Attached is the extension contract concerning Mark Rolley provided to CCO by Evansville City Councilman John Friend, CPA.
“One of the bloggers indicated that I approved the contract. Please notice that the (MRC Extension) contract was signed by Winnecke, Abell, Melcher, and Jack McNeely, the then president of the Works Board, appointed by Weinzapfel.”
Sincerely,
John Friend, CPA, Evansville City Councilman
Footnote: Published without edit, opinion, or bias.
Evansville, IN – Below is a list of felony cases that were filed by the Vanderburgh County Prosecutor’s Office on Thursday, December 27, 2012.
Kyle Anderson Operating a Motor Vehicle as an Habitual Traffic Violator – Class C
Felony
Resisting Law Enforcement – Class C Felony
Receiving Stolen Property – Class D Felony
Hit and Run – Class D Felony
Resisting Law Enforcement – Class A Misdemeanor
(Habitual Offender Enhancement)
Dustin Campbell Possession of Marijuana – Class D Felony
Amber Robinson-Bragdon Theft – Class D Felony
Possession of Marijuana – Class A Misdemeanor
Possession of Paraphernalia – Class A Misdemeanor
For further information on the cases listed above, or any pending case, please contact Carly Settles at 812.435.5688 or via e-mail at csettles@vanderburghgov.org.
Under Indiana law, all criminal defendants are considered to be innocent until proven guilty by a court of law.
SENTENCE CHART
Class Range
Murder 45-65 Years
Class A Felony 20-50 Years
Class B Felony 6-20 Years
Class C Felony 2-8 Years
Class D Felony ½ – 3 Years
Class A Misdemeanor 0-1 Year
Class B Misdemeanor 0-180 Days
Evansville Police Chief Billy Bolin is proud to announce the newest community relations program for the EPD.
We have partnered with The Donut Bank Bakery and Coffee shops to bring you “
Evansville Police Chief Billy Bolin is proud to announce the newest community relations program for the EPD.
We have partnered with The Donut Bank Bakery and Coffee shops to bring you “Coffee with a Copâ€. This program will be a chance for the public to meet with Chief Bolin and his staff to discuss public safety issues.
The first Coffee with a Cop event will be held on January 15th at the Donut Bank at 1200 Lincoln Ave. The event will be held from 7:00am-9:00am. The goal is to provide a stress free environment for people to speak with the police department leadership about things going on in their community.
This program has been successful in other communities and we believe it will be successful here, too. This will be a monthly event hosted at various Donut Bank locations in Evansville.
â€. This program will be a chance for the public to meet with Chief Bolin and his staff to discuss public safety issues.
The first Coffee with a Cop event will be held on January 15th at the Donut Bank at 1200 Lincoln Ave. The event will be held from 7:00am-9:00am. The goal is to provide a stress free environment for people to speak with the police department leadership about things going on in their community.
This program has been successful in other communities and we believe it will be successful here, too. This will be a monthly event hosted at various Donut Bank locations in Evansville.
IS IT TRUE January 2, 2013
IS IT TRUE that before we start our usual morning reminder of what in this country is in serious need of examination and change we would like to wish each and every one of our readers a HAPPY NEW YEAR and a prosperous one to boot?…unfortunately there seem to be 538 elected officials in Washington DC and even a dozen or so here in Evansville that seem to have dedicated themselves to blunting our efforts to achieve prosperity and the antics of the last couple of days have emphasized that point?…the positive thing to take from the avoidance of the congressionally proclaimed “fiscal cliff†is that some compromises did happen?…it is amazing what public officials can do with their own home made guns pointed at each other’s head when compromise is needed to avoid looking like complete imbeciles?
IS IT TRUE that no matter what words spew out of Washington in the next few days most of us are in for a smaller paycheck due to government decisions?…the unspoken and un-negotiated truth is that the payroll tax (social security) will increase by 2% for every working person in America?…many of us will feel this pinch this Friday when our paychecks are issued with 2% more taken out for social security?…in truth we all got a little 2% raise a couple of years ago when the Obama Administration decided to cut the social security tax by 2% as a form of working man’s stimulus?…that a family earning $1,000 per week in when this started got a $20 per week raise which was as impotent as a stimulus as this week’s $20 tax increase is as a choke hold on the economy?…the reality is this 2% should have never been cut if we are to protect social security so this 2% tax increase is just a whip saw reaction to a mistake made two years ago?
