ability and even hints that suspect his work. How did such a mild-mannered lawyer find himself in this mess? Does he deserve to be under fire? What caused the uproar?

There were so many questions the answers for which are not in the public domain and empathy from reading the morass of legal documents that existed before Mr. Plunkett was brought on board by Augusta as its outside counsel, that this writer decided to meet with him to explore these questions. Commissioner Wayne Guilfoyle graciously facilitated the meeting in mid-March, which occurred in the offices of the Shepard, Plunkett, Hamilton & Boudreaux, LLP firm to negotiate, draft, and have executed the documents for the new Trade Center and the associated parking decks.

The primary objective was to see where the City stands with regard to the unexecuted TEE Construction, Operating and Reciprocal Easement (CORE) agreement that the Augusta Commission authorized and directed Mayor Deke Copenhaver to execute in December 2009. The CORE agreement is a critical piece of the legal work, as it sets forth the basic terms of the partnership agreement between the City and TEE Center Manager, Augusta Riverfront, LLC. This CORE agreement is in the process of being finalized as the City elected to have as-built surveys done once construction is complete, rather than chance changes as the project was prosecuted. Mr. Plunkett explained that set-backs between the various parcels underlying the TEE center were a complication that he and the City sought to either avoid or handle in the final CORE agreement.

We discussed the challenges of having a smaller firm like Shepard Plunkett tasked with having to revise hundreds of pages of legalese on the various tracts under the TEE Center, parking deck, and particularly, the existing Conference Center. These legal agreements first arose with the initial conference center agreement in 1989 and were revised in 1998, with the expansion of the conference center at that time.

Whatever one’s position on the wisdom and viability of building the TEE Center, they should understand that Jim Plunkett was tasked with the unenviable tasks of cobbling together enforceable and defensible legal agreements in conformity with the myriad ownership arrangements, funding sources, and negotiations agreed to by the City Administrator. City counsel has little or no exposure to how existing agreements and construction contracts are being directed and coordinated while this legal work is being completed. Those things are the duties of the City Administrator and the city’s program manager, Heery International.

We activists at Augusta Today and CityStink.net appreciate the difficulty and complexity of the legal tasks. Too many harsh words and hinted accusations were made during the Reynolds Street Parking Deck controversy. There are plenty of valid criticisms of that project, but we hope to keep them focused on policy not personalities going forward.

Jim Plunkett has expressed the intention to work with the commissioners to draft as good of a document as possible for the City. As the TEE Center CORE, management, catering, and room block agreements move closer to commission consideration, we trust that getting access to the draft agreements with sufficient time to evaluate them will go far toward alleviating misunderstandings. Going forward it is our desire at Augusta Today and CityStink.net to provide helpful input into having effective operating controls implemented.

Thank you, Jim, for taking the time to meet and review many of the complications with the TEE Center project.***

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TEE Parking Deck Exclusive: Fred Wrestles, Augusta Gets Decked?


TEE Parking Deck Exclusive: Fred Wrestles, Augusta Gets Decked?


Augusta, GA

May 29, 2012

By Al Gray

Our team of community watchdogs at Augusta Today and CityStink.net have not let sleeping dogs lie with the TEE Center and Reynolds Street Parking deck deals that were conditionally approved by the Augusta Richmond County last February 7. Readers might recall that the Augusta Commission then approved a deal for Augusta Riverfront, LLC to manage the new Reynolds Street Parking Deck, contingent upon the land for the parking deck being deeded to the city land bank and being cleared of all liens. The decision was reached in a last-minute panic to get something passed to relieve the Commission of what was a very hot potato of an issue – how a $12 million parking deck got built on land the city didn’t own.


Has the land been deeded to the Land Bank and have the liens been released by Wells Fargo, the bank that holds the liens on the land under the Reynolds Street Parking Deck (RSPD)?

The answer is NO, according to review of the Augusta Richmond County Clerk of Court deeds of record for the property as reported on the Georgia Superior Court Clerk’s Cooperative Authority. The deeds on the GSCCA site are certified to be county-good through May 23, 2012.

Augusta Today and CityStink.net contributors, armed with documents secured via Georgia Open Records Act Requests, the city’s excellent on-line document archives, and the help of several officials inside Augusta government, have taken scrutiny of the proposed parking deck deals to unusual lengths to get the answers to more questions.

