Friday, August 31, 2012

The Cabbage Patch is at a Crossroads

Friday, August 31, 2012
Augusta, GA
By The Outsider

It looks like the city is back to square one with the municipal golf course, affectionately known as The Cabbage Patch. The relationship with Scottish-based investor Brian Hendry went rotten after 5 months of non-payment of rent and the course seems to be in worse condition  today then when he took it over. Hendry seemed to have just given up on the course after he was unsuccessful in getting the city to release $300,000 in SPLOST money for course improvements.

It is still not quite clear why it took 5 months of non-payment of rent for the city to sever its ties with Hendry, but now a local group headed by three brothers has tentatively taken over Hendry's lease with the city; however, they are saying if they do not get a commitment from the city to invest in capital improvements at the course they will also pull out.

The Haunting of Healthmaster
But one of the principal business partners in this local group  has a rather dubious past. Dennis J Kelly, who is the registered agent for the newly formed The Golf Course at Augusta LLC, is also a convicted felon. Kelly was one of the central figures in one of the largest Medicare fraud scandals in Georgia history as vice president of Healthmaster, Inc, an Augusta-based company that provided in-home healthcare services. In 1995, Kelly was convicted on 102 felony counts including fraud, money laundering and conspiracy. He was sentenced to 12 and a half years in federal prison.

A CPA and a chief financial officer for Healthmaster, Kelly helped to defraud Medicare of over $1.7 million. He did this in part by setting up a dummy workers compensation fund and diverted the money to a bank account in the Cayman Islands, collecting premiums but providing no coverage. Medicare was left paying off the claims of injured workers. Kelly, along with his co-defendants David Suba and Jeanette G Garrison, used the Cayman Islands  account as a personal slush fund. The trio also billed Medicare for illegal campaign contributions to Democratic Party candidates. This was done by ordering Healthmaster employees to make contributions to chosen democratic candidates -- after which they were reimbursed in the form of bonuses on their next paycheck. The bonuses were then billed to Medicare.

Kelly was also convicted on charges of embezzling money from Healthmaster accounts, which he used partly to purchase a vacation property in South Carolina.

Even though the convictions took place 17 years ago, some  people are questioning whether it is a good idea for the city to enter into any business relationship -- including renting property-- with someone with such a laundry list of felony convictions -- especially when it involved such a well thought out scheme to defraud the government of more than $1.7 million. How significant of a role will Dennis Kelly have in this new company formed with his brothers to manage The Patch? Will he be entrusted with handling the company's finances like he did with Healthmaster? How will his criminal past impact the ability to sell new memberships at the golf club? Would members worry that their membership fees might end up in an untouchable account in the Cayman Islands?  Would the city be liable if a repeat of the Healthmaster scandal occurred at The Patch? Would city taxpayers be left paying out claims from club members like Medicare? These are reasonable questions to ask with someone like Dennis J Kelly taking on such a prominent role in this new company seeking to run the city's golf course.

But some commissioners do not seem to have a problem with Kelly's criminal history. When asked about it by WJBF News yesterday, commissioner Joe Jackson said, "I think you can put that in the past, you know. You've served your time, paid it back to society, you've cleared yourself. I don't foresee a problem.”

However, it's not as though we are talking about unpaid parking tickets or even a DUI conviction here -- we are talking about 102 federal felony convictions for fraud, money laundering and conspiracy. For all of the people saying to let bygones be bygones we somehow wonder if they would have the same attitude if it were former state Senator Charles Walker Sr. who was wanting to run the municipal golf course after being released from federal prison and use it for hosting a charity golf tournament? Walker was convicted in 2005 on over 100 federal counts including tax evasion, mail fraud and conspiracy that included charges of embezzling proceeds from a charity football tournament he helped  organize.

Why Should the City Own a Golf Course Anyway?
The bigger question though beyond the criminal past of Dennis J Kelly is.. why should the city of Augusta even own a golf course in the first place? 

Under city management, The Patch was hemorrhaging nearly $300,000 from the general  fund annually. The entire point of putting the course under private management was to relieve taxpayers from having to funnel more money into what has essentially become a money-pit. When commissioners voted to lease The Patch out to Scottish investor Brian Hendry, it came with the stipulation that the course came "as-is". The  agreement is what you would characterize as a triple net lease, which is common in business leases, where the lessee assumes the responsibilty for maintainence and capital improvements to the property in exchange for lower rent -- and indeed the lessees of The Patch are getting the property for only $1,000 a month.

