Archive for the ‘shell game’ Category

The Answers From CenterStage

Wednesday, August 12th, 2009

Don here. When Eagle Eyes and I submitted our “Twenty Questions” to CenterStage earlier in the summer, I thought we were being very easy on them.

We didn’t ask about an artists endowment — there isn’t one — or the rumors that ticket sales for the CenterStage grand opening weekend have been slow. And we didn’t ask why there is so little of substance announced on the initial event schedule (BTW: Bringing in The Oak Ridge Boys is actually a good idea. In the context of a full and diverse schedule of events, that is. So where’s the rest? Or is this it?)

We didn’t ask about the parking situation, although there seems to be some problems there too. And we didn’t press too hard on how the Foundation intends to respect the history (ahem!) of the historic Richmond theatres they’ve been handed the keys to, and given considerable public subsidy to oversee and to safeguard. Perhaps, in light of recent events, we should have.

[Incidentally, it's always worth reminding people that this project is, was and will be funded by public tax dollars. So anyone who tries to tell you that CenterStage, or RPAC, or VAPAF — whatever you want to call them — should be able to do with its "history" what it wants — like a private company reworking a new sales brochure — has an awfully broad and somewhat shitty view of both history and what it means to be a leader in the public trust.]

No, we didn’t press Jeff and Jay at Capital Results PR (who officially handled our inquiries about the project — thanks guys!) about such things as the lack of an artistic director — we assumed there would be one. After all, wasn’t there a guy named Joel Katz? And didn’t he run the Carpenter Center successfully for ten years with very little city subsidy? He was fired for truth-telling too.

Why does having an artistic director — a “vision” — matter? Let’s take a look at a reputable arts venue named CenterStage — Baltimore’s CenterStage — which does not take city tax dollars and is overseen by a staff that includes a seasoned artistic director. If you want a good example closer to home, take a look at the diverse international arts programs that the director of The American Theatre in Hampton, Michael Curry, brings to Tidewater each season in a former second-run movie house (click here for the 2009-10 schedule).

Gee, let’s get even closer than that. Think of Kathy Panoff and what she accomplished in building UR’s Modlin Center.

Make no mistake, folks. This stuff matters. You can’t pass your programming and your artistic direction off to a hockey arena promoter (in this case, SMG) and expect to have a “world class performing arts center.” It just doesn’t compute.

Anyway, we promised the boys at Capital Results that we would print their official answers “as is” with a very minimum of linking and editorializing. But forgive us for pointing out facts when the answers fail to do so, and please allow us the opportunity to tell you why some of these questions might just be a wee bit important, and especially to those people who say they support this thing and want it to work.

There was also one “followup” question that we are still a little unclear about.

But you’ll read all about it… as you wade through…

[Cue trumpets, or "Elvira" — your pick]

The Answers From CenterStage.

And for those of you coming in late to the CenterStage / Virginia Performing Arts Center story, feel free to plunder our archives. And start asking your own questions. After all, you are paying for this particular “serious fun,” whether you like it or not.

Save Richmond: Six Years Later

Sunday, July 19th, 2009

Save Richmond didn’t start out as a blog. No, this web address was originally snagged so that its founders could circulate an “Open Letter” that asked for Richmond’s leaders to reconsider the city’s toxic relationship with its creative community.

That happened almost exactly six years ago. But it might as well have been six days ago.

Among the things we asked for in the letter:

- A reduction in the city’s admissions tax.

- No hike in the city’s meals tax.

- Assurance that an independent feasibility study would be commissioned of a proposed downtown arts center… and that oversight of this facility would be governed by proven local arts administrators, including representatives from the city’s grassroots arts scene.

- Increased support for the city’s grassroots arts scene, including First Fridays, with less resources spent on publicly-funded downtown rehab projects.

- An end to restrictive ordinances and restrictions that served as financial and regulatory drains on nightclub and restaurant owners.

An editorial that I wrote for Style Weekly further explained the absurdity of the city’s stance towards its “creative class,” emphasizing the then-recent eviction of artists from the Shockoe Bottom Arts Center (these Richmond artists eventually found a home in Petersburg, which offered them sanctuary — our own town fathers did nothing to keep them here).

Other issues such as tolerance, inclusion and accountability were also addressed in Save Richmond’s “Open Letter.” And hundreds of people ended up signing it — from well-known musicians to respected visual artists, from soccer moms to advertising execs, all of them fed up with the city’s clueless and often thoughtless dealings when it came to Richmond’s burgeoning creative community.

While our message got some play in the local press, the letter and its contents were completely ignored by city movers and shakers — we might as well have been pissing in the wind.

In response to those who thought we were being too negative in our assessment of the situation, we gathered up much of what our signees had to say, noted what other communities were doing, and fashioned a general policy paper of arts-based solutions in late 2003 based on the problems outlined in the Open Letter. It was called “Boats Against the Current.”

