Pinnacle Pointe developers submit statements, not audit

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By The Staff


Roane Newspapers

The developers who, according to the state, owe the city of Harriman more than $230,000 on the Pinacle Pointe development, have responded to the city.

Although the developers have said they would present an audit of their own showing the city owes them money, city officials have characterized what they got as a mere listing of expenses.

In fact, Parsons & Wright, the Kingston accounting firm that put together the report, said this in the document:

“We were not engaged to, and did not, conduct an audit or a review, the objectives of which would be the expression of an opinion or limited assurance on the accompanying schedules.”

“It is a financial statement would be the easiest way to say it,” said Harriman attorney Harold Balcom.

Balcom would not comment in detail about the report, saying the situation could end up in litigation.

He did say the partners of Prestige Land Co., most visibly Steve Kirkham, chairman of the county industrial board, and Jerry Duncan, wanted to meet with the city to discuss the statement.

Balcom said he believes there are some false assumptions made in the developer’s statement.

Harriman Treasurer Charles Kerley agreed.

“They are operating under the false assumption that we are in the agreement to give them $3 million,” Kerley said.

City officials said they agreed to pay up to $3 million in public works spending to bring in Lowe’s, but they believe the developers may be including projects beyond that scope of work.

The statement finds that $3.245 million in payments were made by the city for the project with Prestige paying $519,175 back to the city to make a net paid by the city of $2.726 million.

Based on that number, Prestige contends the city would owe nearly $274,000 to the developers.

Early last year, however, state investigators audited the project and determined that Prestige owes the city for spending on work completed on private property — not public works.

The state Comptroller of the Treasury’s municipal division found Prestige owed a balance of $234,685.

Kirkham on Tuesday referred comment on the Parson & Wright statement to attorney James Scott, but Scott said he had not talked to his clients and also declined to speak.

Those items in question may not include work the city agreed to complete.

Kerley said, for instance, that work done by civil engineers at Site Inc. — excluding a May 2003 payment made by the city — was not the responsibility of the city.

Nine other Site Inc. bills are listed, however.

“None of the other Site bills should be to us,” Kerley said.

Kerley also said anything on the statement after an Aug. 3, 2004, payment to S&ME Inc., an engineering and environmental firm, is in question.

The Parsons & Wright statement, however, includes hundreds of thousands of dollars beyond that point as among city obligations.

Officials have said that the city’s role in the development of Pinnacle Pointe was essentially complete when Lowe’s was finished and opened.

Lowe’s opened in June 2004 and, by any reckoning, proved to be a positive investment for the city, which receives a share of retail taxes on purchases from it and other stores in the development.

State officials who handled the investigative audit that determined the developers owed Harriman had not seen the Parsons & Wright statement.

“We have not been asked to review it,” said Dennis Dycus, director of municipal audits for the state.

He said the division stands by its numbers unless something is brought forward that would make them re-evaluate.

“We reviewed our calculations with city officials and they agreed with us,” Dycus said.

He also said that the partners of Prestige Land Co. were given the opportunity to provide information to the auditors, but failed to do so.

“We are very confident with the calculations,” Dycus said.

The Parsons & Wright report said accountants reviewed the contract between Prestige Land Co. and the city, the 2002 Harriman resolution authorizing up to $3 million to fund the cost of developing the Pinnacle Pointe project, as well as invoices and statements both Harriman and Prestige paid.

Another page of the report to Prestige details a summary of the contract history, including the Dec. 3, 2002, resolution to spend up to $3 million on public works and “incidental and necessary expenses related thereto.”