Friday, September 26, 2003

What a racquet: Authority should fire director, then offer their own resignations

By CAL BEVERLY
Publisher

It's a scandal.

Attention, Fayette District Attorney Bill McBroom and Fayette State Court Solicitor Steve Harris: You two have some work to do in Peachtree City.

Public employees running the cash register for a private for-profit business.

Public money being mixed willy-nilly with private sales, and no accounting at all of what belong to which. Tens of thousands, maybe hundreds of thousands, of dollars are involved here.

A for-profit monopoly retail business operating rent-free in an expensive city-owned facility. (What a sweetheart deal. Does the city have any rent-free space it can let me use? I can make good use of it.)

Who owns this business, and who gets the benefits of the sales? Is it the publicly-paid executive director of a local government entity that runs the city-owned facility?

A $366,000 secret contract with a major sponsor obligating the cash-strapped Development Authority of Peachtree City (DAPC) to guarantee huge quantities of sales in this privately-owned retail business, and DAPC never even voted on it, maybe never even knew about it until this month.

And is there another secret sponsor contract out there that has yet to be disclosed?

A $200,000 bank loan to the DAPC that magically appears. Where is the record of a public vote on this obligation?

Secret meetings, secret deals, secret obligations.

A year after an auditing firm warned of woefully inadequate accounting of public money, the financial picture involving two multi-million-dollar city-owned venues is even murkier now than it was a year ago.

Nobody can say with any confidence what is really going on at the tennis center and amphitheater that Peachtree City taxpayers own.

They face a cash flow crisis and can't borrow any more money.

Folks, you've got a genuine scandal on your hands, and a local government entity, the DAPC, is fully responsible for this foul mess.

It's clear now, even to the willfully blind, the DAPC is incapable of managing the financial affairs of the two venues it is charged with overseeing. And it's similarly clear that the Authority's executive director is out of control. He should be fired forthwith.

Vice Chairman Scott Bradshaw, a class act and a true public servant, did the only honorable thing left to him to do and resigned from the Authority Tuesday. In parting, he delivered in measured, gentlemanly tones a devastating critique of the Authority's failure to come to grips with its own ineptness.

His letter is reprinted in full within these pages and is also on our Web site. Also available is the "contract" between Adidas and DAPC, as well as an excerpt from last year's audit summary.

As he notes in an interview with our reporter, J. Frank Lynch, Bradshaw is no friend of the current mayor. But Bradshaw's blistering summary of mismanagement and management concealment of crucial financial matters fully vindicates nearly everything Steve Brown has been saying about the Authority's faulty oversight of the Tennis Center and the Fred Brown Amphitheater for more than a year now.

Most troubling, perhaps, is the unauthorized and secret deal Executive Director Virgil Christian made with Adidas that obligated the Authority for more than $366,000 in sales through the privately-owned pro shop that is not controlled by the Authority.

For that deal, DAPC gets $15,000 in t-shirts and travel bags to give away to tennis center and amphitheater fans, plus the shoemaker's logo on some tournaments. In return, Adidas requires DAPC to "guarantee Adidas sales" of $366,000 over the life of the five-year contract.

Bradshaw says the contract was never even discussed, let alone approved in any vote, by DAPC. The February 2002 contract that virtually gives away the city's store has Virgil Christian's signature on it. Bradshaw says he had to ask "three or four times for a copy of the agreement" before finally receiving it two weeks ago.

Is DAPC on the hook for $366,000 in sales of Adidas products solely through one privately-owned, non-rent-paying pro shop on city property? That's a question that high-priced lawyers will debate, costing Peachtree City taxpayers yet more money.

Here are other management missteps:

Withholding news of an impending cash crisis until just before the DAPC's fiscal year ends later this month. Bradshaw said management had consistently portrayed a rosy financial picture up until disclosing on Sept. 15 that DAPC likely couldn't meet payroll or pay $50,000 for the band in the upcoming final concert series at the amphitheater.

(An aside: We note that the amphitheater's office manager is running for city council. It will be interesting to learn from her whether she was aware of the dire financial situation confronting the venue.)

