Deal, or no deal?

Mayor and PBA at odds over money, effectiveness of organization

By Lance Coleman
Senior reporter
Blount Today

The Blount County Public Building Authority narrowly avoided trading in their bonds and building projects for moving boxes
recently when County Mayor Jerry Cunningham considered evicting them from the courthouse and suing them in court.

"It was a thought, and it’s still a thought," said the county mayor. "I’ve got entities of Blount County government who are renting space, and we’re paying lease money for them to be elsewhere when I should have space in the courthouse for them. Having PBA here is like having a stranger sleeping in your bed, and you’re renting a bedroom for your kids over the hill somewhere."

The thought of eviction, however, goes deeper than that. On March 1, Cunningham requested that the PBA return $467,000 he said they owed the county as excess revenue from projects they have managed for the county since they were created in 1997.

On March 1, the PBA board, which is made up of 7 members who are appointed and serve without pay, voted to return $304,645.16 of the amount.

The money came from what was left out of bonds the authority had obtained for building projects since the authority was created. While the PBA is to obtain low interest loans for the county, they also seek out business from other municipalities and county governments to obtain low-interest financing for them. In doing so, they earn a percentage off each bond issued, and this money was to go to the county, its enabling authority.

"We’ve got a bit of dialog started with some of the sensible members of the PBA board, the chairman of the school board, (finance director) Dave Bennett and myself," said Cunningham a few days after the meeting. "We’re hoping we can come up some kind of resolution that will serve the best interests of Blount County."

Gloves off
The mayor has made little secret of his thoughts on the PBA’s abilities as project managers and concerns about how PBA’s contracts are negotiated rather than bid out.

The PBA board said they held on to the $146,000 to pay for project management services on two west end county schools because the county refused to pay PBA for their work on those projects. At the root of the disagreement was whether there was a valid contract between the PBA and the school board.

"When we refused to pay (for their management services), it was because we had no written authority from the financial management committee," said Cunningham.

"Then the PBA reaches into undesignated reserves and pays themselves. That was the height of arrogance. Those are moneys that belong to Blount County. They don’t belong to the PBA. You don’t have to have a law degree to understand that. It’s a matter of basic common sense, integrity and honesty. Tender to the citizens of Blount County their money, PBA, and quit using it as your private banking account," the mayor admonished.

PBA board vice chairman Foraker "Buck" Lambdin said he couldn’t speak for the board, but the board voted to keep the money to pay for supplies and staff, not show political muscle to the mayor.

"I felt like that is the only money we had, since we weren’t getting any money from either project we’re working on," said Lambdin. "To me, it’s all county money, whether we get it from a school project or by withholding money that should have been turned over already," Lambdin said.

Cunningham disagrees.
"When I found out what they were doing, I ethically was bound to report those activities to the attorney general. The attorney general was concerned enough to call the TBI, and I have visited with them. I understand that an investigation is going on, and the comptroller may be called involved," Cunningham said.

Admitted mistakes
Cunningham said the questions he has regarding the PBA started a long time ago. "I understand why it was created, and I think the commission was wise in creating the PBA," he said. "At its inception, it was to be a vehicle for bond issues. We’re handling bond issues for other counties, and it’s a money maker."

When the board decided to hire a staff years ago, the mayor said it was a "red flag that a new bureaucracy was being created."

The PBA has Cunningham said the previous PBA director was paid out of money saved on projects and that often it appeared cuts were made simply to show savings. He cited cuts at the Justice Center construction that led to faulty fencing on a jail recreation area that inmates have used to escape. The mayor also pointed out problems with curling in the concrete floor at the new Carpenters Elementary School. He said insufficient supervision led to concrete trucks not being coordinated properly on the day of the pour, and that workers also were allowed to dilute the concrete.

"I go to Carpenters Elementary, and I see floors that are horrible. There were as many waves as in the ocean, and, when they try to buff, they’re blackening the tile. That’s where concrete was curling," he said. "The PBA doesn’t know what happened. Merit doesn’t know what was happening. Nobody seems to know."

Lambdin agreed that mistakes were made regarding the floor at the school. "We’ve not been able to figure out who made them," he said. "All we know is they were made, and the contractor has bought part of that, and that’s good. As far as to whose fault it was, it gets laid at the feet of the PBA. The PBA was in charge, so the PBA naturally gets the blame," he said.

Counting the money
Cunningham pointed out that the PBA recently told Health Department director Micky Roberts that they saved the department $4,000 when they converted the former public library into a health department facility for $2,996,000. The $86,000 PBA project management fee wasn’t worth the savings, Cunningham said.

Cunningham said he’s troubled by complaints he has heard on PBA projects. "The way it’s operated, if I ordered a Cadillac from the PBA, they would deliver a Cadillac, and it wouldn’t have a radio and they would tell me it was a savings," he said. "I’d have to come back and lick the calf over again and purchase a radio and get the car back up to par, and that’s what has happened on every project."

