Cam, thank you for jumping inâ€¦
The audit sounds good on the face of it but, as a fellow construction guy, you got to know teasing out where the monies went could be difficult. Are we paying just for the materials – concrete, rebar, conduit, lights – and labor used to build one level of the deck or will the cost of digging, building the foundations, support infrastructure, etc. be factored in? In other words, are the conditions of the audit established now or will the Council make them four years hence?
The Town will borrow the monies now and pay them back with tax receipts – so, tax-wise, the development itself is neutral over the course of the payback period.
JohnA coined the term â€œsynthetic TIFâ€, which is an accurate description of what we have in this finance plan. You guys were quite vocal in your disdain for this approach. Bill Strom made a big deal recently about TIFs – saying they would NOT be used. But, for all practical purposes, we have a TIF (a COP in sheeps clothing [unless you consider 1-floor of a private development â€œessential public infrastructureâ€]).
What changed? Was it there was no other palatable financing mechanism? We make folks vote on much smaller acquisitions of debt for much larger projects, the Aquatics Center being a notable example. You must of know sometime prior to this years election that we needed the money. Why not float a bond? Was RAM or Council worried the voters would turn it down?
A few followup questions here:
1) How does this impact the financing of related, anticipated associated developments, street improvements for instance, that these â€œmissingâ€ tax monies wouldâ€™ve contributed to?
2) What satisfied you that the bond ratings and debt ratios would not be negatively impacted? I imagine thereâ€™s specifics, could we please see them? Who did the analysis? Did we ask an independent entity to review the analysis?
3) As a corollary, did the town get any independent financial advice on any of part of the â€œnewâ€ deal?
4) Following that, in my review of the financing of a few projects similar to ours, the interest rate was North of %5. In each of these cases, the COP (or COP equivalent) was secured by a fairly complete structure. Do we have a firm financing deal for the %5? I assume not. Given that, and given that weâ€™re securing the debt with one floor of the deck, what is the confidence level in the %5? Where does that confidence flow from?
5) As JohnA pointed out, weâ€™re bumping up against a AA/AAA rating ceiling now – thatâ€™s why Iâ€™m concerned about the ratings.
I published the planned schedules for taking on bond-related and other types of debt. How does the new COPs fit into this schedule? Besides the Aquatics Center, other CIPs and bond-related expenditures are anticipated over the next 4-5 years, how close can we skirt the edge?
6) How does this affect the current reserves?
7) You mention performance and payment bonds, where are the details? Fundamentally, is the $8.2M weâ€™re committing IT? If so, given the huge jump, whatâ€™s the confidence level? Howâ€™s it derived?
8) Again, as a fellow construction guy, did you follow, how the costs increased %30 in 7 months of discussions? National trends are flattening at around an annualized %7-10 increase – at worse. Did you ever see the analysis? Can we see the analysis?
9) You mention Cummings, who seems to really want to deal. Seems like a nice guy to have a beer withâ€¦
Can you explain how he went from PROMISING to eat the construction cost increases, a promise he made in securing the deal, to us contributing millions?
10) As a corollary, since RAM has apparently done such a poor job of estimating costs since the deal was sealed, what confidence does the public have in their further projections? How do you have confidence in their projections?
11) If the value of the air rights is so piddly, why sell them? Why sell any of the rights to either the land or the air? Yeah, weâ€™ll all be dead 50 years from now, so why fret? Still, I imagine the combined value of the land and the air rights to be significant – and combining the two is perfectly allowable under this plan.
I have many more questions which I have or could ask but Iâ€™ll end with one more:
When will the public get the complete financial details, the complete financial impact analysis (including non-associated debt acquisition), the justifications, the whys and wherefores of all these modifications?
Mondayâ€™s agenda and its supporting detail were not available on-line until close of business Friday. I would greatly appreciate at least a full week or more to review what I hope is hundreds of pages of documentation. Not only that, thereâ€™s probably hundreds of answers to hundreds of questions in those pages.
Please publish the details nowâ€¦.
Finally, Cam, Bill, Sally, the staff that worked on this plan, I appreciate your efforts. I salute your intent.
Yet Iâ€™m absolutely flummoxed that we went from a deal that folks said was â€œsolidâ€ to this mess. I had earlier concerns, as you guys well know. I was concerned with all the shielded negotiations the public would have few, if any, checkpoints to measure the progress of this deal – that weâ€™d have a deal thrust upon the citizenry with little or no time to properly evaluate it.
Worries, yes. But I had great confidence and trust that all that back room dealing would put reality to the original plan. For those reasons (and more) I promised to wait and see how the â€œnew dealâ€ panned out. Iâ€™d stop banging the drum. Iâ€™d trust that the deal would smell sweeter on this end.
Please, do not rush this deal through without adequate time for the public to DIGEST the consequences.
Thanks Cam, once again, for publishing your perspective as a key member of the Downtown Initiative. I do support development downtown, just not development at any cost.
And thanks for taking my questions. Over the next couple weeks Iâ€™ll try to ask fewer than 100 more