Monday, July 12, 2010

Standard-Examiner: Room for More Ogden Hotels?

Kudos to the Standard-Examiner for continuing to dig out the facts and focus on the feasibility issues pertinent to this story

By Curmudgeon

Interesting Scott Schwebke story in this morning's Standard-Examiner:
Room for More Ogden Hotels?
Much of interest in it, and well worth a careful reading. But first off, kudos to the SE for ferreting out the name of another of the hotel-building companies interested in building at the Junction that Matthew "Stonewall" Godfrey's administration was refusing to make public as recently as a week ago. Nice work. Now keep digging.

Also kudos to the SE for making central to the story the question of whether investing public money in a new downtown high-end hotel is prudent in the current business climate and when the occupancy rate for Ogden's three existing downtown hotels ran at about 60% last year. The story, let us note, was not reported simply as "two companies vying to build at the Junction," but focused instead on raising doubts about whether any company can build and operate a successful hotel downtown just now or in the foreseeable future. And whether public money should be gambled that one can. With opinion from people in the field on both sides of that question included.

It's a chewy story; read up.

14 comments:

Dan S. said...

Thanks, Curm. Yes, it was a good article.

One minor correction. The article says that Ogden's average hotel occupancy in 2009 was 60%. But that's presumably city-wide. It doesn't give a number for just the downtown hotels.

Dan S. said...

Now: could someone please explain exactly how these tax-exempt bonds are supposed to work?

googlegirl said...

Economic Stimulus through Municipal Bonds – The American Recovery & Reinvestment Act of 2009
Stimulus Bond Program Has Unforeseen Costs

blackrulon said...

Since Schwebke almost always reports what the mayor desires I view the story with great skepticismt. This is merely an example of the mayor preempetively answering concerns with a eventual study favorable to his viewpoint. When was the last time Schwebke or any reporter for the S-E actually reporter facts or viewpoints contrary to the mayors vision.

Curmudgeon said...

Dan:
Thanks for the correction.

Curmudgeon said...

BR:

You ask: When was the last time Schwebke or any reporter for the S-E actually reporter facts or viewpoints contrary to the mayors vision.

Well, let's recall that the SE broke the story of the do-it-yourself trash dump Leshamville had become with both a print editorial and an on line piece with visuals. And the SE did a big story on Mr. Lesham's legal troubles and financial ones as well. There have been other stories I'm sure did not have them popping champagne corks up on the ninth floor of city hall.

And many of the SE stories covering city council/administration clashes include comments from the non-administrative side. I recall particularly the stories regarding Hizzonah's saying he'd ignore the Council's over-ride of his veto regarding the MWC, etc.

The problem is not that SE stories do not frequently include comments from others than Administration spokesmen. The problem is, the stories rarely go beyond that to fact-check the claims of both sides, and so they become simple "he said/she said" journalism.

Today's story was good journalism, I thought. It did what a city daily ought to do. It raised --- as a question to be answered, not one already answered --- a matter the public [and city council] should be aware of as both consider Hizzonah's latest plan to invest public money in private ventures. It brought in commentary from industry people on both sides of the question, and it made it clear the question is a complex one, with several facets [Is another hotel needed? Can one survive here for the foreseeable future? How will it impact Ogden's existing downtown hotels? Can private financing be found to complete it in the current business climate? Should city money be invested in it, in light of how the questions above are answered?] And it revealed information not made public before.

This was neither a booster-ism puff piece ["Companies Battle For Right To Build Junction Hotel!"] nor was it a hit-piece ["Junction Hotel Doomed to Fail, Experts Say!"] It presented a question the public should be aware of, as a question, with several facets, and it included opinion from a variety of sources qualified to speak to those questions. I thought it was good work.

We thump the SE regularly in these parts when we think it has dropped the ball on a story. Seems to me that requires a pat on the back when it does good work. Today, I think it did.

blackrulon said...

Curm-The story of Leesham and his problem properties was an editorial, not a news report. The online story was not viewed by the majority of the S-E subscribers. The S-E is still a print paper and by not runing the story where the majority of subscribers can view it the S-E failed. You failed to answer the question that this is just setting up a false concern that the mayor and his staff have made in order to justify vast expenditures. The S-E seems to have a reporting staff that has no curiosity about the source of stories or concern for the citizens of Ogden. Why do people on this blog raise questions and alarms that the professional staff at the people ignore or overlook?

