How many times does Mr. Carucci get to "rework" his deal with the Taxpayers of the City of Utica?
Article VIII of the State Constitution §1 provides:
"No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking, or become directly or indirectly the owner of stock in, or bonds of, any private corporation or association . . . "
Arguably there was a public benefit to the original deal struck between the City and Carucci et al to keep the deal from being an unconstitutional gift of taxpayer money. The Hotel Utica was symbolically too valuable a property to the citizens of Utica to remain shuttered as it had been . . . and to their credit, Carucci and crew really have done a marvelous job in returning this jewel to Utica's crown.
But when is a Deal "a Deal?"
How is the drop in interest from 3.4% to 2.4% justified, particularly at a time when the cost of borrowing is rising?
If the deal is going to be "reworked," it has to be at the prevailing interest rate, or the City should get some new "consideration" from Carucci to support changing the contract. Neither is the case. The City will collect a smaller finance charge and have to wait 15 years longer to get its money back. In the long run, the Taxpayers will wind up with less . . . and THAT'S WHAT MAKES THIS "REWORKING" WRONG.
So, what's the deal? The "same old same old" in New York: Nothing more than a public official using taxpayers' money to confer an illegal gift on someone who is "well connected." Haven't we had enough?
CNY Underground also has some comments on this.
4 comments:
By lowering the interest rate and payment, they (hotel Utica) can now afford to join a nationally recognized hotel chain. This actually makes sense as the hotel cannot go it alone. It is the best chance for survival.
The interest rate is already far below market value. If it is a matter of "affording" something, perhaps it's time for the principal's involved to come up with more of their own money.
Personally, I agree with you.
With that being stated, the project should never have been started in the first place without adequate private capital and financing. The government should have no place investing in a hotel - regardless of its history. Where was the demand for the additional rooms? Did they not realize that Turning Stone was going to build a massive hotel 15 minutes away? Did they really believe that everyone would flock to a non franchised hotel in downtown Utica? You don't need an expensive occupancy projection to indicate the obvious. I could go on and on ......
However, getting back to reality, this is Utica we are talking about and the ship is sinking. Without the bailout, this project will eventually fail and the public investment would be lost. A national chain is the last chance for survival. Utica has to do what it has to do and LEARN from the mistakes it has made.
You may be right . . . but wouldn't it be refreshing to see Mr. Carucci et al come up with some money of their own to keep THEIR business venture going?
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