Phil Cannon: My opinion of the $6 million bond
What follows is a post written by current hero Phil Cannon regarding the downtown bond issue. Phil has problems with the bond as well, but also supports the issue. As we try to be fair here, I told if he would Phil to write up his position, we would post it. I sincerely hope this inspires respectful but spirited debate as $6 million is hardly chump change. – Tom
My opinion of the 6 million dollar Bond issue for Downtown Albany
Revitalization: (This is longer than a “Blog” but is the only way I can offer my own explanation.)
I understand the issue regarding the public feeling like they are being asked to fund a 6 million dollar bond issue without being told the purpose of the funds. To me, that is not a reason to object to the issuance of the bond. The use of the bond money is more important than not knowing.
I agree more information needs to be disclosed. I agree ADICA’s current CEO should not be the person in charge of using the money. I agree there needs to be an accounting, check writing and a check and balance system put in place before the money is received.
Let me take a moment and explain why I agree with the bond being issued.
Downtown Albany is the central part of the Capital of Southwest Georgia.
Think about it, we are the biggest city in a 100 mile radius. We have the biggest shopping areas, the most places to eat and the best choices to shop.
Albany relies heavily on outside people shopping and paying sales tax dollars in Dougherty County. Think about Atlanta, Chicago, Columbus, Macon, Augusta (How many of you ever saw their downtowns in a blighted state?) Those cities allowed the downtown areas to become high crime, drug use, prostitution laden, homeless living places that just fell apart. When the center of a community reaches this stage, this type of activity stays until it is stopped. Criminals attract criminals. At some point this activity begins to spread, it only has one way to spread, OUT. Where is out? Into the more prominent areas of our community that have grown up over time.
When the central area is allowed to reach this cess pool state, How much money will it take to then, clean out the homeless, clean up the prostitution, clean up the drugs, repair sidewalks, lighting and every other item that is broken? Think about how much further dilapidated our buildings would be with homeless people, drug users and prostitutes coming in and out.
If we allow the central part of our community, the central part of Southwest Georgia, to reach this stage we will have a cancer in our heart that will stifle the remainder of Southwest Georgia, a cancer that will spread until someone or some community says enough is enough. This is exactly what has happened in the communities I mentioned above, the hearts got so over ridden and dilapidated money had to be spent to clean it up. Downtown Albany at this point, our heart, is no where near the condition of these other cities when they decided it was time to clean up. We don’t have to spend the money to clean out the cancer because it is already clean. The only issue that remains in Downtown is the age of the buildings. In my opinion, we can’t just demolish over 100 year old buildings. That would be a travesty. We have to find some way to take what is here, bring the buildings up to code and make the investment viable for a private entity.
Right now we do not have enough foot traffic at night and on the weekends to make a business profitable. We have plenty of traffic downtown from 8 to 5 Monday thru Friday. This is a set amount of traffic and set amount of dollars. Expanding more businesses in downtown while relying on the same number of dollars only splits those dollars between more businesses. All this is going to do is make every business fail because the same dollars can’t support more business. We have to attract more traffic.
Private investors won’t come downtown because they know they can’t profit.
The few that have examined the issue have realized that bringing an older building up to code adds so much expense to the project that enough rent can’t be charged to make the venture profitable, therefore the investor backs out. The thought with the bond issue would be to obtain a building, bring it up to code for electrical, plumbing, fire etc., and basically sale the property to a private investor without consideration of the amount of the bond money invested in the property. In other words, the private investor pays FMV for the property which in all likelihood, the first 2 or 3 of these projects, FMV will be less than the bond money invested in the property. But, what does this do? It brings a private investor into downtown, puts the property back on the tax roll, opens up the property for use, makes the venture profitable for the investor, which in turn, means the FMV of the surrounding properties increases, which means a private investor at some point will be able to purchase a building, do all of the code work on his own and still make a profitable return on the investment. The purpose of the bond issue is to jump start the investment using this theory.
I do believe, before this is done more discussion needs to be done on what we want our Downtown to be. There is no one consensus of where Downtown is going. No one, including myself, knows if we are trying to make an entertainment district, a college student area, a place for doctors and Phoebe nurses to live and walk to work. I do know that we cannot allow the 50 million dollar investment already made go to waste by allowing the blighted property to remain. I do know we cannot allow the cancer of crime to grow in the heart of our community. I do know we need to build on our river walk. I do know we need to capitalize on our position of being the Capital of Southwest Georgia. I do know we need to continue being the central place where our surrounding counties come to shop and play.
