Feeds:
Posts
Comments

Archive for the ‘Contract, Contracts’ Category

State slow in revealing purchase of $9 million golf course

Posted in Budget, Contract, Contracts, Golf Courses, Governor's Office, Public Records, Transparency, tagged on October 12, 2010| 3 Comments »

When the State of Louisiana purchased the assets of financially troubled Tournament Players Club (TPC) golf club in Marrero in Jefferson Parish on September 10, 2009, it’s no wonder the Division of Administration did not inform the State Land Office for a full year.

State Land Office (SLO) Administrator Charles St. Romain said his office is responsible for the identification, administration and management of state public lands and waterbottoms, but that he was unaware that the state had purchased the TPC facilities until September of this year.

The Act of Sale, dated September 10, 2009, was signed by then-Commissioner of Administration Angele Davis. The purchase price was $9,150,000. Davis resigned in August of this year.

Marrero Land and Improvement Association, headed by real estate developer Buckner Barkley, a financial backer of the Louisiana Republican Party and Gov. Bobby Jindal, donated about 250 acres of land in 2001—during the administration of then-Gov. Murphy Foster. The state in turn spent about $12.8 million to pay for the cost of building the course which hosts the Zurich Classic PGA Tournament each year.

The state then leased the property to TPC and Foster agreed to a deal whereby the state guaranteed a minimum number of rounds of golf at the facility each year. The rounds were to be purchased through hotel concierges in New Orleans but the hotel industry was not informed of the deal initially and the state found itself shelling out $5.1 million in the club’s very first year.

The club continued to lose money and in 2009, the state purchased the facility. The Division of Administration in November of 2008, more than nine months before the execution of the sales agreement, entered into an agreement with the Louisiana Stadium and Exposition District (LSED) to administer the club. LSED also manages the Louisiana Superdome.

LSED in turn executed a “golf facility management agreement” with TPC Louisiana under which TPC would manage the club for 30 years for a minimum of $100,000 per year, plus an incentive management fee of 2.5 percent of gross revenues and 10 percent of net revenues not to exceed $150,000 per year with annual increases not to exceed 3 percent per annum. That agreement was dated September 10, 2009, the same date as the sales agreement between TPC and the state.

No explanation was given as to why the state bailed out a failing facility for nearly $9.2 million and immediately turned the operation of that facility back over to the company that had been running it at a financial loss.

Even more puzzling is why the state saw the need to invest in a golf course in the first place. Or in the case of the Louisiana Legislature, four golf courses. The state is also financing the construction of courses in Lake Charles and Alexandria and it assumed operation of Black Bear Golf Course at Poverty Point in 2006. Since 1997, the state has spent in excess of $141 million on golf courses—all at a time when the state budget is hemorrhaging red ink and designer golf courses are on the decline in popularity and shutting down all over the country.

The Louisiana Municipal Police Employee Retirement System (MPERS) in October 2009 lost its $24 million investment in the Hal Sutton designed Boot Ranch Development golf club in Fredericksburg, Texas. That would be bad enough if that were the only such loss by MPERS, but it’s not. The retirement system has also dropped $12.1 million on Olde Oaks Golf Club in Haughton (and still losing $500,000 a year) and $3.1 million on The Club at Stonebridge, also in Bossier Parish. MPERS also lost an additional $15.7 million on its purchase of and improvements to the development of Olde Oaks properties, bringing its total losses just on golf courses to more than $39 million.

Golf courses that have recently closed in Louisiana include:

• The Bluffs Country Club in St. Francisville, designed by Arnold Palmer and which opened in 1988, closed in March of 2009;
• Sherwood Forest Country Club, Fairwood Country Club, and Shenandoah Country Club in Baton Rouge;
• Santa Maria Golf Course in Baton Rouge, designed by Robert Trent Jones (closed for a year before being re-opened by East Baton Rouge Parish);
• Carter Plantation Golf Club in Springfield in Livingston Parish, designed by David Toms, while not closed, has not performed up to expectations and is currently mired in litigation;
• Belle Terre Golf and Country Club in LaPlace in St. John the Baptist Parish (closed in August of this year).

In Georgia, the Fairways of Canton has closed, leaving that city on the hook for annual payments of $300,000. Other golf courses that have closed in Georgia include courses in Jones Creek, Tucker, and Roswell. In all, at least 15 golf courses in Georgia currently are on the market.