Were the contracts for management of the decks put out for bid? Yes.

The City Procurement Director issued Request for Proposals RFP Item #11-087, Managing Augusta Parking Facilities, in January 2011 with a due date for bids to be opened on Friday, February 18, 2011. That the RFP covers the RSPD and the Parking Deck at the Augusta Marriott is established in the Introduction Section I on page 10 of the RFP with, “The Procurement Department… is soliciting proposals to manage and operate the Augusta owned parking facilities located on Reynolds Street in Augusta to include the Parking Deck at the Augusta Marriott and the new Reynolds Street Parking Deck currently under construction.”

Was Augusta Riverfront, LLC the low-bidder? The LLC did not place a bid in response to RFP #11-087, covering the two Augusta owned parking decks between 9th and 10th streets in Augusta.

Augusta Riverfront did not appear as a party on the Pre-Proposal Conference Sign In Sheet of January 28, 2011. It does not appear on the Cumulative Evaluation Sheet. There is no indication that Augusta Riverfront, LLC submitted a bid of any type in response to RFP #11-08.

If another firm offered an acceptable bid, was it recommended and its proposal accepted? The bid of Ampco Parking Systems of Houston, Texas was recommended for acceptance, but all bids were rejected with the knowledge of the City Administrator. 


Mr. Richard Acree, Jr., Assistant Director of the Augusta Facilities Management Division wrote,It is… my recommendation that we award the contract for Bid Item 11-087 to Ampco Parking Systems.” After an exchange of emails on August 5, 2011 between Augusta’s then Recreation Director Tom Beck, Procurement Specialist Nancy Williams, and Administrator Fred Russell, Mr. Beck wrote a letter to Ms. Williams on August 8 directing her to reject all bids associated with RFP #11-087.


Are there costly inconsistencies between the sample contract included in the RFP that Ampco Parking System accepted and the one with Augusta Riverfront, LLC that was recommended by the City Administrator for adoption by the City Commission? Apparently. They include:

1. Management Fee.

Ampco quoted a fee for the TWO Decks in the amount of $17,964.00. The fee in the management agreement in 3.1(see page 6) for the Reynolds Street Deck alone with the LLC is $25,000.00. After recovery of the $50,000 rental fee paid to Augusta under the Conference Center Deck agreement on page 3, the LLC gets another $25,000.00 fee.

There is a recommended contract in the RFP which appears to be largely based upon the previous conference center contract with Republic Parking. To be fair, the RFP agreement would have given the management company an incentive fee of 25% (up to 45% based upon increments of $100,000) of net revenues over $150,000 for both decks (page 33), while Augusta gets 100% of the RSPD net revenues, if there are any, with Augusta and the LLC management group sharing net revenues after the rental sum and $25,000.00 fee on the Conference Center Deck.

Why did the City Administrator agree to pay more fee on the RSPD than its recommended bidder quoted for TWO decks? 

2. Liability Insurance

The Deck RFP Addendum 1 stated, “Liability Insurance is to be paid out of the management fee.” However, the RSPD agreement in 9.4 on page 17 states, “Insurance premiums and any cost or expenses with respect to the insurance described in this Article shall be an Operating Expense of the RSPD.” Liability insurance is listed in the Article at 9.1.

Why did the conditionally awarded agreement with the LLC shift the liability insurance costs from the management firm to the city?

3. Operating Expense Limitations

The designated contract within Augusta’s RFP 11-087, page 32 of the RFP package, limits operating expenses to enumerated expenses and, “other expenses as authorized and included in an operating budget approved in advance by AUGUSTA.” This provision was accepted by Ampco. The agreement conditionally accepted by Augusta with the LLC contains no such requirement, broadly defining “operating expenses” outside of the Annual Plan to include, “any other expenses incurred in the operation of the RSPD that would be considered operating expenses under GAAP.” GAAP means Generally Accepted Accounting Principles.

Why doesn’t the agreement with the LLC limit what can be considered an operating expense to those expenses enumerated in the Annual Plan and authorized by Augusta?

4. Expenses Allowed Under the Annual Plan

Ampco submitted a bid compliant with Augusta requirements that included an annual budget. This budget shows expenses of $21,557. The management fee of $17,964.00 was added to this balance to arrive at total expenses of $39,521.00. Since the Ampco proposal covers both parking decks, adjusting the expenses to a factor of 0.54 (the ratio of RSPD parking spaces to total parking spaces in both decks) produces $21,341.43 in total non-labor operating expenses for the RSPD for the first year.

