Mathematics Does Not Lie, Â So Why Do Our Leaders Keep Lying to Themselves
Four years ago the City County Observer published an editorial that exposed the fact that the valuation of the downtown convention hotel that was proposed at the time would not exceed $20 Million. We were scoffed at for that opinion, yet proven right by three deals in a row all of which came unraveled when the financing fell apart over VALUATION. Â We followed that up with perhaps as many as 100 articles that called out the City of Evansville and particularly the Evansville Redevelopment Commission for failing to have a competent vetting process in place. We hoped that our elected leaders would actually elevate their financial skills to at least a sophomore business student level and learn something about valuation and vetting. Â Alas, that has not happened and another valuation based debacle has been exposed with yesterday’s confession that the funding for the convention hotel is once again on the verge of collapse.
A year ago, elected officials by the score were congratulating themselves on striking a deal with Old National Bank to buy the naming rights to the Centre for $14 Million with all of the proceeds going to subsidize the convention hotel. When questioned about such a stratospheric value in these pages and the fact that Old National is a public company that has shareholders to answer to by the CCO, we were dismissed again by the golden shovel team. Well folks the valuation chickens just came home to roost, EXACTLY AS THE CCO PREDICTED.
Yesterday’s news was filled with the typical finger pointing associated with delays with HCW blaming the City of Evansville and ONB for not delivering the cash, and the Mayor’s Chief of Staff blaming HCW for not having their finances in order. Â Who is telling the truth? Probably none of them, they never have when it comes to this project. Â This is typical for a project that has been mired by inaccuracy, fluff pieces by local media, and down right delusion from lots of people who should know better.
The reality of the financial valuation of a 250 room hotel with 60% occupancy and a $100 per day rate has not changed one iota since 2010 when the CCO first called out the City for visions of grandeur without basis. Â The price paid for the naming rights for the Ford Center was $400,000 per year. Â The Ford Center has 4 times as many seats and double the number of events that the Centre has so it seems very generous to assume with that as a comp, how the Centre’s naming rights could exceed half of what was paid to name the arena. Â That would calculate to $4 Million for 20 years. Â County Commissioners past and present have acknowledged that the naming rights have been on the block for over 10 years with no interested party. Â One even stated that the naming rights were worthless.
Bob Jones, the CEO of Old National knows the valuation and has sent the expert opinion to HCW. Â Soon, this truth will come out and the ERC and the City Council will be faced with a demand for more than the $20 Million they have already committed to the project. We doubt that they will do any vetting because they simply refuse to learn how. Â We also doubt that there will be 5 votes to move forward with a subsidy that is higher than $20 Million in an election year. Â The potential for this hotel, that our former mayor said would come free if we only built an arena, to go away for good has never been higher. Without 5 people on the City Council with the will to vet projects and who understand the mathematics of valuation, Evansville will keep making these same mistakes over and over and over and over, etc.
In closing, we would like to ask why a valuation for the naming rights to the Centre was not done before the self congratulatory golden shovels were brought out and a press release was distributed? It could have been done and it should have been done, but that would have required a willingness to face reality instead of a camera.
Oh, Oh, Oh, Merry Christmas…what a crock of crap, they must have been on weed stroking one another. Walking down ol’ memory lane, was it not Friend asking for financial data concerning these jack-wagons from Missouri. Now, that they have pocketed one million in fees, etc. they are sitting back having our brandy while they load up the van and we eat cake. Ol’ Winnie seems to never disappoint us…oh, there goes Santa Claus!!!
We did not need to vet HCW, do you recall the council’s questions to Bob Jones, do you vouch for these fellows from Missouri and his response was “Certainly, would I invest 12 million otherwise”? Imagine
Hey Bob – you have that $12 mil handy?
Yes, I do recall that Friend hauled out a laundry list of due diligence questions. HCW refused to answer them. City Council even tried to hire an accounting firm to vet the developer, accounting firm withdrew.