Around the same time, Church Hill artist Lisa Taranto began lobbying then-councilman Bill Pantele to hold a series of meetings that included city planners and representatives from the arts and music scene, from gallery owners to rock drummers to sculptors. The objective was to brainstorm solutions to many of the arts-based issues Save Richmond (and others) had been writing about. Alas, despite a well-rounded plan of action, nothing ever happened with any of these proposals, devised charrette-style by a diverse crossection of Richmond’s indigenous arts community. Bill Pantele soon turned his attention to other urgent artistic endeavors — like funding a censorious war on fun through “the Party Patrol.”

I often stop to think where we might be if the city had listened back in 2003.

Six years and two mayors later, these same issues — from draconian city codes to high taxes to conservative censorship — are still with us. Many of them have reached a boiling point.

The Admissions tax remains, but…

As Terry Rea reports at SlantBlog, there is finally some movement on an ordinance that would abolish or severely lower the city’s crippling admissions tax. But it may come too late for some. At this writing, this tax may be directly responsible for the closing of one of Richmond’s true arts success stories, Gallery5. Read more about that here.

The city’s meals tax rate remains one of the highest in the region.

This, despite assurances from City Council in 2003 that the rise in the meals tax would be a “temporary” hike. The money from this regressive tax — which disproporately affects low-to-middle income people — went to fund a performing arts foundation that used the money to fund a multi-million dollar hole in the ground. A city auditor later determined that city council basically wrote the private foundation a blank check, and did not adequately define how it could spend the people’s money.

The performing arts center has still not been independently studied or treated to a single officially-sponsored public meeting.

Contrast this with the reams of paper and face time allotted to the recent Shockoe Stadium proposal and ask yourself why. Worse, the arts foundation has cited statistics and projections for their project that they can’t provide proof for — and that supportive city politicians have never adequately explained to their constituents.

Local arts voices are still shut out… along with the larger community.

Aside from those 2003 meetings initiated by Lisa Taranto, there has still yet to be a single official public meeting that invites artists, taxpayers and city officials to discuss arts-based problems and issues, including what kind of an arts center we want to have built with our tax money. Instead, we’ve been treated to a few “limited seating,” “exclusive,” “invitation-only” discussions that normally bring together the same old voices spouting the same old meaningless platitudes. This is not how you have a community dialog, this is how you throw a Tupperware party.

Six years ago, the Carpenter Center had a director (Joel Katz) with arts administration experience. He was eventually fired for disagreeing with the arts foundation. His real crime was in reaching out to groups like Save Richmond. Six years ago, under his management, the Carpenter required no public subsidy. Today, the planned Carpenter Theatre (CenterStage) will have no artistic director, will have very minimal representation from area arts authorities, will delegate programming to an out-of-town entity, and will cost taxpayers up to $500,000 a year.

So, in short, the future of Richmond’s performing arts scene will consist of theatres operated by people who have no experience in the field of the performing arts, and managed by a firm (SMG) that has been accused in the past of over-charging the city and gaining sweetheart city contracts over more capable competitors; a company that mainly manages hockey arenas and convention centers, not performing arts facilities.

Contrast this with another CenterStage — Baltimore’s premier performing arts center. It not only has an experienced artistic director guiding its creative mission, it requires no funding at all from the city of Baltimore. Baltimore’s arts patrons also didn’t need to hire an expensive consultant to steal someone else’s name.

No support for what works — grassroots arts and culture

After decades of failed “build it and they will come” projects — dependent on public financing and pushed by county dwellers in the metro business community — downtown is in the process of revitalizing itself. For that, you can largely thank the city’s grassroots arts and music scene.

But, despite this success, the city and its satellite business consortiums continue to do little or nothing for Curated Culture’s “First Fridays” — which has now been forced to close its downtown office because of a lack of money. Ah, but you’ll notice that these same folks have no problem touting the success of this monthly artwalk and the city’s resulting downtown renaissance on the city website and in promotional materials. What’s wrong with this picture?

Our city’s war on nightlife has, if anything, intensified.

New burdensome fees for nightclubs, midnight curfews and suspicious feuds with “undesirable” venue owners are why Richmond has earned the monicker, “The City That Fun Forgot.”

The recent busts by the city’s Community Assisted Public Safety (CAPS) program comprise yet another chapter in Richmond’s unfair targeting of music and cultural attractions. See the aggregated coverage of that here.

But all you really need to know about the bureaucratic arrogance of CAPS and its overseers can be found in this highly revealing Style Weekly report of a July 9 CAPS community meeting at the Visual Arts Center. An excerpt:

The Visual Arts Center of Richmond on Main Street seemed an ideal neutral setting for a meeting between Richmond’s arts community and the city’s Community Assisted Public Safety program.

The pristine, nonprofit facility was newly renovated with modern, brushed-metal interior architecture. It’s a friendly place for local gallery owners, and had passed its recent city construction and occupancy inspections with flying colors.

So it was no surprise to see the shudder that went through the meeting’s organizer, Curated Culture director Christina Newton, when one of the city officials in attendance stood up to call attention to a lack of marked exits in the second-floor conference room where the July 9 meeting was held.

“Tomorrow I’m going to send my inspector over,” said A.R. Abbasi, the city’s acting building commissioner — a half-serious joke that earned uneasy laughs from the already-nervous assembly of about a dozen and a half arts community leaders.

