IS IT TRUE September 25, 2013

Mole #3 Nostradamus of Local Politics
Mole #3 Nostradamus of Local Politics

IS IT TRUE September 25, 2013

IS IT TRUE the more one ponders the 30,000 foot details of the latest version of what may well be the basis for an eventual agreement to develop a convention hotel, a parking garage, some apartments, and some infrastructure improvements in downtown Evansville, the more palatable the deal looks?…with the exception of some real purists who will not accept that even one red cent of public money should be allocated to any private business, the deal as presented will have some appeal?…if the need to use Innkeeper’s taxes to service the bonds is eliminated in the forthcoming resolution the objections on the basis of the tax collector sending money over to their competitor will be removed?

IS IT TRUE that when one breaks down the $20 Million public funding proposal it is made up of $7.1 Million of infrastructure and improvements that would have to be done with public money even if a sugar daddy developer came to town with a bag of benjamins to build a hotel and a parking tower?…exactly $7.5 Million is allocated for a direct hotel subsidy?…the other $5.4 Million is for a parking garage that will be owned by the City of Evansville but leased to HCW at terms that indeed reflect the Evansville market for parking but do not come close to covering the cost of building and maintaining the parking garage?…even if the entire cost of the parking garage is considered to be a hand-out to the developer the public funding in this project that is really an incentive is $12.9 Million?

IS IT TRUE the question then becomes how will the cash to service the bonds be raised?…since the County ($1.5 Million) and the CVB ($2 Million) are prepared to fork over their money for the project in cash the bonding will only total $16.5 Million?…this is a great opportunity to economize as Councilman O’Daniel mentioned last night to keep as much bonding capacity available for the upcoming IU Medical School package?…the payment for a bond of $16.5 Million should only run about $1.2 Million per year?…it is very likely even at market value as opposed to construction cost the combined assessment of the hotel and the apartments is very likely to be sufficient to service this debt when combined with the food and beverage taxes in the TIF district?…if that is indeed the case this may well become the deal of the decade when it comes to the embattled world of financing convention hotels?

IS IT TRUE the CCO while encouraged by the analysis will err on the side of caution in asking for the VETTING of all of these funding sources to continue as planned?…with respect to the ability of HCW to secure financing this concern can be alleviated by an irrevocable commitment to fund from an institution like Old National Bank?…the yet to be named investors who are getting equity for their “contribution” can come forward and deposit their $11.5 Million into a building fund?…if both of these things add up to the construction budget less $7.5 Million then the means test should be considered to pass?…when it comes to operating a hotel according to a pro-forma the examination of the predictions vs. the results for their Branson, MO property since its inception should suffice to satisfy that threshold?…if Councilman Friend and the City Council must sign a non-disclosure agreement and forever hold their peace we encourage the people of Evansville to trust the verdict on management capacity that they come back with?

IS IT TRUE that as just on last incentive in the City of Evansville’s favor that should be considered is to participate in the profits of any eventual sale of the hotel according to the percentage of the construction cost that $7.5 Million would make up?…in a future sale if there was a profit of $10 Million made, if the City of Evansville’s $7.5 Million were 15% of the construction cost, under this scenario the City would receive $1.5 Million?…if the hotel were never sold by HCW or if it were sold at a loss the City would not receive a profit distribution?


  1. Thanks Joe, this is the most concise analysis to date. While I remain uneasy about this deal, if and when you like it, I will likely like it.
    Like? …

    • I think if the Innkeeper’s tax piece is taken out, I like it as much as I can. We need a hotel on that spot, and this seems to be the best deal we can get.

      • I agree, and I also like The Editor’s idea of including a proportional percentage of any profits from a future sale of the property ought to come back to city coffers. This is good policy.

        I ask that Connor and SBR stick to their guns until our last couple objections are met. Recall we began this process on our side saying “zero subsidy”. We are prepared to compromise and applaud a deal IF these last couple of obstacles can be removed. We are so close. It would be a shame if I couldn’t tell my Facebook page this was a victory for everyone.

  2. I’m almost there. ONB can take care of the vetting issue if they are financing HCW. If the 11.5 m is real and shows up, I don’t really care where it comes from. That person will get a small return on their investment if the hotel is successful. The City, at 7.5, will also get a return on its investment if the hotel is successful through the economic activity and taxes. I don’t have a moral issue with where the county’s money comes from. I just want it to come in a lump sum and drop the bond to 16.5. I’d vote for it at that point, and this can all be done in a week. And City Council should get a raise.

  3. Editor: What is your objection of using Innkeeper’s taxes?
    I cannot begin to understand why not?

    • If City Council drops the bond to 16.5, they are at least out of the issue. Where the Mayor gets the remaining 3.5 is up to him.

    • Wayne, I can’t begin to understand how anyone can not get it. I asked one of the union business managers how he would feel if the city taxed his union to subsidize a non union competitor?

      Maybe you need to take the 30,000′ view. You just seem to close to this issue and you have lost your objectivity. IMHO

      • Indianaenoch: It is obvious you are commenting on something you do not understand.

        The “innkeeper tax” is not the hotelier’s money any more than “sales tax” is the hotelier’s money. The hotelier’s just collect both taxes from the people who do business at the hotel. Most “innkeeper taxes” are paid by out of town people.

        The new convention hotel will be collecting both sales tax and innkeepers tax as well. If innkeepers tax was done away with, I guarantee your taxes will go up. Would you like to pay more taxes or let the guy out of town pay?

    • You really can’t understand why anybody objects to taxes collected by local hotels is being used to subsidize new competition for those hotels? Think about it, Wayne.

      • elkaybee : Innkeepers tax is used to pay for bonds already issued. The new convention hotel will also be collecting sales and innkeeper taxes.

        Hotels are currently collecting innkeeper taxes that are paying for new balls fields. The businesses that benefits the most from the current and new ball fields are hotels. Hotels love new ball fields.

    • As a closet democrat the old tax and spend to buy votes or backing seems justified! This deal just is not in the best interest of the taxpayers. Get real Wayne living in the past is doomed to fail!

    • Wayne, I can’t believe you are that blind. I assume you would be pleased to take some of the local Republican Party’s money and give it to the Democratic Party? Or take money from your personal bank account and give it to McNeely, Owen, or whoever runs the VCDP these days.

    • Wayne….

      It’s not that difficult to understand once you reap you head around it, an analogy for you.

      You have a McDonalds that is operating and paying taxes, down the road you have a property that someone wants to build a Burger King but wants incentives from the city to build their private business, so the city decides to take food and beverage taxes that McDonalds is paying and give it to Burger King as a incentive, do you see a problem with this?

      In essence your taking tax money from one business and giving it to a direct competitor creating a unfair advantage for the business receiving the other party’s tax payments as a subsidy….it’s not how private enterprise works or is suppose to work in America.


      • You are missing the point and your analogy is flawed.
        Innkeepers do not pay a dime of the innkeeper’s taxes; the people that rent the rooms pay the tax.

        • Lon…so what you saying is that you don’t pay sales tax to the state your customers do…right?

          Sir, if JE Sheckel wanted to open a business in Daylight In. and the city/county gave him some of your tax money to help him open that location would you still think it’s a bad analogy?

          Tax money is tax money it matters little if it’s property taxes, income taxes, sales taxes, food and beverage taxes, local option income taxes, user fees, licenses for business, it’s all the same, giving that revenue stream to one party (private enterprise) and not another sends a very clear message to the businesses paying and not receiving.

          Look Lon, I like you and think your a very intelligent guy, I wish you were my ward representative instead of the fool we have in office, but I have to disagree with you on this one.


        • I am absolutely astonished that yet another republican leader does not get market value or grasp that it is our money first. Lon, the customers belong the you. That’s why you call them “your” customers. So is it alright with you for the city to tax “your” customers to subsidize your competition?

      • Blanger: Just like Indianaenoch: It is obvious you are commenting on something you do not understand.

        The “innkeeper tax” is not the hotelier’s money any more than “sales tax” is the hotelier’s money. The hotelier’s just collect both taxes from the people who do business at the hotel. Most “innkeeper taxes” are paid by out of town people.

        The new convention hotel will be collecting both sales tax and innkeepers tax as well. If innkeepers tax was done away with, I guarantee your taxes will go up. Would you like to pay more taxes or let the guy out of town pay?

        • Lon and Wayne are both wrong and are proving once again why we need a conservative overhaul of the Republican Party. Wayne Parke’s threat that citizens’ taxes would rise as a result of eliminating the innkeepers tax shows again why he has no business running the local Republican Party and why he doesn’t understand the basics of conservative economic theory. Rather than making an effort to slow government spending, he has taken to scaring taxpayers on the government’s behalf.

          Every good or service has an optimal price the market will support. The hotelier in a given market will find that price with the innkeepers tax included. This tax is built into the price of a room and reduces the potential profits of the hotelier.

          The benefits of the tax are then not spent equally as government will create spending projects in one are or another that will not help all hotels equally. This is the problem from a conservative perspective, you are removing potential profits from a hotelier to a government fund, which will then claim a cut to pay bureaucrats to come up with spending proposals which may or may not generate tourism, then you tell hoteliers they better have influence with these powerful bureaucrats who decide the locations of these things or they won’t see any spending in their area.

          It is a system ripe for corruption and has no place in a fiscal conservative model of how things should be done. The bureaucracies should be eliminated and the hoteliers should be encouraged to do these things voluntarily through cooperative associations.

          • Brad: Absolute double talk hogwash. All hotels collect the innkeeper tax for government. No one has a competitive advantage. Supply and demand set the pricing of a good or service.

            Have you ever ran/owned a large competitive business? It is obvious you have not.

            Until you have real experience, do not pretend to be an expert.

        • Malarkey Wayne! I understand it as well as I understand political spin. It’s the hotelier’s money first just like a sales tax is your money first. Where does the money you use to pay your sales tax come from? YOU!

          There is only so much of a price per room that the market will bear. he market will bear. If we tax a hotelier, then he has to give up a percentage of that price to the city, otherwise it would be his to keep. Therefore, that money goes to the hotelier first and then the city.

          If I am trying to attract people to my city, then i would rather the visitor pay less.

          I have never heard a true conservative make the arguments you just tried to make. I’m just flabbergasted that you think I’m the one that doesn’t get it.

          • Indianaenoch…Your argument is well spoken, factual and concise! You are also spot on!!

        • I’m not asking to remove the innkeeper’s tax, just that it be used for it’s intended purpose which I’d rather doubt is to build a hotel that will directly compete with other hotels.

          You know I keep asking myself WHY is this such a big deal, and what do we as tax payers stand to gain….the other question I like to ask folks is if you were a event planner what would be the compelling reason you would choose Evansville over any other city to have a convention in, most people said the only reason would be price, Evansville isn’t a destination city/location and unless you like to gamble we really have nothing downtown to offer, so what makes all of you think that building a hotel will change that?

          I just don’t get all the exuberance over a hotel that will do nothing to revitalize downtown except add more monies to what has already been wasted over the years.

          It would seem that the current administration is caught up in the democrat liberal notion that it doesn’t matter if we succeed or fail, what’s important is that we tried.

          Again JMHO

        • Hotel pricing is elastic, i.e. consumers are price sensitive. When you add a tax, at the margin consumers will skip your product or service all together or seek a substitute.
          e.g. Exchanging a higher priced hotel for a lower priced one. The idea that the Innkeeper is just a neutral party collecting money for the state/government is just BS.

          See Diagram 2 in the link.

          Freshman economics students understand this.

        • Wayne, the problem is picking and choosing who gets a share of the Innkeeper’s tax and who doesn’t. It is being given to one hotel developer, but none of the others. That’s unfair/favoritism. Why doesn’t the guy trying to refurbish the old River House get some? If I want to build a hotel on the Northeast corner of 1st & Diamond, do I get some? You are correct that collection and distribution of taxes are not the issue. The issue is it is being used to lower the construction cost of one hotel that will compete against all the others. No other hotelier was given a dime of Innkeeper tax money to lower their construction costs.

          • It’s unfair to say the least. It’s immoral and dishonest, and causing massive acrimony and hostility within the whole community, not just the Innkeepers.

      • I totally agree with you! Will someone please tell me WHY we need this hotel. Who is going to fill this hotel? Evansville is not a convention city, we have very little in the line of attractions. Large companies are no longer staging these types of events due to cut backs and cost saving efforts to stay profitable. I am all for progress, I’d love to see festivals, events, and physical attractions in Evansville but we are not there yet…This is the cart before the horse.

        • I’ll tell you why we need it. It is because we tore done a stadium to build an arena which necessitated the need for a hotel, then tore down a hotel which necessitated the need for this hotel. See how simple that is?

        • The real reason we need it is that we need to cover up the weed-infested eyesore next to the Ford Center Mistake. The fantasy reason is that this will make Evansville a “destination city”, and we are all going to get rich because of all the conventioneers that will show up to the wonderful hotel.
          Right now, my “inbox” is overflowing with “off season” offers for everyplace I’ve ever gone. It is amazing how cheap nice places to stay are in the “off season.” I can’t figure out when Evansville’s “on season” would be.

          • We can’t even draw a high school sports state or semifinals event because we do not have an arena big enough!! Those type of events sell hotel rooms! If we had built a 15 thousand plus seat venue we would not be having this conversation. I wish someone could sway my opinion by telling me what who is going to be staying at this much needed hotel. Conventions?? pshhht

  4. The End, justifies the Means mentality, used to rationalize corporate welfare, has always rubbed me the wrong way, in the real world it happens everyday anymore, but that does not change my opinion that it is morally wrong for the Government to take the everyman’s labor and gift it to private enterprise,–with the promise, that the wage earners will get a piece of the “pie”, to make it more palatable for “consumption”. These schemes turn on the Politician’s belief(often true),that the masses won’t care if you loot the public treasury, as long as they get a share of the “Pirate’s Booty”. Sorry, I cannot be “bought off”, it will always be Stealing from the Citizens, in my mind,– no matter how “wonderful” the lipstick, the Ruling Elites put on their pet pig.

    • While I also hate corporate welfare, if the deal pays off for the city like Joe has written it can, then opposing it based on principle is just being bullheaded and not the type of thinking we need around here. The developer is still taking some risk with this project.

  5. Exactly! My comments to the council were that I felt using the innkeepers tax was immoral and that if we have skin in the game, then we also deserve some of the meat and potatoes.

    I doubt we will have any more vetting. I do not trust Huffman and believe he that in five years he will run for the Branson hills with as much of our money he can grab. That’s fine, I can’t blame him for that, but you better have every promise in hand or in a contract or it does not exist.

    So about the best I can say is that I support this deal more than the first, but can not give it my wholehearted support, for what that is worth.

  6. The county is having a difficult time cutting the budget and now jumps in the hotel fiasco. I still do not trust the ONB private investment deal. Will we ever know if they are backing HCW or are they backing the city’s incentive? They will get their return or they would not front this. Could it be taxes will pay them back over time? Local banks have not purchased hotels in the past so I doubt they are buying a percentage of it.

    • Has anyone even bothered to ask whose money ONB will be using to buy the bonds? By law you cannot loan other peoples money, i.e., depositors. So where do they get the money?

  7. Editor, may need to double-check your facts.

    The County’s share of $ 1.5 Million is NOT money “thrown in to the pot”. It comes with stipulations along the lines that ” the $ 1.5 Million will be used for capital improvements AT THE CENTRE in support of the Hotel”.

    So if the skywalk/connector hub got axed in going from $ 37.5 MM to $ 20 MM, you have a $ 1.5 Million equity piece which can only fund the ‘Bridge to Nowhere’; and if that Bridge remains over troubled water (not part of the project) . . . then the $ 1.5 Million won’t reduce Bonding.

    • I had been wondering about that, myself. Is the Centre really going to benefit all that much from the hotel? I know it would for really BIG conventions, but how many of those are we going to get? My understanding is that the Hotel will have its own convention facilities, and I’m guessing those will take care of most of the traffic. Am I wrong?

    • If the world ends tomorrow , nobody has to worry about anything.

      The current “Bridge to Nowhere” is not going to be axed

      • Wayne,

        You better ring up Marsha Abell . . . that’s not what she reported last night at County Council meeting.

    • That “bridge to nowhere”,can add up to extra infrastructure costing with the whole building in reference to the wear & tear on the Centre buildings HVAC system. Referring to the plywood plug installed on the end of it.
      The differing atmospheric pressures from the outside environment verses the inside can cause the whole building to drawl humidity so to speak.
      I’m sure the extended run times and moisture pressure issue’s have taken an toll on the upkeep of the buildings HVAC system.
      Just air filtration PM alone costing could be higher if an proper PM schedule is maintained . Basically think of your homes environment,open an window,stick an plywood plug across it see what issues arise. I wonder if that was accounted for with operating losses after it was chopped down and plugged.

