Public Watchdog.org

Council Video Shows Shakedown Begets Negotiation, Not Rejection

05.30.19

For over a decade we’ve been investigating, researching and writing about the incompetence, stupidity, greed, dishonesty and outright mopery of our local elected and appointed officials, as well as our well-paid bureaucrats. On occasion, we’ve even sung their praises when they actually acted like sentient, rationale, responsible People’s Representatives and done something good, or just didn’t screw up.

Unfortunately, two nights ago our City Council, during a COW meeting, put on a display of aggravated mopery with intent to gawk, if not worse, that needs to be seen to be believed.

That’s when the Council discussed giving hundreds of thousands (maybe even a million, or more) of taxpayer dollars in “incentives” to the proposed purchaser of the Mr. K’s property on Higgins and/or the proposed developer/operator of a hotel proposed for that site.

The festivities start at the 1:17:04 mark of the meeting video.

CP&D Director Jim Brown kicked off those festivities by effectively reading from his Agenda Cover Memorandum that was already posted on the City’s website. He casually mentioned his and City Mgr. Joe Gilmore’s meetings with the owner and developer, as well as a 04.24.2019 “letter from the developer” that mysteriously didn’t qualify for an attachment to his memo.

That was followed by Gilmore introducing what apparently was the theme of the night: No matter what kind of deal the City might cut with the property owner and/or developer, it would be “cash flow positive” from Day 1.

Say “Cash flow positive”…from Day 1. Say it again and again. Consider it City Hall’s new mantra, at least as to this project.

We haven’t done the math to check if Gilmore is right – primarily because neither Gilmore nor Brown have provided sufficient data from which anybody could make such calculations. In fact, Gilmore actually admitted that those rosy projected revenues to the City are hard to quantify – causing Brown to engage in what appeared to be a bit of CGA (“Cover Gilmore’s Ass”) by claiming that the prospective owner and developer offered to provide the City their pro forma, which is basically just a collection of self-serving projections and guestimates.

If those kinds of things really matter, however, why didn’t Brown already have the pro forma? He didn’t say.

Resident Joan Sandrik, along with Alds. Nick Milissis and Roger Shubert, tried to stem the rising incentive fever by reminding the Council of the Whole Foods sales tax abatement demand made by that property’s developer as an “or else” condition on Whole Foods coming to Park Ridge, and how Mayor Dave Schmidt and that 2012 council successfully called the developer’s bluff, thereby saving the City’s taxpayers over $2 million.

That prompted Brown to start explaining how the Whole Foods situation  was “different” from this hotel deal. But if you’re watching the meeting video you’ll never hear his explanation: The video’s sound drops out at the 2:12:13 mark, and the screen goes blue 7 seconds later. By the time the sound resumes at approximately 2:14:15 and the video 20 seconds after that, Brown’s explanation is long over. So we have no idea what kind of differences Brown identified.

Shades of Rose Mary Woods, lite!

Two true highlights of this meeting, however, deserve special mention.

The first is the fact that while Brown, the developer and the prospective property purchaser kept referring to this hotel as a “boutique,” none of them identified what brand, or “flag,” the hotel would bear; e.g., Hyatt, Marriott, Hillton, La Quinta, etc. And when they described the hotel as having a “pantry” instead of a restaurant, and room rates between $145 and $160 a night tops (with the City staff guestimating $115-$120), it sounded more like a Days Inn than The Talbott.

Yet NOBODY around The Horseshoe – not the mayor, not a single alderman, not a single staff member – dared to ask the developer or the owner, on the record, what name or brand their “boutique” would bear. Did they all know but weren’t saying for some unknown reason, or did they not even care?

The absolute pinnacle of absurdity, however, occurred fairly early on, when somebody (we think it was Joyce) asked the prospective owner and the prospective developer why incentives were a necessity for them to do the deal. Amazingly, the prospective owner explained that the property was worth only $2 million but he had agreed to pay the Mr. K’s owners $3.3 million!

Yes, friends, you heard that right: The City is considering bailing out, with our money, someone who is knowingly overpaying for the Mr. K’s property by a whopping $1.3 million, or 65%!!!

If even one of the elected officials around The Horseshoe had an iota of common sense, and a spine stiffer than Silly Putty, they would have responded to the prospective owner with:

“You, sir, are either an idiot or a scam artist who thinks WE are a bunch of idiots who will sell out our taxpayers to bail you out of a totally boneheaded business deal. Go away and don’t come back until all you want from us is a zoning change.”

But that’s not the way this City Administration rolls.

Instead, the prospective owner’s admission set off a round of babbling by those around The Horseshoe about how the City might go about satisfying itself that the incentives really were a “necessity.”

Mayor Dave and that 2012 council knew how to do that: Just say “No!” But apparently that’s too final and too harsh for the gentle souls currently inhabiting The Horseshoe.