South Augusta community activist Juanita Burney submitted a Georgia Open Records Act Request to the city’s Law Department seeking the annual plan for the RSPD as submitted by selected management firm Augusta Riverfront, LLC. After some delay and a follow-up request, she received documents including undated cover letters from Augusta Riverfront, LLC, accompanying one 12 month budget for 2012 dated August 29, 2011 and an 11 month budget dated January 26, 2012.

The August 2011 budget was used for comparison purposes, as it covered 12 months and was closer in timing to the Ampco budget. The LLC budget for expenses totaled $83,818.00, but $29,505.00 related to Augusta-provided utility costs and credit card fees which were outside of those listed within the RFP. This brought the total costs down to $54,113.00, which were higher than the Ampco adjusted total by $32,771.66. Bear in mind that the Ampco agreement only limited the manager to the specific types of expenses listed, but not totals, so actual costs may have exceeded the budget for Ampco.

Did the Augusta Administrator consider the budgeted expense differential between the rejected, but deemed compliant Ampco proposal and the much higher Augusta Riverfront budget? If not, why not?

5. Labor Costs Under the Annual Budget

Ampco’s labor budget was $212,225.00, plus labor burden of $44,444.00 for a total of $256,669.00, with the RSPD portion (0.54) totaling $138,601.26. Augusta Riverfront LLC’s labor budget was $95,150.00, plus labor burden of $27,402.00, for a total of $122, 552.00, or $16,049.26 less. Most of the extra cost from Ampco was the inclusion of a Supervisor and from unusually high worker compensation costs.

As noted above, Ampco would seem to have been limited to the costs enumerated in its budget by the terms of the proposed agreement. The LLC can add costs that fall under GAAP (Generally Accepted Accounting Principles). Also, the language of 5.3 on page 8, of the RSPD Management Agreement states that the Manager determines the personnel necessary to operate the RSPD and in paragraph (f) on page 9 states that the Manager can assign, “shared employees.

Are there sufficient contract controls over the assignment of additional staff and shared employees for Augusta when the Manager has this level of discretion? 

6. Operating Cost Advance 

The terms of the RFP, and accepted by Ampco, states in Article 3, paragraph 4, “The Operator shall be granted an operating fund advance equivalent to 2 months operating expenses, to be credited against the first two months of operation.” The terms of the LLC agreement on page 11, in 6.2, provides for an ongoing 90 day operation expense fund balance.

Is the fund balance sufficiently offset by the LLC’s funding of the other deck agreement? 

7. Capital Budget


The RFP and Ampco proposal contained no separate capital budget. The LLC budget included a schedule entitled, “Equipment – Startup Cost,” which included a Riding Sweeper at an estimated cost of $59,000. The schedule also included additional cost of Freight and Tax. The Conference Center Deck Agreement in Paragraph 4 (page 5) states, “With respect to any equipment owned by by Landlord but used for both the RSPD and the Demised Premises, Tenant shall pay a fair rental rate for the use of said equipment, as set forth in the Annual Plan in effect for the RSPD Management Agreement.” No credit was found in the proposed RSPD budget for that sweeper, so perhaps it will be used only in the RSPD.

If the capital equipment was purchased via an Augusta bank account with Augusta funds, wouldn’t the purchase be exempt from (sales) tax? Will the prorated fair rental costs for RSPD capital equipment be included in the Annual Plan?

8. Credit Card Fees 

The initial Annual Budget for 2012 proposed by the LLC includes an expense item for credit card fees. However, “Operating Revenues” includes discounts for credit card fees, which is consistent with the RFP sample contract.


**Could this give rise to double reimbursement of credit card fees?



Augusta had a long running contract with Republic Parking that seems to have been the basis for its sample RFP contract. Ampco Parking did not find this contract objectionable and accepted large portions of it. In general, why are the agreements the City Administrator recommended so much more flexible in terms of internal controls? Will the relative infrequency of reporting and manager control over revenues and expenses provide Augusta with sufficient information to assure that potential conflicts of interest, alluded to in Article 5.1.b of the RSPD Management Agreement, have not arisen? Did the Administrator use the Ampco bid terms, conditions, and costs to negotiate the best deal possible for Augusta?

