Response from Prosecuting Attorney Richards

UPDATE - Jeff Pruitt: Link should be working now. Kalb also posted the text in the comments

Received in todays mail - from Karen E. Richards -

City Budget Passes With $2.5 Million in Cuts

Councilwoman Liz Brown’s cuts were grouped and voted on by department. Community Development was the only department to receive any cuts and those cuts totaled $115k. Interestingly enough one of the items cut was the mileage reimbursement for employees that have to drive out into the community as part of their daily work. I guess they won’t be getting reimbursed next year.

Also of note the previously cut Public Information Officer position was reinstated by a 6-3 vote with councilmembers Harper, Smith and Didier Brown voting against it.

Taking the previous $2.43 million in cuts, adding the $115k from community development and subtracting $54k for the PIO position brought the total budget cuts to $2.5 million. Overall the budget passed by a 7-2 vote with councilmembers Brown and Harper voting against it.

News Sentinel Corroborates Hotel Financing Troubles

Read Kevin Leininger’s column in today’s News-Sentinel. He actually spoke with the same White Lodging spokesman that Fort Wayne News did and he corroborates the FWN report.

Deno Yiankes, president and CEO for investments for White Lodging, blamed “unparalleled market conditions” for the lack of financing, but said the company is negotiating with a potential lender and could have an agreement within two weeks.

“There’s a chance (groundbreaking) will come in the first quarter (of 2009), but we’d still be OK. We’re pretty optimistic. The demand for hotel rooms in Fort Wayne year-to-date is still OK, but that may soften.”

I’m not sure where Leatherman got his data about them meeting with numerous banks but it sounds like that information is factually incorrect. I think everyone would like to know what the hell is actually going on and the city putting their PR spin on everything isn’t helping matters.

And it isn’t just crazy bloggers that are worried. The Grand Wayne Center’s general manager is worried about where this might be heading:

“First they were going to break ground (on the hotel) in October. Then it was November. Nobody has said anything to us. The longer we don’t see something happening, the more apprehensive I get,” said Grand Wayne General Manager Bob Lister. “We have another five conventions pending, but they won’t commit until they know the hotel will be ready. With today’s economy, that worries me.”

The city council needs to take an active role in getting to the bottom of what’s going on with the hotel. If there are scheduling problems ahead then everyone should admit it now and plan accordingly. Ignoring the problem won’t make it go away…

H/T: Penny Wise

Hotel Comments Don’t Add Up

I think most readers probably understand that the downtown Courtyard by Marriott is the linchpin to the entire Harrison Square project. So it should be of some concern to everyone that statements coming from the hotel developer (via Fort Wayne News) and the Redevelopment Commission don’t mesh.

Here’s Greg Leatherman speaking on behalf of the city:

He said the developer has already acquired long-term financing for the project but is still searching for short-term construction financing. He said the developer intends to meet with several banks about the project this week.

But that’s contradicted by White Lodging:

I asked about financing and Yiankes stated equity financing was in place, but the current financial environment was preventing them from obtaining a construction loan. He blamed it on the fact that most lenders are in a holding pattern until some of the new federal bailout programs are finalized.

He stated they only had one interested lender, and they were planning on taking the application to the loan committee in about two weeks.

So which is it? The city claims they are meeting with several banks but the White Lodging spokesman says they only have one option. This kind of discrepancy is exactly why council needs to bring White Lodging to the table - something council President Tom Didier told me he is working on for a December meeting.

There was another discrepancy between the city and White Lodging. Here’s Leatherman speaking for the city again:

The city’s contract with the developers requires it to be open for business by April 2010.

That end date means construction has to begin by the end of this year, Leatherman said.

The commission earlier this year approved moving the required construction start date from Nov. 1 to Dec. 31.

“They are still optimistic about having it going by that date,” Leatherman said. “Obviously, we’d want them to get started right now.”

And here’s what White Lodging says:

He said they have high hopes they would succeed with this lender within 30 days, and construction could start within 30 days of closing on the loan. If they failed with this institution he said it would most likely be spring before they could get a loan, and construction would start soon after.

Bailing out the Big Three US automakers

Much has been written about bailing out the Big Three US automakers: GM, Ford, and Chrysler.

As I am sure you have guessed; I oppose bailing them out.  Bailing them out makes no sense to me because their business model is not economically viable for several reasons:

Read more

City Attorney Absurdity

Fort Wayne city attorney Carol Taylor has said the mayor could use his line item veto power to restore the previously cut PIO position:

Purcell said the administration will ask for her position to be reinstated.

While Purcell has said he hopes the position can be returned amicably, City Attorney Carol Taylor recently told the council that Henry has line-item veto authority on the budget. Purcell said the city would prefer not to use the “unattractive option” of a line-item veto, but he didn’t rule it out.

