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Let's Go Shopping!!
By John Rueb
Atlantic
I couldn't help but watch the February 3rd Atlantic City Council Meeting. An issue that is still near and dear to my heart was being discussed; the Boulders Inn project. I tried to keep an open mind as I watched, but once again I drew the same conclusion that I drew several months back; the Boulders Inn project will not fly unless the Atlantic taxpayers give the project $250,000. Yes, give. Boulders will not pay it back directly. It will cost them no more in taxes if they get the $250,000 from the city or if they don't. If they do get it, the City of Atlantic will just skim large amounts of money off each of the checks that Boulders sends in for their tax payment until we finally skim off a total of $250,000. The City of Atlantic will take a loan for the $295,000, give Boulders $250,000 and Boulders will pay nothing back for 2 years because their first tax payment won't be due until September 30, 2012. The City of Atlantic will make bond payments for 2 years before Boulders pays a dime in property taxes. That's why we will borrow an extra $45,000; to use for the first 2 years payments. That's right taxpayers we are going to borrow $295,000 in order to give boulders $250,000. But that's not all. By the time the bonds are completely paid off we will have paid $380,000 in interest and principal in order to give Boulders $250,000.
In reference to Jeff Lundquist and his comment about the Iowa State University Feasibility Study being obsolete; OK, maybe things have changed, but why haven't our city officials seen the new plan? Any other entity being asked to invest money in the project surely has seen a business plan. Any way you slice it and from any side you take, the city will be covering at least $130,000 in interest, which is $105,000 more than any one share holder invested. We as taxpayers deserve an open and honest illustration of how the business will operate and be convinced that we as taxpayers are not at risk.
Did you read between the lines during the February 3rd meeting? It supports what a CADCO board member implied after the Meet the Candidates meeting last October; the bank wants more money invested in the project than was originally planned. The plan as shown in the ISU Feasibility Study was Boulders raising $400,000 in equity through sales of 16 shares at $25,000 per share. As was implied in the Feb. 3 council meeting, the bank changed their mind and wanted more up front investment to reduce their risk. But did the bank change their mind last week? No, it must have happened last fall based on what the CADCO board member stated. So why wasn't somebody open and honest about it last fall? Openness and honesty could have gone a long way toward getting the money when they first asked for it.
Considering the economic times, I can't blame the bank for any changes in requirements they threw at the project. So why doesn't Boulders just sell 10 more shares to raise the additional $250,000 the bank wants? Why not sell some people 2 shares? In the words of the same CADCO board member mentioned above, the investment is 'pretty risky'. Maybe that's why. If it's so risky, then why as taxpayers do we want a part of it? Another angle may be that selling 10 more shares will just dilute the profits of the people who invested in the original 16 shares. No that can't be, this project is being done for economic development, or is it? If I owned one of those 16 shares, the last thing I'd want is to split the profits with 10 more share holders, not if I could get the money for free from the City of Atlantic. Think about it. What is the real motivation here and who is behind it? I'm all for people making money, but I'm not for people using taxpayers money to leverage their investment. How many of you are fed up with the bank and investment company bail outs? Doesn't this smell like the same thing, only at a smaller scale at a local level? Maybe it's OK at the local level if I'm a big dog who's coming out on top with this deal. I've got an idea; let's see the list of the 16 share holders along with the revised business plan. I'll bet each private investor knows who holds the other 15 shares. Why not the public investors? I'm with Kelly Wise, let the banks do the financing.
So here we stand, with Boulders back and asking for the identical thing with a new council. The council was given a document by our new City Administrator Doug Harris that clearly stated and I quote; "In order to move this issue forward either the Council Rules would need to be amended or a new motion that is substantively different than the one that was defeated last October would have to be considered." These "Rules" are contained within Resolution #6-95. First of all, why is the council even entertaining a visit from Boulders knowing that they can't proceed with it anyway? Why waste council time and Boulders' time? Obviously with Boulders asking for the identical thing, the motion would not be "substantively different". I guess this means that the council will be going back and discarding a resolution we've had on the books for the last 15 years and re-writing it. Something like this shouldn't be treated lightly. That resolution was put in place for a reason and having the mayor considering its replacement so they can make a loophole to proceed with a controversial issue like this just smells fishy, and that is being kind.
