Construction of Reelfoot visitor center stops due to audit results

Friday, August 25, 2017
The unfinished structure that was to house the new Reelfoot Lake interactive visitors center currently awaits its fate. With audit findings reported by TDOT and the state comptroller’s office, construction ceased months ago. Though no official decision has been made, it is possible the structure could be demolished.


What was to be a new interactive visitors center at Reelfoot Lake State Park now stands vacant on the shores of the historic lake, bound in weather-resistant home wrap, with its fate still to be determined. With years of planning, over a year’s worth of construction, and up to $700,000 in taxpayer dollars spent to date, construction came to a halt months ago due to a result to audit findings reported by Tennessee Department of Transportation as well as the Tennessee Comptroller’s Office.

In 2013, TDOT entered into a contract with Mississippi River Corridor-Tennessee (MRCT) to build the visitors center using a $1.51 million federal grant through the National Scenic Byways Program. The program was an initiative through the Federal Highway Administration, and an 80-20 grant, with state funds covering 20 percent of the project cost.

The center was to enhance the visitor experience and boost tourism as well as economic development in the Reelfoot Lake area and Lake County, which has the third-lowest per capita income of all Tennessee counties. The new center would serve as an upgrade to the existing museum and visitor center at Reelfoot Lake State Park, which has not been updated since the 1960s.

According to State Rep. Bill Sanderson, “It is an ongoing federal investigation by the Department of Justice based on some findings with the State Comptroller’s Office, and until that, nothing will be resolved. Furthermore, it was federal money that was used for the project. It was not state money. The state really has no jurisdiction or power to do anything with it.”

“The department gets federal money for different things,” said Paul Degges, TDOT chief engineer and deputy commissioner. “There’s a federal program called the Scenic Byways Program, and so MRCT, they applied to us for a grant in this program to build a visitors center. So, the department awarded them a grant so they moved forward in implementing the grant.”

MRCT President and Executive Director Diana Threadgill stated, “When this opportunity came up, the National Scenic Byways Grant, TDOT called us and asked us to apply for it because we had a whole master plan done about what we wanted to do in the corridor. That was one thing that we wanted to do – build a new visitors center. The state park got on board, and everybody we talked to said ‘yes, yes, yes’.”

According to Threadgill, MRCT had previously applied for the grant, but were unsuccessful the first time.

“Our first grant application was in 2010 or 2011,” she said. “We didn’t get it, but our program manager at the time called and said they wanted me to reapply. So, we rewrote the grant, and I went to an architect friend of mine, who was also on our advisory council, and said I don’t know anything about these construction budgets – I don’t know how to do this. Can you help me? He probably helped me for 6 to 9 months pull that application together. And that’s the reason why we got it to tell you the truth. I went and sought help from experts. He worked probably about a year and half without charging us a dime. He just became part of the team.”

“Our accounting section in the department, one of the checks and balances that we have is that we do spot audits on expenditures and grant programs,” added Degges. “Our external auditor contacted MRCT for information and could not get answers to any questions or satisfactory answers. We turned it over to the investigations part of our audit section. What we found was that they had not procured a consultant or a contractor in accordance with the rules of the program. We turned it over to the comptroller of the state. We also turned it over to the U.S. Department of Transportation Office of Inspector General because there’s federal dollars involved.”

According to the state comptroller’s office Fiscal 2016 Single Audit Report (released in March 2017), it states that:

“The Department of Transportation’s Environment Division failed to monitor and review the bidding process used by its subrecipient, the Mississippi River Corridor – Tennessee, Inc., resulting in noncompliance and questioned costs of $466,262…

“…During our 2016 Single Audit testwork, we received allegations concerning the contractor. To address those allegations, we performed routine audit procedures at the department and worked in conjunction with our office’s investigators to focus on issues relative to the department’s and contractor’s responsibilities. Although we have finished our audit fieldwork for the department, other work at the contractor level is ongoing…”

During an email correspondence with John Dunn, Tennessee Comptroller of the Treasury public information officer, on Thursday, he added, “I can tell you that work is continuing at the contractor (MRCT) level. We are involved in that review.”