The group was gathered to seek answers about what many people perceive as a crackdown on code enforcement targeting the city’s arts and culture venues, including the Broad Street galleries that make First Fridays happen each month.

The punchline of the article comes from Mayor Dwight Jones:

“We’re going to take a look at it and see what’s going on with CAPS… I’m thinking there are some more serious issues that might [need] our attention.”

No offense, Mr. Mayor, but considering your administration’s decidedly mixed record of supporting the city’s arts and music scene, we won’t be holding our breath.

When we started Save Richmond six years ago, I was confident that town fathers and elected politicans could be reasoned with on the subject of the arts. That all one would need to do is identify the obvious problems, to document the inequalities and to present the evidence to the proper authorities, and our leaders would be only too happy to help the quite visible creative renaissance occurring under their noses. After all, it is only in their best interest. Right?

More than a half-decade later, I’m now disabused of that notion. As the last lap of the Downtown Master Plan process has shown, the powers-that-be in Richmond are utterly disinterested in the will of the people.

And this especially includes the artists and musicians that have made up one of the city’s few genuine success stories in recent years. As SR pointed out in our “Richmond Arts Flashback” series, this is nothing new — Richmond politicians and business community has traditionally shown little but contempt for its artistic community.

Gallery5’s Amanda Robinson is currently soliciting feedback from citizens that she wants to incorporate into her own contemporary “Boats Against the Current” document. She hopes to submit it to city council in the near future. We wish her luck but hope she has a lot of patience and a strong stomach. Go and share your thoughts with her here.

And — surprise, surprise — we are about to be treated to yet another “private” discussion about the arts. This one on Tuesday night at Morton’s Steakhouse. [Side note: With all due respect to the distinguished and noteworthy participants who will be involved in this discussion, having a conversation about the arts in such a conservative bastion is not unlike holding a vegetarian convention at Fuddruckers.]

At what point are we going to realize that we are talking in a vacuum? The problem isn’t that people in the arts and music communities haven’t been making suggestions and acting in good faith to brainstorm answers and offer up compromises and solutions. The problem lies in our leaders, who seem utterly disinterested in listening. All they have to offer up is empty lip service and sick jokes.

It’s pretty obvious that, six years later, our city is as clueless as ever when it comes to the arts. Sadly, for all of the “progress” made, Richmond’s creative community might still just as well be contemplating Petersburg.

Door Hangings vs. Reality

Wednesday, June 24th, 2009

Thinking about thinking about changing. That’s Richmond.

How many years have we been talking about the Richmond school administration’s wasteful and potentially corrupt procurement division? It’s been compared to everything from a cesspool to a black hole. Now another audit, this one conducted by the school board’s own auditor, confirms (one more time) the waste and abuse by the department, and the serious lack of oversight by high-ranking school officials.

In short, if this is a “re-do,” it looks like Richmond Public Schools has failed the test again.

If you’ll recall, “Auditors were denied access to detailed procurement records” during a 2007 investigation of the schools. Despite the in-house stonewalling, the final version of this report by the City Auditor detailed a system where fund allocation was largely unsupervised (that’s your money, by the way). It also made numerous recommendations for change.

More than a year later, after much teeth-mashing, the city finally released a full audit of the Procurement and Accounts Payable division. As was predicted by many, the April 2008 report uncovered a host of irregularities and outright scandals.

First of all, the auditor was kind enough to explain why examining and closely monitoring school procurement practices is necessary:

Traditionally, procurement and accounts payable functions are targets for fraudulent activities. According to the Association of Fraud Examiners, 71.4% of the total number of instances of occupational fraud committed involved billing, expense reimbursement, check tampering and wire transfer frauds.

Looking at the school’s procurement policies and performance, the report found:

- The internal controls for following procedure and ensuring lawful practices in the procurement and accounts payable processes were “significantly weak.”

- There were “significant non-compliance with RPS policies and the Virginia Public Procurement Act provisions.”

- School officials paid $18 million for purchase orders that were not authorized.

- Richmond Public Schools buys more textbooks than it has students [this will be news to teachers in several city schools who complain about not having enough books to go around]. Moreover, RPS has higher textbook costs per student than localities with more students, such as Henrico. It also has no record of what is done with used textbooks, who sells them and for how much.

- The RPS staff may have skirted regulations for emergency and single-source purchases. Moreover, the School Board’s approvals for most of the emergency purchases were not obtained as required by the School Board bylaws.

- Looking at 52 competitively bid purchases, 96 percent did not comply with such requirements as documenting bids. The purchases were for more than $1 million.

- School officials awarded a $104,000 contract to a firm barred from doing business with the federal and state governments because of unethical business practices.

- Two RPS employees were related to contractors who provided services to RPS. One was a purchasing officer responsible for construction procurement. The Auditor’s office identified that “one of the construction firms utilized by RPS is owned by a family member of this purchasing officer. And a Plant Services employee’s immediate family member performed construction services for RPS. This is of concern since construction projects are handled by Plant Services. During the audit scope, both contractors received a combined total of approximately $357,000 from RPS.”

