Affidavit of Larry Savage

Transcription

1 Affidavit of Larry Savage This is to certify that I am eligible to assert a complaint of Ethics Violation under the Cobb County Ethics Code, Chapter 2, Article II, Division 2, Sec. 2-78, of the Official Code of Cobb County. I reside at 4226 Columns Drive, Marietta, GA I have been a resident of Cobb County since I am a registered voter and have no outstanding debts to any government. I am qualified to bring this complaint under the Code section cited above. The information within this complaint comes from my personal observations, published reports in the Marietta Daily Journal and/or Atlanta Journal- Constitution, and documents obtained from Cobb County Government through Open Records requests. Specific evidence exists in documents acquired from Cobb County government through a request under the Open Records Act. These documents reveal in some detail the expenditures for construction of Sun Trust Park by Cobb County and associated entities and by the Atlanta Braves. These documents are included by reference here and on page 12 as item j. The facts stated in this complaint are factual as I have presented them and the documents are accurate replicas of original documents on government web sites. I swear to the truth and accuracy of the complaint and the materials within, and attachments, as represented. Larry Savage 4226 Columns Drive Marietta, GA Date 1

2 To: From: Subject: Clerk of Board of Commissioners of Cobb County Larry Savage Complaint of Violation of the Ethics Code of Cobb County Date: June 18, 2018, revised July 11, 2018 This complaint is filed with the Clerk of Board of Commissioners as directed by Chapter 2, Article II, Division 2, Sec. 2-78, of the Official Code of Cobb County. Complaint: $300 million cap The Board of Commissioners failed to provide minimum oversight of the expenditure of public funds in construction of SunTrust Park, exceeding the promise of a $300 million cap for local financing by as much as $80 million. $11.8 million to the Braves The Board of Commissioners voted approval on to give $11.8 million of public funds to the Atlanta Braves. The county s payment was made recklessly and without regard to payments already made to the stadium project, exceeding their contractual obligations and constituting an illegal contribution of public funds to a private entity. Improper Use of Water Department Funds The Board of Commissioners voted to use funds from the Water Department s Renewal & Extension (R&E) Fund to make the payment to the Braves. The county s annual transfer of funds from the Water Department is limited to 10% of gross revenue by covenants attached to bonded debt of the Water Department. The county has violated those covenants by transferring 10% of gross revenues AND more than $11,000,000 from the R&E Fund. 2

3 $300,000,000 Cap on Stadium Construction November, 2013, at the announcement of the agreement between the county and the Braves to build SunTrust Park, a one page Infographic summary of the deal was published (Appendix A). The contents of that summary were frequently touted by commissioners and others as a great deal for Cobb County because the county contribution to the project was capped at $300 million. The document showed that the $300 million cap included $10 million from the Cumberland CID and $14 million from Cobb County for undefined transportation improvements. Documents ( four files attached) obtained recently through a request under the Open Records Act provide the first report of the actual investment by the county and the total cost of SunTrust Park. Cobb County, acting through the Cobb- Marietta Coliseum and Exhibit Hall Authority, issued revenue bonds in the amount of $ million (per ratings report from Standard & Poor). Of the total proceeds from the bond financing, $368,172, was paid into the stadium construction. Total cost of constructing the stadium was $531,985, The Braves contribution was $153,813, and $10 million was contributed by the Cumberland CID. The original published plan said that the Braves contribution would be $372 million with $280 million up front. The original promise from Braves and Cobb Commissioners was that stadium construction would involve: Braves contribution, with $280 million up front $372 Million Local Contribution 300 Million o Includes $276 million from County o Includes $ 10 million from Cumberland CID o Includes $ 14 million county transportation improve. Total $672,000,000 The ACTUAL contributions were $10 million from the Cumberland CID and $368 million from Cobb County. Cobb County provided an indeterminate amount of investment in transportation improvements around the stadium area, possibly as much as $50 million based on media reports of statements by former Cobb DOT Director Jim Wilgus. Adding the project values provided by Wilgus, the county may have invested more than $100 million over the cap. 3

