The city also agreed to share in revenues and losses with the hotel.
I know this got slipped into the story as almost an afterthought but THIS IS A BIG DEAL. To my knowledge this has never been publicly discussed and certainly wasn't part of the memorandum of understanding. Early on, Mark Becker discussed the idea of the hotel sharing profit above certain benchmarks and this was put into the MOA:
11. The Commission and Development Team agree to negotiate, in a final Development Agreement, a provision to give the Commission and/or GWC an economic interest in the Hotel in the event, after the first full five calendar years of the Hotel's operation, the Hotel is then achieving and expected to continue achieving certain minimum threshold investor returns.
I remember discussing this with Mike Sylvester and we both agreed that this was cleverly worded to provide a way for the hotel to mitigate any possible future losses. It was simply not plausible that the hotel would give away profit without the possibility of the city taking on losses. If Lanka's reporting is accurate then the city needs to explain why this was left out of the MOA. I would not be surprised to find out that they deliberately left it out as it certainly would've been a contentious issue.
The next disturbing part of the story covers the idea of a city-subsidized walkway:
The hotel agreement is contingent upon the city constructing an enclosed walkway from the hotel to Grand Wayne Center at the city’s cost. Becker said such a bridge would cost less than $1 million. The skywalk had not been discussed publicly before, and Becker confirmed it will be an additional public subsidy for the project.
This was not in the memorandum of understanding. We're already building them a parking garage, giving them all the land for the project, and giving them $2.5 Million in cash - with another possible cash subsidy 10 years down the road. Why should we kick in an extra $1 Million for the walkway? It certainly can't be argued that the walkway is critical to the business operations of the hotel. Hell, why not subsidize the whole damn thing for them? Is there anything the city and the redevelopment commission would say no to at this point?
Let's not forget that the projected hotel occupancy rates border on President Bush-like delusion. Who in their right mind would use the most optimistic numbers possible when deciding to invest in a project? These occupancy numbers are a perfect example of the city's wanton disregard for our tax dollars...
6 comments:
I remember the sweet days of old, when Greg Leatherman declared "there's $48 million dollars of pur private investment here (in the White Lodging proposal)." Now the paper reports the hotel cost will be $35 million, without indicating whether that's inclusive or exclusive of City subsidy.
I'm still praying that one day I will wake up to a banner newspaper headline announcing that the whole Harrison Square deal was a big spoof, sponsored by USA Today to see if we really are the dumbest city in America. The good news: we're not really going to squander millions of dollars. The bad news: our willingness to do so clinched the title.
6 of the dumbest city council members in America. This is horsesh*t. We're subsidizing a private business and protecting them from losses all the while our personal property taxes and going through the roof. The city council members that voted for this DO NOT care about the citizenry of Fort Wayne. A sky bridge? Another $1 million dollars? How about $2 million, what the hell let’s put a moving sidewalk in it and go for $5 million.
So what does Tom Henry say about this boondoggle?
Mike Sylvester
I'm not sure but I think he's a supporter...
Here, I'm going to make a campaign promise. I promise not to call any of the incumbents flip-floppers if they change their minds and vote against this project now that all the details are on the table. It is perfectly rational to change one's position when more details are on the table.
However, I think many of the council members figure that since the city has already spend so much money that they might as well see it all the way through. But they are sending good money after bad.
You're absolutely right Robert. It's perfectly fine to let the city work out the details but the details are now totally unacceptable...
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