Wednesday, October 1, 2003

Adidas contract being changed, issues addressed

[Editor's note: The following statement was read Sept. 25 by Tate Godfrey, chairman of the Development Authority of Peachtree City. He was responding to a detailed resignation letter from Vice Chairman Scott Bradshaw last week in which Bradshaw laid out in detail the financial and personnel problems facing the authority in its management of the Tennis Center and the amphitheater. That letter plus the Adidas contract mentioned below is online at www.TheCitizenNews.com. Following this statement, Godfrey read a letter in which the DAPC resigned from its management contract with the city and turned the two venues back over to the city, as of the end of October.]

Response to September 23, 2003

I. Adidas contract

The Adidas contract was never intended to bind the Development Authority of Peachtree City ("DAPC") to any guaranteed payout. Instead, the contract intended to provide that the Peachtree Trading Post, Inc. ("the Trading Post") would guarantee Adidas sales at the levels outlined. The agreement was not clearly drafted. Representatives of Adidas have been contacted and they have indicated a willingness to enter into an amended agreement which is in the process of being drafted. In that agreement, the DAPC will have no financial obligation for the purchase of any Adidas product.

II. FY 2002 Audit Recommendation

The recommendation referenced by Mr. Bradshaw from Maudlin & Jenkins, L.L.C. is contained in the Audit Agenda which was provided to the DAPC by the accounting firm with its letter dated May 6, 2003. The recommendations were discussed at the June 16, 2003, DAPC meeting.

During the 4 1/2 month period since the recommendation of Maudlin & Jenkins have been provided, members of the DAPC, primarily Brian Palmatessa and Scott Formel, have devoted numerous volunteer hours to working with various members of the management teams of both the amphitheater and the Tennis Center to improve both their level and knowledge of and obtain additional control over accounting functions. Although additional work does need to be performed, significant strides have been made in improving accounting functions of both facilities, as evidenced by the detailed budgets which have been presented at DAPC meetings. This education process is ongoing and will continue in the future. However, these changes cannot be made overnight.

III. Cash Flow Problem

Based upon a more detailed review of the financial status of the DAPC, the performers for the remaining dates at the Amphitheater will be paid and all payroll obligations will be met. Authority members Bob Brooks and Scott Formel have been working diligently to assist in resolving this issue. Indeed, Mr. Bradshaw indicates that this matter "is being resolved immediately."

By way of further response, historically, the fall has always been the time when the DAPC has faced a cash flow shortage. The Amphitheater's season is drawing to a close and no sponsorship income is being received and few ticket sales are occurring to generate revenue. Indeed, in the past, this is the time of the year when the DAPC has been required to borrow money to meet its financial obligations.

The cash flow issues this year have been enhanced by the fact that the DAPC has been required to pay significant sums to defend itself in the lawsuit brought by Kristi Rapson. In addition, the Authority has also had to pay some of the outstanding construction expenses for the completion of the Tennis Center expansion to vendors who have been very insistent on being paid and have expressed an unwillingness to wait on a bond issue or other solution to resolve the outstanding debt of the Authority.

IV. Conversion to IN-house Accounting

Various options are under consideration by the DAPC as to handle accounting issues. Based upon the charge to the DAPC by the City Council to move the venues toward a break even financial position, all options were considered as to how to reduce existing costs. One of the options which has been tried is to eliminate the need for outside accounting services. To reverse this decision and hire an outside accountant will certainly not help with cash flow issues as these professionals must be compensated. However, at this time using an outside accounting firm is still under consideration.

V. Hiring Freeze

When the hiring freeze was proposed, it was not "clear" that existing positions that became vacant after the hiring freeze occurred could not be filled. No new positions have been created and filled since the hiring freeze took effect. The majority of the positions that were filled were essential employees that were required to maintain the operation of the facility. In any event, it is clearly understood now that the hiring freeze now encompasses all positions and no further hiring will take place without consent of the DAPC.

VI. Capital Projects

No "consolidated final report" with regard to the Amphitheater building renovation or the Tennis Center expansion has been requested. However, the DAPC is currently continuing to work on gathering additional details regarding the expenditures for these projects.

VII. Executive Director's Compensation

As Mr. Bradshaw indicates, proposals for revising the Executive Director's compensation have been drafted and are currently under consideration.

VIII. Commingling of Funds

The DAPC has insisted in no uncertain terms that the Trading Post and the DAPC be completely separated. However, no "accounting report" has ever been requested by any member of the Authority, including Mr. Bradshaw. The DAPC will continue to be diligent in insisting that separate records be kept for the Tennis Center.

IX. Rent for the Peachtree Trading Post

A lease with regard to the Trading Post's use of the Tennis Center's space and a method by which DAPC employes may be used by the Peachtree Trading Post are currently under consideration.

X. Elimination of Management Committees

Although Mr. Bradshaw obviously feels differently, a majority of the DAPC determined that the management committees were not effective and certainly not the best use of time and energies of the members of the Authority. Therefore, their use was discontinued.