Pausing for a Silent Moment of Malfeasance
FOR A JOURNALIST, malfeasance is something for which you expect to have to dig. You are surprised to find it on top of the ground or, in this particular case, sitting on a council table wrapped up as a $50-million present to special interests.
The discussion last week in my city council turned to routinely — it was hoped — approving its odd relationship ($300,000 annually) with a private economic-consulting group. Fortunately for the rest of us, there was someone at the table who understood what was going on.
It was left to Jason Arp, an outgoing councilman and a former banker, to explain the basics to his unquestioning colleagues. Presenting a motion to cut the consulting group’s funding, Arp argued that the city’s relationship with the group creates perverse incentives that produce ridiculous outcomes.
As an example, he detailed the high interest paid on the bond for a $40-million parking garage. The garage is part of a downtown development that the city assessor has estimated will be worth on completion only one-third of its cost.
Good citizenship recommends a careful listen to Arp’s presentation. Here is a video link to the sparsely attended council meeting (Arp begins at the 56-minute mark).
Describing the relationship with the consulting group as a form of “racketeering,” Arp asks the city’s community development director whether she knows what the interest rate was when the garage bond was issued. She doesn’t. He has to tell her it was 500 points above prime with a discount that set the yield to 30-year maturity at 15.5 percent. He repeats that for emphasis.
The other councilmen, silently staring at their hands, are asked, “Why in the world are our economic advisors putting us in deals that are absolutely ridiculous?” No answers and no comments from the council. Nor are there any questions for either Councilman Arp, the community development director or the consulting group’s representative.
“There are other people in this room who can do the math; it’s not hard,” Arp says in exasperation.
He estimates that the sloppy bonding of the garage alone will cost city taxpayers $50 million. And he referred the council to video testimony of the developer saying that if the larger economic-development project ever yields tax income it won’t be until 2055. “That’s a pretty delayed return on investment,” Arp concludes. “Certain people are getting a lot of money.”
The motion to cut the consulting group’s funding is defeated eight to one. The council’s silent moment of malfeasance over, it quickly moves on to other matters. — tcl