Hotel Building Permit But No Groundbreaking Scheduled
White Lodging has officially obtained a building permit for their downtown Courtyard by Marriott. This is good news but it should still be met with cautious optimism. Obtaining a building permit does not mean they have the financing in place to start construction. In fact I think it’s quite clear they do not or else the city would be shouting that news from the mountaintop.
It could be that White Lodging reasonably believes they will be begin construction in the next 90 days or perhaps it’s a head fake to buy themselves more time. Am I the only one that gets the feeling that this project is proceeding exactly like the condos? A constantly moving deadline and no real progress. The groundbreaking date has been moved on more than one occasion for the hotel and now it’s pushing into 2009.
I cannot imagine anyone financing another downtown Fort Wayne hotel in this economic climate but I suppose there’s a sucker born every minute. Of course since the city guaranteed their losses up to $250k/year maybe we’re the suckers…
Spiece In Danger Of Closing - Is City Government To Blame?
It seems the city council thinks tax abatements are great economic development tools and the idea that they may actually be harmful is considered crazy talk - maybe this will get them to see the other side. Anne Davis, executive director of Spiece Fitness, has released a document detailing the value Spiece brings to this community and why it might be lost. Mike Harvey, who alerted me to this information, has a good post over at Fairplay Volleyball that is definitely worth reading.
It turns out that the Gym Rats organization, which brings all the basketball tournaments to town, is considering other locations when their lease expires in 2010:
Over half a million people come to the Gym Rats camps and tournaments in Fort Wayne annually. Third party economic studies have reported Gym Rats, Inc to bring in over $10 million per year to Fort Wayne.
The FWCVB has been a supportive ally to Gym Rats, but no other support has been give to Gym Rats by the City of Fort Wayne. The only requests made were sidewalks and interstate signage to better accommodate the out of town traffic.
Gym Rats’ lease is up in 2010. The owner, Todd Hensley, has opportunities with various partners to move their business to Indianapolis, and is considering these options. Such consideration poses a legitimate threat to the $10 million per year brought to our city.
So the city gives abatements to Spiece’s new competitors like the ice rink and the 24/7 fitness center at Harrison Square but can’t put in a few sidewalks and interstate signs for a company generating millions in revenue for the city?
This is what happens when the government distorts the market by giving abatements instead of lowering tax rates across the board to encourage investment. If the Gym Rats pick up and move to Indianapolis then we will lose a tremendous amount of revenue and Spiece will inevitably close down in the process.
At this point it’s not clear to me why the Gym Rats are considering changing venues or what can be done to make sure they stay here but somebody in local government should be finding out…
H/T: Mike Harvey
Auto Czar?
It’s being reported that a deal is imminent on the auto bailout and that an “auto czar” will oversee the bailout. But why in the world do we need an auto czar? We’re going to buy the companies. As of today GM has a market cap of $2.81 billion and Ford’s is $7.76 billion. Chrysler is private but I’m sure its value is in that ballpark.
That means for the $14 billion in loans we’re giving the auto industry we could own 100% of the big three. We wouldn’t need a stupid czar because we could name whoever we wanted to the board of directors.
I just don’t get this madness. We’ve already bought Citibank and AIG 10x over yet we only get 7% return on Citibank - it should be a 100%! Meanwhile AIG executives keep paying themselves millions in bonuses with our money.
I keep hearing people say “we don’t want the government owning this or that business” but what’s the difference? Those businesses only exist because our tax dollars bailed them out - we should get to run them however we want. I’m not saying the government shouldn’t sell in the future but they damn sure should be making all the decisions right now…
AIG Idiots
Remember my post attempting to explain that the financial crisis (and thus the bailouts) were due to credit default swaps which were essentially worthless investments based on no collateral? More evidence from the WSJ via Calculated Risk:
American International Group Inc. owes Wall Street’s biggest firms about $10 billion for speculative trades that have soured … The $10 billion in other IOUs stems from market wagers that weren’t contracts to protect physical securities held by banks or other investors against default. Rather, they are from AIG’s exposures to speculative investments unrelated to insurance, which were essentially bets on the performance of bundles of derivatives linked to subprime mortgages, commercial real-estate bonds and corporate bonds.
