[Watchdogs] Wow, $900K and an extra $65K for the Lodge Training
Paul Langston
langston at zeecon.com
Sat Jul 11 15:28:17 CDT 2009
Dear Alfred: Re. your note of July 09, 2009, "WOW, $900 and an extra $65k for lodgeTraining".
You can bet that the purchase of the old Honkey-Tonk, the subsequent improvements and the yearly maintenance costs makes the spot worth more like two million dollars.
The $65K expense of the "Eagles" lodge was only the bare cost of the Hotel for the men. To get an idea of how much that junket cost, first start with the cost of the planning, notices, reservations, etc. Say, $5m. Add the cost of the time of the men, highly skilled technicians at about 150 dollars per day each. Nobody ever mentions the cost of transportation. I suppose that is hidden in some other corner. Those limo-buses probably go at about $200 per day, add the cost of the drivers to stay at the lodge, add mileage from Johncity to the lodge and back. That should add another $5m.
The cost of the instructors have to be considered. Probably Contractors, professionals
would be the same if classes were given at The Training Center.
Some percentage has to be added for "Office Overhead". These are the bosses who call the shots. Ok, we are now up to about $87k for this trip., ie. far more than the if the instruction were given in Johnson City
Management does not feel that they have to explain anything to any of us. The habit of doing just as PEC wants is deeply ingrained, goes back about 60 years. Their "accounting" is made to deceive and most likely goes back as far as the founding of PEC.
I certainly agree that the last rate increase should be withdrawn. The technical study was spurious at best. My feeling is that the whole "kaboodle" was just to disguise a rate de-crease for the Big Users. The additional meter cost is going to hurt a lot of small users and people who are trying to conserve. Cheers, Paul Langston
----- Original Message -----
From: alfred stlouis
To: watchdogs at pec4u.org
Sent: Thursday, July 09, 2009 7:09 PM
Subject: [Watchdogs] Wow, $900K and an extra $65K for the Lodge Training
After spending a cool Million to puchase and fix the training site, why squander money at a resort lodge for training. Management has some explaining to do! I think one of the first orders of business should be to undo the rate increase beginning in the August bills. I don't want my $2.50 monthly rate increase to go for paying for junkets! Al
> From: watchdogs-request at pec4u.org
> Subject: Watchdogs Digest, Vol 15, Issue 7
> To: watchdogs at pec4u.org
> Date: Thu, 9 Jul 2009 12:00:07 -0500
>
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> Today's Topics:
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> 1. Re: Welcome, yearly Christmas Parties (Milton Hawkins)
>
>
> ----------------------------------------------------------------------
>
> Message: 1
> Date: Wed, 8 Jul 2009 16:40:31 -0500
> From: "Milton Hawkins" <mhawkins at tstar.net>
> Subject: Re: [Watchdogs] Welcome, yearly Christmas Parties
> To: "'Bill Christensen'" <billc_lists at greenbuilder.com>,
> <Watchdogs at pec4u.org>
> Message-ID: <7A04EFCDC2FB43A7A5097D8A5F836B98 at Milton>
> Content-Type: text/plain; charset="utf-8"
>
> >From the Navigant Report, pages 370-71:
>
> River Palace
>
> PEC purchased the River Palace for $900,000 from the Kuvet Family Trust (Rita Kuvet was listed as the Trustee) in August 2004. The River Palace was a large multi-functional building on the outskirts of Johnson City, Texas that had been a restaurant and a meeting hall over the years. PEC held its annual meeting at the River Palace from at least 1986 to 2007. The purchase and conversion of the River Palace into a training center was discussed as early as July 2001. Board meeting minutes in 2001 indicate that the sales price for the River Palace at the time was $480,000. However, PEC does not appear to have attempted to acquire the property that that time. [Note 621: Minutes of Meeting of Board of Directors, Pedernales Electric Cooperative, Inc., July 16, 2001.] It is also our understanding that Mr. Fuelberg was approached by the previous owner of the River Palace in or around April 2002 and again by the Kuvet family in July 2003, regarding the sale of the River Palace to PEC.
>
> The Board authorized Mr. Fuelberg ?to purchase the Texas River Palace in Johnson City for the sum of $900,000? in July 2004. [Note 622: Pedernales Electric Cooperative, Inc., Board Resolution, July 19, 2004.] As noted, the $900,000 purchase price was significantly higher than the referenced price of $480,000 for the property in 2001. After the purchase was completed, the River Palace was reconfigured and converted into the PEC Training Center. However, it is our understanding that only a portion of the River Palace is currently being used by the Cooperative for training purposes. Similar to the other land and building purchases, no appraisal or other documentation has been identified supporting the purchase price of the River Palace.
