The Outstater

September 23, 2022

A Million Here, a Million There

I AM IN THE HABIT of “attending” local council meetings on my Mackintosh via our municipal television channel. The magical intersection of technology and democracy? Not really, more like malfeasance up close and personal on your laptop.

This week’s meeting, however, saw a member of our foundation, Jason Arp, successfully challenge the promoters of a downtown development project, a $286-million gussying up of an abandoned factory. The issue before the council was whether to amend the terms of the revenue bond for the project. The developer had been surprised to learn he might need another $36 million or so.

There was the usual mumbo-jumbo from the developer and his attorney. They assured the council that the $36 million was just a private matter between them and their bankers. Nothing to see here, just move along . . . 

But Councilman Arp had a question. He wanted to know why the banks wanted so much for the bond, the interest for which was set a full seven points above that day’s Treasury rate. And that didn’t include any money the banks might have required up front to even offer the deal, the terms of which were of course secret or as the attorney explained, “between the developers and their bank.”

As it became clear that Arp, formerly a trader in mortgaged-backed securities for Bank of America, wasn’t going to get a straight answer, he broke into the discussion to tell his fellow councilmen that the banks were sending them a message with the high interest rate.

“They think this thing is going to go bankrupt,” he warned. That also explained why the mayor, a progressive but a savvy fellow with his eye on re-election, had made clear he was not recommending passage.

The Council, a hodgepodge of apartment managers, wholesale food distributors, party operatives, race baiters and former football stars, would not be denied its ribbon-cutting. It voted 6-3 to amend the bonds without more ado. Or as another member of this foundation, the late Don McCardle, said, “If city councilmen are going to act like developers, we’re going to have to elect smarter city councilmen.”

Can a city reorganize as a constitutional monarchy? Asking for a friend. — tcl



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