DeMarCaTionVille

The truth has finally caught up with the rumors.  The Rogersville Review reports: Rather than run the risk of running out of money for the Hale Springs Inn project, the Rogersville Board of Mayor and Aldermen may borrow up to $150,000 to make certain it is completed.  The BMA has scheduled a meeting for February 4, 5pm,  at city hall to discuss issuing up to $150,000 in capital outlay notes. 

The news doesn’t come as a shock.  Not really.  The $150k number has been floating around unofficially for awhile.  And, back in August, Rogersville Building Inspector Steve Nelson told Jeff Bobo @KTN the funds available probably wouldn’t cover the project in one phase.

Of course, when he said “one phase” I wasn’t certain if he meant the original Phase One or Phases One and Phase Two, which were combined after the second or third project redesign into a Single Big Phase, but then later redivided, which would technically make it three phases or not…  ah hell, at this point, I don’t know which phase is what.

I had to contact  Mr. D, the D-Man, The Big D , Mark (who can pick his own blog name later) to find out if the project were short at the halfway mark or $150,000 shy of being finished.  He tells me he is 99.9%  certain the Inn project is $150,000 away from being done.   Over.  Complete.  There is an end in sight.  Glory Hallelujah.  This is good news.

The bad news, however, is the request for more funding has drawn quite a bit of criticism and outrage from the natives.  I understand their frustrations.  I truly do.

When the Town of Rogersville took over legal ownership of the Inn from the Rogersville Heritage Association (RHA) in 2004,  a move necessary to remain eligible for the $746,372.00 in TEA-21 grant monies awarded by the Tennessee Department of Transportation, the project became a series of setbacks, delays, and disappointments.   There were four years of constant pissing contests, convoluted ownership agreements, a foot-dragging state fire marshal, a mind-changing contractor, an allegedly elusive architect – not to mention those nasty wars and hurricanes brought on by President Bush, which caused the price of construction materials to skyrocket.   After a redesign and few bid processes later, work actually started… in January… of 2008.

In February, the rear wall of the Inn annex collapsed.  (Contrary to popular belief, the collapse had nothing to do with  large number of sledgehammer-wielding contractors knocking around the century-n-some old structure.  Nope, the three stories of ancient brick was felled by a combination of  factors:  the ground, the weather, the age, the vibrations from a passing helicopter, an abundance of weighty birdshit  and perhaps some flying pigs, which may’ve nicked the side of the building as they passed.)  Those involved with the project later called the collapse  “a blessing in disguise” and the decision to demolish was a loss to no one really,  except the insurance company who paid out a settlement of $581,000.

With the settlement money and a 2nd transportation enhancement grant in the amount of $168,000, the renovation was back on track.  By then, however, most of us had long since written the project off as Rogersville’s Biggest Boondoggle and righfully so.

And yeah, considering the history,  it’s understandable folks would now be skeptical or angry about this request for more money… particularly in some yet to-be-determined amount not to exceed $150,000.

While it’s standard for local government to fund projects with CONs (though I do think the Inn is stretching the “fulfills a public purpose” description.  I don’t care if it is in the Central Business Development District: it’s a stretch)  and I  understand it’s common for these notes to be issued in indefinite amounts (a series of bonds in xx amount not to exceed a total of XX  dollars) – but seriously?  We might need $150,000 or we might not?  How much might we NOT need?

Folks, I am no contractor, architect or expert in the renovation of historical properties, but this project has been given a June completion date.  We’re not talking about funding a two-year school construction project.  We’re talking about five  months.  In five months, the cost of materials isn’t going to vary so drastically that they can’t come up with a fairly precise set of numbers.  And, in my opinion, if they’re going to sell this notion to taxpayers (and very soon-to-be-voters with an election right around the corner,) both the BMA and the RHA will have to provide more details.   Otherwise, these folks ain’t buying it – and I can’t blame them.

Even I think, based on the information available, the risk is greater than they’re letting on.  City Recorder Bill Lyons claims the money will be repaid by the Heritage Association.  But what if the RHA finds themselves unable to retire the debt?  Then the notes are a direct obligation of the Town of Rogersville, are they not?  And the Town of Rogersville has been tapping into their reserve funds for the past two budget years (translation: they have about as much extra spending money as Uncle Durbin after a three-day bender and a night at the titty bar -which would be, um, none.)

