Saturday ramblings: How to manage a hotel

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But we need to acknowledge the extent to which we’re banking, literally, on the success of the development now that the city of Muncie is the primary financial investor in the project — to the tune of $30 million. Larry Riley –  Muncie goes all-in on hotel Star Press

Riley’s column took me off guard because there was no warning. Certainly borrowing $30 million is newsworthy. Yet, the paper didn’t report on Muncie City Council’s vote. With the additional borrowing, the grand total of debt accrued since June 2013 has reached $55 million.  I’m sure there is more, good luck in researching it, though.

An on-line commenter said it shouldn’t have been a shock. He had presented over the summer to City Council regarding the bond. I went to the City of Muncie’s website to review city council’s minutes. Unfortunately, the last minutes posted – June 2014.  Muncie Redevelopment Commission minutes most current is 2010, too.

He went on to post the financing was a done deal, just taking longer than expected.   And if the financing didn’t go through, the City of Muncie would own the hotel property. Initially we were told the private financing was a done deal. Ground was broken and no mention of the financing problems, no mention city would be the sole financer. How can we be assured of something proving to be unstable financing? We simply can’t.

There are so many things wrong, it is impossible to list it all. The worse being the lack of information and details the City of Muncie and Muncie Redevelopment Commission has presented to the people who will be carrying the financial burden.

Muncie is not capable of managing a parking structure, let alone a hotel. The city dipped their toes into a business venture – the Village parking garage. $5 million for the structure and forgot to consider maintenance – an additional $4,500 per month. The city will hire someone’s kid, relative or friend to manage the garage for $3,500 and then tell us how much money the city has saved.

The possibility of the city running a hotel is disconcerting.

Well thought plans and foresight into the future has never been our strength. Certainly has not improved today.   It has cost us a lot of money.

Prime examples in 2011 when Muncie City Council refused to pursue $4 million in grants for the “Quiet Zone” and instead the city borrowed $8 million in August 2014.    Mayor Tyler was quoted in a news article dated April 5, 2013, the city had just completed a noise study.  Rumor has it, eight train crossings will be closed.  We’ll see.

City Hall built without budgeting for ongoing maintenance. Today we will spend $600,000 to replace a roof that should have 25 years of life left. Again, council refused to spend for repairs on the building.

You may have missed this blip in the paper on what transpired over the $16 million bond for the “Quiet Zone” and garage.

“The last information I had was that it would not be voted on,” Quakenbush said, adding he believed a special meeting had been scheduled.

Quakenbush noted that the 100 pages of documents approved by the CCA and other boards a few days earlier — which place a lot of responsibility for overseeing the garage and quiet zone projects on Todd Donati, executive director of the Muncie Redevelopment Commission and a former county official — don’t break down the details of the projects.

Donati later told W/R that the $16 million will roughly be divided into $8 million-plus for the garage and $6 millionplus for the quiet zone work. The city will cover repayment on the bonds until 2020, when local food and beverage tax revenue will take up the payments until 2040.

“I had a lot of misgivings and questions,” Quakenbush said. Carey said she was unable to attend the meeting also.

“This is a critical time for the authority,” Carey said. “It is vitally important we have a hand and are aware of what’s happening so we can move forward in a positive, not negative, way.” Muncie Star Press 8-31-14


This is so how Todd Donati operated on the county level. Every thing was a rush, incomplete information, verbal promises never realized, costly.   Ted Bowman questioned the Wheel Tax ordinance Donati presented in ’09. It came back for vote with major changes.   Mr. Donati promised transparency, regular updates – never happened.

He claimed $230 million in capital investment as a commissioner.

Todd Donati: This along with job growth of over 2,200 committed jobs and $230 million in capital investment means that things are working in the right direction.  Transcript Star Press candidate interview circa 2012

Today the county is borrowing just to stay open.

You may be asking yourself, “What’s the big deal?”  Muncie is now obligated itself (you) $55 million.  If the taxes collected, including the “special tax” Donati alluded to earlier can not be met with the revenue, it will need to come from the general fund.  This boils down to services being cut to pay the bonds.  If you thought fire department lay-off, streetlights turned off, 12 jobs lost and closing the animal shelter over $2.5 million shortfall, consider what $55 million will do.  Even if the financing comes through, Muncie will still owe $25 million.  The picture is not rosy.

In addition, Muncie submitted the 2015 budget $2 million higher than 2014.   The county did the same and borrowed $4.5 million to operate.

The mayor said the hotel would bring in $300,000 in taxes.  It will not go into the general fund and will barely make a difference on the bond payments.  The Village has a tax abatement for 10 years, so don’t expect a vast amount of tax revenue.

The city has just about tapped every area possible for a Tax Increment Fund districts (TIF).  No additional revenue will be available for the general fund, Muncie Community Schools or Libraries. etc.

The next time someone cries about corporate welfare, will pose the question “How do you feel about Muncie subsidizing it?” Looking at local with eyes wide shut.

Muncie City Budget proposed 2015

Muncie City Budget certified 2014

Muncie City Budget certified 2013

Source: (transparency portal)

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