But now some commissioners and the editorial staff of the Augusta Chronicle want $300,000 of SPLOST money to be put into The Patch under the stewardship of The Kellys. This was denied to Brian Hendry earlier this year, when he asked for the SPLOST funds after being tipped off about them from former Parks and Recreation director Tom Beck.

Indeed, $300,000 was earmarked for The Patch in the 2009 SPLOST,  and that is being used as justification by some people that the will of the public is behind the municipal golf course. However, that 2009 SPLOST referendum had a total voter turnout of a whopping 8.71%, hardly a mandate. And the language regarding the $300,000 for The Patch was buried under all of the fine print with other pet projects that are typically included as riders on these SPLOST referenda. Also, the magnitude of the financial mess at  The Patch was not completely known to voters back in 2009. Would the voters today still want that money going into this golf course? Also, the commission redirects SPLOST funds all of the time when circumstances change. Would there not be a better use for that money today instead of sinking it into a money-pit golf course? And is it fair for the commission to put $300,000 into the course under the local management group when this offer was not made to Hendry?

But to listen to the editorial writers at The Augusta Chronicle, the taxpayers of Augusta are somehow obligated to sinking more money into The Patch because of the city's association with golf and The Masters. Really? Let's be honest here, The Patch is a pretty poor excuse for a golf course -- in fact it's rather embarrasing for the home of The Masters-- but that doesn't mean the taxpayers should throw more good money after bad.

And it's not as though Augusta is hurting for golf courses. There are many fine examples of privately-run golf courses in the metro area that are open to the public with prices that the average Joe can afford. Pointe South Golf Club in South Augusta has greens fees as cheap as $17 for 18 holes -- and that's the price for non members.  The course is in far better condition than The Patch and has yearly memberships that are affordable for the average Augustan.

The private sector is already filling this need -- so why does the city of Augusta need to own a golf course? Wouldn't the city just be better off washing its hands of this money-pit? It was announced the other day that the city of Augusta is placing 15 properties on the market including the old library on Greene Street and a Fire Station on Reynolds Street. So why not add The Patch to that list? It's a large tract of land in a convenient and desirable location near the tony residential neighborhoods of Forest Hills and Summerville -- certainly it could fetch several million dollars for the city. If the Kellys or any other group of investors wanted to step forward and purchase The Patch at fair market value and keep it running as a golf course, then they would be more then welcomed to do so, and the added bonus is that it would put the property back on the tax rolls, which would probably net the city more per year than the $1,000 monthly rent would and without the liability of the city being responsible for maintenance and capital improvements.

Or, perhaps The Augusta National Golf Club would find The Patch an attractive property to develop into a practice course with hospitality suites. Perhaps they could use it for developing a youth golf camp as an extension of First TEE. They certainly have the money, so why not ask them if they are interested in the property?

It's proximity to the ASU athletic complex would make it a natural location for expansion of the new consolidated university. With the Georgia Board of Regents pledging over $150 million toward the new university, they certainly would have the money to buy the property. Why not ask if they would be interested in it?

But even if the city wants to keep the property, would it not be more lucrative to use it for expansion of neighboring Daniel Field airport? Couldn't the city make more on rental fees from privately owned aircraft than from the $1,000 a month  rent on  a golf course?

But the question remains.. why should the city own a golf course? Should it also own a bowling alley -- a skating rink -- a Putt Putt? All have their die-hard fans and patrons -- and like golf courses, the  private sector is meeting their demand.  So instead of the half-hearted attempt to privatize The Patch by simply leasing it out, why not go all the way and sell it?

Like the fad dolls from the early 1980s perhaps this Cabbage Patch is also  past its prime. But those Cabbage Patch kids from the '80s still have their fans of collectors who will pay top dollar at auctions for the homely looking dolls. Well maybe the city can fetch  more green by selling its homely little golf course to its die-hard fans who still have a sentimental affection for it. Perhaps it's time the city of Augusta had a yard sale and unloaded some extra cabbage.  ***

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