Let me ask one more question. I must admit that someone asked me this question last fall, so it's not just me wondering; if Atlantic is so willing to give $250,000 to someone for building another hotel in town, then why aren't we shopping around? Who else or what chain or franchise would build a hotel if we gave them $250,000 to do it? Maybe they'd do it for $100,000 or maybe they'd build a hotel with 50 rooms instead of 31, creating an even larger tax base. Do you adopt the first puppy you see in the window or immediately buy the first car you test drive? Why are we so willing to jump off a cliff with the first hotel proposal that comes along? I'm thinking this is where CADCO and their connections to the economic development community comes in. Let's go shopping!!!
In reference to Jeff Lundquist and his comment about the Iowa State University Feasibility Study being obsolete; OK, maybe things have changed, but why haven't our city officials seen the new plan? Any other entity being asked to invest money in the project surely has seen a business plan. Any way you slice it and from any side you take, the city will be covering at least $130,000 in interest, which is $105,000 more than any one share holder invested. We as taxpayers deserve an open and honest illustration of how the business will operate and be convinced that we as taxpayers are not at risk.
Did you read between the lines during the February 3rd meeting? It supports what a CADCO board member implied after the Meet the Candidates meeting last October; the bank wants more money invested in the project than was originally planned. The plan as shown in the ISU Feasibility Study was Boulders raising $400,000 in equity through sales of 16 shares at $25,000 per share. As was implied in the Feb. 3 council meeting, the bank changed their mind and wanted more up front investment to reduce their risk. But did the bank change their mind last week? No, it must have happened last fall based on what the CADCO board member stated. So why wasn't somebody open and honest about it last fall? Openness and honesty could have gone a long way toward getting the money when they first asked for it.
Considering the economic times, I can't blame the bank for any changes in requirements they threw at the project. So why doesn't Boulders just sell 10 more shares to raise the additional $250,000 the bank wants? Why not sell some people 2 shares? In the words of the same CADCO board member mentioned above, the investment is 'pretty risky'. Maybe that's why. If it's so risky, then why as taxpayers do we want a part of it? Another angle may be that selling 10 more shares will just dilute the profits of the people who invested in the original 16 shares. No that can't be, this project is being done for economic development, or is it? If I owned one of those 16 shares, the last thing I'd want is to split the profits with 10 more share holders, not if I could get the money for free from the City of Atlantic. Think about it. What is the real motivation here and who is behind it? I'm all for people making money, but I'm not for people using taxpayers money to leverage their investment. How many of you are fed up with the bank and investment company bail outs? Doesn't this smell like the same thing, only at a smaller scale at a local level? Maybe it's OK at the local level if I'm a big dog who's coming out on top with this deal. I've got an idea; let's see the list of the 16 share holders along with the revised business plan. I'll bet each private investor knows who holds the other 15 shares. Why not the public investors? I'm with Kelly Wise, let the banks do the financing.
So here we stand, with Boulders back and asking for the identical thing with a new council. The council was given a document by our new City Administrator Doug Harris that clearly stated and I quote; "In order to move this issue forward either the Council Rules would need to be amended or a new motion that is substantively different than the one that was defeated last October would have to be considered." These "Rules" are contained within Resolution #6-95. First of all, why is the council even entertaining a visit from Boulders knowing that they can't proceed with it anyway? Why waste council time and Boulders' time? Obviously with Boulders asking for the identical thing, the motion would not be "substantively different". I guess this means that the council will be going back and discarding a resolution we've had on the books for the last 15 years and re-writing it. Something like this shouldn't be treated lightly. That resolution was put in place for a reason and having the mayor considering its replacement so they can make a loophole to proceed with a controversial issue like this just smells fishy, and that is being kind.
Let me ask one more question. I must admit that someone asked me this question last fall, so it's not just me wondering; if Atlantic is so willing to give $250,000 to someone for building another hotel in town, then why aren't we shopping around? Who else or what chain or franchise would build a hotel if we gave them $250,000 to do it? Maybe they'd do it for $100,000 or maybe they'd build a hotel with 50 rooms instead of 31, creating an even larger tax base. Do you adopt the first puppy you see in the window or immediately buy the first car you test drive? Why are we so willing to jump off a cliff with the first hotel proposal that comes along? I'm thinking this is where CADCO and their connections to the economic development community comes in. Let's go shopping!!!
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