Yet, despite all the histrionics, FRIEND VOTED FOR THE $ 20 MILLION. In typical fashion for Friend, lot of bluster about arcane financial requests, no information received from the request, and then vote for $ 20 Million anyway with no fact checking.
Nice work, Friend !
This clown show just entered a whole new realm of surreal. I’ll say it again…good riddance.
If I owned a home in Evansville, IN, my #1 concern would be selling it and getting the hell out. The map of the earth is way to big to pitch a tent in a place whose leaders too closely resemble those of the floating island of Laputa in Gulliver’s Travels.
Brad’s back! How’s that conservative paradise jolly Ole England going, old chap? If I ever make it over there again I’ll look you up and we’ll have some tea and crumpets!
I own a home in Evansville and selling it will be a problem. When I put it on the market I expect it will take over a year to move and at 20-25% below assessment. If it was out in the county it would move quicker but I think it would sell below assessment. Houses are just not moving in the older eastside neighborhoods, I watch this area closely. There are some who want to put up for sale signs but don’t because there are already so many houses for sale in their area.
Here’s how the numbers stack up…hotel cost after adjustment for overages = 52 million…value of Hotel upon completion = 22 million…bank will only finance 60%..so, the mortgage = 13 mil….the City allocated portion = 12 mil….ONB when they pay up = 14 mil and HCW = 13 mil….all toll = 52 mil….
Of course, this does not include HCW’s down payment on the apartments, estimated at 3 mil…Now, everyone should be wondering if HCW has 16 mil just laying around…the day the hotel opens, should it open, HCW will be upside down by approx 4 mil on the hotel…and, estimates on the apartments, approx 800k…if their plan is to bail in three years, well, sure looks like they will be short on their return of equity…So, plan on Winnie showing up at on of the council meeting hat in hand requesting to double down on the project but the IU Med has stolen the cash…
Surprised the CP could run Mr. Scheafer down. Allegedly, he has been hanging out in the courts and has resigned from Dodson’s “Focus on the Family” local chapter…now, the charter member of “Focus on Chicks”
Was there ever a contract with old national? How could they get the naming without a contract? I would have thought there would be a contract with numbers agreed to long before this.
There is one and it requires them to pay one penny up to 14 million.
Ghost, that is exactly correct. The written deal was for “up to” $14 M. Those two little words which we pointed out time and again seem to have been conveniently forgotten.
If Bob Jones reached in his pocket and pulled out one penny, he got all sorts of perks for ONB, though. The VIP space and the once-yearly free function are worth something on the rare occasions that there is a worthwhile event scheduled there. The Poop takes care of his own.
Just very difficult to put lipstick on the “Pig”…the hotel deal was ill conceived and as Jeremiah Wright once said, the Chickens have come home to roost…but, it is great to know that Big Labor has been suckered…
Math and gravity, ignore either and one to a period fall. Thank you CCO for being a realist in print.
* ignore either on to a perilous fall… An edit button would be nice.
*one
Editor, is Round 4 REALLY OVER, or is this the stage where they ‘play chicken” ? You correctly noted that HCW, the City (Schaefer) and ONB are all blaming one another. The next step will likely be a bunch of players toss in a few bucks to make it all work. The magic number is: ONB promise of $ 14 Million less the valuation report of the naming rights= amount to be raised.
I expect Vectren, 5/3, Berry Plastics, MeJo, the IBEW or the members of the ERBC will all be tapped to raise the money. May even find a borderline ethics way to use federal funds. There is too much hubris at City Hall to come THIS CLOSE and let the edifice complex just die . . .
I don’t believe we were ever very close.
I was wrong, the Hotel has sunk. Maybe the bankers aren’t as stupid as they appear ?
Bankers stupid? Except the one sitting in the mayor’s chair. Oh, I forgot, although he worked for a bank, he was not a banker.
Maybe the improbable amount Ole Gnat was going to chip in, now contingent on the real value of the naming rights to the Centre, was part of their end game all along. Winnecke doesn’t deserve an easy out on this. If that backhoe still sits down there it does so in mute testimony to a failed administration.
