Matt Aitken Insults Downtown Merchants Over Clock Issue

Wednesday, September 26, 2012
Augusta, GA
By The Outsider

One of the cardinal rules in a political campaign is to avoid saying or doing anything that might insult a key portion of your constituency. Think of the video where GOP Presidential candidate Mitt Romney essentially called nearly half of all American voters freeloaders. His campaign is still trying to climb out of that hole. Facebook and Twitter have also become minefields for politicians-- think Congressman Anthony Weiner' s semi nude pics he tweeted out for all the world to see that resulted in his resigning his seat in disgrace. Well, it appears that Matt Aitken, who is running for reelection in the district 1 commission seat, may have offended many downtown merchants with the following Facebook posting this past Monday night. There are  no Weineresque crotch shots -- just commissioner Aitken standing in front of a clock with the message "found another clock downtown."

On the surface the post seems innocuous, but for anyone who has been following the saga of the downtown clock over the past year will understand why the above Facebook posting could be taken as an insult by some downtown business owners and government watchdogs. They have been questioning the unusual circumstances of how the downtown clock was removed from the center of Broad street with no public input and then wound up in the terminal at Augusta Regional Airport. And now, here was the commissioner for the downtown business district where the clock once stood, turning it into a joke -- essentially telling concerned downtown merchants to just get over it. 

The clock seen behind Aitken in the above Facebook posting is located at 13th and Broad in front of an old bank building. The downtown clock that has been the center of controversy (not the one in the above photo behind Matt Aitken) was purchased with over $60,000 in special purpose local option sales tax funds (SPLOST) in 2003 for the specific purpose to give that area of downtown a focal point. It stood in the median of Broad Street between 10th and 9th streets across from The Whites Building for 8 years until last fall when it was removed in the cover of night by The Downtown Development Authority (DDA). It later made its way to the airport. Many downtown business owners were furious. Some of them had even used the clock in their advertising. 

Now it was gone and no one was giving them a satisfactory explanation. Margaret Woodard, director of the DDA, said that it was removed because it it did not function properly. She says there was a vote by the DDA board to do this. However, in an open records request by City Stink at the request of concerned downtown business owners, we found no vote or discussion of the removal of the clock in any of the DDA meeting minutes.

Here is what else we found out in our open records request:

The clock was insured, and a claim for it was made by the DDA. The insurance company later deemed the clock irreperable and payed off the claim to the DDA. 

The DDA's 2011 audit report still lists the clock as an asset worth approximately $35,000

The clock later ends up at Augusta Regional Airport and is miraculously repaired -- after the insurance company paid off the claim deeming the clock a loss. Records show the clock was repaired at a cost of between $8,000 and $9,000.

Questions:

• Why did the clock end up at the airport with no vote or discussion?
• Where is the money that the insurance company payed off to the DDA on the clock?
• How was a clock deemed "irreparable" later repaired?
• If the clock was considered a loss by the insurance company, then why was it still listed as an asset worth $35,000 by the DDA on their books.?

If seeing an empty spot wasn't bad enough for downtown merchants and visitors who had grown accustomed to the large black Victorian style clock as a focal point, things were made even worse when the focal point was taken up by a hot dog trailer. Instead of the elegant clock-- this is what diners on the outside patio of The Casa Blanca Cafe located on the first floor of The Whites Building get to see directly across from them: 

Lovely, isn't it? But it gets worse. During the Arts in the Hearts Festival earlier this month this is what took the place of the clock:

Rather ironic when you think about it since the circumstances of how the clock was removed from downtown certainly do stink.

But to Commissioner Aitken all of this is just a big joke and to him, downtown merchants and concerned citizens are making much ado about nothing -- but they aren't laughing.For many of them, the clock had become a focal point to that part of downtown and they want it back -- and they want answers as to why it was removed -- not insults from the commissioner who is supposed to represent their interests.

Another bit of irony in all of this is that when Commissioner Aitken ran for election in 2009, where do you suppose he decided to give his speech officially kicking off his campaign? Yep.. the same downtown clock that he is now making fun of -- the clock that now resides at the airport. Below is a photo from Matt Aitken's media event in 2009 where he officially announced himself as a candidate for the District 1 seat.

Seems back then the clock was important to him -- now it has become a punchline. Of course if Aitken had decided to hold his reelection announcement at this same spot this year, he would have done so in front of a tacky aluminum trailer or a cadre of crappers -- the latter of which is where Aitken's reelection hopes are likely to end up.***

OS

* Special thanks go to Taylor Bryant for providing the screenshot photo of Matt Aitken's Facebook posting

Related Stories:

• The Case of the Disappearing Downtown Clock

Special Report: A Commission Deceived

Charlie Brown Placekicking with a Luciferian Administrator?