So Moran proposed a “feasibility study.” Joyce said he wasn’t opposed to incentives. Melidosian gave the project a “thumbs up.” And Mazzuca could only wonder how the hotel might fit into that neighborhood in his ward 50-100 years from now.

That means we’ll likely see a string of new rosy-but-fuzzy propositions, projections and proposals designed to make sure this developer (who has never done even one project in Illinois) and this owner – along with the owners of Mr. K’s – end up getting a healthy helping of taxpayer money.

Because in what is becoming a surreal world of City government, when it comes to spending public funds in questionable ways, the question no longer appears to be “if” but only “when” and “how much.”

To read or post comments, click on title.

14 comments so far

I was in the Council chambers the night Mayor Dave and the council (including then-ald. Maloney) told Chody “no” on $2 million of sales tax abatements, and I was there when Chody returned to fold his hand. I wasn’t there Tuesday night, but the video was painful to watch. Listening to Maloney’s speech at the end made me think of Groucho Marx and here are my principles, but if you don’t like them I’ve got others.

Good post PWD, with facts to back up your observation of the city council discussion on the captioned topic. I understand the pressure the current council feels to fill store fronts or develop properties like the Mr. K’s site, but giving into that pressure by agreeing to any of the incentives being requested will set a bad precedent. Holding the line isn’t easy, but telling the Scarlett Hotel Group “no thanks” on the incentives is unequivocally the right thing to do. The fact that members of the council (Maloney and Moran) and city staff (Gilmore and Brown) repeatedly claim this is different in many ways from the Whole Foods project is just not true and misleading to residents, because in principle they are identical. Kudos to Aldermen Milissis and Schubert for attempting to hold the line and Ms. Sandrik for speaking up.

I’m sick of hearing about Whole Foods. THat was 7 years ago. Times change and some tax revenue is better than no revenue. We have had no significant new retail like Whole Foods since then, and we need to figure out why instead of knee-jerk reaction that we don’t give incentives because we didn’t give them to Whole Foods and that worked out.

EDITOR’S NOTE: Public officials in communities like Park Ridge blow smoke up their own kilts when they think they can “sell” companies like Whole Foods – and similar successful retailers, restaurant franchises and hotel brands – on locating here. Such companies make those decisions for themselves using sophisticated marketing and analytic tools to decide where they want to locate. (E.g., Marriott decided it wanted to put that Courtyards on River Road years before suitable property in that area even became available.)

That’s why those companies don’t need incentives. They’ve already decided they can make money at the chosen location in the long-term, which is why they’re willing to make a long-term commitment to the community.

The incentives are for the developers and property owners who only get one shot at getting fat off the subject property. They don’t care if they rip off the taxpayers. And they know that public officials pandering to their voting base, and clueless bureaucrats looking to build their resumes, are easy marks.

PWD, thank you for taking “ANONYMOUS ON 06.02.19 10:53 AM” to school. He or she must work for Scarlett Hotel Group, is Alderman Moron in disguise or can not possibly be a resident of Park Ridge. If it’s actually someone who lives in Park Ridge, please move to another city! Too bad the gutless administrators of PR Concerned Homeowners Group on Facebook won’t let you join the group, because I for one would love to see you take them to task on the BS that’s out there and stop their freeloader nonsense!

EDITOR’S NOTE: You’re welcome. What troubles this editor is that so many folks – including those at City Hall – don’t see that what the current property owner, and/or the prospective purchaser, and/or the developer are doing is just extortion without even the need for a gun or some compromising photos.

Bubble-wrapped snowflake Kathy Meade won’t even let this editor see her posts, much less permit him to post on her PRCHG page. But if censorship gets her off, so be it.

Why shouldn’t the City negotiate with the developer and owner? Isn’t it better to have a hotel there than condos or townhouses that will add children to our schools? All we’d be giving them is future income that we won’t be getting otherwise. Besides, isn’t this a typical “ask” by all businesses in similar situations?

Neighboring communities are eating our lunch while we sit around doing nothing. Something is always better than nothing.

EDITOR’S NOTE: Of course it’s better to have a hotel than condos or townhouses, and we’re all for the hotel. And, yes, “we’d be giving them…future income that we won’t be getting otherwise.” Those are exactly the arguments all the short-sighted Chicken Littles were making for giving developer Lance Chody $2 Million of revenue sharing back in 2012. Mayor Dave and that council didn’t “negotiate” because there was no reason to: They just said “no.” And two weeks later Chody was back and ready to do the deal without any incentives.

We know the Mr. K’s owners want to sell, and we know they don’t give a rat’s derriere what’s built there so long as they maximize their profit – as demonstrated by how they were willing to sell to a condo/townhouse developer a year or two ago. Now they’ve got some sucker/idiot who claims he’s willing to pay them $1.3 Million more than the property’s worth so long as the City’s taxpayers subsidize his idiocy.

