Loading...
HomeMy WebLinkAboutCalled Commission Meeting October 22, 2012 CALLED MEETING COMMISSION CHAMBER October 22, 2012 Augusta Richmond County Commission convened at 10:00 A. M., Monday, October 22, 2012, the Honorable Deke Copenhaver, Mayor, presiding. PRESENT: Hons. Lockett, Guilfoyle, Mason, Smith, Hatney, Aitken, Johnson, Jackson, Bowles and Brigham, members of Augusta Richmond County Commission. The Mayor called the meeting to order. The invocation was given by Chris Thomas. The Pledge of Allegiance to the flag of the United States of America was recited. DELEGATION: Mr. Al Gray RE: Augusta Convention Center/TEE Center Management/Catering Agreements Mr. Gray: Mr. Mayor, members of the Commission, thank you once again for the opportunity, and I mean that in the strictest sense of the term – Mr. Russell: Can you give us your name and address, please, sir? Mr. Gray: I’m Al Gray and president of Cost Recovery Works. I live at 2573 Salem Church Road in Lincolnton, Georgia. I come before you today to oppose these contracts, these series of contracts. In 1996 Mayor Bill Campbell of Atlanta engaged in a series of escapades with an Alabama based general contractor that wound him in prison. At the same time I had a new client that had the misfortune of signing on to that very same contractor’s standard contract and that became the standard by which I judged aggressive contracts. The damage to that contractor, my contractor, there wasn’t anything I could do, they had signed off on the contract. We were powerless once they signed that contract. It was a very helpless feeling to see my client, who was almost bankrupted from the process, lose over a period of five or six months vast sums of money. These contracts extend over 50 years. If that was an aggressive contract, this set of documents is the Mona Lisa of aggressive contracting. The contracts are a blank check where the manager dictates cost from A to Z. Augusta has to control this because now you’re looking at a drain on the general fund. Every dollar is a dollar that’s either going to be raise taxes or lost services. The $2 million dollar kitchen is Augusta’s and it should stay with Augusta irrespective of who you contract with. In other cities where the city owns the kitchen equipment and provides it to the caterer, the caterer provides up to like 3% of gross revenues to cover depreciation on that equipment. The worst aspect of this thing is that these contracts, if the existing Conference Center agreement stays in effect, which I understand it does, it represents the opportunity for a gigantic cost shift of hundreds of thousands of dollars a year from the Conference Center agreement over to the TEE Center agreement. Over the 50 years of this agreement if you had $300,000 that fell into that category, you’d be talking about $15 million dollars of cost to Augusta, most of it out of the general fund the way it looks now. Cost under this agreement should be limited to new TEE Center cost by capping cost transfers from the 1 Conference Center agreement. Both Riverfront Augusta and Augusta have food and beverage purchases that apparently will be comingled in this big new kitchen you’ve got. You’ve got all these huge new freezers and everything. You’ve got purchases that have to go to the hotels for room service. Potentially Augustino’s. The Conference Center agreement which is walled off from the TEE Center agreement by these contracts and then the TEE Center. So if you have steaks, for instance, you could see it being purchased, you could have comingling and what kind of incentives are going to be in place? What kind of controls are going to be in place to keep Augusta’s merchandise bought with general funds from being transferred over to the other operation? There’s no operation procedure manual in effect for these transactions. The contracts allow members of Riverfront and the management LLC to be charged to the general fund of Augusta and does not necessarily provide back the charging back of fixed salaries to Riverfront when appropriate. There’s language in there that says that timesheets shall be kept to segregate these costs but I think the language might be missing to provide for the backcharging of those fixed salaries back when they do work for the hotels or under the Conference Center agreement. One thing that came through our review of this over the years is there’s considerable disagreement and confusion over what exactly the Convention Center means. On one hand it’s finding these contracts to be the TEE Center, the Conference Center, the Conference Center annex, the parking decks and that is defined as being the Convention Center. But the budgets that have been submitted, as best I can tell, are just for the TEE Center. Mr. Mayor: Okay, thank you, Mr. Gray. The five minutes that you are allotted are up. Do we have any questions? Mr. Bowles. Mr. Bowles: Al, could you just bowl up where you were going with the budgets are just for the TEE Center? Mr. Gray: The budgets that were submitted from what I was understanding from what was said is those numbers were just for the TEE Center. They weren’t for the overall Convention Center as the agreement defines it. I guess you’d have to get clarification from those who prepared it on that matter because there’s been a lot of back and forth and there’s been one illusion created by the Convention Center was (inaudible) when really contractually when it comes to the accounting the flow of funds and the reimbursement, the