By Wendy
After reading today's Standard Examiner article about the Windsor Hotel renovation, I'm a bit miffed. From the article:
The city council has granted $288,000 to Ogden Properties to help fund the renovations, with $100,000 coming from the city’s sale of foreclosed HUD homes.I agree that the preservation of 25th Street buildings is extremely important, but why is the City forking over so much dough to this one enterprise? What about all of the other business and building owners along 25th Street who can use free money to improve their businesses and buildings? It seems completely unfair to me. If I had a building or business on 25th Street I would be irate! Has anybody from the City explained why this one entity is receiving such a large subsidy and others have not? If the City is granting this much money maybe they should take ownership and do it themselves. I dunno. Does anybody know how much money the private investors are putting towards the project?
In addition, $111,500 will be derived from tax increments generated by the 25th Street redevelopment project area, while $76,500 has been earmarked from the city’s Business Information Center reserve account.
15 comments:
What's truly annoying about this project is the heavy-handed manner in which Ogden City treated the former owner. We discussed the situation in an earlier WCF article: Windsor Hotel Residents Told to Hit the Road, where we find this information within the embedded Std-Ex article:
Ruben Villalobos, the previous owner of the hotel, said the sale closed June 4, but declined to share the purchase price. According to Weber County property records, the hotel and the 0.12 acres it sits on are valued at $286,319.
Villalobos said he wanted to convert the building into an upscale dwelling when he originally bought it in 2004, but it wasn’t feasible at that time because there were many unsold residential units at the Union Square development on the other side of the street.
The Union Square units are all sold now, he said, and property values in the area have gone up. He said he is disappointed he couldn’t fix it himself.
“The city gave me an ultimatum, either sell it or clean it up,” Villalobos said. “I wanted to renovate it myself, but I guess the city wanted to get it done right away.”
He said he was about six months away from securing the necessary funding to clean and fix up the building.
Notably, it's been ten months since Nicol and his Godfrey-picked investment group acquired the property from Villalobos.
"Cronytown USA" is exactly right.
Wendy:
As I recall, the SE ran a story on this at some point that quoted the developers as to the anticipated cost of the renovations. And as I recall, their argument was that without the subsidy from the city, they could not make the numbers work, they could not make sufficient profit on the renovations given the costs, to go ahead with the project.
As for the former owner, to be fair, it should be at least noted that he'd owned the property for some time, he was operating it as a deteriorating low cost apartment complex, that the city had been after him to maintain it or improve it for some time, and that nothing had happened. As for his doing the project himself, we have nothing but his claim that he could have arranged financing if given six months more to do it. No specifics, none of the kind of detail critics of the administration, like myself, would have demanded if a Godfrey Crony had insisted he would certainly be able to fund something if only he was given six months more. That's not much of a hook to hang confidence on, the bald assertion by the former owner that he could probably get the money to renovate in six months.
As for the other questions you raise... about other businesses in the Twenty Fifth Street RDA... well, some of the have received considerable backing from the city, at some cost to the city. The Union Square Condos come to mind. And the city has pitched in some limited amounts to other businesses to expand or renovate. And the city has start-up funds to help new businesses interested in moving to twenty-fifth street. So this is not the only project in that RDA getting some city backing. And whatever has been done has been done with City Council approval.
The broader question is the one you hint at and that Rudi raises directly: should the public be involved at all in backing renovation projects like this. I'm of two minds about that. As a general rule, it's investors who should accept the risk of investing in new businesses and new business construction, and then properly reap the profits if it all succeeds, or take the hit if it doesn't. On the other hand, there are some properties, and larger areas, in cities, that are truly blighted... think "Ft. Apache, the Bronx." Areas that have nearly no hope of renovation without public funding, and that will continue to drag down adjacent areas if they remain blighted. Blight can be a little like desertification: it can spread. In such areas, I think there is an over-riding public interest that justifies public funds being used to encourage renovation and rebuilding.
The problems generally arise when developers and a city's elected officials attempt to expand the definition of "blight" in order to arrange city funding for business ventures by... well, let's just say "close associates" of elected officials... in areas not truly blighted. One mid-west city, for example, had vacant land... wild land, that had never been built on, ever --- declared "blighted" so it could be taken from its owners by eminent domain processes and made available to a mall developer.
Is the Windsor a property that would not have been redeveloped by private investors without the city chipping in? The investors and Hizzonah say "yes," particularly if the city wanted the historic "look and feel" of the Windsor to be preserved, to keep the turn of the century look and feel of twenty fifth street. I recall, I think, the developers saying that if they could bulldoze the Windsor and build a new structure from the ground up, they wouldn't need city backing. But if the city wanted the historic structure preserved [as the city did], that would involve considerable extra cost for the new owner/builders, and so it was proper to ask the city to pitch in some to help with the costs of renovating and saving [as opposed to bulldozing]a historic structure in a historic district. That is not, on its face, an unreasonable argument.
The counter argument is that we've been told about the miracle of twenty fifth street's revival for some time, now. The Mayor crows about it regularly. And there has indeed been significant development, improvement, growth and a general upgrading. Given that, why should it have been necessary for the city to chip in for renovation of a declining historic property in such a "hot" improving and desirable residential area? That is indeed the question. I suspect it was not necessary, but I don't have the numbers I would need to see to make a hard categorical statement about that one way or the other.
The questions you raise are not simple ones, capable of simple answers. It ends up as a judgment call. Did the Council make the right call in the case of the Windsor? I suspect not, but the Council members I presume had access to much more information about probably costs, etc. when they made their call than I did, or do.
