Big D, a stringer for Grainger Today and a right fine fellow, attended the Rogersville BMA meeting last night.
He comments:
FYI, the BMA voted to have the city borrow $173,000 ($173,815) to make sure there is enough money available to finish the Hale Springs Inn. The Rogersville Heritage Association has informally said, “We’ll pay it back.” No real mention of a formal agreement that would assure that, at least not in the BMA meeting tonight. The stated reason the RHA asked the city to obtain the money is that because the RHA already holds the mortgage on the building, the city would most likely get a more favorable interest rate. The city will shop the loan to several banks to see which one will give them the best rate. No mention of a “top end” rate that would be a deal-killer. The saga continues.
The full comment is here.
The Rogersville Review also has a brief write up of the meeting (with more coverage available in the weekend edition.) And Jeff Bobo at Kingsport Times-News, who has done a marvelous job covering this project since it began in `04, has a rather thorough piece online. Jeff reports the big question at the meeting was (very similar to our conversation on this blog: )
Borrow or…
Don’t borrow the money and leave the inn unfinished and unusable after five years and $2 million in combined grant and local money spent.
[...]
(City Attorney Bill) Phillips pointed out, will the state want its $1.8 million in grant funding back if the city doesn’t follow through and complete the project.
Again, I do not object to the Town issuing the 12-year notes. The additional debt is manageable enough, and as I’ve said, their actual investment in the project has been minimal (though by my calculations it would be closer to $360,000 with the CONs.) They’d be foolish not to complete it at this point – and I honestly don’t see any reasonable alternative.
Likewise, I do not object to the project itself. The “Main Street” trend and/or revitalization of existing business districts is, I think, a lasting one. Overall, such efforts do have a positive impact on the local economy both through improved property values and increased activity (which also translates into tax revenue.) While I do think locals rely a bit too heavily (perhaps unrealistically) on the Inn, this historical structure is one of our greatest existing assets – and certainly, if the feds/state can dump $15 Million worth of Transportation Enhancement grants on Greeneville or plop a million on TN battlefields, this project is worthy of the funding it has received.
My issues are related more to the confusion and disorganization, which has plagued the project, and the fact that our local officials have been seemingly derelict in their management of the renovation.
The most recent examples: Bobo includes this line in his report: “A stipulation was included, however, that the Rogersville Heritage Association — which actually owns and will operate the inn — pay the money back.” So, the obligation is to be payable from the revenues of the project? The RHA budget? That’s all fine and dandy and can certainly be included in whatever resolution/agreement is sent to the state Director of Local Finance for approval. Ultimately, however, the Town is responsible for repayment of the debt.
Yet, as Big D indicated, there was no discussion with the RHA about finances. And, aside from last week’s mention of a 1% increase in the lodging tax (which is a horrible idea considering that Rogersville’s rate is among the highest in the state) no one asked how the Town might meet this obligation should revenues from the Inn/RHA be inadequate. You’d think, the aldermen might be interested in the contingency plan. Apparently not.
Likewise, no one mentioned an interest rate or cap on the rate. This is odd because I’m nearly certain the rate information must be included in the body the resolution/agreement, approved by the local government and sent to the state. So, will this resolution come before the board again? Did they simply authorize the Town to gather information or did they vote to proceed with whatever rate – as high as the law will allow – without additional approval?
I honestly don’t know what to make of this. I don’t. Given the lack of discussion on this and other issues, one might conclude the either the entire BMA is so afflicted with a case of the raging stupids that they spend their meetings preoccupied with the task of not slobbering down their shirtfronts… or they already know the answers, which would mean these issues are being discussed outside public meetings. By the way, that would be illegal.
Similarly, I find it disconcerting that project managers not only underestimated the entire cost of the project by (last week’s) estimated $150K, but this number jumped another $23,815 before the BMA meeting. Obviously, I’m not the only one concerned:
Prior to the vote, however, board members — as well as members of the RHA — wanted to know why they were told two weeks ago that construction funds for the inn renovation had fallen so short.
Especially after city leaders were told only a couple of months ago that the project was on schedule both financially and on the calendar.
[First Tennessee Development District adviser Ken] Rhea and construction contractor Glen Courtney attended Wednesday’s meeting to explain. In a nutshell, they guessed wrong on the cost estimate of the second phase of the renovation, but there was also an explanation why they guessed wrong.
In order to meet the deadline for an upcoming TDOT tourism grant, Courtney said he whipped together some “guesstimates” as to the cost of building a new rear addition and completing the 1824 main building’s renovation.
Rhea said he plugged that number into the grant application.
I will reserve judgment on the “guesstimation due to deadline” explanation for now. The bottom line is Courtney’s poor guesstimating skills left the Town holding the $173K (or more) bag, and they own it. The numbers submitted in the grant proposal were inaccurate. I’d assume Mayor Sells signed off (in good faith) on the application. Applicants are responsible for verifying costs and their accuracy – and any errors are the responsibility of the local government.