A quick internet check revealed clubs for sale all over the country, including three in Louisiana (Florien, Ethel, and Monroe). Others on the market in neighboring states include four each in Mississippi and Alabama, three in Arkansas, and a dozen in Texas.

It remains to be seen what, if anything, the state will realize on its investments in the four golf courses but should any or all of them fail, it’s pretty certain some hard questions will need to be asked—and answered.

Read Full Post »

Gov. Jindal’s cost saving plan for Louisiana

Posted in Auditor, Budget, Contract, Contracts, Governor's Office, Legislature, Legislators on October 11, 2010| 2 Comments »

Once upon a time the State of Louisiana owned a vast scrap yard in the middle of nowhere.

The Legislature said, “Someone may steal from it at night.”

So they created a night watchman position and hired a person for the job.

Then the Commissioner of Administration said, “How does the watchman do his
job without instruction?”

So they created a planning department and hired two consultants, one person
to write the policy manual, and one to do time studies.

Then the governor said, “How will we know the night watchman is doing the tasks correctly?”

So they contracted with a Quality Control expert and hired two people:
one to do the studies and one to conduct motivational workshops.

Then the Legislative Fiscal Office said, “How are these people going to get paid?”

So they created two positions: an HR director and a payroll officer, then hired two clerks.

Then the Inspector General said, “Who will be accountable for all of these people?”

So they created an administrative section and hired three people: an
Administrative Officer, an Assistant Administrative Officer, and an in-house
Legal Counsel.

Then the Legislative Auditor said, “We’ve had this agency for one year
and we’re $918,000 over budget. We must cut back.”

So they laid off the night watchman.

Read Full Post »

Earl’s big blunder (no thanks to Leander Perez)

Posted in Budget, Contract, Contracts, Earl Long, Huey Long, Economy, Ethics, Exemptions, Incentives, Legislature, Legislators, Lobbyist, Revenue, Taxes, Transparency, tagged , , , , , , , , , on August 11, 2010| 7 Comments »

            The fiscal news from Baton Rouge continues to be bad. Besides a projected $319 million deficit for the current fiscal year that ends in seven weeks, there have been moves to privatize state services, a sell-off of state assets, layoffs, and now a massive oil spill that threatens the state’s seafood industry.

            There are those who insist it didn’t have to be that way but 60 years ago, on June 5, 1950, everything changed. That’s the day that the U.S. Supreme Court ruled that all of the submerged land from the shores of coastal states belonged not to the states, but to the federal government.

            It was a devastating decision that affected coastal states from Texas to Florida. An earlier decision, in 1947, had a similar affect on California. The ultimate cost to the states estimated as high as $300 billion, according to the late Mike Mansfield, former senator from Montana. Mansfield, writing in the May 4, 1953 Congressional Record, was critical of the decision by the Eisenhower administration to returned title of the submerged land back to the states.

            Eisenhower’s action, which was approved by the House on April and by the Senate on May 5, reversed a proclamation by President Truman in 1945.

Truman, in his Continental Shelf Proclamation, said that federal government had jurisdiction over all the mineral resources in the lands beneath the oceans out to the end of the U.S. Continental Shelf. Immediately after he issued the proclamation, the federal government initiated litigation against the states, claiming sovereignty over all offshore resources. Truman reasserted that position on Jan. 16, 1953, just before leaving office when he issued an executive order that set aside the submerged lands of the Continental Shelf as a naval petroleum reserve.

The issue of tidelands mineral rights didn’t appear of major importance to either Louisiana or the federal governments other than shrimpers and oystermen, until technology progressed sufficiently to drill in offshore waters. In November of 1947, the first such well was completed in 16 feet of water in the Ship Shoal area in the Gulf of Mexico, about 12 miles south of Terrebonne Parish. After that, all bets were off.

            Just as with California, litigation soon followed as the federal government filed suit against both Texas and Louisiana over control of more than four million acres of submerged land. Then, in the early fall of 1948 came one of the biggest negotiating blunders in the history of Louisiana politics that ultimately led to the landmark Supreme Court decision that will in all probability go unnoticed by most on its 60th anniversary on June 5.

            The players included President Truman, Speaker of the U.S. House Sam Rayburn, Gov. Earl K. Long, Lt. Gov. Bill Dodd, and Plaquemines Parish boss Leander Perez. Lurking in the shadows was the man who would emerge central to the decision by Long to refuse a generous offer from Truman that would cost Louisiana upwards of $100 billion, according to Dodd. That man was 29-year-old Russell Long, Earl’s nephew and the son of Huey P. Long.

