An Open Letter to the City Council Regarding the Hotel Funding Decision

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Fort Wayne Covention Hotel

Open Letter to City Council on the Decision to Vet Hotel

Evansville, September 10, 2013:

The following is an open letter to the City Council from an Administrator of the Facebook protest page, Citizens of Evansville against a Taxpayer Funded Hotel.

Dear Esteemed City Council Members,

We are aware you just voted Monday to extend the vetting process and require more information of developer HCW. We are also aware that an Indiana company Crowe-Horwath was selected by an 8-1 margin to perform the additional vetting and produce a report.

While we applaud the efforts of Councilman John Friend in requesting this additional information, and while we appreciate the deliberative efforts of the eight City Council members who voted for the vetting to continue, we feel there is already plenty of information contained within the Hunden Report and within the proposal itself to warrant a vote of “no”.

It is our belief that even if all requested paperwork is in perfect order and it turns out HCW’s history is spotless, the council will still ultimately be faced with the same decision with which they started – whether or not to GIFT $37.5 million to a private, out-of-state developer to build a hotel that is twice the size the market will bear.

Placing too much emphasis on additional vetting, we feel, is a red herring that distracts from existing facts. If the ethics of this deal alone aren’t enough upon which to base a decision, then surely the findings of the $105,000 Hunden Study are enough. It is our hope when all this vetting is complete that the Council will return a vote of “no”, regardless of the Crowe-Horwath findings.

Sincerely,
Brad Linzy
https://www.facebook.com/EvansvilleSaysNo

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43 COMMENTS

  1. I would not be surprised if this band of puppets convenes at Midnight one night, to carry out the ERBC order to pass it–or ELSE!

  2. Excellent letter, stating the obvious facts. Brad, you have succeeded at putting into words the gut feeling that we all have lived with since this overstuffed Hotel proposal surfaced.
    Bravo! …

  3. As John Dunn has so aptly pointed out, Lloyd Winnecke has taken his sophistry about the proposed hotel to an extreme level. Dunn called him on it, but others in this community should be speaking out also.

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  4. You ask for more vetting and you got it. Appears you are now concerned what the new consultant will find. A yes vote is the best interest of Evansville. Build the hotel.

    • There are those who are opposed to any public support and there are those like you who seem to be willing to empty Fort Knox to get a convention hotel. Both of the extremes are coming at this from an unrealistic position given the low value of property in downtown Evansville. Obviously the land and the infrastructure will be a part of any deal that gets done whenever it gets done. That will amount to between $5M and $6M. The real questions are how much is the City willing to pay to a developer to get a convention hotel built? Under the current agreement that number is about $25.4 Million plus $225,000 per year plus interest on the debt. That comes from $20 Million to directly subsidize the hotel for the gap between what it will be worth and what it will cost to build and $5.4 Million plus operating expenses for a parking garage that we otherwise do not need. The rest of the $37.5 Million is because of the insufficient design of storage for the Ford Center, unrelated retail space, and infrastructure. So please enlighten us as to why this is really worth this much money to go into the shrinking convention business knowing this action will sour the relations with our existing hospitality industry (4,000 rooms) and Tropicana.

      • You seem to believe the convention hotel is going to fail financially. I believe it will be successful. You seem to believe the economy is the best it is going to be. I believe it is going to get better. When it does, the number of conventions will increase.

        A “first class” hotel needs to be built to attract conventions to our City. If a first class hotel is not going to be built–do not build one.

        If a convention hotel is built, all boats (property values) will rise.

        This is a very unusual situation. To get a hotel built downtown a very large amount of financial participation by the City is required.

        • First Billy, this is not a first class hotel. It is a 3 Star, $100 a night hotel and for this location and application that may be sufficient or maybe even a little bit more than is needed. The restaurant and retail is not needed as is evidenced by the 30+ available storefronts in downtown Evansville. That number has not changed since the 90’s.

          If anyone comes forward to invest $44 Million to build this without a subsidy then I believe it will fail and the pro-formas all support that belief. I think it is possible for HCW to accept a $25.4 Million handout and do okay if conventions come and downtown Evansville becomes more financially robust than it has been in 30 years. That is a big if and carries much risk. Even the pro-formas need to be able to count on 65% occupancy rates to really thrive. Fort Wayne by your own admission is doing 50 or so conventions a year to Evansville’s 35. Is another 15 conventions worth this kind of investment?

          I do not think the economy is the best it will ever be or even as good as it has been in the past. There is much room for improvement and there are many other ways that Evansville can get more bang for the buck that with a convention hotel that requires a $37.5 Million gift to make happen.

          I could go on for a long time on this subject with questions about the failure to capitalize on the tech transfer agreement with Crane, the failure to attract or establish a venture capital firm or even muster a viable angel investment group but I have learned such things fall on deaf ears in Evansville. Why are entertainment and sport the only things that seem to resonate with local leadership? Why can’t local government even do a background check and credit check on the principals of subsidized projects. It doesn’t even cost $100 to do such things yet here we go again without doing them.