Tuesday, September 25, 2012 Augusta, GA
By Lori Davis

*Editor's Note: Click on blue underlined text to see the documents referenced in this report*

Most of us came up reading and watching Charlie Brown’s cartoon adventures with his pals. The most infuriating sequence of strips were when Lucy enticed poor Charlie Brown to kick a football while she acted as holder.  At the last instant, without fail, Lucy would snatch the ball up and away, leaving poor Charlie kicking nothing and ending up on his butt. Lucy had to invent more and more ways to get Charlie Brown to participate in her charade, generally involving ever-more grand enticements, promises, and fantasies.

The Augusta Commission is Charlie Brown and Fred Russell is Richmond County’s Lucy.  By now there are 10 bruised and broken tailbones showing up in Commission Chambers. By now it hurts so bad, none of them can stand to laugh. 

Monday, the proposed contracts for the infamous TEE Center come to the Commission for consideration and approval. If they try to kick those footballs through the uprights immediately, they will find all of the incompetence, yes even deception, which Fred Russell has been up to. The damage will be that Richmond County will lose $tens of millions over time on this boondoggle, with $millions added  that were hidden in one-sided contracts that Lucy Fred “negotiated.”

Why do I write so bluntly? Is it that I think that Fred Russell intentionally misled the entire commission?
Yes and here is why.

These contracts were promised to be nearly complete THREE YEARS ago! Here are Russell’s exact words from the July 7, 2009 commission meeting. “Land acquisition is almost finalized.  The operating contract is almost finalized……I’m getting very close to giving you the final documents on all three if not the schematic  designs  the land acquisition and the operating agreements” Three years and two months later the final agreements are just coming  before the commission.

What did Fred Russell do with these agreements in all of this time? He allowed $50 million of Tee Center and Parking decks to be erected on land the city didn’t own. This was unbelievable incompetence and it may have been worse. It put the city in a difficult and now perhaps impossible negotiating position.
I submitted several Georgia Open Records Act Requests trying to get to the bottom of the Tee Center kitchen kettle of waste, including one dated July 2, 2012 and another dated August 3, 2012. A stunning string of misstatements by the administrator and irregularities surround the $1.4 million that Augusta paid for kitchen equipment.

When asked for the action of the commission that changed the PARTNERSHIP AGREEMENT with Augusta Riverfront LLC, all the city could show was approval of the change order  with RW Allen LLC to purchase the equipment.

When the draft Tee Center agreements were obtained in March by Commissioner Guilfoyle, there were references to the kitchen space in the building, but not the equipment. The existing Conference Center agreements, recorded in the clerk of court office and the August 7, 2007 preliminary agreement approved by the commission, both say Riverfront LLC pays for the equipment. WHERE IS OUR MONEY?

The motion to approve purchase of the kitchen equipment presented by the Administrator stated  “There is no financial impact to the overall project cost. “ Beyond whether these costs belong to Riverfront LLC, not Augusta, which would make Fred’s claim ridiculous, there was only $700,000 in the project estimate for food service equipment, not $1.4 million.

Project contracts require the architect to review and approve all change orders, but the architect, TVS Design pointedly noted that it was cut out of its required approval of the change order, writing: “We understand that Change Order Number 01 was reviewed and executed on a process solely between the Owner and Contractor.”

The RW Allen contract requires that combined overhead and profit of the general contractor and the subcontractor on a change order not exceed a combined 22%. The pricing available to Augusta doesn’t permit verification that this maximum hasn’t been exceeded.

Commissioners need to be wary of the Russell move that now looms. These partners under the original Tee Center Deal of August 2007 are getting a $2 million annual subsidy courtesy of the Augusta taxpayer.  There is the matter of depreciation on $50 million of new buildings. There is the matter of the Augusta Convention And Visitor’s Bureau budget of millions of dollars largely dedicated to promoting their hotels. There is the $350,000 cash outlay every year from the Hotel bed/transportation tax. There is relief from property taxes. Rival hoteliers must pay these costs and get none of the benefit. All of this isn’t enough?

Summary for Commissioners

Did Fred tell you that Riverfront was obligated to pay for kitchen equipment ?  Did he tell you he was giving away $1.4 million of Augusta’s money if Riverfront didn’t pay its share?

Why did Fred tell you that the kitchen equipment did not raise the overall project costs when Riverfront was responsible and the cost was double the amount in the April estimate? (I got that included in the response to my first GORA.)

Why was the architect cut out of the approval process for the kitchen equipment change order? Did Fred tell you about that?