Alfred E. Lewis said...

Blackrulon: The S-E runs all of its stories in both the print and online editions. With your flawed logic there is no way for the paper to ever satisfy you. You criticze the paper for reporting just what Godfrey says and then it writes a story on hotel feasibility and quotes people who say it may not work. And somehow you believe that's a setup by the mayor so the city can spend more money for something that may or may not work. What kind of screwed up logic is that? Godfrey exercises no control over the S-E or its news policy! I hear the paper has printed plenty of stories that the mayor hasn't wanted made public.

David S. said...

I sent a letter to the city council last week pointing out factual data that the hotel industry is in the tank, as well as pointing out the many times Godfrey's assurances have proven to be false.

This article appears to be an end run around those concerns.

The newspaper is basically quoting hacks that are bought a paid for by our tax dollars, to give a sense of leaning in Godfrey's direction.

The fact is that hotels are going bust nationwide and we are in the teeth of a double dip recession. This is the worst time to be considering more hotel rooms.

Look at the massive amounts of vacant space all over Downtown Godfreyland. It is especially troubling that it is impossible to rent now, when it is still brand new and never rented.

Thank goodness a former city council did not put us on the hook for $400,000 per year payments to add floors to the vacant "Junction Building" that only suceeded in luring one customer - Wells Fargo - across the street.

Will the current city council be as wise? Who knows.

Godfrey has simply found another credit line. He is simply trying to max it out before his election campaign next year.

Carolyn said...

The people of Ogden do not need another hotel; they need infrastructure support. When was the last time this administration took care of the needs of the people of Ogden instead of trying to lure tourists?

oldguy said...

Carolyn....
The last time the mayor and his merry band did anything in the public's best interest was on the last day of never, or was it the day before, I forget. Anyway, his nadaness just isn't the public servant type - never was, never will be.

Curmudgeon said...

If the hotel developers believe the Ogden economy over the next decade is going to be strong enough to make their hotel a success, they should invest in its construction... but without expecting many millions of dollars in a massive public subsidy. If they can finance the thing with their own money and think the risk a prudent one, then more power to them. If they're right, they will reap the benefits. If they're wrong, they will take the loss.


But public money, however dabbed, daubed, powdered and tricked out as "tax increment" financing or some other brand of subsidy should not be part of the project. The assurances we all had from the Administration that putting the full faith and credit of Ogden City behind the Junction's construction bonds would not cost the city a dime, that it was all purely a formality to achieve a lower interest rate, turned out to be in the end very very expensively untrue as the Junction faltered and Ogden began paying principle and interest on those bonds, and still is. And the Administration's judgment regarding the River Project has been a similar "success" --- politely so called.

With a track record of having made sound, prudent and conservative business decisions, the Administration's case for city bonding for the new hotel or its supporting infrastructure might make merit consideration. But the Godfrey administration's track record on such matters has not been good Enough is enough.

Dan S. said...

Thanks for the links, googlegirl. But being the slow guy that I am, I still don't understand exactly how these bonds work. It sounds like the only thing that's special about these particular bonds is that the lenders either get a tax credit, or pay less tax or no tax on the interest. So the direct benefit goes to the lender, not the borrower. Presumably, though, this makes it possible for the lender to offer better terms to the borrower, e.g., a lower interest rate or perhaps less collateral. Whether that actually happens in practice seems to be far from guaranteed.

For the parking garages, the borrower would be Ogden City, and the promise has been that the loan would be repaid using a special assessment on the businesses that benefit from the garages. But we haven't yet seen any financial details, and I'm especially suspicious of the $700,000 that the mayor has requested out of city funds. I also wonder whether the lender would expect some other type of collateral besides the expected special assessment revenue. If the businesses fail, they won't be able to pay the special assessment tax, yet the city will still have to pay off the loan.

The rest of the bonding, though, would apparently be done by the private businesses themselves. Again, I guess the benefit to them would be a lower interest rate or some other more favorable terms. Here I don't understand what the city's role is, other than to bless the transaction or otherwise give permission to the businesses to take advantage of the bonds. Is the city involved in the transaction in any other way? If so, we need to know about it.

Curmudgeon said...

Comment bumped to front page

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