>
> In addition, it appears that Shelton Coleman was the owner or operator of the River Palace prior to 2000 and that he sold the River Palace to another party prior to the Kuvet Family Trust acquiring the River Palace. It is our understanding that Shelton Coleman was the grandson of former Director M.C. Winters and may also have been affiliated with A.W. Moursund. We have not been able to identify the extent of Mr. Coleman?s relationship with the Moursund family. However, based on available information, it does not appear that Mr. Coleman had any involvement in the subsequent sale by the Kuvet Family Trust to PEC.
>
> C. Observations and Findings
>
> 1. Lack of Formal Policy and Procedures
>
> We did not identify a formal policy or procedure related to the purchase of land and buildings. As a result, it appears that many of the land and building purchases were approved by the Board through a resolution authorizing Mr. Fuelberg to complete the purchase. The Board resolutions typically included the purchase price of the property. However, the resolutions did not normally outline the business purpose for the purchase, especially related to the general plant purchases.
>
> 2. Potential Related or Affiliated Party Transactions
>
> We identified four land and building purchases to related or affiliated parties of the Cooperative including the Harmon Property, Felps ROW, McCrocklin Property and the River Palace. As described, the River Palace appears to have been owned by an individual with potential ties to the Cooperative prior to 2000. However, it appears that the entity (Kuvet Family Trust) that sold the River Palace to PEC was not related to the Cooperative.
>
> While the Board was informed of, and ultimately authorized, the purchase of property from Mr. Harmon, it appears that the Board was not informed that PEC was purchasing land from Mr. Felps and Mr. McCrocklin. We did not identify any Board resolutions that disclosed the purchases from Mr. Felps and Mr. McCrocklin. All land and building purchases or any other type of transaction with a potential affiliated entity should be disclosed to the Board and potentially to outside parties.
>
> 3. Lack of Appraisals Supporting Purchase Price
>
> As described, we did not identify appraisal or other documentation supporting the price for the land and building purchases. As a result, we have been unable to determine the reasonableness of the amounts paid for certain land and buildings.
>
> 4. Business Purpose for Land and Building Purchases
>
> Due to the limited availability of information, we were unable to perform a detailed review of the purchasing process for each land and building purchase. However, we did identify two instances (Harmon Property and River Palace) where questions still exist regarding the purchase of the land and buildings. As described, it is our understanding that the Harmon Property was not utilized by PEC for a period of time and only approximately half of the property is currently being used as a service center and pole yard. In addition, it is our understanding that only a small portion of the River Palace is currently utilized as the training center.
>
> D. Recommendations
>
> Formal Policy and Procedures
>
> ?? It is our understanding that PEC currently does not have a formal process and procedure for the purchase of land and buildings. It appears that Mr. Fuelberg would typically obtain authorization from the Board for land and building purchases. However, consistent with other items, the Board may not have received sufficient information to evaluate the purchase including the business purpose based on the information contained in the Board minutes. It is recommended that PEC implement policies and procedures that evaluate each general plant purchase including comparison to other available properties. That includes, among other items, obtaining appraisals for all property purchases and evaluating at least two alternatives to the property under consideration for purchase.
>
> ?? PEC purchased land and buildings from individuals who were related parties of the Cooperative. It is recommended that PEC adopt policies and procedures that outline when and to whom disclosures are to be made when business transactions are conducted with related parties in which a potential conflict of interest may exist and what action should be taken by Directors or others affected by the transaction.
>
> Milton Hawkins mhawkins at tstar.net 830-868-9075
>
> -----Original Message-----
> From: watchdogs-bounces at pec4u.org [mailto:watchdogs-bounces at pec4u.org] On
> Behalf Of Bill Christensen
> Sent: Wednesday, July 08, 2009 2:29 AM
> To: Watchdogs at pec4u.org
> Subject: Re: [Watchdogs] Welcome, yearly Christmas Parties
>
>
> >We always had it at the old 281 club (when it WAS the 281 club)
>
> Just out of curiosity.... Does anyone know whose
> sibling/child/golfing buddy owned the 281 Club before PEC bought it?
> Or how much PEC paid (and what the market value was at the time)?
> Considering the way PEC was run and all the other insider deals we've
> seen, I'm suspicious.
>
> --
> Bill Christensen
> <http://greenbuilder.com/contact/>
>
>
>
>
> ------------------------------
>
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>
> End of Watchdogs Digest, Vol 15, Issue 7
> ****************************************
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