- “On at least two occasions, staff members were instructed to backdate contracts.”

- RPS has no little control over its vendor data input. “Staff could add, change and delete vendors without any supporting documentation.”

- There were approx. 300 vendors that had duplicate names in the RPS database. Little wonder that Dalal and his staff found duplicate payments on 59 invoices totaling $121,073.

- RPS balances its bank account haphazardly. “Basically, RPS personnel reconcile the bank balance with outstanding checks and relevant adjustments. This means that, as long as the list of outstanding checks reconciles with the bank balance, any errors in the general ledger balance will not be detected by this process.”

- There was no proper documentation concerning expenses charged to credit cards issued to RPS management and former School Board members. “The charges on two former School Board members’ credit cards included the following: $485 in gasoline purchases in the Richmond area with no receipts or explanations. The business purpose of these charges is unknown… $10 for one on-line charge to an inappropriate website…. $175 for a Western Union money order. The payee and the reason for issuing the money order are not known.”

- Two interactive, computerized classroom projection systems are missing. These cost a total of $7,000.

There’s more, a lot more. This devastating report, which came complete with detailed recommendations for improving the department, should have been enough to get the school administration cracking down on their procurement policies immediately.

But, no, Richmond schools had to wait one more year, and endure one more embarrassing procurement scandal — a $291,000 school elevator job awarded without proper bidding— before the school board began its own audit of the school’s accounts payable division.

In other words, RPS began thinking about thinking about doing something.

Now this latest study has arrived. And surprise, surprise… there are problems within RPS’ Accounts Payable and Procurement Department!

From the Times-Dispatch:

The Richmond school system’s payroll department is overstaffed but has been unable to detect overpayments, accurately track time off or collect money it is owed by employees, according to a report released yesterday by the schools’ internal auditor.

In addition, an audit of the system’s human resources department, also released yesterday, showed a department operating on the fringe, with out-of-date policies and procedures and ineffective management. Neither department has seen updated guidelines since the mid-1990s.

“We have a lot of concerns with policies and procedures,” internal auditor Debora R. Johns told the School Board’s Audit Committee.

Her review of payroll information, covering the period from July 1, 2006, to May 31 of this year found a number of problems, including:

* Overpayments to 19 employees, totaling $50,356.96. The biggest was $10,050 to an employee who was paid while on education leave. While that employee has agreed to repay the money — in $50 increments over 201 pay periods — four other employees may have gotten away with keeping $1,710.64 in overpayments, according to the report.

* Employees taking off time but not recording it, leaving time off on the books that had been used. There were also problems with the awarding, tracking and use of compensatory time off, with no single way of recording such time.

* Sloppy record-keeping. A spot review of 30 employee files became a review of 29 files when one employee’s file couldn’t be found. Of those files in place, all were missing certain forms, including copies of photo identification, Social Security cards and internal paperwork used to prove job status.

“It’s deja vu all over again,” as Yogi Berra might say.

So what is RPS’ response to this latest latest audit? Immediate adoption of the report’s recommendations? A tearful mea culpa for ignoring the last audit’s recommendations (and the one before that)? A pledge to begin a campaign of no-excuse housecleaning? A concentrated bout of unequivocal fat-trimming?

Girlfriend, please. [Emphasis mine]:

“This is the cumulative effect of long-term problems,” said Superintendent Yvonne W. Brandon. “These are bigger issues than any one person.”

The payroll department has nine employees, and the audit recommended eliminating two positions. While Brandon agreed with most of Johns’ findings, she balked at the idea of cutting two of the payroll employees.

She did, however, agree to an aggressive time frame for correcting the problems, with a September target for fixing many of the problems. “We can’t afford to wait,” she said. “Even if we don’t hit the target on all of them, we can’t wait to start.

“I welcome audits. They help us identify strategies toward improving.”

Uh-huh.

I’m happy to hear that there will be “aggressive” action taken. Problem is: RPS has “waited to start” for years. They have disregarded and thrown excuses at previous studies that either hinted at, or pointed directly to, the same kind of findings. Now, as she “welcomes” the latest findings, the superintendent of schools is appearing to resist common sense remedies that would help to improve and streamline the department.

See you in September, as they say.

Let’s not kid ourselves about the message that all of this sends. These latest revelations (and the superintendent’s less-than-definitive response to them) will resonate with area parents more than any glossy door hanging or slick advertising slogan. Yeah, it’s all well and good to initiate expensive public relations campaigns designed to convince people that everything is OK at Richmond Public Schools. But wouldn’t it have been more beneficial and honest to work on the reality first?

This latest audit of RPS is scandalous stuff, sure. But it is hardly surprising and it’s certainly not breaking news.

When Not Really Risky = Extremely Hazardous to Your Financial Health

Monday, June 15th, 2009

Eagle Eyes here. Quick note from the new Lord of Local Business News, aka RichmondBizSense on ward of the taxpayer First Market Bank [emphasis added]:


First Market Sees Surge in Repos

Richmond-based First Market Bank has seen a rise in repossessions among clients who have not had credit problems in the past.