But hey Souder says they’re worth 95 cents on the dollar right? But just in case you really wanted your blood to boil, us taxpayers are now giving massive bonuses to the boneheads that got us into this mess:
American International Group Inc., the insurer whose bonuses and perks are under fire from U.S. lawmakers, offered cash awards to another 38 executives in a retention program with payments of as much as $4 million.
AIG needs to disappear and take its brilliant executives with it. Of course one would think that since they only exist because the US taxpayer allows them to exist that we could simply give Uncle Sam a seat at the board and fire everyone of these idiots. Silly me, I thought when someone bought something they actually owned it…
Hotel Bust
Still waiting for the construction to start on the downtown Courtyard by Marriott? Don’t hold your breath; Calculated Risk links to two separate reports quantifying the pending collapse of the lodging market:
U.S. hotels have entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry according to a new report issued today by PKF Hospitality Research (PKF-HR). The 7.8 percent drop in RevPAR that the hospitality research firm is now forecasting for 2009 will be the fifth largest annual decline in this important measure since 1930.
[...]
According to the PwC forecast, 2008 RevPAR will decrease by 0.8 percent, primarily due to a 3.7 percent decrease in occupancy, the highest annual decrease in occupancy since 2001. In 2009, demand is forecast to decrease by 2.0 percent, which, when coupled with a 1.6 percent increase in supply, is expected to further reduce occupancy to 58.6 percent, the lowest since 1971.
[...]
“The deteriorating outlook for the economy is impacting travel habits and spending, and hotels are expected to experience reduced occupancy levels, and to a lesser degree, some room rate erosion through 2009,” said Scott Berman, principal and U.S. Leader of PricewaterhouseCoopers’ Hospitality and Leisure practice.
Translation: Occupancy rates are going to fall off a cliff and investment in new lodging will do the same. The only question is whether or not our downtown project will survive…
Privatization Disaster Averted
Imagine how bad it would be had the “Privatize Social Security” crowd won. We’d be bailing out a massive crowd of soon-to-be retirees - I can’t imagine what that would cost…
More City Debt
The city council recently gave its approval for the administration to issue a $30 million CEDIT bond:
The Fort Wayne City Council agreed Tuesday to borrow $30 million to pay for road and street projects during the next few years – if the economy cooperates.
The city will use county economic development income tax revenue to repay the 25-year bond issue. About $2 million will cover insurance costs.
The above story doesn’t mention the $22 million in interest we’ll be paying. For those of you scoring at home that means we’ll be paying $52 million for $28 million worth of projects. Councilmen Harper and Shoaff voted against the bond with Shoaff suggesting we should start paying for these projects as we go.
But hey the credit might be available so why not pile up more debt right?
Downtown Fire
A massive amount of smoke is coming from an area just northwest of Downtown. This photo was shot from the corner of Berry & Harrison looking Northwest…
I really dislike corrupt politicians
I really dislike it when politicians abuse their power. I dislike there politicians whether they are Democrats or Republicans.
Any reasonable person realizes that there is corruption in both the Republican and Democratic parties. In fact, any reasonable person realizes that there tends to be more corruption among the party in power because the party in power has access to more power which breeds more corruption.
In the last few months there have been some heartening signs that corruption is being investigated and that the voters are voting corrupt politicians out of office.
Parking in downtown Fort Wayne
I was visiting one of my clients in downtown Fort Wayne last week. I parked on the street and the meter would only let me pay for two hours of parking at once. So I paid for 2 hours of parking (50 cents).
Our meeting lasted a little over three hours. I am not used to using parking meters and so I did not think to go and put more change in the parking meter. I should have went out and put about another 35 cents in that parking meter once I had been there for two hours. I forgot.
So when I came down I had a parking ticket.
I sent them a check for $5 to pay the fine the next day.
I am not sure why the City issues parking tickets for $5? It seems awfully cheap to me. It certainly is not enough to deter people from “risking getting a ticket.”
Mike Sylvester