How can Augusta verify that it didn’t pay more than the RW Allen contract allows for the kitchen equipment when the details to do so are missing?

I note that these things are on top of Fred telling the Commission that the land under the Reynolds Street Parking deck was going to be purchased.
Why is Fred Russell bound and determined to snatch away the last pig’s skin of real value to Augusta and convey it to Riverfront LLC?  Is this why $50 million in buildings have been completed with no contracts between the partners in place?

Fred has been up to no good. He has either deceived or misled 10 commissioners throughout the Tee Center ordeal .It is a debacle for Augusta that he will leave as his legacy. Unless something changes, Augustans can spend the next decades shunning and lampooning these commissioners for letting an Administrator run amok, squandering millions of dollars.

Someday soon, accountability must return to Augusta and to America.  We citizens must force the issue!***
LD**

*Cost Recovery specialist Al Gray provided assistance with this report

The Bounty Trace to Magnolia Trace

Friday, September 21, 2012
Evans, GA
By Al Gray

The fury in and surrounding the Columbia County Commission Chambers on December 6, 2011 sizzled and seethed. Citizens packed the room and the overflow could have surrounded the building. An incongruous and unwelcome subsidized housing development, to be known as Magnolia Trace, was coming to their midst. The county commission had invited the intruder in. The Georgia Department of Community Affairs (DCA)was funding it. The only notice had been the real estate closing and starting of the building permit process. Revelations that the project's limited partner, Affordable Equity Partners (AEP) of Columbia, Missouri, had – through subsidiaries, related entities, and PAC’s - liberally provided campaign donations to Georgia’s governor, lieutenant governor, speaker of the house and local state legislators added to the combustible mix. Capping it off later was the discovery that the county attorney also had worn the hat of closing attorney for the developers.

Inside, the commission chairman, three commissioners, and that county attorney were stoic, but their white faces and knuckles spoke fear.  Their position was one of relative comfort juxtaposed to the District Three commissioner, a man inopportunely appointed to the offending Department of Community Affairs board (albeit after DCA had approved the tax credit funding to AEP) and who had voted for the county’s resolution to endorse the project. His business had been picketed, his phone ceaselessly chattered, a local talk radio show with 60,000 listeners was hostile, and real pressure was on. He was beet red and seemed to be near break down.

An epic meeting ensued that concluded an hour and a half later with the commission engaging an outside attorney charged with seeing whether there were avenues to void the deal.  It was a fig leaf and seen that way. The project was too carefully planned and orchestrated for citizens to have a realistic chance of canceling it. After all, Affordable Equity Partners boasts of its long history of doing tax credit projects in multiple states and its role in encouraging states to provide the tax credits.  From the company website: "By forging strong relationships with key government entities, AEP ensures a secure and favorable investment environment for our investor partners."

Who Done It?

The first stage in the development and investment process for a Low Income Housing Tax Credit project is said by AEP to be this: “A developer of an affordable property will admit AEP as its limited partner.." This portrays the circumstance of a group of local property developers gaining control of land, then engaging the AEP companies to structure the deal as a LIHTC financing. Who are the principals behind Magnolia Trace? They are hidden by the LLP structure, so that remains a mystery.

The birth pangs for this project came when an AEP entity named Peach Way Holdings LLC obtained an option on March 24, 2010 to purchase the land. Later the option would be exercised by Magnolia Trace LLP. Immediately the process began to submit an application to DCA for tax credits used to finance the project. Peach Way Holdings was the first entity publicly involved out of an AEP interconnected stable of companies who are very adept at carving out a lucrative niche.

Extraordinarily High Costs Meet a Stunning Reversal

The Magnolia Trace project was so astonishingly lucrative that the DCA staff initially refused to approve the application on December 14, 2010 (click link to view document) based on that fact and a host of other financial criteria. “Total development costs for this project are over $10 million dollars which translates into almost $141.24 (author used round numbers) per square foot. A similar project had total development costs of only $7,561,982. This translates to almost $2.5 million more of total development costs.”, DCA wrote. Despite having slammed the numbers as entirely too high and the applicant being barred from updating or modifying anything upon appeal, DCA  approved the credits for MagnoliaTrace in a letter dated March 14, 2011 (click link to view approval document) .Incredibly the approval notification letter has a DCA documents date stamp of January 7, 2011, 66 days before the document was dated!

A need to call upon AEP's “strong relationships” within government to gain approval before December 31, 2010 lay in the expiration of a key contract with Peach Way Financial Services. The vaunted "genuine advocacy for both developers and investors" worked wonders to speed approval, evidenced by what looks like an obvious post dating episode, over a period interrupted by Christmas and New Years.