IS IT TRUE that some small compromises of no real financial consequence were made by the president and congress like settling on $400,000 and $450,000 as the point where income taxes are increased by 4.6%?…President Obama is already claiming to have fulfilled his promise to soak the millionaires and billionaires, the left is at his throat for being weak and not soaking enough, and the right is after him for increasing taxes?…the reality is that the money raised from this is so miniscule when compared to the federal budget that it is nothing but fodder for divisiveness, AND we have increased taxes for the first time in over 20 years without solving any problems?…it seems as though the right thing was done with respect to estate taxes which was to leave them as they are?
IS IT TRUE the Congressional Budget Office has completed its analysis of the “cliff deal†and has projected that this “deal to save the country†will actually add $4 Trillion to the federal debt?…no matter how much trivia this cast of fools compromised on we are still on the same track to $20 Trillion in debt that we have been on for many years now?…not a word was spoken about the errors and omissions in the Affordable Health Care Act (Obamacare) that are looming today?…that financial advisors to small businesses of just over 50 employees all over the country are coaching these businesses on how best to reduce their workforces to less than 50 employees before New Year’s 2014?…this determination has to do with hours worked in 2013 so the layoffs will start hitting to avoid Obamacare in about 3 months?…not a word was spoken about how the fines of Obamacare are so much less than insurance that even the big companies will opt out?…the best business model out there for where the healthcare system is being pushed by the government is the US POST OFFICE?…it is poorly run, loses money, has a declining customer base, and is a vanilla experience much like the old USSR?…the competitors like UPS and FedEx are privately run, charge more, provide better service, and are profitable?…American healthcare is headed down the path of the Post Office?…at least the bowl games have been entertaining because the across the board conclusion from those who should know in and out of government is that 2013 will be slower economically than 2012 was in spite of the grand first act of 2013 from President Obama and the Congress?
(Washington, D.C.) – (IN-08)Congressman Larry Bucshon released the following statement regarding the Senate Amendment to H.R. 8 – American Taxpayer Relief.
Congressman Bucshon (IN-08) states:
“While I want to keep tax rates as low as possible for all Americans, the fiscal cliff deal passed by the United States Senate fails to address our most pressing problem – reducing out of control spending. This plan has $41 in tax increases for every $1 in spending cuts. It is not balanced in any way and will not improve our economy or reduce the deficit.â€
“Thousands of Indiana small businesses will be forced to figure out how they’ll pay this new tax and they are likely to do it by cutting back on employees, reducing hourly wages and many will have to lay off employees.
“The president ran on a platform of more taxes, more spending, and more government and he won. Unfortunately, the American people will have to pay the price with larger deficits, increased government power and intrusion in their lives, and slower economic growth. I came to Washington, DC to fight for common sense Hoosier values and I cannot support legislation that will take more of your dollars while continuing to over extend our resources.
“As long as I am in Congress, I will fight on behalf of all Hoosiers to set America back on a sustainable financial path that stops mortgaging the future of our children and grandchildren.â€
8 things that deserve recognition as making positive steps in Evansville’s 2012
Mayor’s Focus on Litter: As he promised to do in his campaign for Mayor, Lloyd Winnecke hit the ground running with a campaign to attack the litter problem that has plagued Evansville for as long as many of us can remember. Mayor Winnecke has been like the energizer bunny when it comes to mobilizing the efforts of good people who have pride in the City of Evansville and has literally collected and disposed of tons of litter. The Mayor did not just give lip service to this effort. He has rolled up his own sleeves and picked up litter till his fingers bled. The has been a great and commendable effort that the CCO encourages Mayor Winnecke to keep up in the face of a population that still does not seem to get it.