The Comptroller’s Office audit report also mentioned that MRCT failed to obtain competitive bids when seeking the service of a project designer as required, and that MRCT awarded the contract to an architect firm that had a direct conflict of interest with MRCT, as a partner with the architect firm also served as a member of MRCT’s advisory council.

The audit also states:

“…MRCT could not provide any evidence that the company solicited bids from any entity other than the firm selected. Because the department did not ensure that MRCT followed required bid procedures to subcontract with the designer, we have questioned costs paid to the subcontractor as of June 30, 2016, totaling $141,029, as these costs are subject to disallowance by state and/or the federal grantor.

“MRCT and the architect firm failed to publicly advertise the request for bids for the construction contract. We determined of the contract and bid documentation submitted to the department that MRCT and the architect contacted three potential construction contractors requesting they provide bids…

“…Again, because the department did not ensure that MRCT followed the state’s established policy, the construction subcontract is questionable and may be disallowed by the state and/or the federal grantor. We questioned the entire $325,233 that has been paid through the construction contract on the basis of the contract not being bid properly…”

“The bottom line is while we did catch this through our audit procedures, we were somewhat lax in our oversight and management of the grantee, MRCT,” said Degges.

“It’s my mistake,” said Threadgill. “I did send out preliminary RFQs (request for quotation). I didn’t send out requests for proposals and stuff like that to architects, but everybody in town pretty much knew it was going on. I should have gotten a waiver for him, but then we got a new program manager, Mark McAdoo, and it just slipped through the cracks. It’s my fault [and] I assume full responsibility for it. We still could get a waiver for him to tell you the truth. All the documentation he had, he showed in the audit of all the work he had done in helping us with the application and after we got the grant all the free work he did. That particular firm, they specialize in museum work. They’ve done some really big projects here in Memphis and other parts of the country. So, they have a lot of experience. Apparently, a complaint was made to the feds saying that the construction company had not been bid out properly. We sent out 3 requests for full proposals to 3 different construction companies. I should have placed an ad in your paper. I just didn’t know I was supposed to. I was never told by anybody at TDOT, and remember, we were working on this grant for 3 years before the TDOT audit happened, they [TDOT] were audited by the Comptroller’s Office and were found to be noncompliant in proper guidance in the grant administration. Then, they came after us.”

“After we found all this stuff out, we stopped all activity on the contract,” said Degges. “The investigations as to whether this was just basically the MRCT being unfamiliar with the program or was it more than that – the answer to those questions lies with the investigative arm of the Office of Inspector General. We don’t have anything to do with that. That has kind of gone over to the feds to do the investigation.”

“All of these federal grants are different,” added Threadgill. “That’s my mistake – I messed up, but I have been told by three or four individuals that it was a construction company in Dyersburg that made the complaint. It came up so many different times. That’s what people told me, and I’m not going to tell you who it was, but there’s only one big construction company up in Dyersburg. We also had a former board member from Dyersburg. My point being, that is what caused the audit – that complaint. Remember we have been working on it for 3 years – building the building, getting the exhibits together, public meetings – and not a word was said from TDOT about any invoice or anything. My program manger with TDOT, and this hasn’t come out and I think it’s very important; he was handling over 70 grants. Not just ours. They up and fired him [McAdoo] and hired 5 people to replace him. They went to his office, interrogated him for 3 hours, and then 2 weeks later, after the audit in June 2016, they fired him.”

According to Threadgill, she believes that TDOT should share in the blame for the result of the project.

“TDOT hasn’t assumed any ‘maybe we didn’t do right, here’,” she said. “They are putting this all on us, and that is so unfair. We lost 4 other major grants because of TDOT. They were all things that would have brought in more tourists. They were great projects. As a matter of fact, TDOT still owes us $65,000 from an invoice that we paid [and] that they refused to pay. TDEC (Tennessee Department of Environment and Conservation) didn’t pay [and] they owe us like $18,000. We paid out all of this money for the project, and they say we’re not going to pay any more invoices. But I did not take a paycheck for 7 months to keep that office going.”

