Tuesday, October 5, 2010

$3 Million to Keep Wonkaland Open

Residents of Dupage County, Illinois might be surprised to learn that the city of Naperville is planning to buy the Dupage Children's Museum property.  Your surprise might exist on several levels.
First, you might be surprised that a municipal government -- you know, them of stop signs, streets & sewers -- would be in the business of buying a financially troubled Kiddieland park.  Oh sure, I know they call it a 'Children's Museum', but that's about like calling tilt-a-whirl a centrifugal force museum.  Let's face it.  It's a Six Flags amusement park for small children.

Or maybe you're surprised to discover that this deal has been in the works for two years.  Perhaps you're startled to learn that the city council has been working on it in strict secrecy for all that time, floored that details of the deal just came to light October 1, and down right hacked off at the realization that the city council's first and final public vote on the purchase is scheduled for tomorrow, October 5th.  Five fabulous days to force feed a $3 million expenditure down the public gullet before they know what they have swallowed.

At least one Naperville councilman agrees, “I think the public deserves more than six days to make this decision,” said Councilman Grant Wehrli. “Just because the council members have been giving this mind-share for two years, we should not remove public input from the process.”

Perhaps the single most surprising fact is that the Naperville City Council will make this $3 million purchase of WillyWonka's place while floating over next years $10 million dollar budget deficit, presumably in their Wonkavator.  I can hear the soothing sounds of 'Pure Imagination' now.


Grooving to that tune, one councilman, Robert Fieseler, engaged in that most sublime of political talents: double speak.   “The whole idea here is to try to assure that the museum is self sufficient,” said Councilman Robert Fieseler. “We think it’s important that this not become a user of city resources at this time.”

Please forgive the Watchman for breaking in on the councilman's alternate reality, but 'at this time' is now and those $3 million dollars are certainly city resources.  If the goal is to help the Chocolate Factory attain self sufficiency, why is the city subsidizing their rent for the next 20 years?  For 5 years the rent will be zero and for the next 15 years, rent will be only about 10% of market value.  That's an interesting way to define self sufficient!

But politicians do that, don't they?  They take the most common sense understandings and turn them on their ear.  Just as the city plans to subsidizes it's way to Wonkan self sufficiency, it considers two of the three million dollars to be essentially found money.
"Hey look!  I just found $2 million dollars in this year's budget that we didn't spend!  Oh we tried to spend it, let me tell you we tried hard!  We allocated every last penny, but some dopey contractor didn't spend all the money we gave him.  What a mope!  So this is like found money.  Finder's keepers but we hate keepers.  They're boring, responsible people.  Use it or lose it, baby!
What's that you say?  Look, please stop nagging me about next year's deficit.  Don't you realize that next year never gets here when it comes to fiscal responsibility?  We don't have to worry about next year because we've got a Wonkavator!"
At least one councilman is showing a little hard-headed Republican sense.  In an email sent out on Monday, councilman Furstenau admits he's not in this to Free Willy.
“I (Councilman Dick Furstenau) immediately supported the deal in executive session meetings as soon as the price hit $3 million because that’s cheap money for that piece of property.” “But if for any reason, the museum can’t hack it after a few years, we own the property and can force them out, level the building and give the people of Naperville the parking solution they’ve desperately needed for years.” ~ Quote from the Daily Herald, September 29, 2010
Sentiment like that brings a tear to the eye... of Alex P. Keaton.

While the Watchman admires Councilman Furstenau's  city-first approach, this lease agreement with the Wonkans doesn't get the job done.  If the city wants the property for cheap, just yank the $250,000 annual SECA funding and the DCM will fold like a lawn chair.  That property will never be cheaper than it would be in bankruptcy court.  It's not a prime commercial property.  It sat vacant for a long time after the hardware store couldn't make a go of it there.  Whatever realtor gave it a valuation of $6 million is living in the Wonkavator.

In fact, by signing this agreement tomorrow, the city will ensure that for at least 20 years the city will not get more than 57 parking places from the Wonkans for train station parking.  The lease contract is rock solid for 20 years with automatic renewal for 50 more years.  Willy can bail with 12 months notice, but the city cannot get out of the deal for a minimum of 20 years.  I assure you that none of the present council members will still be serving the city when this lease ends.  So if you want to build a parking deck on that property, you'll have to leave it to your successors.

Once this deal is signed, the Wonkans will never fold.  With a $500,000 - $800,000 annual rent subsidy from the city, they have no reason to fold.  Ever.  Even if they can't continue to operate the Chocolate Factory, there is nothing to force them to give up the lease.  There should be a clause in the lease agreement terminating it if Willy ceases to operate a Children's Museum on the site, but there is no such clause.  As long as they  make the $62,000 annual rent payment to the city (a pittance, really),  there will be no parking deck built.  Even a moribund non-profit can keep hope alive by making that small annual payment.

The council likes to trumpet the fact that the $250,000 per year in SECA funding for the Wonkans will be ended with this purchase.  But what the city takes away with one hand, it gives back with two hands in the form of the $3 million cash and the massive rent subsidy.  Even the $250,000 SECA cut is likely not to be permanent.  The lease agreement clearly states that the Wonkans can apply for additional SECA funds for 'capital expenses and other projects.'  This is a shell game, folks.  There will be continued SECA funding for Willy but it just won't be called 'operating budget'.

The only thing the city will accomplish by signing this lease is to ensure the property cannot be taken over by the city for 20 years.  Even the 57 parking spaces for the train station are not guaranteed.  The lease calls for phasing in those 57 spaces "in such a manner that it will not negatively affect the Tenant's business operations."  since 57 spaces represents a quarter to a third of all parking at the facility, the Wonkans could easily argue (and prove) that giving away that many spaces is in fact detrimental to their business.

This lease agreement is terribly one sided in favor of the Wonkans.  The city makes all the iron-clad promises and Willy makes none.  The city thinks it has control of Willy by virtue of budgets and two board seats, but two board seats don't equal control of the board.  Willy will still be able to oppose the city when he wants to.

And now, here at the end of a long article, the Watchman buries what probably should have been the lead to this story.  It should be pretty clear to all by now that this is yet another government bailout of the private sector.  What is not so clear, and which you will see reported nowhere else, is who is the largest beneficiary of this bailout.  It is not the Wonkans as many would suspect.

The largest beneficiary of this bailout is Chase bank.  Naperville's $3 million payment goes not to Willy, but to Chase bank to pay down Willy's real estate loan.  In total, Chase will receive payments of approximately $6 million dollars from state, local, and private sources and and only write off $3.2 million in bad debt.  The bank is presently on the hook for the whole $9 million, but we, dear taxpayers, are bailing the bank out.

Who says state and local government can't play the bailout game as well as the feds.
Enhanced by Zemanta

No comments:

Post a Comment