Questions abound with these deck arrangements. We could ask questions approaching the number of parking spaces in these parking decks. The Augusta Commission should have asked them before rushing to approve the parking deck agreements, too. ***

Bradley Owens
*Contributing to this report were Cost Recovery Specialist Al Gray, with South Augusta Community activist Juanita Burney and Harrisburg Community activist Lori Davis.

Augusta’s Contract With Heery International Contains More Surprises

Hear Ye, Heery is Here

More Overpriced Payees for the City?

Originally posted on CityStink
February 24, 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 2003 the City of Augusta did a wise thing in a very foolish way. The administration saw an enormous upswing in capital spending that it lacked the staff and expertise to plan, engineer, procure, manage and control. A large, growing, and respected Atlanta-based firm, Heery International, was selected to perform these functions. The strategy was sound.

The execution was horrible.

This blanket order was executed with 4% annual rate increases mandated. Despite the downturn in construction and the overall economy, in which labor, overhead and profit have tended to fall, the compounding of Heery’s rates continued unabated. The rates established for next year are up an incredible 48% over the initial rates. A Principle in Charge then was $162.16 an hour, this year one is $230.81 and next year it would be $240.04. A project manager then was $87.32. Now one is $124.28, rising to $129.25 next year. An administrative assistant went from $42.41 to $62.78 an hour.

The cumulative effects are stunning. In July 2010 the contract was extended to 2013. At the time, the contract price was raised from $7,082,355 to $10,317,906.

Amazingly, the total overhead and fee in RW Allen’s contract to build and equip the entire TEE Center is $1.8 million, while Heery’s program management fees will top $1.2 million. There is another $1.3 million slated for the Webster Detention Center Phase II. The Reynolds Street Parking Deck is a surprising $549,390.

A defense can be made that division of duties between the construction management firms and Heery reduced the costs of the former. That is a valid point. The difference in rates probably negates a lot of this advantage, however.

A fairly common approach is for the hourly rate for such services to be based upon some verifiable figure, usually the salary rate of the employee divided by 2080 (52 weeks, 40 hours per week) times a multiplier that is negotiated. 2.0 to 2.3 is a normal range. The Heery contract does not accomplish this. The rates were firmly set on an unknown basis back in 2003 and 2004. Augusta did not negotiate controls over composition of rates.

Beyond this, generally there is a firm division in setting rates that only people directly engaged in the project or on site are billed. Principals, Project Directors, and home office administrative assistants, all of whom appear on Augusta’s contract, are included within the markup applied to the directly-engaged employees. Augusta’s Heery contract allows these employees to be billed in addition to the marked-up billing rates of the direct employees.

Augusta is only permitted to audit the hours billed and the employee classification. Augusta is not allowed access to payroll records to ascertain accuracy of the rate billed or upon what basis the rate is determined. The language is blunt: “OWNER may only audit accounting records applicable to a cost-reimbursable type compensation.”

What this says is that the public can never know how community liaison Butch Gallop‘s Heery billing rate got to be a whopping $177.91 an hour billed, with the potential of being billed at the $240.04 an hour on the rate sheet for next year!

The contract is nearly always advertised as a joint venture between Dukes Edwards Dukes and Heery International. Indeed, Dukes Edwards Dukes principal Winfred Dukes appears on the billing rate sheet at $240.04 an hour in 2013, up from the initial $162.16 an hour. For the sake of clarity and honesty, Dukes bills only about 4 hours a month. He is one of several Heery executives who Augusta should never have allowed to be billed, in this writer’s humble opinion, since they are at supervision levels above the Senior Project Managers and directly-engaged staff on Augusta’s projects.

To summarize, the Heery contract has been on auto-pilot with compounding rates, unverifiable rate bases, and apparent inadequate division of direct labor versus overhead. The fault lies with Augusta, not its contractor, in this case as in all of the others recently reviewed. Augusta is profligate with taxpayer money, in this case by not revisiting a blanket order for services, electing to extend it untouched for years.

Who is Winfred Dukes? Well we found him under the Gold Dome in Atlanta.

Who knew Augusta had another State Representative in the Georgia House?
Mysterious bodies abound in Augusta’s contracts. So far there are two in the Heery contract.

Stay tuned, there is more to come, as the deciphering of Augusta’s contracting continues.
Much more.***

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“Galloping” Away With Taxpayers’ Money

**View Heery Document Below