Bottom line: Scott Martin is proposing a “short-term”, 5-year solution to the CC funding crisis that does NOT include a hotel tax increase and requires buy-in/concessions from 5 entities:
1) PDCVB: They agree to live without the 20% of the bed tax that they are currently living without and are unlikely to get back. If future tax proceeds got really good (unlikely), there might be certain triggers that would kick in and get them some money.
2) LCCCA: Reduce expenses $35K/year.
3) City: Throws in $100K annually OR guarantees some portion of the remaining debt.
4) PSP: Increases F&B royalty from 5% to 12%.
5) Well Fargo: Reduce letter of credit fee by 60 bps from 1/1/13 for the term of the agreement (presumably his 5-year agreement).
NET PROCEEDS: $1.7 million annually.
Plan assumes 1% room tax growth. Let me add that this is a conservative and attainable number. 2012 will show strong increases; however, the current increases that are being reported through June of 2012 will NOT continue on the current pace.
Overall, not the worst thing I have heard. In essence, he kicks the can down the road 5 years and holds the line on the hotel tax. There are still lots of assumptions here. I think the PDCVB and the LCCCA go along with this without issue. While Martin acknowledges that all parties will have issues, everyone is talking and no one has left the table. I assume he thinks he can get the City on board and then PSP will be forced to relent. At that point, Wells Fargo, who was represented today, has got to decide if they want to play ball and what they will eat. Everyone knows the last thing that they want to own is the LCC.
My thoughts:
-Martin does deserve credit for his effort.
-The LCCCA look like fools because they could not come up with this and are too afraid to call-out or attempt to get anything further from PSP, they only want to raise the tax.
– I expected PDCVB representation at the meeting today and they were surprisingly absent. A board member was there but on behalf of his own business not the PDCVB Board.
In the end, the problem here is that we built something that has no demand…period – end of story. Whatever events that are being hosted could in large part be hosted at existing facilities and those that could not, do not warrant this project. I continue to believe that there are only 2 options: 1) close it and support the closed facility with the existing tax and 2) bring in the slots.
Scott Martin’s proposal seems to fairly spread the responsibility around. With buy-ins from the LCCCA and the PDCVB apparently in place, I would think that Wells Fargo would be willing to sign off as well.The most challenging obstacles will be (as always) PSP and Mayor Dick.
It was interesting that PSP shill Bernard Harris was not told how to write this article. I’ll be curious to see what Gil (not so) Smart and Marvelous Marv Adams have to say on this subject in the Sunday News.