The “guesstimation,” however, doesn’t explain the $23,000 increase over the last week or how the entire $173K overrun went unnoticed until two weeks ago. I was under the impression the state required a rather sizable paper trail for such projects and that the Town held meetings to discuss progress each month. You’d think someone would have stumbled across these discrepancies between “guesstimate” and “actual cost” long before now.
Furthermore, how can officials, taxpayers and project mangers trust that Courtney’s latest (gu)estimate” is accurate? Oh, they can’t.
In a project that has been plagued by delays and setbacks during its five-year duration, BMA members and the RHA wanted assurances from Courtney and Rhea that this was the last time they’ll be asking for more money.
No one was willing to make any promises.
In conclusion, I’m not going to allege that the local government has been neglectful in the management of this project. I’m not going to reiterate all the points of confusion, the missing or incongruous information (insofar as the public is concerned) or mention those aspects of the project I find downright strange. I’m not going to speculate that some BMA members have been skirting open meeting laws. In fact, I am not going to say anything negative .
Quite the opposite. In order to keep this bunch of officials on my good side, I wish to extol the wonderous virtues of the entire Town of Rogersville BMA and tell you how get-down-with-their-bad-selves fabulous they are. What’s more, I do, hereby, declare them utterly brilliant in all things municiple… because well, let’s be honest here. I am a local business owner. As such, I’d love to slip them a guesstimate for whatever work they need done – providing I could have an arrangement similar to whatever Courtney has with them.
i am curious as to where Bill got his figure of $1.8 million that “the State” might want paid back. First, it is federal funds, not state funds. And looking on TDoT’s own web site, i find $914,372 awarded, which is half that amount. (The grant was an 80-20 match.)
i spoke with TDoT this morning and was told the project must be completed within the scope of the contract and its amendments, so it is important for all involved to see the contract and its amendments, and to be familiar with them.
The City pays all invoices, within the awarded amount, up front. They then submit the invoices and canceled checks to TDoT for review and reimbursement, up to the awarded amount. Any overruns on the awarded amount will not be sent to Nashville but merely turned in to City Hall for reimbursement.
Carolynn, based on my notes, all of the calculations Bill tossed out at the meeting were off. By my accounting, your numbers are correct w/ the city investment standing at closer to $360,000 after the CONs. All I can figure is he must have been counting the total investment (including the insurance settlement) and this would still be slightly inaccurate.
Then again, this isn’t the only part of the story that doesn’t quite add up, is it?
Now, as to the funding source, since the state distributes the fed. funds: I believe they’d be the ones to come calling for a refund if the Town fails to complete the project. So, unless you’re on budgetary pig patrol, I’m not sure the distinction between fed/state would matter any more than the distinction between tourism/transportation would.
What the TDOT told you is accurate and plainly stated in the handbook for local management of Enhancement Grants. But, at this point, I don’t think it matters how armed with information the citizen’s seek to make themselves. I suspect town officials have navigated themselves into an situation where they, you, and every other city taxpayer are at the mercy of Investment Contractors. And while knowing might be useful ammunition against incumbents in the upcoming elections: I have my doubts that the situation can be rectified.
You had to be there…..
1. Contractor “guesstimates” done without having any plans available due to time constraints in applying for the grant.
2. Alderman relying upon memory for what was to be completed in the project. (That’s what “documentation” is for. Next thing you know someone will claim they (and two others….) remember passing a resolution but can’t find it documented anywhere so therefore they will comply with their memory….)
3. As one who attends every meeting….without being paid…very little has been discussed or reported on this project.
4. I was a little bothered by the “Special Called Meeting to discuss the Hale Springs Inn Project funding” being turned into the regular February meeting by the mayor with no notice.
5. RHA “sure…we’ll pay the monthly payments…” (~$1500/mth for a 12 yr $1783K loan @ 3.25% (my calculations) plus the $3000.00/mth mortgage payment.)
6. Bottom line. I have regularly attended RBMA meetings. Based on what I have heard and observed, I have no idea what is going on and who is in charge, responsible or accountable.
PS…various petitions were passed around for candidates running for office. For some reason, no one asked me to sign….
Nice to see you back.
Tim if you live in the city of Rogersville you’re welcome to sign mine!
Tim,
To be fair, the Town did have monthly “Inn Update” meetings. I suppose these issues may have been discussed in great detail there – at least I can’t say they weren’t.
Again, I’m reserving judgment on the “guesstimate” thing until I gather more info – but I do absolutely understand there was a pressing “political” need to make this grant cycle.
As far as documentation, we could talk for days about what they don’t have and should have: the niggling question for me simply is this: Do they approve broad measures with few details because (a) they don’t fully grasp what’s going on or the possible outcome(s) of their actions or (b) they’ve discussed these details outside of public meetings and are knowledgeable coming in? And, given the lack of citizen interest, does the answer even matter since it’s going to have the same outcome either way?
Personally, I’d like to think they’re violating open meeting laws. This issue, with the right amount of pressure, could be addressed. If the answer is (a)… well you can’t fix stupid.
@Big D, I am thrilled to hear you’ve picked up a petition. While I am not a city resident, I might be persuaded to make a small donation to your campaign after you qualify. Just so happens, I think you might be just the change this city needs.
A.