TEE Center is very specifically spelled out so the kitchen is only really benefiting the TEE Center. The catering applies to the TEE Center not the Conference Center. There is actually a schedule out there on line of various personnel identified with Augusta Convention Center apparently have come underneath the existing Conference Center catering and management so my question to you would be this. How do you know who those people are because the existing Conference Center agreement, if I’m understanding it right, is not a profit sharing as has been described in places at certain times but it’s a certain percentage of revenue and even those revenues don’t specifically include catering. So there’s a lot of things that need to be answered with regard to these contracts. Mr. Mayor: Thank you, sir. Commissioner Guilfoyle. 2 Mr. Guilfoyle: Thank you, Al. Thank you for actually speaking to the commission as well as the audience. When you spoke about the 3% charge for the use of the equipment, where did that come into play at? There was other cities that has done that. Mr. Gray: I believe that was the city of Austin, Texas. The contracts with Aramark for catering and that was one place I’ve seen it but these contracts really go across the board. These particular contracts, the fees are very reasonable. I would grant you that. There’s no question about the fees being very reasonable. It’s the other capabilities that shift cost that I’m most concerned about. Mr. Mayor: Thank you, sir. Mr. Johnson. Mr. Johnson: Al, I think the issue I have as well is, and I agree with you, the fees are not really extreme. I just feel like you it’s not enough language in there that protects the city and the citizens if you will. What I would have liked to have saw was I guess a few more general management agreements, if you will, on typically how these things work and how they’re set up to protect both parties, not just one but both parties and I don’t really see that here. I even had a question about the catering because we have a set amount, I think $3600 or something like that a month, in catering and I want to know if you’re not using the folks for that particular month or whatever it may be, how do you offset that? Why is it necessary and why can’t we do it on a basis of as needed or whenever the event is coming you base it on that and not only that, the catering itself, why can’t it be options with the catering? I do know typically in most cases hotels, they do not outsource and the conference, as you stated earlier, I can understand that but the TEE Center itself, the avenues there, it’s just kind of gray. You know, you can’t really say, yeah, you can get caterers to come in and cater that particular event for that particular company or whoever it may be who’s leasing it for that particular moment and I think with that, it kind of got us in a bind as well or a jam, if you will, because it’s not, we don’t really have much leverage, if you will, when it comes down to how it’s structured and set up. Once the agreement is agreed upon the managers basically state how the catering is going to be set up and what’s going to be done as far as the cost and what have you so I’m not really clear on that yet and that’s one of the concerns I would have and do have now and I would prefer to see other agreements like that that would give us a guidance of how these agreements are typically set up. Mr. Gray: Well, I share that concern and I’d like to see somewhere in the United States where this set of circumstances has been replicated where you can find these same circumstances and these sort of same contractual relationships. We get to be critical maybe but the Augusta Riverfront folks have done just a marvelous job of operating the Conference Center over the years and we’ve got a history with them but the thing that really bothers me about this in response to your question is that there’s unlimited rights to sign these agreements to somebody else if they buy those hotels. Now what they will tell you is that these agreements, Augusta would have the option to cancel these agreements if that happens but the reality is that with all these easements and encumbrances on all that property under all those buildings the reality is that this is a package deal. It’s a 50 year package deal because you really can’t separate out these agreements from each other. So it’s over 50 years and what really worries me about this with these very aggressive rights of a contractor, the management company and the caterer establish who they are going to assign to this contract, at what cost without any ability that is specifically 3 in this contract that you do not have the ability to counter those costs because once that contract is signed, it’s in that contract so you can say that the budget is just, has just an advisory role, it has no impact or force in law under this deal. So an aggressive Wall Street firm can come in here and they could buy up the hotel and these contracts, and there’s literally no limit to what they can charge Augusta Richmond County under these sets of documents. And I say that in all sincerity and seriousness. Mr. Mayor: Gentlemen, I will tell you coming from a background in real estate, I’ve negotiated lots of contracts and there is no such thing as a perfect deal and we’re never going to get there with this one to where it’s perfect for everybody, but I would just encourage we need to take the step forward and pass this prior to beginning to lose bookings