Sunday, July 04, 2010

7/6/10 Emerald City Council/RDA Work Session: Hotel Development and Additional Parking at the Junction Are On the Agenda

Many question arise, including whether the timing is right for this $30 million mayoral pet project

By: Disgusted

On the RDA agenda for next week is one of the Administrations pet projects:
Ogden City Council/RDA Work Session Agenda July 6, 2010
The administration thinks they have found free money from the Feds under the American Recovery and Reinvestment Act of 2009, $18 million to be exact and they want the State to reallocate an additional $12 million (3 & 9) of similar funds for a hotel development and additional parking at The Junction. Of course all of this would be bond money (most likely acquired from a financial institution) and the resultant debt would either have to be collateralized by either revenues or assets or both. Unless the administration has truly found free money (which I don’t believe is the case) the Fed involvement is only to make the process easier to get the funds, not to pay the debt service on the funds.

Before the RDA board drinks the cool-aid they need to ask a lot more questions and have a much better understanding of the risks before they commit the residents.

The administration as usual has made the process painless for the RDA members and has even prepared a nice little letter for his lap dog board chair to sign in an effort to secure the State portion of the bond funding.

The council staff has even suggested the following questions for the board members to ask;
1. Please give an overview of the project and the need for the bond funding as a financing tool.
2. Please describe the City’s liability on the bonds and the source of repayment.
3. Please explain how the job creation numbers were calculated.
4. What would be the consequences if the Board decided not to support the application?
IMHO there are several other questions that need to be asked so that the city doesn’t end up with another zero net gain to the bottom line and some $30 million more debt that it is collateralized for on its books.

Finally in light of the earlier comment I lodged under a previous article, probably the biggest question would be, is this the right timing for a project like this?

7 comments:

Danny said...

The documentation provided by the Godfrey administration uses the words "bonds" and "funds" interchangeably, indicating they either don't know the difference, or are trying to deceive the city council into believing they are voting for free money when they are actually applying for a right to borrow money.

The lack of competence and/or honesty in the administration's pitch is a red flag.

Council staff's questions are a good starting point.

This is a bad time to vote for bonds to build hotels when the ones we have now are vacant, and when many of Godfrey's other bonds are being paid by public money in contradiction to his assurances that they never would be.

Stephen M. Cook said...

First item on any downtown agenda should be the Ben Lomond Hotel. Period.

Second should be addressing half finished projects.

Everything else is slush money.

Dan S. said...

Am I missing something? I downloaded the linked agenda packet and all I see, regarding the hotel/parking project, is this:

"A REDEVELOPMENT AGENCY WORK SESSION WILL BE HELD IN THE COUNCIL WORK ROOM IMMEDIATELY FOLLOWING THE CITY COUNCIL WORK SESSION. THE PURPOSE OF THE WORK SESSION IS TO DISCUSS AN OGDEN HOTEL AND PARKING PROJECT AND BOARD BUSINESS."

I don't see any details in the packet regarding the source of the funds or the council's questions.

RudiZink said...

Thanks for the heads up, Dan. I've now inserted the correct work session packet link.

Outsider looking in said...

Isn't a bond just an instrument that is used to raise/acquire funds? Thus, the words "bonds" and "funds," although technically different, could be used interchangeably in some context of the dialogue.

Is the CC that stupic, collectively, to not understand what the financial meaning of a bond is and how it's application would be used to pay for the parking is?

If so, we really are in trouble.

RudiZink said...

"Isn't a bond just an instrument that is used to raise/acquire funds? Thus, the words "bonds" and "funds," although technically different, could be used interchangeably in some context of the dialogue."

No. Words and their understood definitions are crucially important. The council packet is unclear about whether the federal and state money that's being requested will be furnished by bonding (incurring debt) or through direct grants. The information in the council packets is fuzzy at best; and even an expert in finance (like your blogmeister) can't be expected to understand the true source of funding, if the important and distinct "terms of art" are used sloppily and interchangably.

Outsider said...

I concur and stand corrected, Rudi. In this context, there is a vast difference between "bonding" and "funding."

Well said--I guess it's the Mayor's old smoke and mirrors game again, eh?

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