4 Actual costs of stadium construction were as follows: Braves Contribution $153,813, Cobb County Contribution (stadium construction) 368,172, Cobb County Contribution (cost of issuance) 2,817, Cumberland CID Contribution 10,000, o Total Project $534,803, Total Contribution, Cobb County Stadium Construction $368,172,034 Cost of issuance 2,817,988 o Cobb County Sub-Total $370,990,022 Estimated Infrastructure Improvements by county 50,000,000 o Sub-Total with infrastructure $420,000,000 The payments to the stadium project exceeded the $300 million cap that was widely promoted by county leaders. Commissioners failed to monitor the payments into the stadium project and exceeded the cap by at least $70 million, constituting an improper and illegal gift of public funds to a private entity. All members of Board of Commissioners since completion of Sun Trust Park had a responsibility to assure that the county s responsibilities had been met and that the public interest had been protected. Their failure to do so constitutes violations of Sec of the official Code of Cobb County ( Compliance with Applicable Law ) in violating the Georgia Constitution, Gratuities Clause, (Art. IX, II, Para. VIII), County Code: Sec Compliance with applicable law. No officer shall engage in any activity or transaction that is prohibited by law, now existing or hereafter enacted, which is applicable to him by virtue of his office. Constitution, Gratuities Clause, (Art. IX, II, Para. VIII), The General Assembly shall not authorize any county, municipality, or other political subdivision of this state, through taxation, contribution, or otherwise, to appropriate money for or to lend its credit to any person or to 4

5 any nonpublic corporation or association except for purely charitable purposes. and violating Sec of Cobb County Code, Impartiality and Impeding Government Efficiency : County Code, Sec Impartiality. No officer shall: o Give preferential treatment to any person. o Impede government efficiency and economy. Violations by: Chairman Boyce Commissioner Ott, Commissioner Birrell, Commissioner Weatherford Commissioner Cupid. 5

6 $11,800,000 Payment to the Braves Over the construction period there evidently was discussion by the Braves that the $14 million in transportation projects had not been provided. Media reports indicated that county staff people disagreed as numerous transportation projects were completed or in process in the stadium area. No action was taken. Upon the arrival of newly-elected Chairman Boyce the subject resurfaced and the question was placed on the agenda for a BoC meeting. Former Cobb DOT Director Jim Wilgus produced a list of county transportation projects around the stadium that totaled more than $50 million in value. The list was later referred to as the County Manager s list. The BoC voted on to consider the recommendation of the County Manager who was also the county s representative to the stadium project. See minutes of meeting (Appendix C) Commissioners determined that only $2.2 million in transportation projects were provided for the stadium, leaving an obligation of $11.8 million which was approved for payment by the BoC. See Agenda pages from (Appendix D) Commissioners discussed this matter on several occasions without knowing how much the county had already invested in the stadium project and without knowing whether the county and the Braves had met their respective responsibilities. Evidently there were no financial reports during construction of the stadium. In discussing the subject in meetings of the Board of Commissioners, Chairman Boyce made statements that the payment must be made because there was an understanding with the Braves but he has not disclosed what the understanding might have been or who had knowledge of it. It is still unclear why commissioners approved the payment of $11.8 million to the Braves in Adding this to the county s actual contributions earlier and Wilgus statements of transportation projects, the county s total contributions to the project may have exceeded the $300 million cap by as much as $140 million. The Cobb County Board of Commissioners seems oblivious to the true cost of the stadium project to Cobb County. 6