After TDOT cancelled the contract, the MRCT board of directors voted to dissolve. Threadgill mentioned that the organization held out for as long as possible, but she closed the office in July.

According to Degges, TDOT worked with the Federal Highway Administration and took over the grant in late fall of 2016. Since TDOT engineers deal with the construction of highways and bridges, they procured the services of a consulting firm to provide a set of completion plans to finish the building.

“The way state law works in Tennessee [is] that you have to have an engineer of record for a project,” said Degges. “You can’t take someone else’s design and just use it. So, there’s a little trickiness here in procuring a consultant and to have an original design plan. We did look at the design that was performed by MRCT’s architect and consultant, and one of the things we found was that our architect and engineering team that we hired was telling us that they did not believe the construction that is in place out there today in the partially built building was designed to the proper code, in particular the design of the structural elements to hold the building up. Our consultant did not believe that it was designed to the correct seismic code.”

With further discussion with their designer, Degges mentioned that it would cost more to retrofit the current uncompleted building to the correct seismic code than it would to tear the structure down and start over from scratch with new construction.

“The quandary we are in right now is do we tear it down or look at some of the different options?” asked Degges. “We looked at repurposing the structure from a visitors center into maybe a pavilion or something like that. Again, our architect and engineering team is telling us that it cannot be repurposed to any public type of building.”

Degges added that a final decision has not yet been made on the fate of the building, and the Federal Scenic Byways Program is no longer in existence, meaning no additional funds from the program can be awarded.

“None of the new programs that we [TDOT] have available to us would allow for the construction of a new building,” said Degges. “TDEC really doesn’t have money for a new building, and the State of Tennessee would have to fund it out of the General Fund Budget, which you would have to go through the budget process there. That’s the dilemma we’re in right now.”

While there is additional investigation to do, Degges added that, “We believe we are at the point right now that we are going to have to make the decision to potentially demolish the building. We think that we can salvage some of the material for reuse or for it to be sold. It’s a lot of pressure-treated wood that has value. Then there are steel components in the building as well.”

He added that a decision to tear the building down has yet to be made.

“Everyone needs to call their legislature and say help us,” said Threadgill. “We cannot let that building be sold for scrap. To us, the visitor center is important – we could have marketed it in Memphis. Look at Discovery Park. People go up there all the time now. Some of the exhibits you see at Discovery Park, you could actually go and get on the lake and see what they were actually talking about. It [visitors center] would be an outdoor learning environment. We bought them a new pontoon boat to prepare for visitors coming in. We redid the kitchen at the state park to get ready for the catering that would be needed, and I was starting to raise money for the community center, too [Ellington Hall]. Everybody was so excited for the visitors center and what an insult for TDOT to say they were just going to sell it for scrap.”

Lake County Mayor Denny Johnson added that, “When it became public last Thursday that TDOT was pulling the plug [on the project], I reached out to [State Senator] Ed Jackson, [Representative] Bill Sanderson, [U.S. Senator] Lamar Alexander’s office, and [Congressman] David Kustoff’s office. They are all assuring me that the project isn’t going away. They are going to fight their best to keep it from happening. I’m fighting to keep it and willing to complete the project if they let me be the grant administrator. Lake County can take the lead and finish the project.”

The Office of Inspector General’s review will determine whether criminal or civil violations occurred during the awarding of contracts. They will also determine if the visitor center project would be deemed ineligible for federal funds. If that is the case, TDOT would have to repay the money.

“The way the federal program works is once the Office of Inspector General finishes its investigation, they will make a determination of what is eligible and what is not eligible,” said Degges. “Our expectation is they are probably going to tell us that most, if not all, of the stuff is ineligible for federal aid participation and that the State of Tennessee would have to pay that money back. So then, the State of Tennessee would have to make a decision of do we think it is cost-effective to the state to try to recover the funds. If they didn’t follow the rules, it could make it not eligible for reimbursement. Even if the investigation finds out that nobody did anything wrong, but they procured the contractor in violation of the federal rules, then they are going to ask us to pay the money back.”

Respond to this story

Posting a comment requires free registration: