Only hours after a defeated looking Mayor Winnecke and wingman Bob Jones were looking exhausted during their announcement that the deal for a downtown hotel had come apart, an unexpected left hook came in from the Indiana Commission for Higher Education when it announced that it did not include the Evansville branch of the IU Medical School campus in a list of projects it wants state lawmakers to fund in the new state budget.

Indiana Senator Luke Kenley, said information he received showed that Indiana University ranked the project last in priority out of all of its proposed capital projects. Of the 31 projects recommended, the Commission only recommended that 7 be funded this cycle

In May, the Evansville City Council approved $57 million in public incentives for the medical school campus, including incentives to contribute to the cost of the project, parking and other infrastructure needs. Recently the combined cost of the incentives for the downtown hotel and medical school came under advisory that the City was nearing the maximum of its bonding capacity. $20 Million of that capacity came off the table today when the hotel as we know it was cancelled by Mayor Winnecke in a press conference at the Labor Temple.

Evansville received the one-two punch of project funding problems within 24 hours and while expressions of confidence still fill the air, this may just be a perfect time to sit back and think about the plan to move forward in a sustainable manner.

Evansville Mayor Lloyd Winnecke just called a emergency 10 a.m. news conference at the Labor Temple on Southeast Eighth Street, regarding the latest developments on the Downtown convention Hotel project. The news conference was disclosed by the office of the Mayor. The labor temple is a curious choice of venues for a republican Mayor. There has been speculation that labor may bail out this project with a loan from their pension funds.  There is also speculation that the Mayor shall announce that he is pulling the plug on building the Hotel with HCW and shall go back to square one.

The hotel despite 3 golden shovel events and claims of funding is still not started. A solitary backhoe is gathering dust on the lot that supposedly serves as proof that construction has started.

According to HCW, the developer, they have already spent $1 M on the project and have permits with a signed construction contract. HCW has also asserted that the Old National Bank contribution is not secure nor is the amount defined leaving the financing up in the air. City sources point the finger back at HCW for not being ready.

The facts are that the $20 Million in bonds have not been sold and ONB has not paid a dime toward the naming rights. It is unlikely that HCW has a firm financial commitment from any bank without the other two funding sources secured. It seems as the the trinity of Mayor Winnecke, ONB, and HCW are forming a circular firing squad to assign blame.

The CCO hopes that Mayor Winnecke tells us where the million bucks will be coming from in the event this deal falls apart. Please see our feature article on this deal in today’s CCO.

This is a developing story please stay tuned for further information. 

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Mathematics Does Not Lie,  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.  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.  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.  Who is telling the truth? Probably none of them, they never have when it comes to this project.  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.  The price paid for the naming rights for the Ford Center was $400,000 per year.  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.  That would calculate to $4 Million for 20 years.  County Commissioners past and present have acknowledged that the naming rights have been on the block for over 10 years with no interested party.  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.  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.  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.  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.