for January of next year. If you come out of the box on a bad step, there’s a domino effect that’s a potential so I would just add that to the conversation. Mr. Russell. Mr. Russell: I agree with Mr. Gray. We’ve talked about this a long time. Lots of opportunities have presented themselves and I think we have reached a point now where it’s time to move forward. The perfection of the contract, you’re not going to have a perfect contract. You’ve got opportunities there particularly with the annual agreement to help to control the budget. You’ve got numbers there that are reasonable. He made a few misstatements that are easy to make at this particular point in time after the conversation. The deal with the Conference Center was a 50-year deal. Nobody sitting in this room had anything to do with that. The catering agreement that you’re looking at now is 15 years. That’s controlled yearly by this commission’s input on the annual plan. That annual plan will be voted on by this commission and accepted or not accepted. Every year you’ll have a bite of the apple on how to make things different and better as you do that. I think Mr. Gray and I agree that as we go forward the Riverfront Center has done an excellent job in what they do. My concern is I keep getting asked by people on the street how are we going to make Augusta better. How are we going to do this and what are we going to do. We’ve got the opportunity to bring in additional revenue by bringing in guests, by bringing in people that can help pay for some of the things that we can’t pay for now. We’ve got an investment there in a building. We’ve got an investment in an opportunity that we need to take advantage of. We’re at the point now where if we don’t move forward, we’re going to stand still and we all know that standing still is not going to get us anywhere. The scrutiny that this has been given is pretty cool. I wish that we could have this level of scrutiny on a lot of things that we do simply because the public has a right to know all this and we’ve got lots of people out there that have spread the word from one end of Augusta to the other. At the end of the day it’s our responsibility to move Augusta forward. At the end of the day it’s our responsibility to make those decisions that will do that. At the end of the day you will enter into an agreement that can be reviewed every year and in the past and in the future, I think, is good for Augusta. I think it’s time to move forward, gentlemen. Mr. Aitken: You know I ran primarily on progression of downtown. That’s why I move downtown and why I think a lot of us want to see that happen. This is an opportunity that we have to capitalize on and we have to look across the board and how many people have been working towards this for a long time. The commission, the Convention and Visitors Bureau promoting Augusta. The perception of Augusta, we have an opportunity to change that and if we don’t capitalize on where we’re going right now on behalf of the citizens of this city, and as we 4 all know, this is a campaign time for me and as I go door to door and I’ve been to 300 doors and people in this community want to see the progress and a lot of time I think us as commissioners don’t really feel the progress that the citizens want to see. They don’t want to see bad press, they want to see us working towards the common good that’s going to give us the quality of life that we deserve in this community. And it rests on this commission to do that and I think as Mr. Russell mentioned, the annual plan gives us the leverage to hold tight on how the funding goes towards that in a year. This is a starting point. There has to be a starting point. We have to engage in a starting point of moving forward and I just want to take my hat off to the hotel management group and what you’ve done because there’s a lot of bickering in this town and where does everybody go to do their main events and that’s your place. And I think how do we start to dialogue and how do we move forward in these ways of beautifying our city? Is this going to attract the guests? As we attract the tourism to come to this city to stay downtown in these other hotels in the surrounding area, that’s what’s going to change the culture of this downtown. If you talk to the merchants downtown, they’re waiting on us to move on this right now because they’re holding on by shoestrings and we’ve got thousands of people booked and ready to come and that’s going to help these small businesses downtown and in the Laney Walker area to continue to succeed. And as this culture starts to change, we’re going to be a city to be reckoned with and I respect everyone’s opinion on this. Somewhere, ladies and gentlemen, we have to come together and try and if we’re not willing to gamble and try and invest in our own city, we’re missing the mark and we can’t let this group in here hold us back from where we need to go. We need to come together, look at it for the year, look at the annual plan next year, instruct the Administrator to do what he’s got to do and I think how we look at our contracts, Mr. Gray, is important for the future. Corey and I have talked about how do we look at our contracts for the future but we can’t let that hold us back right now. We’ve got a $50 million dollar investment and if we look at the rate of return right now on what we have booked, it’s over $7 million dollars. On a 50 year deal or a $50 million dollar contract versus a $7 million dollar return for the first