7 It is hard to imagine a more egregious mis-use of taxpayer resources. The Board of Commissioners voted 3-1 (Cupid opposed, Ott absent) on to provide payment to Atlanta Braves in the amount of $11,293,318. In doing so, three commissioners violated the Gratuities Clause of the Constitution of the State of Georgia (Ga. Const. Art. IX, II, Para. VIII, and Sec of the Official Code of Cobb County, Expenditures in Accordance with Budget. Violation by Chairman Boyce Commissioner Birrell Commissioner Weatherford Gratuities Clause, Georgia Constitution, Ga. Const. Art. IX, II, Para. VIII The General Assembly shall not authorize any county, municipality, or other political subdivision of this state, through taxation, contribution, or otherwise, to appropriate money for or to lend its credit to any person or to any nonpublic corporation or association except for purely charitable purposes. Sec Cobb County Code, Expenditures to be made in accordance with budget; quarterly allotment system. No expenditures of county funds shall be made except in accordance with the county budget, or amendments thereto, adopted by the commission. The county manager shall enforce compliance with this provision by all departments of county government, including those for elected officers, and to this end shall, through the comptroller and the department of finance, institute a system of quarterly allotments of all monies appropriated and budgeted.(1964 Ga. Laws (Ex. Sess.) (Act No. 22), page 2075, 20; 1983 Ga. Laws (Act No. 383), page 4283, 9) 7

8 Excess Transfer from the Water Department The record shows that the county payment to the Braves relied on $11,293,318 taken from the R&E Fund of the Water Department (Appendix D, page 2, BoC Agenda for ). It is unknown if the Water Department was consulted prior to the decision to use their funds. The attached document BoC Agenda (Appendix D) is the transmittal letter included in the meeting agenda describing the $11.8 million payment to the Braves. The letter includes the explanation for use of funds from the Water Department, the installation of stormwater vaults at the stadium site. Following the letter is the list of projects explaining the $14 million commitment and the reduction to $11.8 million. It is unknown why the stormwater vaults were included in this list since the vaults are not mentioned in any of the agreements connected to the stadium project. These stormwater vaults are an integral part of the stadium project itself as they were necessary for the project to comply with county requirements for control of stormwater on the site. The vaults are built-in to the project and are not part of county infrastructure. Control of stormwater runoff is a common requirement for any development project in Cobb County. The stormwater vaults were not a county responsibility. For several years the county has transferred surplus funds from the Water Department to the county s General Fund. This is permissible but subject to specific limits. These financial transfers have been controversial as many residents have objected to the practice. It is not possible that the commissioners were not aware of the limit on transfers. Permissible transfers from Cobb Water are limited by bond covenants to 10% of the gross revenue of the Department. The county budget already included the maximum 10% transfer for the year. The additional transfer of $11,293,318 from the R&E Fund is above the permitted maximum, violating the covenants. The use of funds that were maintained by the Water Department for system upgrades weakens the Department financially and potentially risks the Department s AAA credit rating. The suggestion that the stormwater vaults on the stadium site were part of the Water Department infrastructure is 8

9 disingenuous at best. Also consider that the stadium and the surrounding development The Battery are inseparable in consideration of stormwater management due to the almost total coverage of the entire area with impervious surfaces. The requirement for stormwater management and facilities is standard for major development projects and is part of the cost of the project. Use of these funds for payment to the Braves was improper, injured Cobb Water Department financially, and likely violated the bond covenants on outstanding bond debt. This is certainly a factor in the recent announcement of rate increases by Cobb Water. Along with other expense increases, the department must replace the funds taken from their R&E Fund. Although the Cobb County Water Department is a subsidiary of the Cobb Government, the department operates as a business fund in the county s financial picture. It is self-sustaining and self-managed. The department should not be subject to political manipulation. 9

10 Correction of Deficiencies noted in letter of July 9, ) No public officer identified as a Respondent: a. Public officers are now named as respondents in each section of complaint; 2) No provision of the Code of Ethics cited: a. Appropriate citation added in each section of complaint; 3) Complaint not supported by affidavit: a. Affidavit attached as cover sheet of complaint; paper copy via postal delivery will be Notarized.. 4) Complaint not filed within six months of alleged violation: a. There is no specific date of a violation. The complaint relates to construction financing of Sun Trust Park, a process that covered almost three years. My expectation was that a financial report would be published by county officials at the conclusion of the business affairs of the project. b. I first had concerns early when the parties published estimated cost of project as $622 to 672 million even without a plan or a contractor named. That figure remained a constant throughout. c. On June 13, 2017, the Board of Commissioners voted 3-1 to approve payment to the Braves for $11,293,318 as initial payment to the Braves as settlement of a claim brought by the Braves for $14 million. The claim for $14 million was related to certain statements in various documents that the county would provide up to $14 million for unspecified improvements around Sun Trust Park. d. As I am familiar with the documents related to the stadium project, I immediately felt that this claim was unjustified and payment was improper. The explanations provided by Chairman Boyce were brief, unspecific, and vague. I also recalled that various members of county staff had been quoted in media reports many months ago that the county had more than met its obligations to the Braves with transportation projects totaling close to $50 million. Specifically, 10