That backhoe is the symbol of fluff over substance. You seriously have an administration that is willing to spend money on renting a backhoe and believes construction is started? My God, that must be the stupidest damn place on earth to fall for such scams.
Just curious, who owns that backhoe?
Winnecke is staging a ‘news conference’ about the hotel at 10 this morning at the Labor Temple. I’m sure he’ll explain everything then.
Looks like my GB brothers and sisters are going to have an old time tent meeting for 2017. Come one; come all. “This way to the egress.” http://ptbarnumspeaks.com/images/egress.jpg
If they’d do that, renting the tarp or tent locally from Anchor, it would probably draw many non-conventioneers. If they did it right a large scale tenter could make national news. I might even go and wear my straw boater. They could make it an old time, oops tyme, revival/convention. It might drive some of the demons out of the Civic Center area.
Should I write my GB brothers and perhaps suggest Urbanna for 2017? I must admit that the shenanigans of Ole-gnat’s-ville has me reconsidering Urbanna for November. Maybe Gail was on to more than I realized.
Well, the latest developments look to be moving your GB brothers down a little closer to the river, assuming they’ll still come. If GAGE or the Chamber would act fast we might be able to convince them the Ohio is a baptismal font, pre-consecrated. If not … we’ll always have our Jehovah’s Witnesses.
Tropicana has plenty of convention space and rooms. If the local GBs would start feeding the slots now, they could even get several rooms “comped” and great deals on dining. Just a thought!
” Without 5 people on the City Council with the will to vet projects and who understand the mathematics of valuation, Evansville will keep making these same mistakes over and over and over and over, etc.”
We know we are losing one of the most thorough and vocal protectors of the public interest, with SBR’s decision not to seek re-election. All the three Republicans on City Council only need two more McClintock-bots for the “show” to go on.
Haven’t heard from SBR lately, is she OK? Hope she hasn’t relapsed. I would hate to work a recovery program and be on this CC, it would doom one to failure. The #1 relapse trigger is anger and this city council would keep an honest person in a constant state of anger.
Evansville Redevelopment Commission – Is there a reason that Alsman keeps getting a pass for not being called out on this? He works for an investment company and spent time in corporate finance at MJ before that. Clearly one would expect deal Valuation would be within his wheelhouse. Yet this hotel deal appears to be collapsing with not a speck of dust landing within the scope of his responsibility for the vetting. I understand Friend is a local accountant with a more visible elected office platform. But of those involved in all this, a banker, an accountant, and an investment advisor, it seems the later should be most questioned for lack of vetting… is he watching your money?
There is none so blind as those who will not see. Even the educated professionals refuse to use their skills to the benefit of the city. The machine is powerful enough to lock their minds shut.
Perhaps they do do know the value…for themselves. Perhaps the forgot that when you wring the neck of the chicken to make it lay golden eggs, the chicken will one day die.
I have said it before, and I will keep on saying it until it sinks in: close down the Evansville Redevelopment Commission. It is nothing more than an unelected additional branch of local government created by, and restricted to, the chamber of commerce lobby.
Force the duly elected and appointed officers in the administration and the city council to perform their jobs. At least we can vote them up or down at election time, and in the mean time they can be fired for cause.
right on Press
Press. Or—– eliminate their bond issuing authority.
There is a limit to their bonding authority. Anything over $5 million must be approved by an elected
body, in this case, the City Council. They are the ones directly accountable to us AT THE BALLOT BOX.
History will not be kind to LW or the minion he replaced. Facts show both were & are PITIFUL people.
Did the Poop just pull the plug on the hotel deal? He said we cannot move forward with it the way it’s currently structured. Surely he went begging before making such a statement and must have came up empty handed.
In a sane, rational world, wouldn’t monies raised from naming rights to the Center be used to pay the center’s expenses?
Precisely. The Centre is running about $3/4 million deficit annually. The naming rights should have been set up in annual payments that could be applied to that deficit.
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