            Dodd, in his book Peapatch Politics, laid out the details of a deal gone bad as a result of Russell Long’s political ambitions and Perez’s determination to protect his questionable control of mineral-rich Plaquemines Parish with Earl Long and Dodd caught in the tug-of-war between the federal government and Louisiana.

            In 1948, Russell Long was a candidate for the U.S. Senate. Perez, who was also head of the Democratic State Central Committee, ran his own less sophisticated but equally prosperous version of Huey’s old Win or Lose Oil Company in Plaquemines and, according to Dodd, was not above a little blackmail and extortion to protect his fiefdom. Rayburn was Truman’s emissary who was instructed by the president to make what in hindsight was a more than generous offer to Louisiana to settle the federal lawsuit against the state.

            In that fateful autumn of 1948, Rayburn called Dodd and Louisiana Attorney General Bolivar Kemp to a Washington meeting. Also in attendance in Rayburn’s office were Perez, Texas Attorney General Price Daniel, several representatives of the Department of Interior, as well as others.

            Rayburn, without fanfare or ceremony, offered to settle the Tidelands dispute with Louisiana by offering the state two-thirds of all revenues accruing from mineral bonuses, leases, and royalties in the two-thirds of a three-mile band extended from the Louisiana coastline outward into the Gulf of Mexico. Rayburn also offered the state 37.5 percent of all revenues in the Tidelands outside the three-mile band. In addition, Rayburn said the federal government would drop its lawsuit against the state. It was a much better offer than the state had anticipated and everyone present except Perez was ready to jump at the offer.

            Perez told Rayburn that he would recommend to Gov. Long that the offer be rejected, prompting Rayburn to explode. “This ain’t no compromise,” he said. “It’s a gift, and you better take it while the president is in the mood to give it to you.”

            Perez, who as attorney for Plaquemines Parish’s various levee boards, was in a position to dictate how and to whom the levee boards leased their lands. Many of those leases went to corporations he and his family controlled, reaping him millions in much the same manner in which Huey Long had structured his Win or Lose Oil Co. With no intention of losing any of his power, he got to Earl Long first and convinced the governor that the state was being sold a bill of goods by Truman and Rayburn. He insisted, moreover, that the state would prevail in the federal litigation against the state even though California three years earlier had lost an identical lawsuit.

            Perez, who was backing States’ Rights presidential candidate Strom Thurmond for president, controlled the state Democratic ticket and threatened to take Russell off the States’ Rights ticket, which would, in effect, hand the U.S. Senate seat to Shreveport Republican Clem Clarke. Earl wanted his nephew to win the election and eventually capitulated to Perez’s demands to reject Truman’s offer, prompting Baton Rouge Morning Advocate Editor Maggie Dixon, a close friend of the governor, to remark, “Earl is gonna trade our chances to be a tax-free state in order to elect that little tongue-tied nephew of his to the U.S. Senate.”

            Dodd, in his book, speculated that the immediate loss to the state was $66.5 billion, not including billions more paid in bonuses and leases, plus the severance taxes that would have amounted to about a fourth of the total value of production. Dodd said the cost as of 1986, when he wrote his book, was “$100 billion plus,” with future losses as much as $10 billion a year.

            Still, given the track record of the legislature to fritter away past “embarrassments of riches,” one would have to wonder how such an influx of revenue might have taken legislators from embarrassment to humiliation in emptying the state coffers.

Read Full Post »

Ex-DOA Commissioner Angelé Davis moves to Arkel

Posted in Contract, Contracts, Governor's Office, Transparency, tagged , , , , on August 5, 2010| 1 Comment »

            In the constantly-shifting tides of Louisiana politics, it seems the same personalities keep bobbing to the surface over and over in a never-ending parade of appointments, resignations, and re-appointments, always ushered in or bid adieu with words of laudatory praise and expressed optimism.

            Such is the case of Angelé Davis, who until this week served as Commissioner of Administration for Gov. Bobby Jindal. Before being brought on board by Jindal, she served as Secretary of the Department of Culture, Recreation & Tourism and prior to that, she was Deputy to Commissioner of Administration Mark Drennan in the administration of Jindal’s mentor, former Gov. Mike Foster.

