2/8/13

The Tabares building Part 4

Now, let's look at the 'demand' for this project, and the multitude of potential tenants for it. This is the "Smoke and Mirrors" part of the deal.

I'm taking the term 'demand' right out of the latest survey: '... the group was able to determine the existing demand ...'.

And this is what they found:

The latest survey states that in the last 12 months La Junta economic development has 'been in contact' with:

Boutiques - at least 2 inquiries
Restaurants - at least 4 inquires
Various retail - at least 4 inquiries
bar/sports bar - at least 2 inquiries
non-profit expansion - at least 2 inquiries, both have already located
ice cream franchisee - 1 inquiry
meat market - 1 inquiry
specialty grocery store - 1 inquiry
furrier for taxidermists - 1 inquiry, presently established by may be open to expansion options
retail incubator - must produce sales tax to participate and must be a participant of the OJC Small Business Program and the SBDC.
winery
microbrewery
office space
existing local businesses looking to expand or move to a higher traffic area.

Is that what they call 'demand'? Note that these 'inquiries' are not specifically about the Tabares building; they are just general 'inquiries.' We have no idea as to how serious they were, or how in-depth they were.

Check that 'at least ...' thing. Do they not know how many inquiries they received? The non-profit 'inquiries' used that 'at least' thing, but then we see that 'both have already located.' So ED only received 2 such inquiries, not 'at least two' which implies more. So that 'at least' is a bit of smoke and mirrors on the part of the supporters of this thing, trying to put the best face on it.

Now ... note that this study doesn't say that these outfits were specifically looking at the Tabares project. Nope. These are just 'inquiries' though there is no mention of specifics regarding these 'inquiries.' 

What we have here is a grasping at straws. The project proponents - and that includes the people who performed this so-called 'study' - asked Economic Development how many 'inquiries' they had received. Then they stuck it in this report, giving the impression all these 'inquiries' are related to the Tabares Project, when in fact they are not.

You will recall that Source Architechnology was invited by the project proponents. They are not neutral. They have an interest in getting this project. If this were Chicago politics, we'd be looking for the kickbacks trail.

But wait! There's more! 'They' are really pushing this commercial kitchen function for the Tabares. So now we find that some of the businesses in town would like such a kitchen to use in the furtherance of their business. They are listed as 'potential building users/project partners.' And then we have OJC 'interested in commercial kitchen use for increased community education opportunities.' Really? What does that mean, exactly? And how about social services? They have 'an interest in a classroom area and kitchen to work with clients on food preparation.' Really? The Urban Renewal board wants to spend at least $1.3 million so social services can have a place to teach clients how to cook?

If a commercial kitchen is such a driving community need ... has anyone approached the Catholic Parish or the Knights of Columbus about leasing their facilities? How about the kitchen at East School? How about the kitchen out at CBR?

Then we have several local businesses who have 'expressed an interest ...'. Ark Valley Organic Producers; the Barista; F&J Brands; Froese Family; Lanahea Everrett; Rocky Ford Growers Association; S&J Brands ... and one 'local entreprenuer' who would like to start a bakery.

All of these are listed as 'potential' users who 'may have an interest' in the building.

Do you remember in the previous post the statement by Mayor Rizzuto about cost per square foot? He said that if the entire building, including the basement, were used, it would cost $300 per square foot to renovate. He said it would cost $600 per square foot if the basement were not included in tenant space. He used the project cost figures from the study.

And the survey says ...

For the apartments, fair market value based on HUD data:

1 BR - $495/month
2 BR - $601/month
3 BR - $832/month

The 2 bedroom units are 813 square feet. At $601 per month rental, that translates out to $0.74 (yes, 74 cents) per square foot per month. Contrast that against the Mayor's $600/square foot renovation cost. We will use the 'no basement' option because the study does not indicate any use of the basement for 'potential tenants' who 'might have an interest.'

And, taking the information from the study, office space would be $0.75 to $1.00 per square foot/month; retail space would be $1.00 per square foot/month; and restaurant space would be $1.00 per square foot/month. Contrast that against the Mayor's $600/square foot renovation cost.

It would take long, long time to recoup those costs, and that's assuming the thing is leased/rented out to capacity every day of the year, every year. The study calculates that the gross income allowing for 10% vacancy would be $52,032/year.

They plan on a fixed expenses cost of $1221/month, or $14,642/year. That would be, according to the survey, for utilities, maintenance, management, insurance, reserve fund contributions, legal fees, and advertising. Strangely, they don't break that down so we can see their figures for each category.

So what we have here is some very nebulous data on occupancy. It's all 'potential' or 'expressed an interest.' There is no 'demand' identified. There are a few entities/individuals who have 'expressed an interest.' There is no information on the fiscal capability or capacity of any of these entities/individuals to become involved in any way in the project. There is nothing concrete. It's all smoke and mirrors, cherry-picked by the usual suspects, to try to justify spending hundreds of thousands of tax dollars on this farce.

A high school business class could have done a better survey than this.

City council should vacate that board and reconstitute it with someone who has at least some vestige of business sense.