Two of the most difficult decisions I made during eight years on the Fresno City Council was to guarantee the $15 million loan for the not-for-profit Fresno's Metropolitan Museum and the almost $5 million loan for the for-profit ball parks at Granite Park. The most satisfying aspect of my tenure on the Council was leaving the City with a $17 million reserve during the worst recession since the great depression. Now, in retrospect, I realize that guaranteeing the loans was a mistake since the loans are now in default, and the City will have to divert valuable financial resources to make them whole.
Granite Park was the most difficult decision since it required guaranteeing a loan for a private for-profit entity. The bank would not make the loan to the developer unless the City guaranteed the loan. I wrestled with my decision, trying to make the case that the area was heavily blighted with significant crime and the City could, therefore, assist with relatively little risk to improve the area with a youth-oriented athletic facility. Also, if a default occurred, the City would be able to take over the facility and operate it as a city-owned park.
Suffice it to say that all my suppositions were incorrect. The developer was less than forthright with the City and stopped making payments on the bank loan while attempting to develop commercial property adjoining the ball fields that were out of legal reach of the City. If I remember correctly, only Councilmember Mike Dages --to his credit--opposed guaranteeing the loan. Bad decision, former Councilmember Brian.
The Fresno Met was a different set of circumstances. The Met approached the City with essentially an ultimatum: Guarantee their $5million construction loan for completing renovations or the Museum would have to shut down. The Met had a dozen or so reasons why they had dug themselves into a financial hole, but it really came down to irresponsible planning and follow-through. The Council, whipped on by the editorial board of the Fresno Bee and other community leaders, supported guaranteeing the loan.
In retrospect, the City should at that point have taken decisive action to replace the Met's board and key administrative staff. Instead, the City guaranteed the loan and chose not to monitor further developments. Maybe it wouldn't have changed the final outcome, but it certainly indicated a lack of due diligence once the City had signed on as the financial guarantor of last resort.
This lack of City oversight is indicated by the series of continuances granted to the Met for bringing a viable payment plan to the City for approval. It is also shown by the more than $2 million construction costs the Met incurred over and above the original $15 million loan guarantee that is now presented as a fait acompli to the City for payment. How audacious for the Met to add insult to injury by demanding this additional taxpayer subsidy after defaulting on the original loan. But I also hold the City responsible for not replacing their board and senior staff and auditing their books. Bad decision, former Councilmember Calhoun.
While mistakes have been made, it is now necessary to decide what now to do. My advice for the Council is to not allow the Met to operate as is since the Met will soon, for all practical purposes, be owned by the City taxpayers. On the other hand, I don't believe that the City is capable by itself of effectively operating it unless they want to have the Met continue with a hefty taxpayer subsidy. Please remember back a few years when the City Council was struggling with problems of running Chaffee Zoo. If Measure Z had not succeeded in providing a County-wide subsidy, the zoo would have been reduced to a petting zoo today.
I would recommend that the City consider a City (Parks and Recreation Department) and Visitors and Convention Center joint management model. The Parks and Recreation Department Director, Randy Cooper, and the Visitors and Convention Center Director, Stan Oken, are very knowledgeable, creative persons that would, at least in the short term, provide the Met with much needed leadership. The possible inclusion of SMG, the large national entertainment management company currently used by the City, might also be a partner in operating the Met.
While I am still very disappointed with the necessity of the City having to guarantee the loans of these two projects, I hope that Mayor Swearengin and the Council take a hands-on approach to solving these unfortunate problems. The Mayor and Council can also learn a valuable lesson from the mistakes of the previous mayor, council and administration to not guarantee in the future pleas from either for-profit developers or not-for-profit organizations to be bailed out by the taxpayers.
Coming attractions...
1) End of the Coffee Stops: Serving coffee to constituents at a street corner is deemed illegal.
2) Bullard High was cheated.
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2 comments:
I used to work at the Met and was one of the 14 recently laid off. I think you're correct about the Administration's and Board's mismanagement of funds. I worked in the only department to be paid minimum wage, while every other department made at least $2 more per hour.
Although the Met is a non-profit with lofty goals, in my experience there, the administrators don't care about the more lowly employees. They refused several requests from several employees for a much needed pay increase. A few key administrators make a lot of money in their jobs, and I believe that although they may believe in the Met's vision, they have been doing all they can to keep their high-paying jobs, regardless of the welfare of employees or the city.
I think this is why they have been so insistent in issuing an ultimatum and demanding taxpayer subsidy.
The biggest thing for me is that it is sad and frustrating that an institution which is important to the Valley and whose administrators talk big about the importance of art, science, education, and working with the community at large, doesn't care for its employees.
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