Beware
of Strangers with lots of money…
This article is a rebuttal to
an article by Cliff Schrader which appeared in the Port Huron Times Herald on
June 15, 2007, and which can be found by clicking
here. Cliff’s sentiments reflect a popular view
that when it comes to McMorran – it’s hands off. We can never let go of the generous gift by
Mr. Murphy, not matter what the cost.
Consider the awful prospect
posed by Cliff – our beloved McMorran
Complex could fall into the hands of strangers! Someone with a
lot of money could come into our city, and buy the complex and use it, heaven
forbid, to make a profit! We certainly wouldn’t want anyone making a
profit in
He asks you to close
your eyes and imagine downtown without the McMorran
Complex… I ask you to open your eyes, rub them good, and try to imagine someone
trying to move the complex out of town, or tearing it down. I suggest
that the buyer for McMorran would probably keep it
where it currently is and probably try to figure out how to get a return on his
investment by operating an auditorium, ice arenas, pavilion, etc, by conjuring
up creative ideas that would entice the people of our community to spend their
hard earned dollars, not out of a sense of guilt, but because they found real
value in what he had to offer.
My guess is that we probably
wouldn’t see any more two bit circuses, or money losing events that are
currently being subsidized by your city tax dollars. He would have a
serious challenge to bring a value package to the people of St. Clair County,
while paying his help, utilities, maintenance and property taxes. And
until he succeeded, he would spend more of his money, not taxpayer money, to
fund the loss. Of course, if he were able to attract many people, he may
rake in profits, which are taxable. Chances are that people coming
downtown might spend some of their money in other businesses – and maybe they
would be more profitable. It could get out of hand.
While our well traveled and
informed city leaders tell us we should try to emulate the cities of Holland or
Royal Oak, I’m sure that the various city and county commissions and bureaus do
not want private profiteers to be involved. Only non-profit, civic minded
people should be entrusted with the management of our downtown jewels, our
waterfront, our marinas, our city owned housing, our city owned factories (that
need refurbishing), etc. Even though these ventures all require tax
dollars at a time when we are going broke, it is a bargain, if we can keep
strangers from investing in our city.
Now consider what a real
private sale might provide. Cliff suggests that McMorran
is worth 30 to 40 million dollars – wow. Perhaps it would cost that on a
replacement basis, but as most appraisers would agree, the income approach to
value would be utilized to produce a much smaller sale price.
According to the chart
included in Mike Connell’s Port Huron Times Herald, on June 10, 2007, titled
“City: Taxpayers can’t afford costly civic center”, the McMorran
Complex has racked up losses averaging more than $500,000 per year for the past
46 years – that’s adjusted for inflation in 2005 dollars. Only a stranger
would buy it.
Suppose the city would take
bids, over a six-month period of time, and seek a true market sale – no
restrictions, no tax abatements, no inside dealing, and suppose a rich idiot
stranger offered 10 million dollars (highest bid). What would be the
benefits? First, we would stop the bleeding. No more annual losses,
passed onto the taxpayers. Second, we could probably find a use for
the $10 Million, given today’s budget crises. Third, we would begin to
receive $300,000 per year in real estate taxes (based on a $5 Million Dollar
taxable value) – a bottom line improvement of $800,000 per years! Fourth,
if the buyer were successful and received a 10% return on his investment, it
would generate another $10,000 in city income tax. Fifth, we would
bequeath to our children, for the first time in fifty years, a sound business
decision that would save them millions in future taxes.
Perhaps it could be the first of many decisions that would attract money from
strangers.
Don’t worry…it will never
happen. Too many people have vested interests in McMorran.
McMorran is a cash cow, they do not own it, it is fed
and maintained by the taxpayers, but they get the milk. That cow is not
for sale. Unless…., they could broker a deal, with some side
considerations (the Flags), to someone who is not a stranger, who would
consider taking on the burden at a low price with tax abatements. The
public relations spin has already begun: “There’s trouble in