Who might Magnolia Trace LLP/Affordable Equity Partners have called upon for help in this time of emergency? Lt. Governor Casey Cagle's campaign got $882.50 from AEP going back to 2008. Sister company Capital Health Management Inc. gave Cagle another $10, 453.50.Capital Health Management in October 2006 had given $40,000 out of the $40,500 total of The Fund for Georgia's Future (Filer # NC2006000414 ) who gave Cagle another $10,000 that same month. Capital Health Management in 2008 gave a whopping $100,000 to The Fund for Georgia's Future, who dispersed it to a raft of legislators. and the Republican Party.  

Capital Health had also given the campaigns of Speaker David Ralston $5,000, Senate Majority Leader Chip Rogers $5,500 and Nathan Deal $6,300. Another PAC that AEP contributes to, albeit not as the dominant contributor, is the Committee for Affordable Workforce Housing (GAHC-PAC – Filer NC2008000070). This PAC gave another $6,100 to the Deal campaign in September 2010, $1000 to Ralston in December 2010, $5,973 for Deal in December 2011,  and $3,000 for Cagle in March, 2012.

Nearly $200,000 in campaign funds wins friends. In this case did it reverse a project rejection and move a date?

Magnolia Trace under construction

A Masked Partner?

The DCA application process requires disclosure of all related and controlled entities. Peach Way Financial Services, LLC , the Development Consultant, seems to fall within this category, as William A. Markel, Executive Vice President of AEP, is listed as Peach Way's Agent for its business registration with the Georgia Secretary of State with the listed mailing address in Missouri coinciding with AEP’s office address. However, in the tax credit application filed with DCA, Peach Way Financial, the project Developer Consultant, was listed with an Atlanta address and was reported to  “not have an identity of interest with any other entity in this chart.”  *(Click here to view Magnolia Trace parties document). It is noted that the “identity of interest” question applied to each and every entity in the chart.

A side note is that Peach Way Financial Services, LLC  is shown to have filed its business registration with the Secretary of State for 2011, when the application process remained in play, but is reported to be in a state of noncompliance for 2012. According to its contract, Peach Way Financial Services gets fee payments in 2012 from Magnolia Trace.

“Inefficient financial structure”

Before Magnolia Trace LLP's sudden change in fortune, DCA had written this about the project: “.... the financial structure is not an effective or efficient use of DCA resources.” What might be the reason that the “financial structure is not an effective use…?” Could it be that multiple layers of AEP affiliated companies produced the $2.5 million more in costs cited by DCA?

Arguably the largest money tree in the AEP stable is that the tax credit financing process allows “AEP’s ability to insert an experienced affiliate into every step of the tax credit process provides added security to AEP’s investors." With Magnolia Trace, Peach Way Holdings secured the land option. Magnolia Trace LLP became the owner.  MACO Development Company, LLC is the Developer. AEP itself is the State and Federal Limited Partner. MACO Properties, LLC is the Managing Partner. Peach Way Financial Services LLC is the Development consultant. Fairway Construction Co. Inc. is the General Contractor. Fairway Management is the management company. All are related and most stood to gain fees, directly or indirectly.

How much  of the $2.5 million excess cost that DCA objected to might be found in having so many AEP companies involved? The land acquisition and construction 'costs' totaled $6,986,826, or a whopping $100 per square foot. The total development  'costs' of $10,152,634 were $145.45 per square foot. Of the roughly $3.2 million difference, fees, overhead, and profit of the AEP stable of companies were about $2.1 million, or 66%.

A Lot More than A Trace of Money

Once a subdivision is complete, the AEP companies begin to draw management fees from leasing operations. Magnolia Trace will join 17 previous AEP company developments in Georgia. Projected management fees to be generated from the Martinez complex are estimated at $1,160,885.

The approved tax credits were $1,065,849. If the DCA's figures and objections ifrom December 2010 are correct, the excess of tax credits over the norms would be about 25% or more than $250,000.

Magical Words to an Auditor's Ears

The application contained the language “Certification of Actual Cost” and the authorizing provisions in Chapter 42 of the tax code preserve the rights and capabilities of audit before the tax credits are issued. This could prove providential in protecting state and federal tax revenues, as there are new homes for sale in similar neighborhoods for sales prices in the low $70's per square foot. Upon audit can the $145 per square foot price supplied by the AEP companies be sustained?

The larger question is whether anyone will ever be allowed to audit this transaction.