If we don’t protect our heart we will only being cleaning it up in time.
A lot of concern is also placed on the potential millage rate increase to repay the bond. The repayment of the bond will take place from the TAD money. What is the TAD? The best way to explain this is by example–Lets say right now the total tax property value of all property in the TAD (basically the TAD boundaries equal Downtown Albany) is 1 million dollars, we invest the bond money to get the blighted property cleaned up, in private hands and back on the tax roll. In 5 years the FMV of the property in the TAD is 5 million dollars. (and remember, the new Wal Mart that will soon be built in East Albany is a part of this TAD) The property taxes paid on the first 1 million continue to go to the general fund, however the taxes paid on the 4 million increase in fair market value can only be spent inside the TAD. Therefore, the money is paid back not by the tax payers of the community, but by the increase in the fair market value of the property within the TAD. And, the increase comes from the investment of the bond money. This means, the bond money must be used wisely and we must get the most bang for the buck to make this work.
I have no explanation of the secrecy some have placed on this bond issue. I don’t agree with the secrecy and intend to make all of it as public as I can.
I look forward to the debate this will inspire.
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July 10th, 2009 at 10:28 am
Phil, bearing in mind that you sit on the ADICA board, I have some questions:
1) What exactly are the nature of the projects Buie was talking about that led to the $6 million figure? I would like to think that number wasn’t picked out of a hat. Who came up with it?
2) The excuses for not disclosing the nature of the projects are non-sensical. Bob Langstaff claimed on this blog on 6/03 that “There are some larger projects that could also occur, but most likely won’t occur, if I offer any more detail than I already have.” Are you personally aware of any such projects contemplated by ADICA that require secrecy?
3) Also, it has been claimed that disclosure of the ADICA projects would lead to competition from private investors wanting to get into downtown Albany. Isn’t that the point? What private investors are believed to be competing with ADICA? If they are “competing” to invest, shouldn’t we let them “win,” and have them make the investment rather than taxpayers?
4) Why was ADICA not subject to financial audits prior to Al Lott’s announcement yesterday?
5) Who (other than Buie) was responsible for “keeping the books”? Does ADICA have a treasurer? Why was Buie requested to turn over all ADICA financial documents if someone else was tasked with “keeping the books”?
6) What amount has ADICA spent in legal fees fighting with taxpayers and opposing disclosure?
July 10th, 2009 at 1:11 pm
Phil,
While I admire your motives and enthusiasm, I have to respectfully disagree. We’ve already poured taxpayer money into downtown for twenty years. After the death of Mayor Gray, the bulldozed downtown square looked like Dresden, Germany after an air raid. We scratched our heads to figure out how to replace the scuttled downtown hotel/office pyramid project. We tried to get commercial ventures to locate downtown. Didn’t work.
And here is what we did. We decided to spend public taxpayer funds to build public buildings like the City-County Government Bldg and the DoCo School Board Bldg (which could have been located anywhere in the County) on the downtown square. This would “jump start” commercial private ventures into locating downtown. Didn’t work.
So we created and funded Albany Tomorrow to recruit and coordinate the development. Then we ask ourselves: What worked for Columbus? A riverside park? Let’s build one. The planning was fumbled and the execution was horrendous. So we hire the most inefficient and costly contractors to renovate the Bridge House, build turtle park and the Riverquarium. All on the backs of taxpayers.
What else has been built to “jump start” downtown? A Federal courthouse. A Parking garage. The Law Enforcement Center. The Ga Dept of Labor Bldg. A stupid Archway over the Oglethorpe Bridge. The Ray Charles Memorial. All at taxpayer’s expense. Resultant commercial activity downtown? Very little.
The crown jewel of downtown commercial construction is the Downtown Hilton. I don’t recall all of the financial terms involved but I do recall the City took the bulk of the financial risk burden. The theory was that this commercial anchor would “jump start” other commercial enterprises. Did it?
I’m not trying to flood the debate with negative waves. We just need to face some realities. When will we admit the costly experiment failed? In all fairness, there has been some downtown commercial activity but not nearly the proportion expected from such a large public investment of funds. Also our MSA has experienced some new construction – it just hasn’t been in the downtown area. In a free-market system, businesses will locate where they will thrive – not necessarily where you want them. We should have been funding infrastructure development on Ledo Rd, Old Dawson, Dawson Rd, and Westover Rd much earlier than we did.
