Friday, July 20, 2007

Harrison Square Financial Update

Many of the readers of this blog have been following my commentary on the financing underlying Harrison Square.

Late last year the City was saying that the financing for the initial phase would be around 45% public and around 55% privately financed.

By April of 2007 Pat Roller's presentation to the City Council predicted that the financing for the initial phase had shifted to 49% public and 51% privately financed. At this time there was a Memorandum of Understanding in place between the parties that spelled out the general terms of the contract. The City hurried the project through City Council by stating that the agreements would need to be in place by May 31st.

Believe it or not the agreements were not put into place until July 16th!

At Tuesday's City Council meeting Pat Roller gave another presentation updating the Funding amounts. I still have not been able to check her projections; however, I filed another series of Information Requests today and I asked that they be expedited.

Too make a long story short during the "negotiations" the City had to make a long series of conessions that were not outlined in the Memorandum of Understanding. As near as I can tell the Developer has the City over a "barrel" and they just keep asking for more and more.

This is due to the fact that only one Developer is interested in the Project. That Developer now has us over a large "barrel."

Per Pat Roller's presentation the results of the "negotiations" are as follows:
The private funding for the project has DECREASED by 10.4 million dollars
The public funding for the project has INCREASED by .8 million dollars

The net result, according to Pat Rollers' projections are that the project was worsened for Fort Wayne by a net value of 11.2 million dollars.

This is a lot of money and should cause the City to seriously reconsider they support for this project.

Please realize this is according to The City's own projections; I still plan on checking them myself.

For example I doubt if The City included the legal costs of stealing Belmont Beverages with Eminent Domain, I doubt if they include paying for all the consultants who have worked on the project, and I doubt that they include any overhead that has been incurred by the City to date.

I do not know what the exact percentages will be in the end; however, they will most likely be 55% - 58% public funds and 42% - 45% private. The number has grown since the project was initiated. Some City officials are calling this negotiation...

I call it getting "screwed."

Mike Sylvester

1 comment:

Jeff Pruitt said...

Mike,

I don't think it's coincidence that the hotel group missed out on $6 million in state tax credits and now they're asking the city for exaclty $6 million in extra subsidies - $5 million in cash and $1 million for the walkway. When you couple that with the fact that they are investing $12 million less than what the original numbers said - well you do the math.

I might do some checking w/ Marriott corporate because I get the feeling that his might be the largest subsidy in history for a Courtyard by Marriott...