Harrison Square Hotel Update

Last week Around Fort Wayne reported that the hotel’s general contractor had been to the building department to discuss the project but had not officially obtained the building permit. A source close to the situation has now informed me that a representative from White Lodging will officially obtain their building permit next week.

Whether or not this means they have obtained a construction loan to break ground is unknown at this time; I suppose they could just be trying to allay public concern over the project’s lack of progress. Another interesting note mentioned by my source is that nobody really knows what’s going on except the city’s project consultant Steve Brody. I was told he’s the only interface between the city and White Lodging.

Clearly Brody’s been telling anyone that would listen that “all is well” but it seems odd that the city would put this kind of responsibility in the hands of one individual no matter how capable he might be. Brody claims that White Lodging is still 100% committed to the project despite the slowing economy and slow condo sales. Right now everybody seems relatively comfortable with his reports but insiders are saying that if progress isn’t made by the first of the year then it will be time to worry…

Commissioner Peters On Proposed County Salary Increase

The story fronted by one local newspaper today caused my blood pressure to increase by about 30 points. The county council is considering raising their own salary, and those of many other elected officials, by a large amount while their constituents are hunkering down hoping they aren’t the next casualty of this global financial crisis:

The County Council will consider the recommended salaries for about 50 positions during a special meeting in early December.
[...]
The bulk of the increases, worth almost $140,000, would go to elected officials, including the commissioners and the County Council, and the chief deputies those officials appoint.

I mean seriously, could there be worse timing for a such a move? They would use our tax dollars to raise their own salaries after they cut staff, said they couldn’t afford to maintain the bridges and squandered tens of millions of dollars on a bridge to nowhere? And all this conveniently 2 weeks after the election? Really?

Instead of going into full meltdown mode I decided to call the county commissioners to try and figure out what was going on. Surely, surely our county government officials are not so insensitive to the plight of our local economy that they would propose raising their own salaries while this region and the rest of the country slips towards a depression.

Commissioner Nelson Peters took the time to meet with me today to explain the situation as well as give me an update about the 911 consolidation and the bridge financing issue. It was a good conversation, and I’ll have a post on 911 consolidation and bridge financing tomorrow, but for now here’s a summary of our conversation regarding the proposed salary increses:

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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.

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.

Credit Default Swaps & The Financial Crisis - A Simple Explanation

I’m sure many of you are wondering just why in the world the government is giving AIG $150 Billion dollars. And you probably keep hearing the term Credit Default Swap and how it is destroying our financial markets but don’t really understand what it is. If that’s true then read on because I’m going to explain CDS’s, why they’re a problem and how it relates to AIG.

Just what exactly is a Credit Default Swap?

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Canyon Cliffs press release

For Immediate Release  11/12/08

Site work on Canyon Cliffs has begun.  Today bulldozers and earth movers from Scheidleman Excavating (5727 County Rd. 11 Garrett, IN 46738  260 637-4545 http://www.scheidleman.com) are expected to break through into the area that lies just north of the great blue heron rookery.  Today’s activity will take place in a location easily viewed from a prominent hill on adjacent property, and some of the remonstrators who spoke at the 5 hours of testimony back in June will be keeping vigil today.

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Three Options To Balance The City Budget

At the last city council budget meeting councilwoman Karen Goldner presented a chart that showed we didn’t need to make significant cuts in the near term if we committed to limiting the growth of our expenditures to between 1%-2%. This alternate approach inspired me to take a look at a few different scenarios for solving our budget problem and I came up with 3 options - all of which I think are achievable and acceptable to the taxpayers.

First, controller Pat Roller’s assumptions are a non-starter. She is assuming 4% growth in expenditures but only 3.2% growth (after 2010) on the revenue side. Obviously that’s unsustainable and no amount manipulation is going to make those numbers work. So the idea that all 3 of my ideas are based upon is that we must limit future expenditures to 3% growth over the long haul. If the revenue base grows (without an income tax!) then fantastic - that will put us in an even stronger position. Here are my options:

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