year I think that’s pretty good and if we can continue to take that to the next level that’s what we’ve got to do. I’ve supported it. I thank my colleagues for the negotiation we’ve done with the parking deck and this and I think this is what we have to do, this good dialogue as we move forward. So, Mr. Mayor, I’m just encouraged by where our city’s at and what we’re doing in trying to better it across the board. Mr. Bowles: Fred, I’ve got a few questions for you. The benefits factored at 30%, are we reimbursing based on that percentage or are we going to reimburse based on the actual benefits cost? Mr. Russell: Actual cost and our benefits citywide are right at 30%. That’s where that number came from. Mr. Bowles: And that’s why governments are going bankrupt all across this country. Mr. Russell: Ours are pretty good. If you look at the state numbers, they’re hitting about 50%. Mr. Bowles: The cost sharing of employees. Is there any way we can indicate on that annual plan which employees are full time, which ones are being cost shared? 5 Mr. Russell: Yes, sir. That’s a detail that probably wasn’t in there but could be as we look at that. Mr. Bowles: Could we put a rider in here so that there are no management bonuses if the loss, operating loss exceeds $250,000 a year? I don’t see why we would bonus somebody out for – Mr. Simon: I notice you had a question about the top paid person over there. Mr. Bowles: Yes, sir. Mr. Simon: Now, that is very low pay in relationship to what others are paid at top rate centers like this and what you find in this case is the city’s got a very good deal because you’re getting the benefits of our management, of all of our departments over there. If you look at Savannah or Athens and I’ve got the numbers right here, it shows that each one of those Convention Centers have a finance department, they have a sales department, they have an administrative department and all these departments cost thousands of dollars and then you’ve got a top guy who runs it. He makes a lot more than what we’re showing right here so you’ll have one person over there that makes the kind of numbers you’re talking about and the bonus plans that we have in place for our people include many factors as it relates to how they run their job, how they get along with the people, how they supervise and then the results, not necessarily that they’ve lost money, but they may lose money and still get a bonus because they’re making progress towards a profit. So I’d rather not put in there that we wouldn’t give somebody a bonus if we lose money because this center is going to lose money for several years, in my opinion. You look at Savannah – Mr. Plunkett: Mr. Simon, if I could for just one second. To be a little more direct with your question, the answer is the annual plan allows you the flexibility over the 15 years to put in – Mr. Bowles: So every year we could – Mr. Plunkett: Every year you have the opportunity to, say in years 8 through 12, you know, it was doing great, we should do a bonus. One year it may not. So the flexibility is in there through the annual plan so I didn’t mean to be rude and cut you off, but I think the short answer is the annual plan allows you to address that issue. Mr. Simon: Each thing we have in the annual plan, you have the right to change it totally. But then you’re putting the burden on us. Here is what we’re going to submit to you that we can operate this and this is the best way for us to operate it, but, nevertheless, you can override that by saying we want you to take out these employees. We want you to add something, whatever you want to do, you have that right under the contract. I also want to say that I appreciate Mr. Gray’s comments; however, a lot of his comments are not totally accurate because I don’t think he fully understands, and he admitted that to a degree, the contracts. They’re very complicated and you’ve got to get into them in detail. But some of the things he said a minute ago are not right. The contracts have been looked at by your attorney, by Fred and 6 all of us and I think you’ve got a good contract and a good relationship here that we’ve had for many, many years. Mr. Mayor: Thank you. Commissioner Guilfoyle. Mr. Guilfoyle: Things being said, what I was saying is not correct, I think he should have a right to come up and speak on what is not correct in the contract so he can dispute it but I wanted to bring up a couple of other issues as well, Mr. Mayor. We talk about moving forward, holding hands and doing what’s best for this city. I look at it like this. I do get questioned a lot. I don’t have anybody coming up saying you need to push this on through. I’ve never been one to just jump into something without looking at what I’m jumping into. This contract is very convoluted. It has a lot of wording, wording that I don’t understand and I have to thank Al and Brad for their help on this as well as my colleagues that’s been supportive of doing what’s the right thing. Just because you go into a jewelry store when you buy a diamond at face value, you could actually get it cheaper, the worth of it will remain the same. That’s something about this contract here is that it’s the negotiations. That’s what we did on the parking deck. I think we come to agreement. As far as this contract here, there’s some stuff in there no different than the annual plan. I don’t know if this annual plan that we’ve got is the max it would go. You would have to answer that, Mr. Simon, or your