Smoking Ban in City of Evansville: 25 years after many progressive cities in America instituted a smoking ban the light bulb and the will of the Evansville City Council finally mustered the ability to pass a comprehensive smoking ban with the single exception of Casino Aztar. With this single FREE passage of a smoking ban Evansville removed a very large barrier to child sports tourism and promoted itself to a better place to raise children.
Renewed Awareness of Obesity and Public Health: For all of the fun that has been made of Mayor Winnecke for his “Chicken Fat†video, that video did put some meat on the bones of a City lead awareness effort regarding obesity and public health. Mayor Winnecke has kept it up with exercise days in the parks and by maintaining a personal fitness level that is a good example to all. It is an appropriate reward that the Winnecke Administration presided over Evansville climbing out of the dungeon of being the “most obese city in Americaâ€.
Shaking off a Coma to End the Earthcare Deal: Sometimes it is admirable to learn one’s lesson and correct the errors of one’s ways. When it came to the Earthcare Energy deal Mayor Winnecke seems to have learned from the shoddy job of vetting Mayor Winnecke eventually came around and has hopefully found an elegant way out of a deal that should have been scrutinized better.
Defeat of Consolidation: The people of Evansville and Vanderburgh County spoke by a 2 to 1 majority in their vote to defeat the consolidation plan supported by many of Evansville’s beautiful people. In truth the plan was incomplete, the sacred cows were allowed to remain sacred, and no compelling reason was made to consolidate city and county governments. The rejection of the voters for a shoddy plan was not so much a rejection of the theory of consolidation as it was a rejection of the specifics of this consolidation plan and the history of economic stagnation and population loss.
Change of Ownership of the McCurdy: After 4 years of floundering with no refurbishment action and a struggle to get taxes paid the McCurdy Hotel is now in new hands. We hope to see this change of ownership bear the fruit that leads to tastefulness and prosperity for this classic icon on the Ohio River.
Denial of Vectren Fee Increase by IURC: The first positive occurrence from this denial was the fact that the IURC actually had a meeting in the City of Evansville. Eventually the IURC weighed all of the options and decided that the dense pack technology should not be result in a $32 Million fee increase to the ratepayers of SW Indiana. This is not to say the technology was not a good investment. Quite to the contrary it was a wise and good use of shareholder funds to upgrade the efficiency of Vectren’s turbines but as the IURC rightly determined this should not have been passed on to ratepayers.
Aztar’s Private Investment in Evansville: In spite of seeing the City of Evansville consider using Riverboat money to subsidize a new hotel to compete with them, Casino Aztar confirmed their commitment to seeking prosperity in downtown Evansville by investing in a multi-million dollar upgrade to the Aztar Hotel. It looks much better as does the crosswalk that makes the trip from the District to the Casino safer. Cheers to Aztar for investing without subsidy and continuing its role as sugar daddy to the City of Evansville.
Public-Private Partnerships: A Strategy to Minimize Public Subsidies
By Hans Detlefsen
Jan 11, 2012
This article discusses why the cost of capital available to developers influences whether they will require subsidies. A strategy to minimize public subsidies involves seeking the most qualified developer who also has the lowest cost of capital.
Public-private partnerships can be an effective means to initiate economic development projects. Development types can include a range of properties including mixed-use developments, tourism attractions, conference centers, sports venues, hotels, and other real estate types. Public officials often rely on a competitive process, such as a Request for Proposals (RFP), to solicit proposals from private sector developers.
The aim of such an RFP process is often to identify a private-sector stakeholder to design, plan, construct, and own the physical real estate as part of a public-private partnership. The public sector’s role in a public-private partnership often includes providing some form of incentive to close a “feasibility gapâ€1 between the private sector developer’s total project cost and the estimated value of the completed development.
This article will focus on one key metric to determine which potential developers are likely to require the smallest and largest subsidies. This sometimes overlooked metric, the “cost of capital†to developers, can be a critical factor in determining the amount of public subsidies a given developer will need. A strategy to minimize public subsidies involves seeking the most qualified developer who also has the lowest cost of capital. Although such a strategy may be applicable to many development types, this article pertains specifically to the relevance of determining developers’ costs of capital in the context of developing hotels.
