I asked Finley several clarifying questions about the Industrial Park agreement by email. Of course, he “didn’t have the agreement right in front of [him]”, so I didn’t get an answer to most of it.
Weird, because I only read it a couple times and I think I remember all the major points….and I’m not even a City manager making $200,000 in salary in benefits with an assistant who does all my busy work for me! Nor did I haggle over the minutiae of this deal for well over a year. But that’s just me.
Here is the deal, if you want to take a gander….
Finley must be swamped with all the train wrecks currently going on around him like the disastrous Hostess House bids and the skate park still not being done. Oh well. I’ll give you my synopsis – which is likely 100% correct. I’ll edit this later if Finley says I got something wrong.
#1 – Martin Rod & Custom (MRC) is renting the entire 5.6 acre parcel from the City for only $100 per month. Yes, you read that correctly – $17.50 per acre per month. Or about 1/20th of a penny per square foot. I remember a couple years ago when a farmer friend of mine said she was renting land for $500 per acre per month. Too bad she didn’t have a city government of the other side of HER deal!
Mind you, Martin himself admits he thinks he can rent this space out (boat and RV storage) for $50 per month per boat/RV for 50 boats/RVs and rake in $2,500 per month [see page 23 under Business Description]. I am doubtful he can pull that off, but I will humor him.
Making 25x your cost is not a bad ROI at all. He will make $30,000 per year if he is right – and pay the City $1,200 for the land he is using. At the very LEAST, he will cover his $100 per month with ease. Hell, he could just store his own personal crap there and come out ahead on this. So this is ZERO risk to him. None.
#2 – The City removed the concrete there for $38,300 SPECIFICALLY for MRC. So the City starts off in the hole that amount. The City lied about this in October of last year. This was the first gift.
#3 – The city can change and extend any of the deadlines in the deal, if they want to. So, if we get to June of this year and things are kind of a disaster for MRC, the City can give him more rope to save face when this ridiculous fairy tale fails to materialize (see page 15 – “The City may grant an extension to the deadlines noted herein…).
#4 – Phase I (Martin basically doing nothing but hanging out a shingle that says “park your shit here” and collecting some money) creates ZERO “primary jobs”. If you want a definition of “primary jobs”, see page 7 of the Economic Development Incentive Guidelines and Principles”
So far, we see zero upside for the City here: they spend almost $40,000 to clean up the land, collect $1,200 from MRC for the year and MRC pockets $30,000 for himself – and creates ZERO JOBS…which is supposedly the Prime Directive of Economic Development, as I understand it.
As far as I can tell, this “RV and boat storage” “phase” of the “agreement” may last one year OR it may last two years! A nice option for MRC – and I have no doubt he will take the entire two years. Why wouldn’t he?? That’s $60,000 in his pocket for doing very little. He can push the wild promises of “Phase II” out another year at no cost to himself.
Now the “Agreement” says he needs to “negotiate the terms of Phase II” by June 30th of this year. But remember: the City can change that any time they want. Also, he only needs to “negotiate the terms, including capital improvements and employment projections” – which is STILL all just “pie in the sky” bullshit on paper. We have seen how easy it is to bullshit the City when we watched Eco-Strong and Mike Cour make up mountains of lies and get away with it repeatedly.
#5 – MRC has the right BUT NOT THE OBLIGATION to buy the property for $165,000. This is the second gift. As a former professional derivatives trader myself, I can tell you this is known as a “zero-cost call” or a “free look”. All upside and no downside. The City can only renegotiate the price of the land if MRC takes longer than 18 months to shit or get off the pot. Until then? Free look.
If the real estate market takes off scorching hot again in the next 18 months (which I consider unlikely), MRC can grab the land at a bargain price. On the other hand, if the economy is deeper in the shitter and land prices are too, MRC can walk away from this entire thing, as I understand it.
I see nowhere in this document where he is FORCED to buy the land nor pay any penalty for not doing so. Finley can correct me if I’m wrong, but I’ll be damned if I can see any real penalty for walking away from this whole thing and never doing Phase II as described.
I am guessing that “deals” like this one will be struck for the Business Pork Project too, someday. All upside for a company which puts no skin in the game and all downside for the taxpayers.