  8. If you wanted my vote that $11.5Mil had better be sitting in an escrow account Monday morning or else no deal.

  9. The more I learn about the Innkeepers Tax the more I dislike it.

    Taxes are paid to provide infrastructure, and pay the bureaucrats/refs to enforce the laws, stop the unscrupulous, monitor, track, and create a level playing field. (As level as humanly and cost effectively as possible)

    Government could not exist without the taxes paid by the private sector. The private sector could not deliver their goods and services without the backbone of infrastructure provided by government. Subsidizing private enterprise for “economic activity” or because they “create jobs” is nonsense.

    A tax to “promote tourism” just invites political mischief. Further the politicians hide behind the “you don’t pay for it someone else does shell game”. BS. It’s true out of town people pay our Innkeepers tax, but then when Evansville citizens go out of town they pay it right back.

    • B.B. Your comments on the Innkeepers Tax seem onto the sensible side of the realism’s brought forth in concern of that tax funding.
      I am wondering,and don’t have the figures right at hand,what is the ratio of your Evansville and county citizens income sourcing per the county or city they actually travel to their employers base of operations?
      That number and the average wage earned by your counties employment base per job classifications?
      Just where is the travel and food and beverage cost of the average citizen being earned and spent?
      Remember those medical facilities to the east are in another county as well.

      • V-is-to-r,

        Reading your first sentence, dude, what are ye smokin’, and can I borry some ??

        Have you misspelled ‘visitor ‘

        • No. I did not misspell visitor. I don’t smoke, bad for the lungs. You will have to “Borry” that from someone you might know that tends to blow smoke on an daily basis,try that “Wayne” fellow that participates on this thread.

          whoosh -> duck now.

  10. I haven’t seen anyone address the fact that the push for this hotel is to attract conventions, thus increasing the business at the Centre. Since the Centre is a county owned property, why are they not being asked to share the financial responsibility in a more equal fashion?

    City residents have already fronted the purchase of the old Executive Inn and the cost to demolish it. To me it seems if the County owned facility is going to be the big winner out of this whole deal, then they should be putting in more or at least an equal amount that the city is paying.

    Yes I realize that City residents are also County residents, but since the majority of County residents are also City residents, it always seems like City residents get the short end of the stick when it comes to County spending.

    • Don’t forget all the weddings and lunch meetings that might be sucked away from the CENTRE over to the new hotel.

      Wouldn’t that be a kick in the pants to Marsha!?

  11. We need something of an official nature concerning this proposed bond. The amount, the interest rate, the number of years to retirement, the identified sources for debt service, and the bond’s proposed likely rating.

    As for some people not wanting to give public money to private enterprise, the solution is simple: poll the people involved and let the majority rule.

    We do need a hotel, but as we have seen, there are all sorts of permutations for these deals, and we do not have a very good track record of getting the best deals for those footing the bill.

  12. This has gone from a horrendous deal to a moderately bad deal and leadership isn’t having local business men rescuing a crummy deal, that is pathetic.

    Yes I hear and understand the progressives when they say there are many in this town who are stuck in the old days would oppose not only this deal but any deal for a hotel or anything else. I understand their desire for hotel next to the CENTRE.

    However, I’m also sick and tired of hearing about how this project or that will finally be the one that “transforms” downtown. I’m sick and tired of hearing that the taxpayers won’t have to pay for it. I’m sick and tired of our mayor(s)playing the three card monte with the taxpayers.

    This mayor thought the cocktail party crowd, civic pride and our unions brothers and sisters never ending quest for jobs would enough to get everyone on the bandwagon of his crummy deal.

    I laugh in Winneke and Wayne’s face for not understanding that the type “A” personalities, the hard nosed businessmen, and the analytical types(the type that frequent this site) expect to see business plans, projected ROI’s and pro forma financial statements. Stonewalling and bluffing and ignoring out objections as you work you way through this only makes us more suspicious, and dig in our heels more.