Hotel
Example
Let’s consider an example. For the sake of this article, we assume that a community is comparing two potential private-sector development partners as finalists for a desired hotel development. In general, we find that communities can compare development proposals on the following basic criteria, among others:
Knowledge and experience of developer
Development cost (or quality)2
Income potential
Cost of capital (or funding strategy)
For the purpose of this article, we assume both developer finalists have similar knowledge and experience pertaining to hotel developments. Furthermore, we assume they both agree on the hotel’s construction cost and have plans that indicate identical quality. Finally, we assume both developers forecast similar or identical income potential for the hotel.
The only difference between the two developers is their funding sources, which cause them to have different costs of capital. Hotel funding typically includes an equity component and a loan component. As different developers have access to different sources of equity and loan financing, the funding aspect of a hotel development can play a crucial role in determining a developer’s total project cost. This article will discuss the importance of identifying the developers’ costs of capital as a selection criterion for public-sector decision-makers running an RFP process of this type.
Measuring the Feasibility Gap
A feasibility gap can be defined as the difference between a project’s cost and its value. If a project’s value is greater than its cost, then it is feasible and no subsidies are required. However, this may not be the case for full-service hotels for which development costs often exceed the property’s value.
How can one determine whether a feasibility gap exists? And how can it be quantified? There are many methods developers and investors may use to estimate the feasibility gap of a hotel project. However, most methods essentially rely on quantifying two numbers for comparison: (1) the total development cost of the project and (2) the anticipated investment value of the project upon completion. If the project’s anticipated investment value is greater than its total development cost, then the project is feasible and would not require public-sector incentives. However, if the total project cost is greater than the investment value, then a feasibility gap exists. The size of the feasibility gap is measured by quantifying the difference between the project’s cost and its value.
Developers or cost estimators can provide detailed estimates of a hotel project’s cost. An experienced appraiser can estimate the proposed hotel’s value. The comparison of these two numbers allows one to quantify a project’s feasibility gap, if one exists.
There are three basic approaches used by appraisers to estimate value: (1) Income Approach; (2) Sales Comparison Approach; and (3) Cost Approach. The Income Approach is often the most appropriate approach to rely on when evaluating income-producing properties, such as hotels. Within the Income Approach, appraisers may consider several techniques for estimating value, but one of the simplest techniques is known as Direct Capitalization. This technique allows one to estimate a property’s value by dividing its net operating income by an appropriate overall capitalization rate. Although the Direct Capitalization technique is not always recommended for valuing a complex property, such as a hotel, the technique is useful in illustrating the importance of evaluating developers’ costs of capital. This simple technique can be expressed as the following formula, familiar to most appraisers:
I / R = V
In this formula:
I = net operating income
R = overall capitalization rate
V = value
This article focuses on the importance of capitalization rates used by potential developers. For the purpose of this article, a capitalization rate can be thought of as the overall “cost of capital”3 to the developer. Based on the preceding formula, then, one can see the relationship between a developer’s cost of capital (or required financial returns) and the resulting feasibility gap. The higher a developer’s cost of capital is, the lower the developer’s derived investment value will be. In other words, all else being equal, the higher a developer’s cost of capital is, the more subsidies this developer will need.
Comparison of Two Developers
Suppose a local government has issued an RFP for the development of a 400-room, full-service hotel. Then, assume two developers have been selected as finalists, based on their knowledge, experience, and other qualifications, as previously indicated. Assume both have estimated the total development cost for the proposed hotel to be $120,000,000. So, to determine whether a feasibility gap exists, we need to estimate the investment value of the project to each of the two finalists and compare these values to the development cost estimate.
Based on the formula shown earlier, we can estimate the investment value to each developer if we know the hotel’s expected net operating income (I) and the developer’s cost of capital (R). For illustration purposes, assume both developers are forecasting similar financial operating projections for the hotel, indicating a net operating income level of approximately $8,000,000 annually. We can divide this income figure by the cost of capital for each developer to estimate the investment values to these respective developers. We can then compare these values to the estimated development cost to quantify their respective feasibility gaps, or required subsidy levels.
