Renaissance Square - At Least Pay Cash
Posted by Jeff Pruitt - 8/25/09 @ 12:01 am - Filed Under City Council, Featured
I’ve made the argument against Renaissance Square numerous times over the past few months. Just to rehash:
- The purchase price is way too high
- Not a wise use of economic development dollars
- Provides too much room for government to grow
- Removes building from the property tax rolls
- Eliminates a potential private sector investment from downtown
- The building would be an extremely lame city hall (this was recently brought to my attention and I agreed)
Now having said that, I think we should still consider how we can maximize taxpayer investment if the city were to buy the property. For me, this is quite simple - stop paying massive amounts of interest and fees by bonding every project. For example, the acquisition and renovation costs for Renaissance Square are estimated to be $14.5 million but the total debt service would be $26 million. That means taxpayers will be forking over an extra $11.5 million and getting nothing in return.
One might argue that this is akin to a mortgage and thus a reasonable approach to take when purchasing a large capital asset like a building. However, most people take out a mortgage because they do not have the cash on hand to buy their home outright - the city does. They are sitting on approximately $50 million in cash reserves and only require roughly $9 million for a solid bond rating.
So the question becomes how much reserve is enough? Keep in mind that reserves are an extraction of private sector wealth that would otherwise be available for investment in our economy. The city controller wants to maximize the cash reserves as that makes her job easier - I can’t blame her for that - but as citizens we must ask why we can’t buy this building outright and save $11.5 million in interest? Do you really believe the city has plans for that money that would provide more than $11.5 million in direct taxpayer savings?
If the city wants to maintain the long-term reserve level they have now then let’s borrow the money from ourselves. We can pay ourselves back over the next 10-20 years instead of paying interest to somebody else. This would be similar to borrowing from your own 401(k) in order to make a down payment on a house.
Think of it like this, if you believe the administration’s line that the building will generate operational savings of $9.3 million over 20 years then the real cost to the taxpayer becomes $5.2 million or $260k/year. That number looks a hell of a lot better than the alternative of $835k/year doesn’t it?
Comments
6 Responses to “Renaissance Square - At Least Pay Cash”
Leave a Reply
A “public hearing” followed immediately by a vote isn’t even a pretense for open government. In this case it’s not even required by law. The last one I went to, on the FWCS bond issue which was required by law, was such a farce I walked out after 30 minutes. At least the voters had a recourse after that one. On his one we don’t.
The actions coming out of this city adminstration like the casino lobbyists, Calhoun Street, public sector salaries and employment, and now the need for more space to grow go against common sense. One can only conclude there’s another back room agenda that the public’s not privy to, leaving an unsavory taste in our mouths.
Jeff,
I agree with all of your points except that it would be a “lame” City Hall.”
I of course oppose this expansion of Government and needless spending; however, I 100% agree with your point that it would make a lot more sense to pay for it with cash.
Government needs to stop borrowing money!
Mike
Mike, I should have clarified that the “lameness” I was describing is from an architectural viewpoint.
Is anyone planning to go and /or speak tonight? I have emailed my objections to all Council members(not that I think they will pay attention but maybe it will p…Tim and Marty off if they get lots of citizen input).I make many of the same points as Jeff.
More of the same
Lockwood, I’ll be there