Interesting email sent to me by a very good facts and figures guy.
I don't know if you listened Monday night or if the "Special Meeting" was even broadcast to be able to be listened to, but if you didn't or couldn't listen, put thee $4.5 million into this context of the entire $102,000,000 project budget.
$4,500,000 Owner equity finance 9% of this number is $405,000
$58,300,000 Bank financing (unknown if portion of this has owner equity "down payment" or if
it is 100% finance as it appears to be) 9% of this number is $5,247,000
$39,200,000 City of Peoria GRANT <<<<<<<<<<< not a loan, but an outright GRANT
of MONEY 9% of this number is $3,528,000
$102,000,000 TOTAL PROJECT BUDGET 9% of this number is $9,180,000 YES $9.18
MILLION
Within the $102 Million project budget is a line item called "Developer Fees" which based on a handout the night of the "special meeting" was ;limited to a maximum of 9%. Prior to the handout, the "developer fees" could have been higher.
So now lets analyze the deal in the context that the OWNER puts up $4.5:million of their own dollars (PANTS A), but the Developer is entitiled to 9% of that or $405,000: (PANTS B)
the City's GRANT of $39.2 Million (NO PAANTS, JUST MANNA FROM HEAVON THAT DOES NOT REQUIRE REPAYMENT) yields a Developer fee of $3.528 million (PANTS B) for a total of those two pots available to the "Developer" $3.933 million dollars; (getting close to the owners total poney amount in PANTS A);
Loan proceeds of $58.3 Million yields the remaining $5.247 Million in "Developer Fees" to PANTS B
Now you have to understand this equation OWNER=DEVELOPER,
so the $4.5 Million Owner Equity in PANTS A is replaced with $9.180 MILLION dollars in PANTS B, so you have the owner wearing two pair of pants, one (PANTS A) empty pockets, but the other pair (PANTS B) now containing $9.180 MILLION in them.
Some say double your pleasure, others say double your money. I can;t fault and won't fault the "Owner/Developer", they negotiated a great deal by leveraging little or no money into a tremendous tax subsidy. I fault those "good Council representatives" (your description/definition, not mine) and the staff that mortgaged the next 23 years with phoney financing that is as dangerous as the highly leveraged derivative financing that brought Wall Street down
3 comments:
(laughter) " So, I shouldn't expect YOU at the groundbreaking? "
From what I know at this point, no. Nor at cash strapped PPD zoo grand opening, nor the library, nor the museum nor the $70 to 120 million Peoria Public School District open houses, nor BelWood Nursing Home in their new $32 million building, nor the million plus roundabout on Sheridan and Loucks.
Possibly at the $100-300 million sewage upgrade kickoff but only if I still live in the City of Peoria.
Not at times like these, and especially, since it was only 18 months ago, union leaders were complaining of not having enough skilled workers to fill the $3 billion worth of jobs on the books for the then next 3-4 years. Now these same union leaders are begging for closed shop jobs to build anything anywhere.
I'm pleased for those who have a lot of money, a good job, guaranteed health plans and guaranteed retirement income. They should be spending their excess money to help shore up the economy locally and donating more to all those causes they deem "good for us".
For those who say Peoria is hardly involved in the recession, I say "wait and see".
I don't agree and the facts are backing up the facts. It wasn't long ago that CAT closed at $82 a share. It has been as low as $32. Cat"s return on investment can rise with Obama and the Democrats (with LaHood's "pull") spending "phony money". Read "The Creature from Jekyll Island", by G. Edwin Griffin and the WSJ article on Dec. 20, by financial specialist,James Grant, "Is the Medicine Worse Than the Illness?", stating that "The world ran out of trust in 2008-but there is no shortage of money because the Fed is printing like mad. It's the wrong approach, with potentially dire consequences".
As some say, as CAT goes, And CAT is going to "right to work" states in small increments, (they have to move some manufacturing to stay competetive) so goes Peoria.
CAT is still pretty much domionate even with the dramatic rise in health care services that pay little in taxes and do not create a marketable product.
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