Summary

Citizens of suburban, Republican Martinez, Georgia got an unwelcome subsidized housing project courtesy of unknown developers. If there is solace in this story it is that Martinez county commissioner Trey Allen got the Department of Community Affairs to reform its policy so that future locales will be notified beforehand of low income projects. The politicians got nearly $200,000 of campaign donations. The AEP stable of companies look to have secured a backdated approval of a project that DCA deemed excessive on the way to winning more than $1.5 million in development fees, $1.1 million in tax credits, and $1.1 million in management fees. Along the way, one entity looks to have been undisclosed as a related party and has fallen into noncompliance with Georgia's business registration unit.

The identities of the parties who launched this controversial project will be hidden behind opaque partnership structures, while a cash-strapped state government sees its revenues drained, not only by very lucrative tax give-aways, but also by layered on costs that the state agency found to be excessive.

Can this really be government by and for the people?***

--Al Gray

Related Stories

• Wide Open Records at DCA Put Sunshine on Magnolia Trace
• Magnolia Trace: Money Traces to Gold Dome
• Exclusive: County Attorney Worked for Magnolia Trace Developer
• Magnolia Trace: After the Storm

Stop the Insanity!

Monday, September 10, 2012

Augusta, GA

By Lori Davis

Looks like Mr. J's Famous Door Supper Club is going to see some new business. The dilapidated former night club located on Laney Walker Blvd. has sold to the city's Land Bank for $332,840, when the property is only valued at $83,000. The plan is to tear it down and build a new office to house the Department of Housing and Community Development, just one block from the old office. That would be Chester Wheeler and Company; the same Chester Wheeler who has continued to be in hot water for apparently mismanaging Federal Funds overthe years.

Now there is going to be another pot of money to dive into? Red Flag Number One.  On the surface, most of us would say that there is just no way to justify this and we would be correct. Why would the city agree to do this? Well according to Fred Russell,"It's a small part of a very complex puzzle." To translate, we are just too dumb to understand everything that is involved in this deal." Red Flag Number Two….. Augusta citizens are beginning to understand a lot, and are not looking so dumb these days. Look at the players.  Follow the money. Same cast of characters.  Same CRAP!

CityStink.net has been alerted that Donna Murray, who is a deputy chief appraiser for the City, spent a lot of time at this club and was very good friends with the owner. Red Flag Number Three. I believe she said something to the effect that the property had not been appraised since 2005 because of a lack of help in the appraisers office…convenient in my opinion, Red Flag Number Four.

When we received this next comment at CityStink.net from a concerned citizen, we decided to pass it along to our readers as well. We need to know the truth about these deals and put a stop to this insanity!

"Have you ever seen this place - go look at it. It's a run-down dump that could have easily been condemned if they really 'needed' it. And that excuse that property values have risen...and there have been staffing shortages!

"WHAT??....and it was a thriving business at the time it sold.

The tax on my property  has certainly gone up since 2005 while my sales have gone down to almost nothing. They didn't have any staff 'shortages' then."

"And Fred Russell - he's either the most incompetent city administrator or he's on the "take" or most likely BOTH.

There is NO way the city needed this piece of crap land at this hugely inflated price especially with all of the empty space in the Municipal Building." (Augusta Citizen).

Where are our city commissioners on this deal?  In a conversation I had this a.m. with my commissioner, he was not even aware that this deal had taken place. Not surprising!  Business as usual in Augusta, Georgia…… And lastly from our angry citizen……."Just like the technique used by the master greed mongers at the Marriott - how can you blame the 'poor' blacks for just trying to even up the score."

"I just can't stand much more of this corrupt b.s.

If I could sell my property I'd be gone today -  it just continues to get worse.

Billy and Paul soak up all of the big dollars and the rest of the worker termites finish the job.....

But there is no money to even clean the parking wells on Broad Street.

This is beyond disgusting."  (Augusta Citizen)

I would say that we at CityStink.net would have to agree. It is amazing to me as a citizen of Augusta since 1991 that this keeps going on and  on while the downtown area and South Augusta continue to disintegrate. Seems to me to be a tit for tat between the white power brokers and the black power brokers and the rest of us can just suck it up and live in our our nasty drug ridden neighborhoods and the like. When the tax base is totally gone, then what?  I guess daily greed is what wins out.  As long as the greedy are getting their money, who cares what happens to the rest of the city?

We can see this reflected in the Downtown Development Authority, as well  $Millions in SPLOST dollars have rolled through this authority and where does it go?  To the crony capitalists who own the properties while the  downtown business owner who is renting the space is  suffering. Keep it up dear leaders and we will keep it up on our side. There might just be a day of reckoning really soon for all of you. One major suggestion from CityStink.net to get this city on the right track. Get rid of  Fred Russell, Chester Wheeler "Dealer" , and Queen Madge Woodard. That would be a good start. It's time to stop the insanity!

LD