attorney, but even on the annual plan if this is the max that we would spend, let’s go ahead and put a cap on it to protect the interest of the taxpayers. Let’s do what we are supposed to do on that. This past month we were handed a new version of the contracts. We need to vote now or lose rentals. That’s a lot of pressure put on this commission. We have some commissioners that have actually read the contract. We have some that have not. Over the past week we asked for the annual plan. If we did not ask for the annual plan and we passed this management agreement, we would have to explain to the citizens how it goes from an average of $350,000 to over $900,000. Fortunately our Administrator or our Finance Department has, they said there were provisions to help with offsetting costs but this annual plan is something that’s not locked in stone. It’s actually only as a guide, too, and that scares me. If we go from 350 to over $900,000 as a (inaudible), what’s to keep it from going to $1.2 to $1.5 million dollars. In Fred’s e-mail Friday he said that with ten years’ experience from the Marriott, I’m not attacking the Marriott by any means, so don’t get me wrong, and to be truthful, I think we’ve got a great partner, but what we’ve got to do is come to a meeting of the minds with this. With ten years’ experience shouldn’t this commission have been warned about the monetary cost last week that we have to face the challenges in the future for our districts? If we pass this contract with 900 and something thousand dollars with chances of it coming out of the general fund, we’re going to have to give up services and I don’t want to do that. Mr. Russell: If you look at the e-mail I sent you, what you’ve got as you do with most budgets for the first year or in some cases any year is an estimation of what we’re going to deal with. I think their numbers are good because they know what they are doing. The $350,000 was always in the contract, 100 for capital improvements and 250 for operational expenses. There was never a cap or never any expectation that that would be the top numbers that we looked at. I think Paul has been somewhat conservative in his approach by putting that number that high. I think within the first year you’ll see that it will be somewhat lower than that if not any lower. You’ll end up once again though having every year the opportunity to adjust that as you go forward. We really have no data. We don’t know what it’s going to cost. I don’t think Paul 7 wanted to come out and give you a $12.00 deal and then come back and say it’s going to cost $20. As we monitor this as we go forward, you’re going to be able to make those adjustments. The amount of money that’s available to do this is there without approaching the general fund. As you all know I’m conservative as anything too. We did put half a million in the budget to cover any shortfall. That’s because I don’t want to come back to you and tell you that we messed up but my feeling is that we will not have to go to the general fund to pay for any of these losses. Can I tell you that and promise that to you today? No, but I think over the past ten years the experience that each of you have had with the way we manage things is we do a pretty good job with that and I’m not going to say something that I don’t think I can pull off. The questions becomes is what day do you start. That still becomes the question we’ve got to look at. If we can do that, and I think we can, without impacting the general fund, the impacts are going to be positive as you said. We’ve got events coming that are going to bring people to our city that will give us dollars to do things for your districts that we don’t have now. That’s the whole key that as we grow these opportunities, we’re going to have revenue that we currently don’t have to make things happen in your districts that don’t come off the tax allocations. That’s what we’re trying to do and you’re not going to be able to do that unless you invest in something and we over the past years before you got here and before I got here determined that this was an investment that we want to make and we’re at the point now of kicking it off. I appreciate what we’re doing because it’s important and at the end of the day we’ve got to move forward. Mr. Guilfoyle: I understand that, Mr. Russell, and I appreciate you bringing up districts, what each district gets. My district is probably the farthest south as you could get and my constituents look at all the monies being funneled downtown, no disrespect to my other districts and colleagues. We compared the Conference Center with Athens and Savannah and they have an approximately $900,000 loss that I guess was the guideship to in order to figure out where we’re at on monetary loss for Augusta Richmond County’s Conference Center. But what ain’t being said is Augusta Conference Center’s approximately half the size of what the Athens and Savannah is. Would that be a true statement to say? Mr. Russell: I don’t know the size of the two centers. Mr. Guilfoyle: We’ve both been to both of them but shouldn’t our loss be considerably lower than what the other cities has it at? We always have a tendency of comparing when it benefits us as a government but I know that the Mayor and a couple of colleagues as well as the you, Mr. Administrator, want to keep moving forward and I think we need to slow down still. Seeing the questions that Mr. Bowles had, Mr. Johnson had, they ain’t been answered on this floor. We want to