On Tuesday, BizSense reported that Richmond Auto Auction was seeing more high-end cars from local banks. (You can read that story here.) Today we heard from a local bank.

“People who have had a solid credit history are having their cars repossessed because they are losing their jobs and can’t pay for them anymore,” said Charles Munsey, a senior vice president for dealer financing at First Market.

Munsey said that First Market had not been put in jeopardy because of the increase in repos.

“We’ve always tried to give due diligence to credit applications and we’ve never been into really risky investments,” Munsey said.

Hoocoodanode???? As for the last part, just keep meditating on that mantra, and I’m sure things will get better soon. Lending money to folks who don’t have enough income or savings to comfortably pay their bills, and relying mostly on credit scores, should be a great long-term strategy. I can’t believe the Ukrops want to sell this place.

Other not “really risky” ideas pushed by First Market Chairman Jim Ukrop:

1. The “Super Safe” Broad Street CDA
2. The “Urban Money Fountain” Greater Richmond Convention Center
3. The “It Actually Pays you Money Back When You Buy Prepared Food” Performing Arts Center

If You’re Healthy And You Know It, Pay Back TARP

Wednesday, June 10th, 2009


“We’re going to find out who are the strongest kids on the block and who are not,” said Bert Ely, a longtime banking analyst.

Eagle Eyes here. Yesterday, the Treasury Department gave the O.K. to ten of the nation’s seventeen largest banks to repay funds received from the Troubled Asset Relief Program (”TARP”). Former Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke had forced the ten to accept bailout cash last fall, even though they may not have needed it, in a gambit to obscure the identity of the weaker, actual intended targets of the prorgam (specifically Citigroup and Bank of America), avoid runs on those banks, and preserve the nation’s teetering financial system.

Smaller, regional and local banks, also struggling in the face of surging loan and investment losses, lobbied hard and were subsequently included in the program. On February 6 of this year, Richmond-based First Market Bank received $33.9 million in bailout greenery.

Almost immediately after the worst of the financial storm passed, stronger banks chafed under the increased government scrutiny on executive pay and risk-taking and fought hard to gain clearance to repay the bailout money:


[Jamie] Dimon, calling money received through the Troubled Asset Relief Program “a scarlet letter” and “the TARP baby,” said on a conference call with reporters today that the New York- based bank is awaiting guidance from the U.S. Treasury Department. “We could pay it back tomorrow,” he said.

BB&T CEO Kelly King told analysts the TARP funds are “destructive” to the company.

“Our plan is to repay the [TARP funds] as soon as it is humanly possible,” Kelly said. “It creates excessive controls, it has a negative impact on our people and our strategies” and “it runs a great risk of politicizing the lending process, which is very unhealthy.”


“The company believes it has sufficient capital and access to capital to operate without the TARP money,” CEO W. Moorhead Vermilye said in a statement released last month when Shore Bancshares applied for permission to repay TARP funds.

In the March press release, Vermilye echoed that sentiment, saying: “It has become clear to us that the public, including many members of Congress, view institutions that participated in Tarp as having done so because they are weak, and not because they wanted to do their part to foster economic recovery.”

Weaker banks, with too little capital to pay back TARP, instead fired up the PR machine (I’m guessing “Troubled” is not a word loved by their marketers):


First Market gets TARP infusion of $33.9 million
“The TARP funds are meant for healthy banks,” said Katie Gilstrap, spokeswoman for First Market. “First Market has a very conservative credit culture. We have never been involved in subprime or risky loans.”


Bailout’ it’s not, Virginia bankers say
Virginia bankers cringe at the word “bailout.”

Many have applied for money that the federal government began offering last fall to boost lending in frozen credit markets.

But banking officials don’t want to be included with AIG Inc. and Citigroup Inc., or the automobile-manufacturing industry, as beholden to federal taxpayers for their financial prosperity…

However, now that certain banks have been deemed strong enough to return bailout funds (about two dozen smaller banks have already mailed Timmy G. the check) there is an easy way to accurately differentiate between “good” and “bad” banks. As a result, there will be tremendous pressure on banks to repay in order to avoid being lumped in the latter category. We should all pay close attention to those that cannnot.

It will be very interesting to see if First Market and its new suitor Union Bankshares (which received $59 million in TARP) can return the money. I’m guessing they don’t have the quan.

First Market has operated on a relatively thin capital base since a 2005 reorganization that saw Markel Corp replace SunTrust as a minority owner. Losses on loans and investments eroded their capital further.

And the news isn’t getting any better. First Market’s major lines of business include construction loans, home equity lines of credit, commercial real estate loans and auto loans, all showing significant deterioration at First Market and industrywide. Last week, large local builder Prospect Homes declared bankruptcy. Prospect owed First Market $4.2 million, or about 5% of First Market’s pre-TARP equity capital. Ouch! A few more losses like that one and they might have been graced by a late Friday knock at the door.

But, of course, Jim Ukrop leads a charmed life. With the taxpayers’ $33.9 million in his vault, he can keep the doors open and push though a sale to Union Bankshares that will reap him and his family somewhere on the order of $60 million+. But, if First Market is not going to pay TARP back, at least he can spare us all the “healthy bank” charade.

P.S. How about Richmondbizsense.com needing only about a year to take over as the source for local business news - well done guys!

P.S.S. Wouldn’t it be nice if we could all have a major newspaper give us tons of free advertising under the guise of journalism like this this this (only 6 sold?!) and this?

P.S.S.S. Ukrops Supermarkets only made a $465k profit last quarter and has about $100 million in debt. Better sell it fast…

P.S.S.S.S. Anthony Markel just sold more than $19 million of his Markel stock. Should you sell yours?

Quick Thoughts

Tuesday, June 9th, 2009

Mark Holmberg at Channel 6 weighs in on the city government’s ongoing war with the grassroots music and art community. Save Richmond has had disagreements with Mark in the past, but on this one, all we can say is: “Go Slim Go!”

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There are philanthropists who give money to things and then there are genuine community heroes. Retired real estate developer W.E. Singleton, a huge fan of Richmond’s underappreciated Parks and Recreation Department, has offered to pay for the restoration of the burned playground at George Mason Elementary all by himself. We salute you, Mr. Singleton. If we had ten more like you around here, Richmond might actually be going somewhere.

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Councilwoman Ellen Robertson’s “standards” never cease to amaze. We’ll just leave it at that.

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The emails are still coming in to SR H.Q. about this. We can’t explain it, except to say that it is further evidence of the impending apocalypse. For the record, “Eagle Eyes,” who wrote the cited Save Richmond post, had this to say: “I guess it is just cranks that read our site.”

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I hope all of you who came out to Broad Appétit on Sunday had a great time stuffing your faces. I know I did. And I hope everyone enjoyed those CenterStage hand fans that were being passed out. Just to remind: Three months away from its grand “gala” — on September 11th!! — the performing arts center still doesn’t have an artistic director, or a complete calendar of events. What has been announced on the schedule are programs that would have played the Modlin Center For the Arts if there had been no Centerstage. (Think about that for a minute). So enjoy those fans, folks — they may be the only windfall that Richmonders ever get out of the city’s ongoing boondoggle.

Memphis Stadium Bonds Default

Thursday, May 28th, 2009

Eagle Eyes here. From Bloomberg comes news that the Memphis Redbirds Foundation has defaulted on the bonds it issued in 1998 to build Autozone Park:

Among the latest to default: the Memphis Redbirds Foundation, which in 1998 sold $72 million in sports facility revenue bonds to help pay for a minor-league baseball franchise and a 14,000-seat stadium in downtown Memphis.

All over the country, boosters of ballpark developments have repeatedly used Memphis, as well as Louisville, to justify their case. In both instances the ballparks spurred some ancillary development, making Chambers of Commerce drool. This default does not necessarily diminish this progress, although some return should be expected from spending so much money in these areas.

This news does put one more nail in the coffin of the idea that such projects are ever “free.” Clearly, in Memphis’s case, the project was not even close to being economical or self-sustaining: revenue generated by the ballpark was not nearly sufficient to pay for its construction and operation. And although attendence has fallen the last three years, the Redbirds are still the highest grossing team in minor league baseball. Read that last sentence again. So, if they can’t make it work…

The takeaway from this lesson is that the developers of projects in and around these stadiums receive a form of subsidy, and a pretty significant one at that, from whatever entity pays for the ballpark contruction. It’s pretty easy to see in the Memphis example that there has been a direct transfer of wealth from the bond investors to the developers and property owners. And, while the details of these deals (especially the financing structure) can be slightly different from case to case, I think this remains the universal truth. The developers will not proceed with their projects without the ballpark, and they ain’t paying for the ballpark. You think the bond investors, who just took one in the solar plexus, want another? Count on Richmond’s ballpark to need big, and ongoing, taxpayer support.

So now we are left with the honest debate: do we think this is the highest and best use for $60 million of our tax dollars? Are there things we could do with this money, other than economic development, that would provide greater benefit to the city? If we like economic development, is this the best project? I will be charitable with the purveyors of stadiums and performing arts centers when I say that the jury is still out as to whether these projects actually have a positive economic impact, net of their enormous costs. The legitimate evidence and studies suggest that, in most cases, they do not. So to the questions above, I will add one more: do we care that our tax money will be providing a subsidy that will enrich Highwoods (and all of the other remoras up and down the foodchain of this project) with perhaps no net measurable benefit to the city?

It continues to confound me that Richmond is always the last stop for each of these pied pipers’ tours. Whether its baseball stadiums, convention centers, performing arts facilities or festival marketplaces, there isn’t a hair-brained development scheme we haven’t bought. And we always seem to jump in just as evidence is mounting that the idea is bunk. We’re like that poor kid in junior high that wore O.P.’s or jorts one season too long.

Finally, as I’ve said before, I am partial to the baseball stadium (vs other screwy economic development schemes) because of my love of the game, not because I think there is anything magical about the project. I had Sunday season tickets for the Braves, and I would hope to do the same wherever the new team plays. It seems to me that there will be more to do in and around the stadium, and sooner, if it’s in Shockoe. So if the city is bound and determined to spend itself into oblivion, at least they can build something I’ll use.