The second point is that times are tough. Everyone is tightening their belts to the absolute limit. Jobs are leaving the area in large numbers. Without Merck and Cooper paychecks, we will not have the income base to tap tax revenue that we had in recent years. That is why the idea of a $6m bond is so depressing. The timing is awful. Whether a bond is a credit line or loan makes no difference. I don’t care if its a bond, SPLOST, property tax, federal grant, or state grant – it’s still public funds. There is no free money.
In the eternal debate between burdening taxpayers or cutting services – why does the answer always have to be: raise taxes. For once, we need to say “No”.
Not spending the $6m bond revenue is only a start. I say we implement other ideas to cut costs downtown. Quit funding the Riverquarium, the Civil Rights Museum, fireworks and any other non-essential publicly-funded financial drain. Eliminate Buie’s position. Quit wasting time micro-managing business signs and trees. I know you don’t condone Buie’s secrecy regarding potential downtown prospects or plans on how the bond would be spent, but his conduct might well be the final straw for the public taxpayers.
You can’t spend your way out of a national recession and you can’t do it locally either. Put another $6m into downtown right now? I think we’re trying to “jump start” a dead battery.
July 10th, 2009 at 10:02 pm
Cartman,
You just got my vote for any office you’re willing to run for.
July 11th, 2009 at 7:47 am
Sorry about the delay. Here are my responses to your questions.
1) What exactly are the nature of the projects Buie was talking about that led to the $6 million figure? I would like to think that number wasn’t picked out of a hat. Who came up with it?
The figure is based on purchase price of 4 parcels of property and bringing each piece up to code.
2) The excuses for not disclosing the nature of the projects are non-sensical. Bob Langstaff claimed on this blog on 6/03 that “There are some larger projects that could also occur, but most likely won’t occur, if I offer any more detail than I already have.” Are you personally aware of any such projects contemplated by ADICA that require secrecy?
I am aware of conversations with at least 2 national chains.
3) Also, it has been claimed that disclosure of the ADICA projects would lead to competition from private investors wanting to get into downtown Albany. Isn’t that the point? What private investors are believed to be competing with ADICA? If they are “competing” to invest, shouldn’t we let them “win,” and have them make the investment rather than taxpayers?
I don’t know where this is coming from, of course private investors are what we want. It has been explained to me that, for example, if a private land owner on Ledo Road knew a certain national chain was negotiating to come to Downtown Albany, they may take advantage of the information and convince the chain to go to Ledo road. That is the nature of competition, but the desire was to avoid losing the deal while in the process of rebuilding.
4) Why was ADICA not subject to financial audits prior to Al Lott’s announcement yesterday?
This is my opinion from being around for 3 years. In approximately 1991 ADICA actually transferred all of its power to ATI. ADICA was supposed to oversee ATI. You know the problems ATI had. What happened with Don is the same as what happened with ATI, blindly trusting people. When ATI was dissolved all this came back to ATI and ADICA has to rebuild and reorganize. These issues are issues I saw from day 1. However, there are certain people on the board who have been there for 20 years and I cause so many problems by asking needed questions I often get voted against and can’t get anything done. There has to be a change in the ADICA board.
5) Who (other than Buie) was responsible for “keeping the books”? Does ADICA have a treasurer? Why was Buie requested to turn over all ADICA financial documents if someone else was tasked with “keeping the books”?
I questioned this several times. I was told Don had the authority to spend up to $1,000.00 without asking. I still don’t know how he wrote the check to Nicole for $2,000.00. I am awaiting that answer. In my opinion, this occurred because he had to much freedom. He was blindly trusted by our chairman.
6) What amount has ADICA spent in legal fees fighting with taxpayers and opposing disclosure?
ADICA to my knowledge has spent very little. Maybe a few hours when our attorney had to sit in the hearing. I believe the City is footing that bill and making those decisions.
July 11th, 2009 at 7:55 am
Cartman, you make several good points. I disagree with your perspective. All these projects you refer to were not “jump starts”. They were actually part of the master plan that was developed between 1988 and 1992, which ATI was directed to follow. Those projects have been completed. (Although not without controversy and blind trust.) We can’t stop that plan in mid-stream. We have completed the government buildings which creates the 9 to 5, Monday to Friday foot traffic. We have completed the RiverQuarium, the museums, parks and Hotel, which contribute to day time walking traffic and a small percentage of night time traffic. Now it is time to complete what will create the night time and weekend traffic. That is residential living and night life.
The residential aspect is very viable. The night life is also very viable.
July 11th, 2009 at 8:02 am
My position regarding the bond is that more transparency and accountability are required before the merits are even debated. I suggest that anyone interested should google Miller vs. State of Georgia (83 Ga. App. 135). The above referenced court case outlines disclosure requirements for authorities issueing bonds and it outlines the reasons taxpayers are entitled to disclosure.