11 Former County Manager Hankerson, Former DOT Director Faye Dimassimo, and former DOT Director Jim Wilgus. e. I reviewed file information on the stadium project and found the Infographic (Appendix 1) that had been used to represent the deal to the public. To the people of Cobb County, that document is the stadium deal. It states clearly that the Local contribution would be CAPPED at $300 million and that figure INCLUDES the $10 million contribution by the Cumberland CID and the $14 million in improvements around the stadium area as cited by the Braves in their claim. f. I felt that the best way to evaluate the new claim by the Braves ($14 million) would be to determine whether Cobb County had completed the $300 million CAPPED Local Contribution. But, in the absence of any reporting, there was no means to do that. I still had to wait for a report. g. Noting that no report had appeared, on June 18, 2017, I submitted a request for documents under the Open Records Act, requesting records of the vouchers described in the stadium project documents. That appeared to be the most promising source of reliable cost information for the stadium construction. On June 20th I received a reply stating that I would be charged $388 for the documents. This charge was unreasonable and unaffordable. I decided to wait for an official report. h. In early April, 2018, the Comprehensive Annual Financial Report for Cobb County in 2017 (CAFR) was published. This is the audited annual report for county government. Previous CAFR editions had provided no insight into the stadium costs but I thought this year might include a final report on the project. There were a few casual mentions of the stadium project in terms of small account balances and potential payments on debt, but nothing revealing on construction costs. Clearly the stadium project had not been managed through the county s financial operations. 11

12 i. On May 16, 2018, a request for documents was submitted under the Open Records Act for any records of construction costs for SunTrust Park. j. On May 21, 2018, a response was received to the ORA request and I received documents as follows (see attachment to this complaint): i. Summary of all payments for stadium construction, postissuance ii. Total Cost-GMP1, summary of Braves expenditures in Reimbursement Requisition 1 (reimbursed by Cobb County); iii. Summary of Insurance charges included in Braves Reimbursement Requisition 1; iv. Summary of costs of relocating pipeline, included in Braves Reimbursement Requisition 1; v. Summary of land costs, included in Braves Reimbursement Requisition 1; vi. Summary of Braves Reimbursement Requisition 2; vii. Summary of Cost of Issuance (COI); Cobb-Marietta Coliseum and Exhibit Hall Authority costs for revenue bond issue. k. May 30, 2018, I sent by a message to all Cobb County Commissioners requesting explanation of the apparent overpayment on the stadium construction and another question regarding use of funds collected under a special tax (Appendix F). The following day I received a message from Commissioner Ott that the Chairman had asked him to look into the questions I had raised and get back to me. There was no further response. l. June 18, 2018, the Ethics complaint was filed with Cobb County Clerk. It was not possible to determine the facts of the case in any less time. Until the documents were received on May 21 there was much room for suspicion but not enough facts to assemble the story. As a private citizen my ability to extract information from local government is quite limited. Media reports are helpful but not much depth is provided. 12

13 I believe my complaint is timely under the circumstances. It seems that more than $100 million in public money is unaccounted for. I expect that a proper investigation is in order, perhaps even beyond the authority of the Board of Ethics. 13

