North Little Rock businessman Frank Fletcher, who owns the Wyndham hotel in downtown NLR, has some questions about Mayor Pat Hays' hazy land swap to encourage development of a new hotel downtown with a parking deck financed by taxpayers and the public schools.
Fletcher has an interest, naturally, in city favors given to a potential next-door competitor. It doesn't mean he's wrong. He's certainly not wrong in his court opposition to the gerrymandered midnight tax district engineered by Hays and his stooge of a city attorney to divert school property taxes from an already-completed apartment complex to his little scheme.
Is the city paying too much for a vacant building? Has its value really risen while property values generally have been falling? Who appraised the parcels involved in the swap? Is Mayor Hays' parking deck plan really a public benefit or just a private benefit for a future hotel developer? How will the deck be built if the city loses — as it should — the lawsuit over the tax district designed to raid school taxes for Hay's use? These are among Fletcher's questions.
August 23, 2010
The Honorable Patrick Hays and Members
of the North Little Rock City Council
City of North Little Rock
300 Main Street - NLR City Hall
North Little Rock, Arkansas 72114
Dear Mayor Hays and City Council Members:
On July 26, 2010, I attended the City Council meeting during the course of which the Argenta/Downtown Master Plan was discussed. During the public comments, there were a number of questions about proposed land exchanges required to implement the Plan. At that time, you said that the Plan did not involve land exchanges and that the Plan implementations were separate matters that would be addressed at a later time. The clear and unmistakable message of the July 26 meeting was that details of the exchanges were still being worked out and the public would have more than ample advance notice at a future date to learn the details of the exchanges before they were addressed by the City Council.
Surely you can understand my surprise and disappointment when I learned from this morning’s paper that the City Council plans to consider these land swaps at tonight’s meeting, even though the documents for these transactions were not filed until late last week. According to newspaper accounts, these transactions have a presumed value of $2.2 Million on each side (or a total of $4.4 Million). The concept also appears to involve use of City funds to build a parking deck at some further cost. It is unbelievable that matters of this size will be considered without more thought or study or more advance notice to the public.
According to the newspaper, the land swaps are part of a plan which will result in the City constructing, at its expense, a new “public” parking deck. The new parking deck will primarily benefit a proposed new hotel in the downtown area. Having been in the hotel business here in NLR for almost 30 years, I know the financial risks and challenges a new hotel faces in this economic climate. It is fine for private investors to assume these risks. It is a totally different matter, however, when our City may blindly — or without adequate evaluation — become involved in a transaction that saddles it with large and unexpected losses, losses which will, no doubt, not fit in future City budgets without cutting certain essential services.
As a businessman, it is important for me to ask questions about a potential deal before proceeding so that I understand not only the opportunities but the risks involved. A failure to do so is to invite financial disaster. The City’s proposed land trades are nothing more than business deals and it is imperative that they be considered with the same degree of serious and complete study.
There are a number of questions that should be answered before any of you vote for or against these proposals. Having been involved in many similar deals, I know they are very complex and not all questions or risks are obvious on the front end. So, any list of questions likely will lead to the need for more investigation; nevertheless the following represents is a starting list of the questions that need to be answered before any action is taken on these proposed swaps:
• How were the values for the properties determined? Are there appraisals, and if so, who prepared them, who paid for them, have they undergone independent review, and how current are they?
• What is the true current value of the Rye Wholesale property? Under the swap proposal, this property is valued above $2.2 Million. But, when purchased in 2005, the price was $1,950,000. Is it realistic to believe that this property has increased 15% in value?
• What are the true current values of the properties being traded by the City? Are there appraisals? Have there been any attempts to sell these properties for cash instead of using them for trade?
• If the City is to build the parking deck for the hotel, how much will it cost? How will the City pay for it in the short-term and long-term? If there are cost overruns (which are very common with any construction), what plans are there to fund the extra expense?
• Has there been any analysis as to what size of parking deck is needed? In a July newspaper article, one NLR Alderman is quoting as saying the deck will be either 200 or 300 spaces depending upon how the TIF litigation is resolved? Will a 200 space deck be adequate? Will a 300 space be adequate?
• What impact will this deck have on the plan to build a parking deck north of Fourth Street as shown in the Master Plan? Can the City afford to build both? Does it need both? If not, why is the City deviating from a Plan it adopted only two weeks ago?
• Has there been any independent financial analysis of the projected profitability of the parking deck? What are the contingency plans if the deck operates at a loss? Will funds have to be diverted from other City services to pay operating losses if they occur (which appears likely in this economy)?
• How many spaces will be needed for a 130-room hotel with some convention space and some new retail space? Based upon my experience as a hotel owner, it appears that the 200-300 space deck will clearly be too small for a Hotel and for public parking.
• The TIF litigation has never been resolved by the court. If the city loses this case, from what source will funds to build the deck.
• If the overall concept is to swap the properties and have the City build the deck, why is this project being done in two separate parts? Would it not be better to get all matters resolved at the same time so the City does not get stuck with the Rye building if things change?
• Is there any binding agreement for the investor group to buy the Rye building once the swaps are done? What assurances does the City have that this purchase will occur?
• Is this project and its expected costs the best use of City funds for the NLR citizens?
What I request is this: Please defer this proposal for at least 2 weeks to allow time for a public review of them. All of these questions — and perhaps others — can be discussed at the next Council meeting, and, if need be, I request that you be open this matter to further public discussions before it is put to a vote. The stakes are too high for a rush decision.
We are at the point where everyone needs to know what the end-game is with the proposed land swap. If the City intends to build a public parking deck connected to a new Hotel using public funds in the most challenging of economic times to support a private business, then all North Little Rock citizens need to have a clear understanding of what their tax money is being used for and why.
Frank Fletcher, Jr.