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For Immediate Release from Stephanie Brinkerhoff Riley
September 18, 2013
I will be the fifth “no” vote on the current proposal for the downtown hotel. Since August 5, 2013, I have tried to keep an open mind and wait for all of the information before making a decision. I have read every report compiled, and I have met with everyone who has asked to meet or offered to meet. I list the following points in determining my vote and will follow up with a more in depth statement this weekend:
* The proposed hotel will not “save” the Centre. The Centre doesn’t require saving. There is no operating deficiency at the Centre. The County receives approximately $800,000 per year for operating costs at the Centre from the Inn Keeper’s Tax. The money cannot be used for another purpose.
* The City of Evansville lacks a long-term plan of economic development. For me, I need to know what happens next. The potential for the IU Medical School is a perfect example of why we not only need a plan but an established fund/bonding capacity for unexpected opportunities. I believe we should develop a plan for long-term growth that includes a focus on education and health care. We need this medical school a lot more than we need a convention hotel. I want to make sure we get our priorities straight. I am not comfortable bonding this amount of money without an idea of what happens next or the potential cost to get the medical school.
* The money that would be pledged to pay the 25 yearly $2.6 million bond payments is not “dollars that can only be used for economic development.” They are property taxes that are currently captured by a TIF (Tax Increment Financing) zone. That money can be set free to rejoin the general fund whenever we have the will. Our total average annual budget for paving, sidewalks and demolition of dilapidated structures is about $2.5 million. Imagine the possibilities if that budget doubled for the next 25 years.
* The construction of the hotel will not create 800+ jobs. 800+ people will be associated with the project in some way and receive some amount of compensation. That is not 800+ jobs. Less than 200 people will be employed on the job site for any real amount of time.
* A successful convention hotel (60% average occupancy rate according to Hunden) will not employ 250+ full-time people. The hotel itself will employ between 100 and 300 part-time and full-time people, with the majority being part-time and low-wage. It is estimated that a successful convention hotel would create approximately 71 full-time equivalent jobs county-wide by the stabilization of the hotel in 2018. 71. To all of the people who have written and spoke about the amazing job creation that is coming- it’s 71. And that’s according to the Administration’s expert, Hunden.
* Economic activity is not the same as economic development. Economic development is the creation of permanent, full-time, living wage jobs through a process that builds on itself to spur additional jobs- e.g. a medical school. It requires a plan and a lot of work. Economic activity is what we do to keep the economy going when we don’t have real options for development. When cities can’t attract or create quality employers, they build arenas and convention hotels, and start to focus on people who don’t live here. It’s not the same. It’s rearranging chairs on a ship that’s going down. It’s like holding up your right hand to block the view of the north side of the expressway as you travel from the east to go down for an evening at the arena.
* The subsidy is too high. The Hunden Report does not require a full-service hotel. We’ve been told over and over to look at Fort Wayne. They built a limited service plus/full service lite hotel. So did Owensboro. We don’t need a truly full service hotel to attract conventions. We need a truly full service hotel to attract the business and leisure travelers who will make up 70% of the hotel’s business. At the point that we are focused on taking business from the existing market, we don’t need to be offering a subsidy for it. The developer should pay for the quality upgrade. The city doesn’t need it for conventions. I understand that the cost of full service adds approximately $7 million to the price of construction.
* Since the Mayor claims that the hotel will employ 250 people, and the developer claims that the apartments will need 144 parking spots, the city should not be paying to build a parking garage that will be used so heavily by the developer’s employees and tenants. The parking garage is a giveaway to the developer and should be calculated as part of the subsidy. It takes the subsidy to almost $26 million and put us at over 50% for the cost of the hotel/garage.
* Owensboro and Ft. Wayne got it right when they gave a relatively small subsidy up front and guaranteed an average occupancy rate. We are giving our money all up front. We are literally bidding against ourselves. I was accused of not being positive enough. How about we have faith in this hotel? If it achieved an average occupancy rate of 60%, we wouldn’t owe the developer anything.
* This convention hotel as proposed could do everything the Administration says it will, and it could still go bankrupt. There’s a sustainability issue as to size and quality, and we aren’t addressing it with anything more than an adamant, “we’ll sue if they don’t keep it looking nice.” As an attorney, I’m not really comfortable with that being the only option. We could very well have to put money into this hotel down the road to maintain the Doubletree flag.
* Without a clear plan of economic development, we cannot afford this project in light of the city’s other needs. The EPA mandated projects, the zoo’s desire to bond $25 million, the inability of the Parks Department to meet its needs without an annual $600,000 in County Option Income Taxes, the Administration’s desire to put $1.5 million in a new park, the $3 million requested by the Department of
Metropolitan Development to fix the parking garages located in the downtown TIF, the fact that the downtown TIF accumulates $7 million a year and doesn’t pay to pave its own streets, the fact that our budget is not balanced for next year, etc., make it impossible to support a project of this amount.
* The developer is from another state and has thumbed its nose at the taxpayers that I represent and my request on their behalf for additional information as to their ability to own and manage the proposed hotel.