I am also troubled by the project on many levels. And Curm, I think it is more than a judgment call. The City should have processes in place to help make these types of decisions that allocate so many City dollars to a particular porky project. And maybe they do have a good process in place for allocating such money, but I am unaware of it.
As for the ecomonics of it as raised, Curm, it is very expensive to demolish/dispose/rebuild anew versus preserving an historic building (plus there are already finanical incentives in place for preservation). It would be interesting to see their studies. I don't think they are so much interested in preserving the old building (nor the City for that matter), that is why they are suggesting roof top additions and other incompatible changes that will alter the historic character of the building. They just want to make money, they are businessmen, and will gladly take any money thrown at them (even if it is public funds).
The City has put a lot resources into 25th Street over the years, and I think it should be an investment that they should continue to make (I am comfortable using public money for such things). But when everything is going as good as they want us to believe they are and so much money is being doled out, it is hard not to be skeptical (at least in this instance).
Unsurp:
You wrote: They just want to make money, they are businessmen, and will gladly take any money thrown at them (even if it is public funds).
Well, of course. Businessmen generally are in it to make money. Nothing wrong with that. If I were in business, and I could get a city to pony up ten percent or twenty percent... or two percent... of my costs on a project, you betcha I'd take the money.
And I don't know, as I said, the economics of the project, other than vague claims reported in the paper by various interested parties on one side or the other. Just noting that a person who wanted to turn an old rundown transient apartment building into profitable mid=scale condo units instead, and whose costs would be significantly increased if he had to do it while preserving the visible look and feel of the older structure, and who wanted city help to offset those increased costs, would not necessarily be making an unreasonable argument. Whether that was in fact the case here, I don't know. Haven't seen the numbers.
I do know, having been involved with people over the years doing historic preservation/renovation that such properties, on a purely economic basis, are somtetimes more valuable as knock-downs than as potentially renovatable buildings because the cost of historic renovation/preservation can be very high. At the Windsor, though, the preservation element involved, as I recall, only the street facing facade. That's usually a much less expensive proposition. Which is part of why I suspect the subsidy was not necessary in this case.
As with most things, the devil is in the details, and the analysis [and conclusions] vary from building to building, and from year to year.
The convoluted way in which this project was financed raises red flags for me.
Curm, you were around when the Shell Game used to be popular on the streets of Manhattan. Any time I see someone moving cups around on a card table, I'm thinking "con game".
Why the Godfrey Administration can't make these deals transparently is beyond me -- unless, as I've said previously, the whole thing is just a Ponzi Scheme backed by taxpayer dollars.
Maybe if the city used its money on a new streetcar system, which could stop near the Windsor Hotel, we wouldn't have to give them money to build an automated parking garage behind the hotel.
Maybe if Matty attended to government's role (infrastructure) it would create the conditions that would allow individual businesses to stand on their own without government grants.
Maybe if pigs could sprout wings, Godfrey and his cronies could fly.....
people still don't get it. Godfrey is an old-fashioned corporate shill, who makes his redevelopment moves, depending on who donated money to his last campaign.
I read last week in the SE that Kier Corporation got the contract for the final buildout at the Junction.
Don't you get it?
Kier was one of Godfrey's major campaign contributors in the last election.
Did Keir corporation get the contract through open bidding?
No. It was Keir's turn to reap the profits!
HAHAHAH!
What a laugh.
I hear that the reason the new Wal-Mart is on hold in Ogden, is because of one hold out to sell to the accused tax evader Gadi Lesham.
It's not a soil problem, its aomeone wanting a few more bucks for his property.
Fly:
Hard to know how seriously to take such rumors, unless/until someone is willing to go on the record, or some documents emerge to corroborate them. And recall, there were soil problems discovered, latish, at the mall redevelopment site, and work was held up while they were dealt with. [Underground contamination from gas storage tanks that had not been known of before hand, I think it was.] Since the Wal-Mart site involves land that had been an auto-wrecking yard, similar contamination [gas, oil] is not implausible.
The rumor you report could be right on the money, or not. No real way to tell without some corroborating evidence. But folks can start asking around now and see what [if anything] turns up.
Curm, it's not a rumor. You'll have to trust me on this one.
Thanks for the tip, fly.
Where can we get more information?
And welcome back.
Ify:
Rumor reported by unnamed posters [myself included] pretty much have to be taken with a grain of salt, a large one, until some corroboration emerges. The blogosphere plays a useful role in providing visibility for rumors such as the one you posted, so that people can begin nosing around for corroboration. But until that turns up, they're still just rumors. And, sadly, lots of what people have posted as "information not rumor" has turned out in the end to be not so. So caution still needs to be the watchword until some supporting evidence turns up. Don't mean to single you out in any way on this. Rumors posted as "I've heard that" that I've posted here in the past should be treated exactly the same way: as nothing but rumor until supporting evidence turns up.
Been trying to think what Godfrey/Ghadi would gain by trying to keep quiet the reason for the hold up, by claiming it's contaminated soil rather than a reluctant seller that is the problem. Don't see much for them to gain, and something to lose if the Godfrey administration or its crony is nabbed in yet another attempt to deceive the public. Only thing I can think of is this: if there is a hold-out seller who will not come around, they'd be forced to go after his property by eminent domain proceedings, and that would stir up a hornets next. But if they have to go that route, it would all become immediately public anyway, so I don't quite understand what they have to gain by floating a cover story. But then, I know, really, zip about commercial real estate development, so there could be a reason I just don't see.
How is Gadi on his corruption charge in California? Will it be as drawn out as the VesCor scam?
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