still move forward. Mr. Mayor: Let me just make a couple of points. When I ran in 2005 the initial funding was approved for the TEE Center and seven years later, we’re still discussing it and I would say that we haven’t moved quickly and there does come a time when we do need to move forward and I very much respect your input and your diligence on this. I would also say, Commissioner, not every district has a $172 million dollar Starbucks facility and 140 new jobs being brought to it as well so we’re blessed to be seeing significant investment throughout the city whether it’s Walton Oaks on Sand Bar Ferry Road, the Kroc Center in Harrisburg, the new Starbucks facility, Rockwood Pigment $100 million dollar facility so I think we oftentimes sort of stress the 8 negative and don’t focus on the positive but this year they expanded the Ironman event from 3200 athletes to 3400 athletes. They want to get to 4,000 athletes. They are over the moon about this facility. They cannot wait to use it next year so I very much respect everybody’s opinion but there does come a time when we do need to move forward. Mr. Brigham: Mr. Mayor, everybody’s talked about we’re going to go to the general fund. Mr. Russell, what revenues are dedicated to the convention business, TEE Center in Augusta, Georgia? Mr. Russell: If I could ask Mr. Schroer to explain that. He’s gone over it with me 12 times and I can’t remember off the top of my head but he could explain that to you. Mr. Mayor: And as Mr. Schroer comes up, I do want to say too we’ve got the finest finance team in the state of Georgia. They’ve built the Judicial Center, the Library, they’ve brought these facilities on time and usually under budget and there’s no way that I, I have faith and trust and confidence in them when they say it’s a good deal, I believe them. Several months ago our auditor came before us and gave a glowing review so at some point I think we need to trust these great people that work for us. Tim. Mr. Schroer: Thank you, Mr. Mayor. The funding for the operations of the TEE Center will be the tourism enhancement fee or the dollar bed tax. The first $350,000 is dedicated to the TEE Center. 250 for annual operations, $100,000 for capital expenditures and then also the car rental excise tax has been allocated to the TEE Center. A portion of that goes to fund the debt service on the bonds for the TEE Center and the remainder which were estimated at about $210,000 goes to operations. So for 2013 we have $500,000 from the tourism fee, $210,000 from the car rental excise fee, that’s 12 and 2013 funds so we have about $920,000 available for 2013. Going forward in 2014 we have $460,000 available today that’s specifically set aside for the TEE Center operations. Mr. Brigham: Are there any other funds that are committed to the tourism business in Augusta, Georgia? Mr. Schroer: The hotel/motel tax, sir. Mr. Brigham: The hotel/motel tax, the car rental fee, there is another one, I believe. Mr. Bowles: Alcohol. Mr. Brigham: There is one besides alcohol. I believe the hotel/motel tax is dedicated strictly to bringing visitors to this town. Mr. Schroer: Yes, sir. Mr. Brigham: Are we at the cap on that hotel/motel tax fee for the state of Georgia? Mr. Schroer: No, sir. 9 Mr. Russell: We’re not. Mr. Brigham: I believe we are under it. I believe that we use that fee, if we were to run into a very negative situation that we have alternatives other than the general fund to fund any losses in the convention center is what I believe. Am I anywhere close and correct of that understanding? Mr. Schroer: Yes, we’re at 6% of the hotel/motel tax. I think we can go to 7. Mr. Brigham: And 1% of that raises approximately what? Mr. Schroer: Doing the math in my head real quick. $800,000? Mr. Brigham: The figure I heard was $900,000 but 800 may be correct. Mr. Schroer: Between $800,000 and $1 million dollars a year, sir. Mr. Brigham: That’s not something that I am suggesting. That is something that this commission needs to know that it has in its tools to be considered in the future if it needs to. Mr. Mayor: Just an arrow in the quiver in case of emergency. Commissioner Bowles. Mr. Bowles: The room block agreement, Fred, where do we stand on that? Mr. Plunkett: It’s in our office drafting it, Mr. Bowles. We’re just waiting on some direction to move forward. We have a rough draft out there to be considered. Mr. Bowles: Okay, because it’s critical that we have the room block agreement before this, because it’s all part of the same dance. Mr. Plunkett: Yes, sir. If you recall we talked about that it would be appropriate for the CVB and the manger. I’ve drafted up something but it was part and parcel of this whole project. Mr. Bowles: And okay, I think that’s it. Mr. Mayor: Commissioner Aitken. Mr. Aitken: Mr. Mayor, I’d like to make a motion to approve. Mr. Mayor: Do we have a second? Mr. Brigham: Mr. Mayor, I’ll second the motion. Mr. Mayor: Thank you, Commissioner Brigham. Mr. Guilfoyle. Mr. Guilfoyle: Mr. Bowles first. 