The TAD raises another point of concern. Albany/Dougherty County has experienced minimal growth which would serve to expand the tax base. This is one of many reasons we remain among the highest taxed County’s in the State. The TAD boundary was gerrymandered to include the proposed Wal-Mart location. As Phil explained, all property tax increases due to the construction of the new wal-mart will be directed downtown. I feel the broader tax base should benefit from this growth. Also, while all property is subject to a possible 3 mil increase if the City fails to pay back the bond, only downtown property benefits from the increase in property value if the bond efforts are succeessful.
Tom’s note: The first paragraph was edited by me for clarity per Tim’s request.
July 11th, 2009 at 9:08 am
While it is accurate that “only downtown property benefits from the increase in property value” the benefit is that Downtown supports itself, not the general tax payers. A TAD is how Columbus operates their downtown, and they now have their own police officers, maintenance staff and general purpose labor. No one in Muscogee county pays one penny for any of this (except the property owners downtown), the increase in the FMV of the properties funds this. The district pays for itself.
Of course all this assumes a proper accounting system is in place and honest/trustworthy people implement and oversee the plan.
I do want to be transparent. Other than the issue of losing a national chain to competition I have no other reason to believe anything should be kept “secret”. Secrecy only breeds distrust and dishonesty.
July 11th, 2009 at 9:19 am
My personal opinion is that I can accept the argument of losing a national chain to another region of town as a valid argument for not disclosing which particular chains. That’s the nature of the free market, and specifics of the negotiations are valid topics for secrecy…short term and only to an extent.
For example, a lot of people don’t know that the city subsidizes the Hilton. I didn’t realize it until it was mentioned by a commenter on this blog. I don’t think people of Albany really want to subsidize private business, especially not established brands like Hilton when so many people here dream of owning their own business. I know the arguments for the subsidization of the hotel, and I empathize. But I think that negotiations do require some oversight, and they’re not getting this…or so it seems to the community as a whole.
What kind of oversight is there in these negotiations?
July 11th, 2009 at 9:41 am
Phil,
Do you really believe a national chain looking at Albany is not going to ride around town and see where the traffic is?
The idea that a national chain will come to Albany and be ignorant of the existence of other parts of town (where their competitors are) is CRAZY–(this is Langstaff-type [edited by Tom] gibberish). No property owner is going to need to “steer” them to Ledo, they’ll be looking there on their own.
Again, Phil, with much respect for your efforts, these justifications (made by others not you) for the secrecy behind the expenditure of vast sums of money become more idiotic with each telling. They need to stop.
July 11th, 2009 at 10:18 am
The statment that “the benefit is that Downtown supports itself, not the general tax payers” is not accurate. If downtown was self supporting, this discussion would not be neccessary. Downtown will continue to receive it’s fair share from the general taxpayers. Downtown will receive ALL of the benefit from any increase in property value (including the proposed wal-mart on Clark Ave), and downtown will be further susidized by the proposed bond and possible future bonds. Repayment of the initial $6,000,000 bond is guaranteed by all taxpayers with the possibilty of a 3 mil tax increase.
Phil does make a great point regarding the ADICA board. We do need change. Although Phil and I disagree on some points, I do support him as a board member and I appreciate his willingness to discuss the issues.
July 11th, 2009 at 10:48 am
“5) Who (other than Buie) was responsible for “keeping the books”? Does ADICA have a treasurer? Why was Buie requested to turn over all ADICA financial documents if someone else was tasked with “keeping the books”?
I questioned this several times. I was told Don had the authority to spend up to $1,000.00 without asking. I still don’t know how he wrote the check to Nicole for $2,000.00. I am awaiting that answer. In my opinion, this occurred because he had to much freedom. He was blindly trusted by our chairman.”
Phil,
I’m not picking on you, but did anyone ever ask who gave Buie authority to write checks up to $1,000 and if anyone had to approve them? Is this written down anywhere? Because if I understand your answer correctly, even assuming he wasn’t supposed to write a two-thousand dollar check to someone, he was actually authorized to write two one-thousand dollar checks to the same person (say, for example, one on Monday and one on Friday) without the checks being countersigned by someone else or otherwise scrutinized.
Even setting aside the obvious issue of the kickback and whether or not Nicole was his girlfriend, it seems clear that nobody (not the ADICA board, let alone the commission–God save us!) was watching the ADICA cookie jar while the ADICA sales job was being done to the citizenry of Dougherty County.