    So now that the CC is on to the Mayors crummy deal Bob “Daddy” Jones is out twisting arms for donations, err I mean, invesments to save hizzoners bacon and the rest of his administration. Like a father bringing his son’s homework to school that he left at home so sonny boy won’t fail his homework assignment.

    So now we’ll probably get the hotel and it will lose money hand over fist just like the rest of the convention centers and adjacent hotels across the country do and then we’ll be told that now we just need some retailers downtown or blah, blah, blah to save the hotel and we’ll start ALL OVER AGAIN.

    What NEEDS to happen is the Mayor and the rest of the machine need to have this crummy deal go down in flames with the whole city watching.

    Then maybe the mayor would wake up and think about a long-term plan for the whole city, not just downtown, and how to best SELL that, and how to get buy in from the whole city not just the cocktail party crowd and the back slappers he hangs out with.


    • “Brains” Benton: I do not know if you are joking or not. If you really belief what you have said above, I suggest you change you name to something different.

      • Yes I know if the deal goes through, Hizzoner will have $1.5M land in his campaign account and he will become a “player” in statewide republican politics.

  13. The Real Argument here is, who gets to define “Progress”. For me Progress for this City would begin with rebuilding the foundation/infrastructure of Evansville. The Sewer issue standing out as the most expensive, and urgent, per environmentalists, the EPA view, and the “smell” that propels it to the front of the priority list. The neglect that is all around this city, be it sidewalks, streets, Parks, Mesker amphitheater, or our cemeteries touches all our citizens. Not so with Old Downtown, it’s Dead, just not buried, and has had it’s way with the Taxpayers long enough. I am all for progress,–but the Goal Line needs to be defined by consensus of the Citizenry,–and not the likes of the ERBC, and the Elities desire to be entertained and coddled, with constant raids on our resources to build an Archaic Dream in Old Downtown.

    • I think that “consensus of the citizenry” will show up in the next City election, and I don’t think the current powers-that-be are going to like it.
      I absolutely do not believe that the big downtown revival is coming because of a huge influx of conventions, and that isn’t “negativity”. It is realism. They are going to do this, so let the face the consequences.

  14. By far the vast majority of the “Citizenry” support the convention hotel.

    What do you define as the “Elites” ?

    The convention hotel will attract outside people and their money to Evansville. This is a good project that just got better.

    • Wayne, I don’t know why you are even arguing this deal any longer, it’s as good as a done deal, but from where are you getting this “By far the vast majority of the “Citizenry” support the convention hotel” claim? I have not seen any indication of that claim being a fact.

      • Wayne mistakes peoples acceptance that there needs to be a hotel connected to the Centre and the Ford Center Arena for approval of this specific deal.

        Nothing could be farther from the truth, and Wayne knows that.


    • Wayne, the vast majority of the citizenry supports A hotel, but not this particular boondoggle in the form it was first presented. The ‘friends of Winnecke’ crowd who attended the meeting Monday night are but a fraction of the community as a whole. As for ‘elites,’ those would by popular definition be those folks who might also be called 1 or 2 per centers. You are among them. Frankly, so am I, yet I am adamantly against the city giving so much taxpayer funds to an out of state company who refuses to be responsibly vetted and whose representatives are arrogant to the point of hostility to the very people whose taxes are part of the funding they desire. It would seem that the mayor and his advisors are waking up to the true reality of just how the vast majority of the citizenry really feels about this project as presented. The deal isn’t done yet, but it is moving in the right direction.

      • “Wayne, the vast majority of the citizenry supports A hotel, but not this particular boondoggle…”

        Ahh, that’s where it is coming from. I call what Wayne is doing “trimming the edges of the truth.”

    • Easy to see that I’m an “enemy” of Old Downtown. I never go there, unless I have to, to do business at the Civic Center, beyond that I can find No reason to go there, and I guess I never will , it is, and will always be, a rat hole for public moneys, and this Convention Hotel won’t change that, it will continue it’s history of being a drag on the public treasury,—and yes this latest scheme will lose money,–and yes, I will say “Told You so” every time the True Red ink figures surface in the coming years. If Wayne is a Republican,–I’m a Chinese Philosopher, awaiting a lobotomy so I can join his “Special” people in plotting the Future of Evansville.

    • I wonder how many of the sign carrying and sticker crowd at the Monday night meeting actually lives inside the city limits?

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