I sincerely hope the city attorney was not suggesting that the mayor can veto something in order to increase a line item in the budget. The mayor might be able to strike the city council assistant position or some other act of retribution but the idea that he can veto a line that doesn’t exist is ridiculous. Councilman Mitch Harper had a response to this idea that was 100% welcome and deserved:

Councilman Mitch Harper, R-4th, said Taylor’s reading of the law is wrong. He said a mayor can’t veto a council cut to put more money in the budget. Harper, an attorney, said a mayor can only eliminate something from the budget.

“It’s ridiculous, it’s absurd,” Harper said of the notion that a mayor could veto a cut. “Any attorney who asserts that is not a very good attorney.”

I’m not sure exactly what the deputy mayor was suggesting since his quote was somewhat ambiguous, but here’s the thing, as any 2nd year political science student would know, you can’t veto something into a bill. The city budget ordinance is blank slate and as appropriations are added the mayor is probably within his right to remove them. That’s the definition of line-item veto - you get rid of that line item.

But the mayor cannot veto a line item in order to add appropriations. The fact that we have a city attorney that would even suggest such a notion (if that’s what the deputy mayor was saying) is quite scary. Taylor would be asserting powers to the mayor of Fort Wayne that Bush and Cheney could only dream of.

The mayor will be presented with a budget and if he wants to eliminate certain line items then he should go for it but he cannot assert some sort of kingly right to insert money into the budget without council approval…

High Performance Government Network Contract Could Be On the Chopping Block

I spoke with Council President Tom Didier this morning about the State Board of Accounts audit of the High Performance Government Network contract. Readers will remember that this is the 3-year $95k/year 11th hour contract that former mayor Graham Richard gave to a startup company made up solely of his former direct reports.

The SBOA said the contract should have come before city council for approval and recommended that council approve the contract before any more disbursements to HPGN are made. That audit is dated 9/29/2008 and the city has confirmed that they have been making $7916.67 monthly installments towards this year’s $95k contract - even after the SBOA recommended they stop until receiving council approval.

I specifically asked Didier if he was going to try and bring this before council:

If the State Board of Accounts says it needs to come before council for approval then it should be brought before council. And I’m not sure if it would pass or not at this point.

Didier did say he was going to look into this further and possibly meet with the city controller about it…

Liz Brown Offers Up $7.8 Million in Budget Cuts

A few weeks ago the city council delayed passing the city budget in order to give councilwoman Liz Brown (and anyone else for that matter) time to come up with additional cuts. The final round of cuts were due last Friday and they will be discussed at this Tuesday’s budget meeting (likely the council’s final budget meeting).

It looks as if Brown took full advantage of the extra time. Her proposed cuts total $7.8 Million although $2.2 million of that are health care benefits for some current retirees that I believe the city is obligated to pay. You can download her full list of cuts here but some of the larger ones are:

Brown is also looking to reduce a variety of smaller line items from all the remaining departments that weren’t previously looked at by city council. These smaller items include travel, seminars, office equipment, subscriptions, etc. I took a quick glance at these and it looks like there is probably about $400k worth of cuts here that are similar to previous uncontroversial cuts made in other departments.

Tuesday’s council meeting should be quite interesting and don’t forget that there will be a new legal public hearing before the budget session begins where you can make your voice heard. Update 11-17-2008 - A local paper reports that there will not be a new legal public hearing as the city clerk asked the state if it was necessary and the state responded that it was not.

Is White Lodging backing Out of the Harrison Square Hotel?

See post and todays update at Fort Wayne News.

An addition from Jeff Pruitt:

Everyone should go read the post at Fort Wayne News as it includes an interesting response from White Lodging. The good news is they maintain that they are moving forward with the project. The bad news is that they admit they are having financing trouble and may not get their financing until Spring (which sounded like a new arbitrary date to me).

There were a number of comments on the original FWN post that sounded as if they wanted to expedite the demise of this hotel project. I cannot reiterate enough how bad that would actually be. The hotel is the linchpin for the entire Harrison Square project - if it fails then everything crumbles with it. And that means the taxpayers will be stuck paying off the bonds that our local government guaranteed with property tax dollars.

SEC Chairman’s Understatement Of The Day

From SEC chairman Christopher Cox:

“The virtually-unregulated over-the-counter market in credit default swaps has played a significant role in the credit crisis, including the now $167 billion taxpayer rescue of AIG,” Cox said in a statement. “Bringing transparency to this market is vitally important.”

You don’t say? You mean allowing people to insure bonds they had no possibility of paying claims on was a bad idea? You mean allowing them to run off with the profits while the taxpayers bail them out wasn’t fair?

Awful jackass…

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