10 Mr. Bowles: Are we approving the agreement as written or with the addendum or what? Mr. Russell: With the addendum you have in front of you it would be appropriate to – The Clerk: Mr. Mayor. Mr. Mayor: What’s that? The Clerk: The parliamentarian just ruled that we need to call the agenda item. It hasn’t been called yet. So we need to do that. Mr. Mayor: Okay. Could you please do that? The Clerk: The agenda item is to discuss/approve management/catering agreements for the Augusta Convention/TEE Center. I assume, Mr. Aitken and Mr. Brigham, your motion stands for this item. Mr. Aitken: Correct. Mr. Brigham: My motion was intended to be all inclusive motion that was submitted by the attorneys for the actual reading into the minutes. Mr. Mayor: Mr. Aitken, is that good with you? Mr. Aitken: Yes, sir. Mr. Guilfoyle: Mr. Mayor. Mr. Mayor: Commissioner Guilfoyle. Mr. Guilfoyle: I’d like a substitute motion. Why don’t we have a one-year provisional contract with the right to audit and look at the budget after one year and then do a 14-year term? I don’t think anybody could disagree with that. That way we’re stepping only baby steps and then we’ll be able to move forward from that moment on, gentlemen. Mr. Bowles: I can second that. Mr. Mayor: So that is a second on that? Mr. Guilfoyle: Yes, a one-year provisional agreement with a right to audit after that and look at the budget with a 14-year agreement after that. Mr. Plunkett: Whether or not the body addresses that issue, you probably need to make it a year plus the audit provisions. In other words you wouldn’t have the audit after that. I’m not 11 sure if the other side would agree to it but it certainly might make it more like 18 months or something like that. Mr. Russell: For all effective purposes you’ve got that right now in the fact that you’re signing the agreement. At the end of the agreement, you audit it and review the budget and whatever and move forward. At the end of the day after the first year if you don’t agree with what’s going on, you just stop it. That’s pretty much where you’re at. I don’t want to speak for the Riverfront people but I’m not too sure that that would be acceptable. Mr. Mayor: We always have that bite of the apple. Mr. Guilfoyle: Gentlemen, it’s ya’ll’s call. I’m seconding if ya’ll want to proceed forward on the vote, I’ll be happy to proceed. Mr. Mayor: Is there any further discussion? Mr. Brigham: I want to ask for a roll call vote. Mr. Mayor: We have a substitute motion. Commission will now vote by the substitute sign in a roll call vote as requested by Commissioner Brigham. The Clerk: Substitute motion is for the one-year provisional with a 14-year agreement thereafter with audit provisions. Mr. Aitken. Mr. Aitken: No. Mr. Bowles: Yes. Mr. Brigham: No. Mr. Guilfoyle: Yes. Mr. Jackson: No. Mr. Johnson: Yes. Mr. Smith: No. The Clerk: That motion fails 3-4. Mr. Mayor: Okay, gentlemen, we have the original motion as made by Commissioner Aitken and I would just encourage everybody just please strongly consider getting this done. If there’s no further discussion, commissioners will now vote by the usual sign of voting. The Clerk: Mr. Brigham, did you ask that that motion be read into the record? Mr. Brigham: Yes. The Clerk: A motion to approve the TEE Center Management Agreement, TEE Center Catering Agreement for Right of First Refusal, TEE Center Reciprocal Easement Agreement, Assignment of TEE Center Management Agreement, the Assignment of the TEE Center 12 Catering Agreement as presented to the Commission, and authorize the Mayor and Clerk to authorize same with the following changes: 1. Change CPI adjustments to reflect CPI for the southeastern United States. 2. Reflect those changes requested to the Right of First Refusal, TEE Center Reciprocal Easement Agreement, Assignment of TEE Center Management Agreement, Assignment of TEE Center Catering Agreement requested by Wells Fargo that have not substantive impact to Augusta as determined by the General Counsel. 3. Adding a clause in 6.1 (b) of the Catering Agreement to require excess funds to be paid over to the Manager for inclusion in the budget of the TEE Center consistent with the provisions relating to excess funds in paragraph 6.2 of the Management Agreement 4. Correct recital B of the Catering Agreement to reference the Conference Center CORE Agreement 5. Modify 4.2 (c) of the Management Agreement to provide that in the event of termination and that the manager of the TEE Center is different from the Operator of the Conference Center, that Augusta and the Operator of the Conference Center will negotiate in good faith a reciprocal agreement addressing ingress/egress between the two facilities and appropriate indemnity provisions, and if the parties cannot agree to such an agreement that either party may install a two security door to utilized by both facilities to limit access. To authorize and ratify the purchase and acceptance of all parcels of land necessary for the TEE Center and Reynolds Street Parking Deck and to authorize the Mayor and Clerk of Commission to execute the necessary deeds to the Coliseum Authority as required under the bond funding. To authorize the Mayor and Clerk of Commission to execute an assignment of the Conference Center Parking Lease in substantially the same form as the previously approved Assignment of the Reynolds Street Parking Deck. Mr. Johnson and Mr. Guilfoyle vote No. Motion fails 5-2. Mr. Simon: I’d just like to say we’d like direction from this body as to cancelling events. We’ve got one scheduled in January and if we’re not going to have a positive vote any time soon, then I don’t know what the future might be as it relates to the Center. The Center is complete. They’re going to be punching it out next week as I understand it so somebody will have to take it when the contractor completes it and we can’t hold events over there if we’re not prepared. I think there’s been some misunderstanding too about the numbers. We talk about a $900,000 loss. That is one of the numbers that I sent you but also sent you what we expected to do this year. The $900,000 was explained that it was 13 events that we had booked. If we put on those 13 events and nothing else and we know for instance there’s a wedding that’s wants to be held there, there’s some other things coming, if that happened, then the loss is not 900, it’s 600 and so as we move forward, it’s like any new business. All of you business folks, you start a new business, the first day you’re not going to make a profit. It’s going to take a while and that’s the way this is. It takes a while to make a profit and so we see it as we move forward and these numbers, for instance, is not considering the parking income that I’m not showing that in there 13 because that’s not part of the deal, but you could use those to offset some of those losses as well. But you will, I don’t care who operates it, you will have losses particularly to start with. So I don’t know what our next move is. This is very disappointing to see this not move forward and I just feel badly for the city. Mr. Johnson: Mr. Simon, I don’t think we want don’t want to move forward with this item. I know for me personally, there’s a few more things I want to get some clarity on and you’re right, this contract is not very easily to digest because it is a little complex and if you don’t do this every day, it is difficult to get what you’re trying to get out of it. I will make a commitment this week to get the answers that I need, however I need to get them, and by Monday I should definitely make my decision on moving forward with this. I don’t where Mr. Guilfoyle is on this but I do know we share some of the same concerns and I’m willing to do what I need to do to make sure that I get the answers to this and the solution. I do want to move forward and anybody that think that I oppose the progress. I understand the TEE Center don’t make money. I understand the scenario around it and I think it’s a good thing for the city overall but I want to make sure and I’m going to quote Mr. Brad Owens, “the best bad deal possible” because I think in this economy everything is a chance, it’s a challenge right now. We did it with the parking deck and I feel like we can do it with this so give me a couple of days and let me work through this and come Monday at least I should be comfortable enough to make a decision. Mr. Simon: Are you suggesting that we’d have another vote Monday? Mr. Johnson: Well, we have a committee meeting on Monday so this could be something that could be added on. Mr. Simon: One of your questions was about the catering fee. I hope you understand. That’s just a fee. There’s no way you’d get anybody else to come in and operate a catering operation for that kind of money. That’s very, very cheap. The center around here, James Brown Arena, those folks get $75,000 a year plus 5% of the sales and they can earn up to $150,000 so their fee is $150,000. Ours is 40 something thousand. The management fee, in other words, if we didn’t operate this, this guy could run another hotel so we have to have some offset to his time and expertise that our folks are spending so the city is getting a very good deal as it relates to the use of our people, our departments, like these other centers. They have a sales department. We don’t have a sales department here. We use our sales people. They get a commission but that’s it. So you have each department, like an engineer or a chef and in these numbers we’ve got a sous chef. You couldn’t open up a facility like that without a chef and a sous chef and a staff but the way he’s got it planned, you use our chef but it’s only charged on a part-time basis. There’s no way in the world that you can operate this center at less cost than we’re proposing in these numbers and so we’d be glad to try and answer all your questions. Mr. Johnson: I appreciate that. Thank you. Mr. Mayor: Before I recognize Mr. Guilfoyle, you know, it’s ironic to me, we trust our finance team to put these deals together all the time and at the same time we’ve been working on the TEE Center we’ve built a new Law Enforcement Center with virtually no scrutiny to it and I 14 understand there’s not an operating agreement there but we trusted them to deliver that facility and they did and did a great job so I feel like we need to trust them on this. Mr. Guilfoyle: Mr. Simon, I too will get you some information, actually, get it to the attorney so he may forward it to you, but, gentlemen, if ya’ll want to pass this thing, all you’ve got to do is pass my motion. I’ll be happy to vote for it at that point and we can eliminate having this discussion any further. The only thing this is is just to hold people accountable until next year. That’s it. But that’s up to ya’ll. Mr. Mayor: Is there any further discussion? Okay, hearing no further discussion, Madam Clerk, you made mention that we could add this to – th The Clerk: Well, the noon meeting on the 29. Mr. Mayor: To the legal meeting, the called meeting. Is that, okay, I will request that the Clerk add it to that meeting. If there’s no further business to come before the body, we stand adjourned. [MEETING ADJOURNED] Lena J. Bonner Clerk of Commission CERTIFICATION: I, Lena J. Bonner, Clerk of Commission, hereby certify that the above is a true and correct copy of the minutes of the Called Meeting of the Augusta Richmond County Commission held on October 22, 2012. _______________________ Clerk of Commission 15 16