Thursday, February 9, 2012

Al Gray: Liening on a Stacked Deck

Augusta Deckgate: More Subterfuge?

Thursday, Feb. 9, 2012
Augusta, GA
By Al Gray

The substitute motion that passed at last Tuesday's Augusta Richmond County Commission Meeting to approve the Reynolds Street Parking Deck agreement pending lien-free donation of the land took this incredible saga to a new level of absurdity.

Beyond the criticism that the city didn't own the land, there was no other impetus for doing such a thing. Opponents of the agreement were not questioning the efficacy of the previous air rights transaction in preserving tax exempt financing. To a lesser extent they were questioning a promised donation never made, which this 'solution' would meet. Yesterday's Augusta Chronicle article spends a great deal of time on what looks to be a misdirection play. Air rights were not the major issue, the liens were.

The motion still applies to property with liens on it that have not been addressed or satisfied. Worse, it passed in the face of entreaties to institute rights of audit up front for this agreement and also to implement the capabilities to audit the existing Augusta Riverfront LLC and Augusta partnership arrangements. City hired attorney Jim Plunkett expressed a willingness to do that on future contracts and perhaps include more provisions in the deck agreement itself, but studiously avoided the issue of auditing the existing partnership arrangements over the last 3 years.

The deck agreement is essentially a cost-plus fixed fee arrangement with the LLC's controlling “costs.” The operations budget has to be funded on a 90 day reserve basis. If revenues fall short of expenses the City has to make up the difference. The capital budget is kept at the lesser of $250,000 or the annual Plan capital reserve level. Since the PLAN is largely determinant, have the commissioners seen it?

What is really strange is the juxtaposition of what is said and what the evidence is about the release of those liens. From the Chronicle article we get this:Paul Simon, the president of 933 Broad, said he has had a letter from the bank holding the lien agreeing to release it when the deal is final since as far back as July 2010. He said he expected no problems in transferring the real estate to the land bank.

The proposed Consent and Subordination agreement supplied to the Engineering Services Committee Monday, January 30, as an attachment (Page 15) to the CORE agreement says that Wells Fargo Bank “consents to the foregoing agreement and subordinates the Security Deed to the foregoing agreement. Otherwise the Security Deed shall remain in full force and effect. How can there be a “letter from the bank holding the lien agreeing to release it” from 2010 when the Consent and Subordination attachment, prepared by the City's attorney and submitted just last week clearly states that the Security Deed (lien) “shall remain in full force and effect.” Doesn't this just mean that the City is put in the same position as the Developer in the latter goes away via default? The liens would stand.

Has there really ever been a deal to release the liens? Will there be? It surely doesn't look that way from these documents. How the new land bank deeding strategy answers this is unclear.“The lawyers are handling it” doesn't sound very reassuring, but we are being asked to bank upon it.***
AG
CORE Agreement Pages 1-3 and 15

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1 comment:

bradleyeowens said...

Looks like that $7,000,000.00 would have become part of the "costs" that were covered by the Hotel/Motel taxes under this agreement.

I mean am I worng or were they trying to add that $7mil to the bill of the TEE Center Parking Deck by slipping it in on the "deal" Fred cut?

There needs to be some REAL investigations going on here.