And while the Heritage Association looks attractive on paper – you know, woo-hoo, nice illiquid assets! – as far as actual revenue,  77%  of their income is generated from publicly supported projects and membership dues.  For instance, according to their 2006 tax returns, their biggest money-maker was Heritage Days earning about $56,250.  Membership dues came in next at around $23,420.  Other profits were generated from rentals, merchandise sales and smaller RHA-sponsored events. Every single one of these revenue streams could be significantly affected by the current economy – and are therefore unreliable.

We’re in a recession; it’s not a stretch to imagine booth rentals at Heritage Days might be down  Attendance at luncheons or other events may be flat.   They may even see a decline in membership dues, considering, as of December 2008,  7.6% of the Hawkins County population was unemployed.  (The January figures won’t be released until the end of March because, hell, with all of the shut-downs and layoffs, it’ll take them that long to count that high.) So, I have to be honest here.  Given the amount of debt the RHA has taken on, I’d feel safer putting my money in a crackhouse mattress.

Furthermore, according to Bill, the source of revenue being explored now to repay those notes would involve a one percent increase in the city’s hotel and motel tax.

Uh, the General Assembly just hiked this rate in March of  `07  from 4% to 7%, the 3% increase being proposed by Represenative Mike Harrison and former Senator Mike Williams.  While I’m sure Harrison would introduce another 1% increase in the House without batting an eyelash, doesn’t State Senator Mike Faulk oppose tax increases?  And not only would this plan require him to introduce a tax increase, it would be an industry-specific increase with revenue used to subsidize a government-owned competitor.  Now, that seems downright un-Republican to me – and Faulk is the super-duper Mountain Republican less-tax, less-government man, isn’t he?

Not to mention, it is already is cheaper to stay in Church Hill, Morristown, Kingsport or other surrounding areas than Rogersville: and it strikes me as stupid to fund a tourist attraction using a method that would actually make Rogersville too expensive for the average tourist.

That’s not to say I’m not opposed to the notion of issuing the CONs:  there’s a flip side here too.

The days of these projects being awarded large, juicy grants from the state are, I think, coming to a close.  At the state level, your conservation-minded,  history-loving,  bunker-building Governor’s days are limited.  Former Senator Mike Williams, who was instrumental in getting previous funding for the Inn, was not re-elected.  And honestly, I can’t see Mike Faulk championing one of his predecessor’s pet projects.

I don’t say this because throughout the campaign Faulk railed against Williams’ “government allocations.”  That’s a small part of it, yes – but c’mon.  Ya’ll know Mike Faulk.   Hell, he was a County Commissioner here for years.  Isn’t it likely he’d take one look at the prior management of state funding, which is nearing the million mark, the numerous design changes, the delays, the overruns, the project management structure – and mail you a hammer w/card of encouragement and perhaps some wise(ass) saying about how elbow grease and initiative is good for the soul?

This means if the Town of Rogersville or the RHA doesn’t get the project done, it won’t be done.  And I think it makes more sense to finish – but not because it’s crucial to the revitalization of downtown or any of that blather.

Quite simply: sound judgment usually says profitability of a project should outweigh the investment.  The town is in fair shape so far.  Assuming the local grant matches were 30% or less, they have invested less in the property than it’s appraised value.  Still, it is what it is – an unmarketable, unfinished, untaxable, non-revenue producing building, which benefits no one in it’s current condition.

If the Town invests the additional $150,000, one of two things could happen.

(1) There’s a remote possibility the Inn will prosper and become the Main Street miracle the downtown merchants hope it will be  (I doubt it, but hey, for all we know, they have a business plan so spectacular it’d make Warren Buffett weep tears of joy.  Maybe it includes a flying pig display.)   If that’s the case, the RHA could manage their debt load.  The CONs wouldn’t be an issue AND the increased flow of traffic downtown would generate additional sales tax revenue, easing some of the budget issues that exist for the Town now.   This is the ideal outcome.

(2) A more realistic outcome might be: the RHA loses their ass in this deal.  The bank could foreclose and the local government would still be more likely to see a return on their investment if they have a stake in a functioning taxable commercial property – instead of an unusable one that will sit on the market rotting once again.  Right?

Therefore, since the Town is danged if they do, and just as danged if they don’t – I say why not just dang do it?  Isn’t taking a risk at something better than the safety of knowing you’ve got nothing?  Of course, my opinion could be tainted by the fact that I don’t pay city taxes now and I’m more than willing to gambling with other people’s money.

So yeah, there’s that.

Tags: capital outlay notes, funding, grants, Hale Springs Inn, historical district, lodging tax, renovation, Rogersville, Rogersville Heritage Association