Who Owns the CDA Bonds?

Saturday, May 23rd, 2009

While we all sit around and debate the pros and cons of a baseball stadium in Shockoe Bottom, we can observe the death throes of a similarly structured public/private development project currently playing out in real time, and just right down the street. From the RT-D’s Mike Martz:

The city advanced more than $655,000 yesterday to the Broad Street Community Development Authority to make up a shortfall in the debt payment due June 1 on bonds that were sold six years ago to pay for new parking, demolition of Sixth Street Marketplace and public improvements to the declining downtown retail corridor…

The authority already expects to face a shortfall of $1.58 million in debt service over the next year in the budget it adopted Thursday. Richmond is obligated to pay up to $3 million a year in debt service on the bonds if there isn’t enough money from parking revenues to pay the bill…

The parking authority hasn’t been able to generate the revenue that had been projected to finance $67.5 million in bonds issued in 2003 to spruce up the Broad and Grace street corridors in anticipation of a new performing arts center and hotel that were much slower to be built than expected then. As a result, the authority can’t afford to build garages on two surface parking lots, or complete the renovation of three floors on an existing parking garage.

We should all be shocked (shocked!) to see a deal that private investors wouldn’t touch without a city guarantee unfold so gloriously - actual revenues have come in at about 50% of what was projected. And the city already contributes, either directly or through the RRHA, nearly one quarter of the CDA’s funds. So, even before this bailout, in no way has this project ever been “free” as advertised.

So I think this provides the appropriate context in which to view the proposed stadium. And for the record, I am a huge baseball fan and would love to see something like this built downtown. I would also like to be 2 inches taller, 10 lbs lighter and offer the citizenry free ice cream on Fridays in the summer. Maybe once it gets built we could even work out a publicly-funded “Free Lapdance Night” with Sam Moore across the street at Club Velvet. Now that is a proposal I could get behind. But, I digress.

The common thread throughout all of these public/private deals is that the profits are privatized while the risks are socialized. In most cases it is even worse than a “heads they win tails we lose” situation. Instead it is a “heads they win and tails they still win and we lose” setup. Consider all of the fees and reimbursements paid to the developer, ECI Investment Advisors, LLC for their sterling management of the project. Oh, and we gave them the Miller and Rhoads property too. They did rehab it into condos (which we so desperately need more of) and a hotel, but it looks like they received zillions of tax credits and other subsidies to mostly pay for that.

In addition to ECI, there is one more group that is getting a pretty sweet ride as a result of the bailout - the CDA bond holders. They are being paid what amounts to a “junk” bond rate, 7.5% tax free, while having the backstop of a AA-rated major city. And before you poo-poo 7.5%, consider that the interest is exempt from Federal and state income tax (for Virginia residents). That is a taxable equivalent annual yield of about 12.5%. Not too shabby, eh? It’s an even sweeter deal if the bondholders could somehow make sure the city would ride to the rescue when things went south - because without the city this thing would be headed to default and the bonds would be worth about as much as your average subprime mortgage. But if you knew the city would step in, then there really wouldn’t be any risk to it at all - right?

So, who are these intrepid investors? George Soros? John Paulson? the Oracle of Omaha? Well, unfortunately we just don’t know. What we do know is that back in 2003 the CDA tried and failed to sell the bonds without a city guarantee. As the project looked like it would collapse, the city caved and gave its “moral obligation” and boosted the bonds’ interest rate. The bonds finally sold, and thanks to Silver Persinger, keeper of RT-D archives, we know that:

…Legg Mason declined to name the investors but said six were institutions such as insurance companies and mutual funds and five were individuals.

Since city taxpayers are now on the hook for this thing, I think it is time to unmask these fine fellows. I think it’s important to see if some of these individuals are the same people that foisted this project upon us in the first place. Then maybe we can have an honest discussion as to whether they should be bailed out. And as for the identity of the five “individual” CDA bondholders, it’s just a guess, but the smart money is betting that one of them is this guy

Toast if not for TARP

Friday, May 8th, 2009

first-market-npa1

As we covered previously First Market Bank is selling out to Bowling Green, Virginia-based (yes Richmond it has come to THAT) Union Bankshares for approximately $120 million. The Ukrop family and their affiliates stand ready to receive UBSH stock valued at the princely sum of about $65 million. As the graph, above, shows (updated for bad loans more than doubling last quarter), life was about to get increasingly difficult for green-grocer-cum-banker, brother Jim.

But, as with other unpleasantness in his charmed life, one or more branches of our government stood ready with as many taxpayer dollars as needed to turn this sow’s ear into a silk purse. In this case it took $34 million of our rapidly depreciating currency to insure he emerged unruffled. So, instead of sitting at his Chairman’s desk, nervously waiting to hear a knock on the door from this guy, soon he will be able to relax at home and contemplate some new toys.

About the only thing hopeful we can say about this whole affair is that it moves us one step closer to a future without leaders like this bankster.