But don’t take our word for the dangers of gov’t subsidies for these kinds of developments: Check out Shawn O’Leary’s multiple well-reasoned comments – and links to actual studies – that he has posted in the string started by Tom Fisher on May 30 @ 8:37 a.m. on Kathy Meade’s “Concerned Homeowners” FB page.

I just read Shawn O’Leary’s comments (and most of the links) on Concerned Homeowners and to me that sounds like game, set and match. So why is it that I feel like it isn’t, and that our Council and Staff will contort themselves into pretzels to give the developer or buyer money. Are our elected officials that desperate for a ribbon cutting and some kind of weird bragging rights?

EDITOR’S NOTE: Maybe they’re like the Brad Wesley character in one of the greatest terrible movies ever, “Roadhouse”: “I got the 7-11, I got the Fotomat here. Christ, J.C. Penney is coming here because of me.” https://www.youtube.com/watch?v=KU_Hs0ogXqs

D64 Board member Tom Sotos supports a deal on the hotel but wants the hotel operator to provide free shuttle service from the hotel to Uptown. That sounds stupid to me.

EDITOR’S NOTE: Consider the source.

Mr. O’Leary “gets it” better than anybody at City Hall. Too bad he isn’t on the Council.

EDITOR’S NOTE: In fairness, both Alds. Nick Milissis (2nd) and Roger Shubert (4th) voiced opposition to throwing tax dollars at Mr. K’s owners, its purchaser and its developer.

It’s our understanding that because Mr. O’Leary’s job involves public/municipal finance, his employer prohibits employees from serving as public officials to avoid potential conflicts of interest or the appearance of impropriety. But as his comments on this topic demonstrate, he can be a real community assets even without holding any office.

If Sotos is involved in the project they will end up having to convert the auditorium into rooms.

EDITOR’S NOTE: Auditorium? This “boutique” hotel isn’t even going to have a restaurant, just a “pantry.” But that makes those free shuttle runs to Uptown so much more attractive, right?

What if the city negotiated something more than just a hotel on that Mr K’s site? What if the city negotiated for the developer to buy and develop the old big ten corner, the smaller independent lot between the old big ten and mr k and the property east of mr k? The Higgins corridor plan envisions a larger development there as a southern gateway to park ridge. If we could get something bigger and more beneficial like that to clean up that whole corner isn’t it worth a negotiation?

EDITOR’S NOTE: First: What legal authority does the City have to negotiate anything for a private entity? Second: Why should the City be “[negotiating] for the developer” under ANY circumstances?

There is a statute that allows the city to negotiate for public benefit (improved infrastructure, Street scaling, cleaning up unwanted property, water retention etc) in exchange for zoning allowances, variances, exceptions etc. wouldn’t that corner being cleaned up and some water retention or other benefit be good for the city?

EDITOR’S NOTE: Your point was: “What if the city negotiated for the developer to buy and develop the old big ten corner, the smaller independent lot between the old big ten and mr k and the property east of mr k?”

We don’t believe there’s a statute that permits what you proposed.

But just to show we’re good sports, why don’t you identify the statute you have in mind and we’ll gladly take a look.

I meant to say negotiate “with the developer” for amenities and benefits for the city.

Here is the ordinance.

http://www.parkridge.us/assets/1/Documents/Section_5_Planned_Developments.pdf

EDITOR’S NOTE: If this developer and/or purchaser want to submit a PD application, they have every right to do so. But seeing how this boneheaded purchaser already has contracted to pay $1.3 million more for the Mr. K’s property than it’s worth, we doubt that he’s got the throw weight to do a more comprehensive project.

I’ve said it on the Facebook page and I’ll say it again here for good measure: if the project is such a slam dunk it shouldn’t require subsidy. And if its not… why in the heck should our city subsidize it? It really is that simple. But, and it pains me to say this, if we do provide subsidies it should be for performance and not promises. If, and only if, the hotel meets specific occupancy and RevPAR (Revenue per available room) targets then it gets a share of city revenue. If it opens up and under-performs then it gets nothing. Why cities continue to pony up for promises rather than performance absolutely befuddles me. And, finally, if a developer and/or hotel operator balks at an independent third party tracking their financial performance then guess what? No subsidies!

EDITOR’S NOTE: Amen, Brother!

Over the years I have observed that, when it comes to city staff providing financial analyses for projects that aldermen want, staff consistently produces numbers that they have no known training or experience to produce. They also produce different sets of numbers (by “sharpening their pencils”) and corresponding analyses to accommodate aldermanic opinions.

And when that doesn’t work, they engage one or more “consultants” (like Teska) who know why they are being retained and conveniently come up with a report that satisfies that purpose.

EDITOR’S NOTE: We’ve observed the same thing, including with parking and traffic studies – some of which include half-baked “surveys” for support. A sharp private business person will mop the floor with most bureaucrats (and most elected officials) when it comes to analysis and negotiations, if only because the business person KNOWS what he/she needs and wants while the bureaucrats and elected officials tend to be politically-driven windsocks.



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