14 Appendix A Infographic Summary of Stadium Deal 14

15 Appendix B List of DOT Projects around SunTrust Park (Minutes, BoC Meeting ) The Wilgus List 15

16 Appendix C Minutes of meeting, ( consider in bold and underlined as it appeared in the minutes) 16

17 Appendix D BoC Agenda, Page 1/4 17

18 Appendix D (Continued) BoC Agenda, Page 2/4 18

19 Appendix D (Continued) BoC Agenda, Page 3/4 19

20 Appendix D (Continued) BoC Agenda, Page 4/4 20

21 Appendix E (page 1 of 2) 21

22 Appendix E (page 2 of 2) 22

23 Appendix F, to Commissioners, May 30, 2018 (page 1 of 3) Questions re: Cost of SunTrust Park To: Chairman Boyce Commissioner Ott Commissioner Birrell Commissioner Weatherford Commissioner Cupid I had expected that a report or reports would eventually be produced on the actual costs of building SunTrust Park and on the disposition of the funds raised in issuing the related bonds. The Braves are now in their second season in the ballpark. The Consolidated Annual Financial Report (CAFR) has been examined. Still there is no report on the stadium. I have now taken an alternate approach by requesting information through Open Records requests. The documents that were returned have provided interesting information. Cobb County, acting through the Cobb-Marietta Coliseum and Exhibit Hall Authority, issued bonds in the amount of $ million (Source: S&P Rating report). $368,172, went to stadium construction while $2,817, went to Cost of Issuance, which includes four law firms, Public Financial Management, Inc., ratings agencies and banks. Total cost of the stadium project was forecast at the time of the initial announcement as $622 million to $672 million. This forecast was made before any plans were available or any contractors were retained. That forecast remained unchanged throughout construction and was regularly quoted as the cost of the project. The original promise was that the local contribution would be $300 million, INCLUDING $14 million in infrastructure improvements and $10 million from the Cumberland CID. The Braves upfront contribution was to be $280 million. 23

24 Appendix F, to Commissioners, May 30, 2018 (page 2 of 3) For reasons unknown, Cobb County paid another $11.8 million to the Braves a few months ago. From the records I received, the actual cost of the project was $531,985, (not including Cost of Issuance). That is $90 million LESS than the lower estimate provided by the Braves. Since all savings accrue to the Braves, the $90 million savings on construction combined with the added $11.8 million from Cobb County puts the Braves up more than $100 million from the deal first described at the announcement. The records indicate the Braves total contribution was $153,813, and the CID contributed their $10 million. To summarize (figures rounded, in millions): Local Contribution Planned Actual CID $10 $ 10 Transportation Improvements $14 $ 11.8 Cobb County $276 $368 Local Contribution - Total $300 $389.8 Braves Contribution upfront contribution $280 $154 Payment from Cobb BoC (11.8) Braves contribution, total $280 $142.2 That the Braves get the benefit of savings on actual costs is not in dispute. It has been apparent from the start that the estimates for the project were likely inflated so that their contributions would appear more generous. That merely demonstrates the skills of superior negotiators. Question arise as to why Cobb County would provide $368 million when we were told repeatedly that the county contribution was CAPPED at $300 million and it 24

25 Appendix F, to Commissioners, May 30, 2018 (page 3 of 3) has been undisputed that the $300 million includes the $14 million for transportation and $10 million from the Cumberland CID. That leaves $276 million as the capped figure for Cobb County. Yet, the county has paid $89.8 million more. The Braves, on the other hand, have contributed about half of their upfront contribution, $142.2 million vs $280 million. The most recent and most puzzling part of this is the payment of $11.8 million to the Braves against their claim of $14 million due as transportation improvements. From media reports, it appears that staff people involved felt that the county had more than met its obligations for the $14 million with actual transportation improvements that totaled $50 or $60 million. Why the Board of Commissioners would insist on paying an additional $11.8 million remains a mystery. The mystery grows when the $300 million cap on the stadium project has been exceeded by almost $90 million. Further, referring to the published information from the Braves (see attachment), the Cumberland Circulator Fee would produce $2.74 million per year for debt service but that money has now been redirected to pay for operation of a year round free bus system for the Cumberland area. This document also mentions that there would be no property tax millage increase for homeowners, yet Commissioners are now saying the millage rate must be raised. I could go on. There are many more questions to be raised. For now, I would welcome explanations for the items described above. Larry Savage 4226 Columns Drive Marietta, GA Attach: Braves Infographic from Cobb Web Site 25