I met with Pat Roller (City Controller) and Greg Leatherman (City deputy director of development) today. We spent about an hour and a half discussing the financing package for Harrison Square.
I thanked both of them for their time and I appreciated the opportunity to discuss the financing package for Harrison Square.
The gist of the conversation was "There is NOT an approved hotel proposal nor is there a financing plan." Period! Everything is in flux and NOTHING has been finalized.
The City of Fort Wayne still expects to have the deal approved by City Council and in place by April 1st... Wow, they are in a hurry... This DOES NOT make sense to me and I do not like it.
I went to the meeting with a list of 62 questions that I wanted answered. Since their plans are still in the planning stages they could answer very few of my questions. I did not ask almost 3/4 of the questions because it was obvious they could not answer them since there is not a plan in place... They were able to answer the following questions with some degree of certainty:
1. They used a present value factor of 5% in their calculations.
2. They said that they were able to lower the minimum number of hotel rooms the hotel would need from 300 to 250 because the construction cost of the hotel per room increased from $160,000 per room to $188,000 per room. Greg Leatherman said that construction prices have increased since Hurricane Katrina for various reasons. Since the construction cost of the hotel per room increased they are projecting that the property tax revenues will increase... (This explanation does not make a lot of sense to me, they sent out the proposal in December and changed it within 30 days... Construction prices did not go up almost 12% in those 30 days...)
3. I asked why the $300,000 escrow deposit was waived. Greg Leatherman said it was waived because we are a "second tier" market and because the overall market is "soft."
4. The City of Fort Wayne is paying all demolition costs for the project.
5. The City of Fort Wayne is going to contract operation of the new Parking Garage to a private company! (This is a GOOD thing)
Most importantly Pat Roller told me that she would let me know when the final hotel proposal is completed and when the final financing package is completed and we could meet again and she would answer my specific questions about the project once they had the ability to answer them.
There were a lot of simple questions they could NOT answer:
1. When will the bonds mature?
2. How will the revenues from the stadium be split?
3. How will the parking revenues be split?
4. What are the plans for Memorial stadium?
5. What are the projected operating costs for Memorial stadium?
6. If the Wizards move downtown how will that effect businesses near Memorial Stadium?
7. How many spaces will the Parking garage have? 8. What will the parking deal be with Lincoln?
8. What will the parking deal be with the new hotel?
9. What are the operating costs of the new Parking Garage?
10. What will be the size of the overall bond?
11. What effect will the new hotel have on the operation of other downtown hotels?
12. New hotels are being built on the north side of Fort Wayne, has this been factored in?
13. If the TIF and CReED taxes do not cover the bond payments where will the money come from to make up the difference? (They think from CEDIT.)
I have to say that after talking to them my opinion has not changed. I have the exact same questions that I had before the meeting... They did point out a couple of things about the project financing that I had not considered and that should minimize some of the losses I think will occur; however, there were also expenses that I pointed out to them that they have not accounted for...
There are not enough details to even do a preliminary analysis. In my opinion this project is being rushed through too fast.
From a financial standpoint my largest concern is that this is going to get "rammed down our throats" and we will NOT get a chance to review the project and question it appropriately.
Here is what I think is going to happen:
1. The Hotel Proposal and overall Financing Plan will be finalized on about Friday March 23rd near the end of the day...
2. The proposals will most likely be contained in documents that have a couple hundred pages of details, projections, etc. The proposal and financing will be fairly complicated and all of the details will not be finalized for all aspects of the project.
3. Tuesday March 27th the proposal will be presented to City Council.
I 100% hope that this does NOT happen.
If this does happen I THINK Fort Wayne City Council should decline to vote on the proposal for a LEAST a couple of weeks so that the City Council members and the taxpayers can review the proposal!
What do you think?
P.S. Republican City Councilman Sam Talarico has correctly pointed out their neither he nor I are experts in Governmental financing arrangements. Sam Talarico; how long do you think the City Council and the taxpayers should have to review these complicated proposals after they are finalized?
P.S.S. I think we should have at least two weeks and should really have about four weeks.