          Evansville is not and will never be a major destination for either entertainment or sports. A product design hub for clean coal technology, fracking, or plastics research would yield much higher results in areas where geography and existing infrastucture can be a competitive advantage. Why can’t Evansville pioneer an innovation solution to combined sewer mitigation? There are only a couple of hundred other places that would line up to buy it.

          On property values rising, how did that $127 Million Ford Center work out? This will not be any different. I agree that a large amount of public investment is required to get a hotel built. What I disagree with you on is the impact on the future. I see marginal positive impact that is worth no where close to $37.5 Million. Cut it to infrastructure and a lot and we may just find some middle ground to agree on. Spend the rest if you must on something that is novel and unique that has value in other parts of the country.

          • Excellent response Joe. You have away of clearing the smoke out of the room.

            The question that gnaws at me is if the convention business is really the goose that will lay the golden egg for us?

            I understand that since we have “the build it and they will come arena” that we need to complete the set with the matching hotel, but this proposed hotel does not match the smaller is better arena.

            Then added to that is that our government wants to strong arm the lunch money of other established players away from them to upgrade the hotel piece of their convention set. Dunn is already telling them that he won’t play. How long before Tropicana tells them the same?

            If every middle to plus size town is scrambling for the convention business, then just how much would that market have to grow for it to become a sellers market?

            Having the matching hotel is not going to cure the systemic problems you identified.

          • How much “public investment” was involved in building the Saint George, the McCurdy, and the Hotel Vendome?

            What has changed in succeeding generations of businessmen that requires the investing or gifting of dollars to private companies to do these projects?

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            • Our two favorite sentences in that article.

              The city plans to retain partial ownership of Greystone, under a still-being-crafted economic development plan.
              “We will keep an interest so — if they sell down the line and make money — the citizens will get something out of it,” Plusquellic said.

              “No public money would be used for debt repayment should there be a default.”

          • “No public money would be used for debt repayment should there be a default.”

            * * * * * * * * *

            Well they certainly took care of us taxpayers on that count here. The only thing the taxpayers WILL own in this proposed deal IS the bond debt!

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          • It would make sense for an investor (the taxpayers of Evansville) to maintain an interest in something in which they invest, but the extreme of this thinking is overt socialism.

            It does beg the question – if we’re investing all this money to essentially hire a middleman to make phone calls and subcontract every aspect of the project from the construction to the management, then why wouldn’t we just create a public corporation called Evansville City Hotels, cut out the middleman, and do it all ourselves? Sadly, some people would leap at that idea.

            Someone above asked how we got to a state of affairs where we, as Americans, accept that the only way to get a hotel built is through government participation. The answer is, because we’ve accepted “it’s just the way things are done” and “everyone else does it”, therefore we must.

            This was the prevailing answer I got at all the townhall meetings – everyone else is doing it.

    • Wayne or I mean Billy why don’t you stop making a fool of yourself Get you facts straight before posting. How in the world did you become so rich in the coal business. Oh, your buddy Steve had outstanding CPA’S.

      • danny p

        What facts are wrong?

        Almost all businessmen get rich by working 60/70 hours every week, having good people working for them and listening to their ideas, have a needed product to sell, ability to consistently make good decisions etc. Just to name a few.

        I know of no businessmen got rich by having only “outstanding CPA’s”

        • I gotta agree with you here Billy. CPA’s and attorneys make their money by telling you what you should not do because the numbers do not work. Businessmen get rich by defying the odds and doing things that others do not see in addition to working 70 hours per week. Governments make horrible investors as President Obama has proven time and time again. Local government is no different. Look at the ROI on the Victory, the Arena, the Centre, etc. and project those losers onto this hotel. HCW may make a few million bucks from developer fees and by selling this turd off in the first 3 years but the people of Evansville are guaranteed to lose $37.5 Million right from the get go. No number of hours worked with change that. Where is that businessman who will defy the odds and bet on Evansville? The unfortunate answer is that this hotel is a born loser and every business person knows it. Only government is stupid enough to toss money into this fire.

          • You are wrong. Almost all Evansville businessmen support the convention hotel plan as recommend by the Mayor.

            • You mean almost all of the Evansville Regional Business Committee. Do not confuse a 20 person club with all of the business leaders of the town.

          • Billy says:
            September 11, 2013 at 11:13 am

            You are wrong. Almost all Evansville businessmen support the convention hotel plan as recommend by the Mayor.

            * * * * * * * * * * * * * * * * *

            Then go to those businessmen for your $37.5 Billy, they certainly have the funds, and see what kind of terms you can get on the interest from them.

            Tell them to put their money where their mouths are, rather than arm twisting politicians into squeezing it out of the poor old working class.

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    • It’s quite the opposite, I assure you. I am serially unconcerned with what the auditor finds, precisely because it doesn’t affect my core objections. It may serve to bolster my arguments if one or more of the HCW Directors turns out have a spotty business record, or to have terrible credit, or to have been convicted of trying to pilot a commercial aircraft drunk, but it does not affect my argument in any way if they turn out to be saints.

