Remove ImagesCity Reveals Hidden Bounty
December 06, 2012
All of the talk you have heard about fiscal austerity from the City of Greensboro is a bunch of bunk. The Rhino Times has been saying for years that the City of Greensboro had plenty of money and now we have proof.
The financing plan for the proposed Greensboro Performing Arts Center (GPAC) proclaims just how fat the city budget is. According to Greensboro Financial and Administrative Director Rick Lusk, the city has the capacity to borrow another $20 million and pay it back out of the general fund without needing to raise taxes and without voter approval.
Lusk says the city can take on another $20 million in debt without raising taxes or delaying any other projects. Another way to look at that is the city could offer its citizens a tax reduction if it didn't take on an additional $20 million in bond indebtedness.
As it stands now the people will get a chance to vote on issuing bonds for the GPAC in November, but Mayor Robbie Perkins is totally opposed to holding a bond referendum, so if there is a way to weasel out of holding that vote and just issuing bonds, you can bet Perkins is going to find it.
Whether the $20 million is borrowed, with or without voter approval, the rest of the financing gets dicey because the city has to come up with another $20 million and this is where the real smoke and mirrors come into play.
The plan calls for the city to borrow $10 million and pay it back with funds from the hotel-motel tax. But there is a small problem. Greensboro spends all of its hotel-motel tax revenue to fund projects at the Coliseum, so the only hotel-motel tax revenue that is available is the city's share of Guilford County revenue. This money should be available, but the catch is the Guilford County Board of Commissioners has to approve the spending.
Commissioner Trudy Wade asked about the funding on Tuesday night, Dec. 4, and when told that it had to be approved by the Board of Commissioners, Wade who is a former Guilford County commissioner, said, "That will shock me if the county decides to give us $10 million."
With the old Board of Commissioners that stepped down on Monday, Dec. 3, getting approval to spend $10 million on a performing arts center – something the city doesn't need and that the majority of citizens don't want – would have been no problem. Former Chairman of the Guilford County Board of Commissioners Skip Alston would have gotten in the back room with Perkins and they would have worked out a deal. The new Board of Commissioners has a Republican majority that ran on promises of fiscal responsibility and reducing spending. It is possible that the Republican majority could be convinced to allow Greensboro to spend $10 million in bonds on a new music hall, but, as Wade said, that would be "shocking."
The final $10 million is, if anything, iffier. These bonds are going to be paid with revenue like parking revenue. I have bad news for the people doing the planning it is free to enter the Greensboro parking decks between 6 and 9 p.m., and after 9 p.m. it costs $2 to enter the decks.
The free parking decks are considered necessary to help downtown restaurants compete with those everywhere else in Greensboro where parking is free. The $2 fee was instituted to try and discourage the late night parties that were taking place in the parking decks before and after people went to nightclubs.
If the city decides to start charging $10 for parking in the parking decks at night, it will really hurt downtown restaurants. But paying off a $10 million bond with free parking is going to be tough, and judging from the other performing arts centers most shows start before 9 p.m.
Then there is the park that is supposed to be across the street from the GPAC. According to Perkins, the endowment for the park is $10 million. Councilmember Marikay Abuzuaiter said that if the performing arts center were not built, "Several councilmembers were led to believe that the money she [Carolyn LeBauer] put in her will for a park would go away."
Community Foundation President Walker Sanders, in response to Abuzuaiter's questions, said the restrictions on the money were precise, but the park could be built anywhere the Community Foundation and the city agreed. Sanders said he didn't know who had tied the park to the performing arts center but that was wrong.
Abuzuaiter looked over at Perkins and said, "Mr. Mayor."
Perkins then agreed that the park could be built anywhere, but it was obvious from Abuzuaiter's questions and Perkins' response that he was the one who had told councilmembers the two were tied together.
Councilmembers are also questioning the $20 million in private donations. The open and transparent task force refuses to divulge information on the $20 million that it says it has raised privately.
Councilmembers want to know about that $20 million is, and before the city starts selling bonds the city has a responsibility to know how firm that $20 million is. It is definitely made up of pledges and not checks. And as Wade noted, if the pledge drive comes up short the city is going to be expected to make up the difference which brings up another problem with the current financing plan.
Although the plan proves that the city has $20 million extra lying around waiting to be spent, according to Lusk that's it. He said the city would not have the capacity to go out for another $10 million bond.
That $10 million might be needed if the commissioners don't get on board with the project or if one of the benefactors who has pledged $10 million suddenly goes belly up. In this economy the council is right to be leery of pledges.
Councilmember Nancy Vaughan quoted a study that found that most of these projects go well over budget. If that happens, and the city can't sell more bonds, where does the money to finish the project come from? The obvious answer is the city would have to delay building a library or fire station or widening a road to come up with the money.
One thing for sure is there is enough smoke and mirrors in this financing plan to fill a performing arts center and maybe to fill the Coliseum.
Gifts like $10 million to build a park sound great, but the annual upkeep on a park of the kind they are discussing is in the $400,000 to $500,000 range. A recent City Council made a point of not wanting any more gifts that were going to cost the taxpayers money.