Friday, August 24, 2007

The Heers Building ~ Council Bill 2007-267

I note that Vince of KSGF weighed in on the Heers deal here and Jason at Life Of Jason weighed in on the Heers deal here.

I agree on some points each of them made and disagree on others. The primary distinction I would make would be that the time for the City Council to have taken action against the 2.5% kick back from the Convention & Visitor's Bureau (CVB) hotel/motel tax was when Mary Lilly-Smith sweet talked the City Council into leaving it in the list of incentives for negotiation when they approved the term sheet back on July 2, 2007.

Smith explained on July 2 that when the City brings back the redevelopment agreement in the form of an ordinance, that we now know as Council Bill 2007-267, that Council will be voting on the incentives that the city negotiated with McGowan/Walsh as a package. If they didn't realize it would be "all or nothing" then, they should have.

At that meeting, Lilly-Smith said:

"You'll have an opportunity when we bring a redevelopment agreement back to you around August 1 that will say, 'here are the incentives that the City agrees to provide,' and you will take action on that ordinance and then between that time and December 31 we have to put in place those incentives."

Certainly, the City Council could have displayed a bit more backbone on July 2, but we saw what happened when Councilman Burlison complained about the loss of general revenue for the interest payment on the loan on the Heers building. When he expressed:

"a sense of, well, almost a sense of outrage,"

over the city letting

"a quarter million dollars slip though our fingers."

City Manager, Bob Cumley stated that Burlison's concern was well founded, but Mayor Tom Carlson went on a tirade over Burlison's use of the term "outrage." How dare Burlison tell it like it is?

Jason, at Life of Jason blog, quotes Councilman Ralph Manley from the Springfield News-Leader,

"I don’t want to give away the store to get it done.”

But back at the June 18 City Council meeting Manley said:

"Two hundred sixty thousand dollars at this moment will be peanuts...While it may be dealing in several figures here, those figures are peanuts when we talk about the objective this total thing is going to meet."


Granted Manley was talking about the loss in interest payments at the time, but speaking of the "objective this total thing is going to meet," he knew on July 2 what the terms of negotiation for the agreement were. He and the other Council members listened to the representative from the CVB, they listened to other local hotel owners who didn't want to see revenue be taken from the CVB, he and every other Council member had a problem with the city possibly giving up 2.5% of the hotel/motel tax then, why did they allow Smith to push it through with that left in the list of possible incentives? Why didn't they call to amend the term sheet before approving it on July 2?

But...I don't blame the City Council, at least not today's City Council. I blame Mary Lilly-Smith and the City Manager and the City Council that existed when the Heers building deal(s) first began to be negotiated.

I blame a City Manager who, at the July 30 Council meeting, said about the ongoing former "arena site" negotiations:

"This is one of the areas, as Mr. Manley said, that we can have a closed session on because it involves negotiations, which we don't do in public, otherwise we wouldn't have negotiations with anybody if we had to do that. So we will have a closed session on that. Once we get the term sheet...we'll have to lay it out, what's the best deal, here's the reason and that will be public...."

You see, Cumley is basically telling the Council and the citizens of Springfield, Missouri, "trust us," trust us to negotiate a good deal with one of the prospective developers of the former "arena site." Trust us to negotiate in private, bring you a term sheet to approve and get the best deal for Springfield. "Just trust us."

And that's the problem.

The City of Springfield, a past City Council and the Economic Development Director, Mary Lilly-Smith, negotiated away any leverage they had in the Heers building agreement. They HAD no leverage in the McGowan/Walsh deal because they negotiated away every bit of leverage they had, now they are concerned about negotiating privately on the development of the property adjacent to the expo center because they don't want to lose leverage in ongoing negotiations by discussing details in public? Give me a break.

As far as the Heers building deal? Council has no choice but to pass it. If they don't pass it another quarter of a million dollars will be frittered away in interest on the note, the note they successfully negotiated their way into assuming from Vaughn Prost.

Remember how proud we were when, at the passage of the budget for the City on June 4, Councilwoman Cindy Rushefsky made a motion to amend it to place a quarter of a million dollars out of the "rainy day fund" into the police and fire pension fund? We stand to lose twice that amount in interest on the Heers building note if the Council doesn't pass the emergency ordinance accepting the Heers deal, and it could likely be more than that because the city has likely already negotiated away every other developer who might have, at one time, had an interest in the Heers Tower.

I think one of my commenters, "John Lilly" had it right when he wrote:

"The city wanted a hotel, but the developer has the upper hand. He put in a poison pill (he gets 50% of the guest tax that goes to the CVB). The city punted and left it up to the CVB board to say yes or turn it down. They would be idiots to accept it, thus creating a prescident. So the developer gets his condos with 80 parking spaces in the garage and the ability to build a sky bridge. "

I couldn't have said it better myself, John Lilly. I'm sorry I don't have a box of chocolates to offer you.

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