      To those without the same instinctively caustic reaction to central planning – particularly when taxing certain business sectors specifically to fund their competitors – this new round of vetting may prove instructive, and I recognize that; however, even for those people with no problem handing out government incentives, gifts, or subsidies, the idea of getting into bed for half of a project that our own Report says is 100% too big to be sustainable and betting the farm on a convention market with simultaneously diminishing demand and ballooning supply is not just foolish, it’s reckless and irresponsible.

      This much is already discernible from the available information. I fear this newest round of vetting will serve more to placate the casually opposed than to solve any elemental flaws in the plan.

      • Brad–You are wrong. Our own study says the optimum hotel size size is 250 rooms. Optimum means the best/recommended size.

        • The Hunden study says that is the optimum size to attract conventions. It also says that the stand alone size for a profitable operation is 120 – 150 rooms. I guess you are not interested in financial success and are obsessed with attracting conventions to town. Backing a losing horse for the wrong reasons is your game Billy.

        • “Optimal” for having a shot at the bulk of the convention market and “optimal” for having a shot at making a profit and staying afloat are two completely different things.

          The Hunden Study is clear when it says only a 120-150 room hotel could survive without significant upfront subsidy and “future reinvestment”, i.e. significant capital will need to be pumped into it in the future to keep it afloat. That’s hardly considered “optimal” in a free market sense.

  5. Sorry Biily I should had said outstanding CPA”S, Lawyers, lobbyists and puppet politicians willing to do the deeds of greedy corporate America.

    I personally know people who worked for you and must say that I haven’t heard any raving reviews from them about your alleged business skills. In fact they say you are a self serving jerk.

    • danny p: Where are the facts?

      I know of no successful business person that was successful because he/she had only “outstanding CPA”S, Lawyers, lobbyists and puppet politicians”.

      To bad you resort to name calling and untruths to attempt run down a person. It appears to me to be a sign of weakness in your argument. Please produce some names that support your position.

  7. The Hunden study has had several versions (at least two). How much pressure was brought to bear between the first and final study.

    Do we know how they arrived at the number of rooms?

    I do believe we should have a hotel near The Centre and
    The Ford Arena, but who should pay for it.

    Was the apartment complex added to the proposal to minimize the cost per living space for the apartments/hotel/motel complex? Aaah the luxury of the promise of tax money (which will be TIF funds) not available for general city/county operations.

    I strenuously object to $38.5 million being given to this developer with little or NO guarantee that we (the taxpayers) will ever see one penny of benefit from that gift.

    My suggestion is to start the process from the beginning and ban anyone who has had prior input from participating.

    • This is the 4th attempt to get a convention hotel. 50 % of the convention hotels built received 100% public financing. If you think we need a hotel. This is the only way to get it done.

      • Not true. The only RFPs ever sent out were for 250-270 room hotels that most hotel owners know can’t survive. That’s why they’ve largely stayed away. That’s why the proposed subsidy is so large.

        No RFP has ever been sent out for a 120-150 room hotel on that site offering a gift of the land (worth maybe $6 million) and help with the infrastructure.

        That is the compromise our side is proposing. It’s reasonable, it’s measured, and it complies with what Hunden says can survive in the market.

        • Bids were sought for what the consultant said was optimum size. If we are not going to do it right–then do not do it. We want convention bossiness that will bring new people to our City.

          • What the consultant said the 1st time or what they said after they were told to revise it?

          • Bossiness is pretty standard operating procedure for the goons trying to shove this hotel down our throats as it is now. You are the one that needs a lesson in honesty. The RFP was sent out as a sure loser for a hotel to only address conventions as opposed to the market the city can support. Me thinkum, YOU LIE.

  8. How come nobody locally wants to touch this sweet 37 million deal. It seems all win an no possibility to lose for the HCW people. I still think if you let Tropicana put a few slots in they will build it an give you 37 million. I know legally they could not. But im just saying if…

    • All local hotel owners had an opportunity to bid on this project. For whatever reasons they did not elect to submit a bid.

      • “For whatever reasons”?
        “B”,–this Wayne guy thinks we are all stupid, I urge you to vote, and lobby your fellow committeepersons to oust this ERBC puppet, anyone who has been “around the block” can see,– he is a phony from head to toe.

  10. Billy and/or Wayne Parke please tell me about that $10,000 political donation check you received from an anonymous source at the time Marsha Abell ran against Troy Tornatta foy County Commissioner.

    • danny p—Another one of your untruths. No check was received from a anonymous source. None

      All funds received were handled according to the Election Laws.

  11. Wayne, what political person received the $10,000 political donation? What was the name of the person that donated the $10,000? Who was the treasurer of the local GOP at the time of this donation? What was his ( treasurer) opinion about the way this political donation was handled? Did the local GOP treasurer file a complaint with the State Election Commission concerning this donation?

    I guess you shall answer my questions with half truths, right Wayne.

  12. Wayne, I’m waiting for your response to my post above. Make sure you can backup you statement because I hear certain people have documents to prove the real truth about this issue.

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