Stephanie Brinkerhoff-Riley became the 5th member of the Evansville City Council to announce that after careful deliberation she has decided to vote no next Monday night on the resolution for the City of Evansville to borrow $37.5 Million through a bond issue to provide incentives and infrastructure to give HCW of Branson, Missouri what Mayor Winnecke and the Evansville Redevelopment Commission agreed to.

Brinkerhoff-Riley joined her fellow council members Conor O’Daniel, John Friend, Al Lindsey, and Dr. H. Dan Adams in stating her judgement of the deal as unworthy of her support. In her statement Riley pointed to several reasons for her decision as the other four councilmen did.

The hotel vote was pushed by Mayor Winnecke until Councilman John Friend stepped forward to demand that a 3rd party vetting could be accomplished according to standard protocol. According to Crowe-Horwath the chosen developer HCW refused to provide the vetting information unless they had control over the report issued to the City Council and on the condition that the City Council and the Mayor could not see the materials.

Things have gone down hill since Sunday’s announcement that the vetting was not going to proceed. The first council member to announce a no vote was Councilman O’Daniel followed closely by Councilman Lindsey. This morning Councilmen Friend and Adams announced their intentions to vote no setting the stage for Councilwomen Riley and Robinson to make the final determination. Robinson has made no statement yet but sources indicate her leanings are to no.

Only Councilman Jonathan Weaver, Councilwoman Missy Mosby and Councilman Dan McGinn have announced support for the deal.

All of the members of the council who have committed to kill this deal are adamant that a hotel is the best use for this lot and that they hope for a developer to step forward soon with a deal that is more favorable to the people of Evansville and that can be fully vetted in a transparent way.

This is a developing story.

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.

Over the past several months, I have struggled with the proposed convention hotel, 
especially the financial commitment that would be required to make this happen. 
In light of the many financial challenges of our community; considering that I must act 
as a gatekeeper of the public financial well being, prioritizing projects is essential. 
Consequently, at this time, I will not be able to support the proposed hotel. Once we
have determine the magnitude of our commitment to mandatory expenditures, emphasis 
on the Downtown Medical School, I may be supportive for a convention hotel provide 
it meets our budgetary constraints and makes good common sense. This decision has not
been easy knowing that our community must move forward and I will always be mindful 
of this noble cause. I will be totally committed and will support the administration's
efforts in locating Indiana University's Medical School in our Downtown. This has to
be our number one objective.

Sincerely,

John Friend
Finance Chairman
Common Council of Evansville, IN

For many months, I have consulted those experts here and without about the downtown convention hotel. The time for my decision on this matter is here. I believe strongly that our fair City has a limited number of “golden eggs” of leverage sources for urban development. Although a hotel next to the Centre has some shimmering merit, it also has much risk. In light of the added burden of the EPA mandated, soon-to-increased water and sewer rates on our people AND in harmony with my 2011 campaign promise to my constituents to go slow with new public money spending (See hdanadams.com), I know our “golden eggs” must be used very carefully and parsimoniously with most value to guarantee success. By placing them in the new expanded medical school project basket (IUMS-Evansville)…something I know from a lifetime of experience…, I can assure the taxpayers and my colleagues that our limited monies will be best spent. Right now, we have the convention hotel cart before the new downtown medical school horse.

That powerful, only-one chance for urban renewal will have its RFP come forth at Thanksgiving and the new medical school’s location should be decided hopefully by Valentine’s Day 2014, some four months away. Its construction would begin in 2015, which would allow the bond debt of the Centre to be paid off in 2018. A financial breather for us all would be allowed.

As our local history teaches us, hotels can come and go. Our projected medical school with its 1200 students, 130 residents, an exciting simulation center, a minimum of four or more hospitals and four major educational institutions is forever ! Thus, I know for the best bang for our buck, we must put all of our “eggs” in the downtown medical school basket first. City supported downtown hotels (then requiring very low equity input), parking garages, new living space, many permanent good paying jobs, guaranteed urban growth and a hundred years’ worth of superbly trained medical personnel will most certainly follow, as it has in Scranton PA, Atlanta, Grand Rapids and many other locales. Many will criticize me for my lack of vision. I contend that vision is exactly what I am providing.

At this point in time, I will vote No on the present downtown convention hotel.

H. Dan Adams, MD MBA Evansville City Councilman At-Large