Assume the following descriptions about the two developer finalists:
Developer #1 has an investment partner who is willing to provide equity for this project and requires a 15% return on any equity contribution invested. As a result of this developer’s current banking relationships, she also has a letter from a bank indicating she can obtain a loan for 70% of the project cost at an interest rate of 6.00%. Therefore, Developer #1’s weighted average cost of capital is 8.70%.
The following table summarizes this calculation and provides an estimate of Developer #1’s feasibility gap for the project.
Based on these assumptions, the indicated investment value of the completed hotel is about $92.0 million to Developer #1. This leaves a feasibility gap of approximately $28.0 million. The feasibility gap can be thought of as the required level of public-sector (or other) subsidies needed to allow Developer #1 to obtain funding for the hotel project. This incentive requirement represents roughly 23% of the estimated total project cost.
Developer #2 has an investment partner who will provide equity for the same project, but requires a 20% return on any equity investment. The developer’s bank has issued a letter indicating he can obtain a loan for 65% of the project cost at an interest rate of 6.00%. Note that this developer has access to a loan with a similar interest rate, but a lower loan-to-cost ratio, compared to the other developer. Based on these figures, Developer #2’s weighted average cost of capital is 10.90%.
The following table summarizes this calculation and provides an estimate of Developer #2’s feasibility gap for the project.
Based on these assumptions, the indicated investment value of the completed hotel is about $73.4 million to Developer #2. This leaves a feasibility gap of approximately $46.6 million. This feasibility gap can be thought of as the required level of public-sector (or other) subsidies needed to allow Developer #2 access to the funds required to develop the hotel. This incentive requirement represents roughly 39% of the estimated total project cost.
This article specifically highlights the importance of comparing parameters that influence the overall cost of capital. In the hotel example, there were two key differences. Firstly, the loan-to-cost ratio, or “leverage†available to the developers, affects how much of the total funds required can come in the form of debt, which is generally less expensive than equity. Secondly, the equity yield rate, or the required return on equity for the investors, reveals how expensive it will be for each developer to access the remaining portion of funds from equity capital sources.4
Concluding Remarks
The preceding example illustrates how differing capital costs can greatly affect feasibility. In this example, the two equally qualified developers would have very different requirements in terms of public subsidies needed to complete the same project. By evaluating the cost of capital available to potential developers, policy-makers may be able to gain important insights about the potential subsidies that will be required to complete various desired development projects.
As illustrated, the cost of capital can make a big difference in terms of whether a hotel project is feasible and to what extent developers may require public subsidies to complete projects. Developers can sometimes have significantly different costs of capital, depending on their funding sources. For this reason, public-sector decision-makers aiming to attract hotel developments to their communities may wish to evaluate these funding sources and any differences in capital costs when comparing developers.
Financing full-service hotels often requires some form of public subsidy. But investigating the financial capacity and funding sources available to potential private-sector development partners can help public-sector participants maximize the return on their public investments. More resources for evaluating development deals and public-private financing strategies can be found in the HVS library 5 or by contacting HVS6
1Economic Feasibility is defined as the “ability of a project…to provide a reasonable return on and recapture of the money investedâ€, The Dictionary of Real Estate Appraisal, 4th Edition, p. 91. This can also be thought of as the difference between the project’s cost and the project’s value to the developer.
2Variations of this criterion could include a project’s ability to generate economic impacts, jobs, or fiscal impacts.
3This cost of capital is typically a blended cost of various forms of debt and equity funding, which have required financial returns (i.e. interest rates and equity yield rate requirements).
4Based on our experience, the developers with the greatest access to financing often have the lowest cost of capital; moreover, such developers often have the greatest ability to complete a project according to the original terms negotiated, rather than a “downsized†or “revised†building program
About Hans Detlefsen
HANS DETLEFSEN is Managing Director of HVS Global Hospitality Services in Chicago. He holds a Masters Degree in Public Policy from the Harris School of Public Policy Studies at the University of Chicago, where he received the Harris Fellowship. He graduated magna cum laude from the University of Notre Dame with a Bachelor of Arts in Government and Economics.
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