            On her way out the door, it was announced that Davis would enter the employ of politically-connected Arkel International of Baton Rouge as vice president of strategic programs. She will be in charge of “identifying and evaluating strategic acquisitions and business partnerships and alliances, business development strategies and capitalization and overseeing strategic planning,” according to an Arkel press release.

            In 2007, the First Circuit Court of Appeal overturned a ruling favorable to Arkel during litigation initiated by Arkel against the state. The trial court judge who ruled in Arkel’s favor on a key motion was Tim Kelly of the 19th Judicial District. Kelly is married to Davis. One of Arkel’s attorneys was Murphy J. Foster, son of former Gov. Mike Foster. Kelly’s ruling was handed down before Davis joined Jindal’s administration.

            “Angelé led us through some unprecedented budget challenges and our state is in a better posture today because of her cost-cutting approach and dedication to streamlining government,” Jindal said. “Paul Rainwater will be an effective leader at DOA, as he was at LRA and as Deputy Chief of Staff. The budget challenges facing our state are historic and his dynamic thinking and quick action will be essential to moving our state forward,” the governor added.

            As soon as it was announced that Davis was leaving the state, speculation began as to the reason for her sudden departure. Some equated her and other top Jindal administration officials’ recent exodus to “rats deserting a sinking ship” in anticipation of impending budgetary shortfalls next year estimated by some as approaching $2 billion to $3 billion.

            Others felt that agency privatization and the controversy surrounding the awarding of the contract for health coverage to Blue Cross-Blue Shield of Louisiana led to her resignation, or ouster.

            Considerable controversy resulted from the handling of the privatization of the Office of Risk Management when Davis appeared before the Joint Committee on the Budget with no supporting documentation from her or agency Director Bud Thompson. Both were chided by committee members and told to return later with information requested by lawmakers. Lawmakers didn’t learn until after the privatization contract was approved that the state would actually be obligated to an increase in state funding the first year of the contract.

            A month later, when Blue Cross was awarded the contract for health coverage for 114,000 state employees, dependents, and retirees, Humana, which had previously held the contract, appealed to Davis to block the contract. Davis refused and Humana filed suit against the state claiming that the Office of Group Benefits made a “mockery” of the contract process by “awarding a contract that was never bid,” according to Humana attorney Phil Franco.

            Tommy Teague, executive officer of the Office of Group Benefits, said the Blue Cross contract, which took effect on July 1, would save the state $34 million in the first year.

            But on June 21, Judge Mike Caldwell, who serves with Davis’s husband, Judge Kelly, in the 19th Judicial District in Baton Rouge, ordered the state to reconsider its award of the contract to Blue Cross. Caldwell said Humana had raised some valid issues over the Blue Cross contract. Within a matter of days following Caldwell’s order, Davis announced her resignation, which takes effect this Friday.

            But when Davis decided to leave the state for Arkel, she did not leave controversy behind.

            When former Congressman William Jefferson was convicted on 11 of 16 federal counts of racketeering, conspiracy, solicitation, and money laundering, the second count for which he was found guilty was for conspiracy to bribe officials of Arkel Sugar, one of Arkel International’s many interests. That charge involved Arkel’s efforts to build a $500 million sugar mill in Kenya for which Jefferson allegedly demanded a 4-percent cut in exchange as “consulting fees” for his brother, Mose Jefferson.

            Deborah Haggard, who was Arkel Sugar’s vice president when the deal was consummated in 2001, said the extent of Mose Jefferson’s consulting was when he appeared to receive his pay, which totaled just over $21,000. “To the best of my knowledge, he didn’t do anything,” Haggard said. Arkel did secure an $8 million feasibility and engineering contract with a Nigerian sugar company, according to the William Jefferson indictment documents.

            Arkel, an infrastructure and construction services company employing some 300 people and which works with government agencies, had about $85 million in sales in 2008 and boasts of having constructed the world’s largest sugar refinery in Sudan. Besides sugar mills, the company engages in the design, engineering, and construction of biomass power generation, ethanol plants, warehouses, and port facilities as well as offering food service solutions to government agencies and commercial organizations during times of disaster such as Hurricane Katrina, and sustained catering operations for longer duration missions in remote regions.

            In April, Arkel International was awarded a $6.4 million federal contract by the Kandahar Air Field Regional Contracting Center in Afghanistan to set up electrical power and force protection barriers at 16 buildings at Camp Leatherneck in Helmand Province, Afghanistan.

Read Full Post »

« Newer Posts