Lambdin that there are cases of the PBA avoiding costs and scrutinizing processes to save money. The vice chairman said criticism of the PBA’s work is simply an opinion. "There’s all kinds of opinions. If you look at the sum total, there’s no doubt that the PBA has saved the county money," he said. "We do have a staff, and we do have to buy paper clips, but that being said, we’ve still saved in order of tens of millions of dollars. There’s no question about that."

The mayor said he also was concerned about the Carpenters Elementary School project coming in over budget. When the PBA sent the county a voucher for $48,000 after the bond money for the project had run out, he instructed finance director Dave Bennett to send it back to them.

Lambdin said the cost over run hasn’t really been figured out yet. "We don’t know what the situation is," he said. "It’s not been finally determined as to whether or not there was a cost overrun. The problem is a small one. The school board had to have certain things, and we went along with it. If we had stopped and blown the whistle, and said you have to go back to county commission, that would have put a delay. We went along with the requests," he said. "There are some costs still floating around. It’s not a whole lot of money, but it is an overrun."

The mayor said savings on sales tax the PBA gives could be achieved without having a staff, as could interest earned on bonds issued to other counties. "We don’t need to pay $250,000 to four people to bring four projects in over budget," he said.

Managing projects
PBA director Ron Ogle said there is always a project manager required on a project, and there needs to be clarification between a project manager and a construction manager. Project managers look at the overall project and construction managers look at only one aspect. The PBA works as project managers safeguarding the best interest of taxpayers, Ogle said.

The mayor disagrees. If the architect is doing their job, it ought to be a check and balance between the architect and contractor, he said.

"You don’t need to pay $800,000 to the PBA. If you save the $800,000, we’re three-fourths along the way for what the school board needs on text books," Cunningham said, referring to the fee the PBA is getting for managing the two west-end school projects.

"I’m just appalled by it. I guess the spin you’ll hear from PBA is that it’s politics. This is not politics. It’s about wise use of bond money being paid for by citizens of Blount County. It’s $800,000 that does not need to be spent, in my opinion."
Lambdin said the PBA did nothing wrong in not refunding all of the county’s money when the mayor requested it.

"We never held (the funds) ransom but never returned them either," he said of the $400,000-plus balance. "They were just
never returned. I guess nobody asked, and nobody volunteered it, as I understand it. All the money generated was generated from other projects, from bonds, and then from the county itself."

Bennett said the PBA in 2003 returned $63,000. "That’s the only time they’ve returned funds," he said. "We shouldn’t have to go looking for it. It’s law. They should turn it over."

Deal, or no deal?
Regarding a lack of a bidding process, Lambdin said it appears the county wants to go back to the old way of doing business where government entities simply bid projects themselves. The PBA instead arrives at a negotiable figure using input from the customer, the architect and contractor, he said.

"That’s saved the county money," he said. "You don’t have to be afraid of non-bidding. It’s to be embraced. It’s something that has saved the county much money."

Cunningham said a bidding process would be the fairest way to pick contractors. "It eliminates any scintilla or innuendo that you’re giving a deal to your buddies. It’s fair and does not eliminate throwing out a bid if the people aren’t qualified to do it," he said.

Ogle said that there might be some perception of favoritism because some of the same companies were chosen as architects and construction companies on a number of the projects. "But basically they got the jobs because they’re properly evaluated as being the best people to do the particular jobs that they got," Ogle said. "I think there has been a misconception about that. On every project since I’ve been here we have generally always tried to get different people to submit qualifications and do evaluations on that basis to make sure we’re getting the best people to do the work."

An analysis by Blount Today from records furnished by the PBA showed that of 23 projects that had architects, 15 of those went to Fletcher, three to Barber/McMurray, three to McCarty Holsaple McCarty, three to Cockrill, two to the Lewis Group, one to Allan Hoshall and one to Barge, Wagner, Sumner& Cannon. Of those, five were joint projects involving two of the architects listed.

For the 27 projects that had construction companies assigned, 11 went to Joseph Construction and 10 to Merit, with three of those being joint projects between Joseph and Merit. Three were built by Hickory, two by H&M Construction, one by Harrison, one by Blaine and one by Miller.

(A spreadsheet showing PBA projects, budget, architects and construction companies is on our website at www.BlountToday.com.)

The mayor said he would not use the PBA as a project manager for any project in the county. "Really, if your architect steps up, you don’t need it. No, I wouldn’t use them. Certainly I support that there be a PBA board," he said. "As far as staffing it, I wouldn’t support that in any shape, form or fashion."

Lambdin said the PBA is a very necessary and vital arm of the county that gets things done in an expedient manner and saves money. The PBA staff and director work hard to ensure projects are done on time and under budget. "If you expect the architect to do that, you’re badly mistaken," he said.