BTW, did anyone do a background check on Buie–criminal and financial? It always seemed very odd to me that if he was so successful in Baltimore, why would he come to Albany?
July 11th, 2009 at 10:22 pm
I agree a National Chain would ride around and look. But if our competition is not aware they are here then they can’t try to steal them. I think in some situations secrecy is required, but only for very specific things and only for very short periods of time. Like negotiating a price on a product. Walt Disney didn’t go down to Florida and start buying all the property he needed in his own name. The land prices would have been out this world.
There is a risk the general tax payers will have to pay the 6 million back. There is a risk they will have to pay it back every time a bond is issued for anything. The bottom line is, does the risk of the tax payers having to contribute exceed the need for the revitalization of Downtown? My opinion is no. We already have almost 100 million in downtown, (FRQ, Civil Rights Museum, CVB building, Turtle Grove Park, Hilton, New Science Museum at Thronateeska) Isn’t the 6 million worth protecting this investment? Isn’t the 6 million worth finishing the Master Plan? As I mentioned earlier, all of these activities create the day time traffic. The last part of the puzzle is the night time and weekend traffic.
If we can use the 6 million to bring buildings up to code, for the purpose of attracting night time and weekend traffic, then the start of the end of the Master Plan begins. If it works, then the revitalization of Downtown was successful.
July 11th, 2009 at 11:56 pm
Phil:
I plagarized the “jump start” term from your explanation of the intent of the $6m bond. My point was that we have heard this same phrase as the justification for everything related to downtown spending for 20 years, including the 1988-92 “Master Plan”.
It might be a little inconsistent to state that we cannot abandon the “Master Plan” in mid-stream and yet also admit “there is no consensus about where downtown is going.” I think you suggested it could be an entertainment district, college, residential, etc. It seems to be an admission that there is no longer a “Master Plan”. If this is true: I don’t know whether to be upset or relieved. On one hand it is upsetting that $6m will be raised with no long range focus other than to spend it on downtown property. On the other hand, I would be relieved to know that we are no longer following the marching orders that have directed the past twenty years.
On the matter of secrecy, I think we can all admit that sometimes it is necessary. We can honestly differ in determining where the line is drawn. I firmly feel that excluding personnel matters, secrecy regarding public funds should be a rare rare exception – and definitely not the rule. Everyone quickly forgets to whom the money belongs. It is not Don Buie’s money. It is not ADICA’s money. It is not the City of Albany’s money. It is our money and we have a right to know details regarding how it will be spent BEFORE legal steps are irretreviably taken to raise it.
You state the $6m bond funds will acquire and refurbish properties to be sold at FMV to commercial enterprises to jump start downtown growth? If a financially viable business wanted to locate downtown, why wouldn’t it scoop up the property now at bargain basement prices and develop it themselves? If a business can’t afford to do so, then how are they going to afford to pay a higher FMV for a developed property? And if this “plan” doesn’t work, then will taxpayers service the bond?
Call me a skeptic, but I see the bond as a potential mechanism for people who have gambled on downtown to bail out at public expense. You said the bond will “purchase property and bring it up to code.” Whose property gets bought for development at taxpayer expense? Have the properties already been chosen? If not, why wouldn’t they ahead of the bond being approved. If they have, then we deserve to know which properties, who the owners are, how they were chosen, and the price. Are we just funding a parachute for those who gambled and lost?
Bo Henry gave downtown as good a shot as anyone. The Harvest Moon was the “green shoot” of downtown life. It’s absence is very conspicuous. The Moon didn’t leave Albany. It left downtown. Not only did San Jose leave, but am I the only one who noticed the Herald article stating that despite Buie offering to locate another downtown location, they did not want to stay downtown. Not a very encouraging sign. So much for all that government construction, taxpayer-funded, 9-5 foot traffic supporting commercial. And now we are to believe that residential is viable and night life is viable?
TAD is a separate topic from the bond. I’m not sure I have a big problem with it. It is similar in concept to a stock dividend reinvestment. I do feel it is dishonest to gerrymander Wal-Mart into the TAD. The other areas of town will have to make up for it on their own. However, Wal-Mart’s appearance might just be a pipe-dream anyway.
I know you have a stake in downtown and don’t want to lose it. I applaud your service on the ADICA Board and in the other ways you have served. I very much admire your willingness to debate your position here. You have been a sincere and effective cheerleader for downtown for awhile.
I continue to feel we need to cut spending – not increase it. We are losing jobs. Our property is worth less than a year ago (despite the county’s tax digest). You can’t get blood out of a turnip.