It's Monday, the eve of what is certainly the most crucial city council vote in memory. The city council is poised to vote tomorrow on the latest incarnation of the mayor's rec center plan, a plan which will bind the townsfolks' existing BDO revenue stream for the next 25 years.
Mayor Godfrey has a lot of himself invested in the current plan. It's been on the drawing-board four at least four years. In its original form, of course, it involved the lofty neoCON goal of having the city enter into a "partnership" with the private sector. It had been predicated for the most part, (until last month,) on private financing. Private parties would lease the new facility, and "other people's money" would build out the site. The townsfolk would NOT be placed "on the hook," (except for a little "tax increment money," which is "free," as every grand-scheming urban central planner knows.)
So Scott Brown and the gnomes in the city economic development department located a couple of prospective lessees (Gold's and Fatcats,) and proceeded to peddle the project to lenders and bond underwriters around the country, looking for somebody to take the bait. After a few years of peddling and conniving, though, no lender would get involved. What ought to be obvious to attentive readers is that the private credit market has given Gold's and Fatcats a no confidence vote.
At that point, gentle readers, sensible folk would have seen the writing on the wall. Private lenders have a bias, of course. They're in it for the money. They avoid projects that don't demonstrate "economic viability". They do their own private "feasibility studies;" and they don't invest in projects that are likely doomed to failure.
Failure of course is not an option for the current Gang-of-Six. They're "can-do" folks with zero risk aversion. Why should they be risk-averse? It's not their money they're playing with. Failing to find a private investor who was interested in their obviously doomed private-financing scheme, they did what risk-takers (some would call them gamblers) everywhere do when they're a little short of cash, and their credit ain't so great -- they visited a loan shark.
The net result? The Bank of New York will finance the project; and Norwest Securities will underwrite the bonding. But the taxpayers will now be fully"on the hook" in the event of the lessee's default; the private investors won't bear any real burden. The original plan has changed utterly, in one giant flip-flop. In the event of default of the Health Club lessee co-partnership, Bank of New York will have recourse to 100% of BDO lease revenue for the next 25 years, or until the bond debt is paid off, whichever happens sooner. The formerly private project has now thus become a palpably public one.
This eleventh hour course-change presents another serious problem though, which puts the city council in a genuine ethical predicament. Over the course of the past several years, opponents of the rec center project have incessantly demanded the completion of a "public feasibility study," something that is mandatory for all public projects. In response to these demands, the mayor's office has consistently demurred, arguing that all necessary preliminary studies would be done by the private lenders, and that a public study would be redundant.
The problem for the city council now, is that they're thus forced to consider this project in the complete absence of such a study. The Mayor's sudden flip-flop has created and ethical problem for the council of extreme magnitude. What the council is being asked to do on Tuesday night is to approve a highly burdensome and risky project without even the slightest fundamental information necessary to make such a decision. All they have is the mayor's blue sky promises -- and their own emotion.
"Larry Miller will come," says, Mayor Godfrey. "Boyer will come. Others will come. The rec center will be a "business development magnet for Ogden," so says the mayor.
None of these folks are under written contract, of course. None of them has even provided so much as a letter of intent. Not even Gold's or Fatcats principals have made a written commitment. Gary Nielsen in fact joked with me last week that he could kill the whole project at any time, simply by refusing to sign on the dotted line. That's how truly flaky this project is. "Trust me," says the mayor. The mayor has "the true vision," of course.
I don't know about councilpersons Jorgenson, Burdett, Filiaga, Stephenson and Safsten, but I'd be feeling mighty "put upon," having something like this laid in my lap at the tail-end of a lame-duck council session, if I were sitting on the city council. Sure, these folks have a lot of themselves "invested" in this project, just as does the mayor. I'm sure they're all brimming with emotion over this project, and its truly bizarre timing and fact circumstances.
Nevertheless they should remember that they are fiduciaries, and holders of a public trust. Nobody in their right mind would approve this project in its present posture, given the paucity of objective data that is available. A wrong decision in this matter will have possibly devastating personal-legal consequences; and I hope they will all be thinking about that. Hopefully they'll respond to their rational faculties, rather than their emotional ones, as they arrive at Tuesday's decision.
A couple of other tidbits for this morning's reading:
Kristen Moulton frames Tuesday's issues nicely in this morning's Salt Lake Tribune story.
And I've learned from email scuttlebutt that mayor Godfrey will be staging a "rally" on Tuesday afternoon in the municipal gardens, adjacent to the council chamber. Mayor Godfrey's political base these days, mainly consisting of teen-agers and twenty-somethings who don't vote, it would seem, will be carousing and listening to a live band, in anticipation of Tuesday night's council meeting. Lacking anything concrete on paper, I suppose an emotional rally is all that remains. "Any port in a storm," as the old saying goes.
And what say our gentle readers about all this?
Will the city council honor their fiduciary obligations...or simply roll the dice?
Comments, anyone?