Lambdin said the board understands the mayor’s agenda. "We don’t know why, but we know he wants to do away with the PBA as far as a project manager and building things we normally do," Lambdin said. "We understand that’s his agenda. We don’t know why, and we can’t see the logic in it. We don’t know if he’s against negotiated bids or what."

Ogle said at last count he estimated the PBA was involved in about $180 million on construction projects since it was created. If the new middle and elementary schools were included, that adds an additional $30 million, he said.

Blount County Schools director Alvin Hord said his interest in the controversy is getting students in school rooms. "I’m not willing to spend money we don’t need to spend. My concern is we stay on track and get these two schools so we can get kids in them and relieve overcrowding in schools, especially in William Blount High School."

Blount County School Board Chairman Mike Treadway said he has no reservations in working with the PBA, especially in regards to maintenance and upkeep.

Treadway said he is hopeful the county and the PBA will be able to sit down with the schools and work out an agreement so everyone can move forward with the two schools that are being built on the west side. "My main concern is we do whatever we have to to keep schools on the west end moving forward and opening on time," he said.

PBA Completed Projects

Justice Center
$22,000,000.00
Barge, Wagner, Sumner,& Cannon
Miller Construction

Heritage Middle School
$9,800,000.00
Joint Venture - Fletcher Architect/BarberMcMurry
H&M Construction

Sneed Middle School (Carpenters)
$12,016,000.00
Joint Venture - Fletcher Architect/BarberMcMurry
H&M Construction

Sneed Road Improvements
$1,650,000.00

Court House Renovations
$4,924,000.00
Allen Hoshall
Rentenbach Constructors

Library
$14,000,000.00
McCarty Holsaple McCarty
Blaine Construction

Schools Energy Project
$2,500,000.00
Joseph Construction

Burkhart (Mary Blount Elementary)
$11,520,000.00
McCarty Holsaple McCarty
Joseph Construction

Mary Blount Renovations (William Blount Middle)
$2,000,000.00
Fletcher Architects
Joseph Construction

Oliver (Eagleton Elementary)
$11,020,000.00
McCarty Holsaple McCarty
Merit Construction

Oliver Road Improvements
$400,000.00

Eagleton Renovations (Eagleton Middle)
$2,492,500.00
Fletcher Architects
Joseph Construction

Walland Elementary Renovation
$2,000,000.00
Fletcher Architects
Joseph Construction

Heritage High Auditorium
$353,500.00
Joseph Construction

Heritage Gym Roof/Chiller Boiler
$100,000.00
Fletcher Architects

Highway Department Salt Storage Facility
$86,426.00
Harrision Construction

Everett Parking Construction
$4,800.00

Justice Center – 3rd Floor Addition
$150,500.00

Justice Center - Magistrate's Office
$49,025.00

Burkhart Road Improvements
$400,000.00

School Facility Upgrades
$1,440,080.00

Mold Remediation Projects
$2,523,200.00

Health Department Addition
$375,000.00
Merit Construction

Operations & Maintenance Improvement Program - Phase I
$245,100.00
Fletcher Architects

Operations & Maintenance Improvement Program - Phase II
$4,575,050.00
Joseph Construction/Merit Construciton

Operations & Maintenance Improvement Program - Phase III
$3,930,195.00
Fletcher Architects
Joseph Construction/Merit Construction

Parks & Rec - Senior Citizen Center
$1,300,000.00
Fletcher Architects
Hickory Construction

Frank Bogle Walking Trail (Greenway Extension)
$73,524.10

Fairview Renovation
$4,842,000.00
Fletcher Architects
Joseph Construction

Alcoa Basketball Courts
$64,460.00

Hubbard School HVAC Upgrade
$40,000.00

Alcoa City Schools 2003-04
$4,143,878.34
Hickory Construction

Health Department Dental Clinic
$100,000.00
Fletcher Architects
Merit Construction

Blount County Schools Capital Outlay Projects
$640,700.00
Fletcher Architects
Joseph Construction/Merit Construction

Blount County Schools High School Programming
$150,000.00
Fletcher Architects

Alcoa City Schools 2005
$786,489.78
Hickory Construction

$122,696,428.22


Projects In Progress

Maryville Parking Garage
$3,869,100.00
Cockrill Design & Planning
Merit Construction

Highway Department - Land Development Project
$20,000.00

Carpenters Elementary School
$12,319,610.00
Joint Venture-Cockrill Design & Planning/The Lewis Group
Merit Construction

Health Department Primary Care Facility
$3,000,000.00
Fletcher Architects
Merit Construction

West Middle School
$20,000,000.00
Joint Venture-Fletcher Architects/BarberMcMurry
Merit Construction

West End Elementary School
$14,000,000.00
Joint Venture-Cockrill Design & Planning/The Lewis Group
Joseph Construction

Operations & Maintenance Improvement Program - Phase IV
$2,100,000.00

Blount County Schools Outlay Projecects 2006
$1,150,976.00

Alcoa City Schools 2006
$42,100.16

$56,501,786.16

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