Ignorance of or disdain for common accounting principles, despite being warned in an outside audit last year of the confusing or missing financial statements. "Key members of management [read: Virgil Christian or the Authority chairman, take your pick] did not contain an adequate level of knowledge and control over the accounting function," reads the Sept. 30, 2002, audit report. "We encountered several examples of this throughout the audit, including not being furnished with amounts owed by the Authority ... until after our audit fieldwork was complete. Management should take more of a role in the accounting function of the Authority and obtain the knowledge necessary to make management decisions."

Wow! In that dry, bean-counter's language is as devastating a portrayal of a financially-out-of-control entity as you are likely to see in public documents.

Now this is the same DAPC and management team that have been praised to the sky by former Mayor Bob Lenox and others.

That was a year ago. Has it improved in a year's time? Bradshaw says, "Individual Authority members have worked diligently with staff on this issue, even helping to reformat the budget report. However, much of the information received by the Authority is still vague and it is difficult for members to have confidence in the financial picture as presented."

Again, wow! Could it be more devastating an indictment of either ignorance or protracted, ongoing mismanagement?

An executive director who either ignores or deliberately misleads his board of directors, the DAPC.

Christian fired the outside auditor "without vote of the Authority." He ignored a hiring freeze and hired two full-time and two part-time workers "in clear violation of the mandate. There was never a vote by the Authority to make an exception or waive the hiring freeze," Bradshaw wrote.

The director signed a contract obligating the DAPC to $366,000 in sales through the store he operates, but there is no record he ever asked the Authority's permission nor is there any vote that DAPC ever approved such a one-sided giveaway. The director did get named to the Adidas Advisory Board, presumably a prestigious coup for him.

This is the same privately-owned, for-profit business that operates rent-free inside the tennis center, with DAPC-paid employees running the cash register and selling the store's merchandise for the benefit of private owners.

All that money, from tennis court fees that belong to the DAPC to sales of Adidas clothing and tennis balls belonging to the for-profit pro shop, goes into the same pot and nobody can tell you with any accounting certainty which part is public and which part is private.

That's called "commingling" and it is an accounting and legal "no-no."

And here's an eerie echo of Mayor Brown's yearlong jeremiad about the cost overruns for the tennis center expansion:

"There has been no consolidated final report to the DAPC or to the public detailing the exact expenditures and final cost related to the Amphitheater administration office/SCT building renovation (approximately $200,000) or the Tennis Center expansion project (approximately $2 million)," Bradshaw wrote.

"Members of the Authority have been provided with a variety of somewhat disconnected change orders, contracts and partial lists of unpaid supplier and subcontractors," Bradshaw wrote. "It is very difficult for anyone to clearly understand the total financial picture related to these critical expenditures."

Double wow! This from an insider for the past four years. Is not this exactly what the mayor has been shouting for more than a year to anyone who would listen?

More from Bradshaw: "This issue is particularly important because of the controversy related to the cost overruns and the Authority's present inability to pay very large amounts of money owed to Group VI and other companies. Some Authority members were unaware of most of the cost overruns until the project was complete and the mayor [Brown] was quoted in the newspaper about cost overruns. The circumstances that permitted these cost overruns WITHOUT VOTE OF THE AUTHORITY [my emphasis] should be better clarified and corrected."

Triple wow! Former Mayor Lenox and various also-rans, I'm sure current Mayor Steve Brown would appreciate your phone calls acknowledging your mistaken support of an insupportable situation.

Attention, District Attorney Bill McBroom and state court Solicitor Steve Harris. You two have some obligations to the public here, to find out what has been going on with public money, public meetings and public facilities.

It's obvious that DAPC has miserably mismanaged the amphitheater and the tennis center, utilizing millions in public funds. The DAPC is in the throes of a financial crisis, with more questions than answers about how we got into this fine mess.

Now the remaining DAPC members should own up to their past mistakes and fire the executive director immediately before he can sign more unauthorized contracts or initiate more unsanctioned cost overruns.

They should require that for-profit pro shop to pay market rent for its space. They should stop providing free employees for that private company, public employees that are being paid for by a government entity, the DAPC, with public money.

And then the board can do one more honorable thing: En masse, they can resign and give the City Council the opportunity to get some auditors in there to account for public money and public facilities' use and clean up this miserable mess that has been made.