P.S. We hear rumblings that the grocery store may be on the block. If anyone has information, we would love to hear it!

Tick… Tick… Tick…

Wednesday, April 1st, 2009

safety-last

Who cares if private fundraising is way, way, way down… ?

and why worry that the place won’t have an executive director until after it opens… ?

and why should local arts groups be concerned about where their promised arts endowment is… ?

Just relax.

The publicity stunt is here.

From a press release:

Artists announced for September 12-13 Grand Opening;
Clock on Broad Street starts ticking away time until doors open

RICHMOND – One-hundred and sixty-five days: The countdown is on to the Grand Opening of Richmond CenterStage, with a brand new clock on Broad Street that will tick away the moments until the September 12th grand opening of the world-class performing arts complex.

“The opening of Richmond CenterStage has been a long time coming, and the cultural impact this facility will bring to the city is within sight,” said Jim Ukrop, Chairman of the CenterStage Foundation, the fundraising arm of the performing arts center. “When CenterStage opens this year, it will become the cornerstone of this up-and-coming arts district in Virginia’s capital city.”

The Countdown Clock and signage measure 8 feet high by 16 feet long, and contain 1,280 digital LED lights. The 120-pound clock, designed by Chester-based Holiday Signs, will stand on the CenterStage construction site until the Grand Opening, 165 days from today. The clock was unveiled by school-age local performers.

Yeah, I hear a ticking sound all right. But it’s not a clock.

UPDATE: Several readers have contacted us with questions about all of this. No, the above is NOT an April Fool’s Joke. As much as it might read like one.

Today’s Richmond Times-Dispatch reveals even more absurdity. The paper reports that CenterStage planners and municipal enablers were comparing downtown Richmond to “Beirut” at their sparsely-attended publicity event yesterday — um, no, actually it’s “Bosnia,” folks — while admitting in public that this is not an arts-first endeavor but a bald-faced attempt by corporate bigwigs to spruce up both their downtown real estate and previous taxpayer-supporting boondoggles they’ve championed.

And — how typical for these dudes — they still don’t get it that the downtown arts community is doing pretty good without their arts center. In fact, they seem to think that an arts center that hasn’t even opened yet (a project that has wasted $11 million in public money on nothing but empty promises) is somehow responsible for the success of Curated Culture’s “First Friday” artwalk — a grassroots arts endeavor which was started eight years ago.

O-o-o-kay!

As for their reference points…

The reformed Lebanese capital of Beirut has had its share of awful times, but today it is actually considered a worldwide destination for the arts and nightlife, and was just named to the top of the list of the world’s “Best Places to Visit” by the New York Times. If you’ll recall, the last time the Times wrote about Richmond, it was to tell the outside world that River City had a crazy mayor and a dysfunctional government.

Yep, those in charge of hyping Richmond’s ongoing “Bridge to Nowhere” have clearly disengaged themselves from reality. In today’s RTD article, CenterStage chairman Jim Ukrop is also quoted telling reporters that this arts center project is one of the reasons why Richmond has a new Federal Courthouse.

I don’t suppose any of the reporters on hand were able to ask followup questions. Someone needed to inform Mr. Ukrop that the Federal Courthouse opened last year. Meanwhile, when it comes to an arts center, all we’ve gotten so far is a Digital time ticker… and not-so-fond memories of a $21 million hole in the ground.

Historical revisionism? Try HYSTERICAL revisionism. And you are paying for it.

Ukrop Cashes Out

Tuesday, March 31st, 2009

Richmond BizSense scoops everyone else with the news that Jim Ukrop has sold First Market Bank to Union Bankshares for $105 million. Shareholders of First Market Bank, which include Ukrops Supermarkets, Markel Corp and the Ukrop Family, will receive 6.7 million shares of Union Bankshares common stock, which last traded at $13.43 per share.

First Market Bank ran into trouble over the past year as its thin capital base was eroded by losses on loans and Freddie Mac preferred stock. In the fourth quarter of 2008 First Market was forced to raise additional equity from Markel Corp. in order to maintain adequate levels of regulatory capital. And in February, the bank received a $33.9 million bailout from the federal government’s Troubled Asset Relief Program (TARP). Given the huge preferred stock dividends payable to the Feds and large looming losses as a result of the worsening credit environment (First Market Bank’s loan portfolio was heavy in residential and commercial real estate and auto loans) this was the easy way out.

More to come on this one as we read the SEC filings, including how much the Ukrop family stands to pocket as a result of our tax dollars propping up their bank. Stay tuned…

Help Wanted For Boondoggle

Thursday, March 26th, 2009

CURRENTLY SEEKING:

An Executive Director who can tell the difference between this…

ft3nl1xd2xc

… and this:

snapshot-2009-03-21-13-56-38

When it comes to Richmond’s own “Bridge to Nowhere,” Save Richmond has earned the right many times over to say it.

We told you so.

Amy Biegelsen’s update on the CenterStage boondoggle in the latest Style Weekly should be a sobering wake up call to all arts center apologists and enablers who think that the Titanic has finally up-ended itself and is smoothly sailing along. Emphasis mine:

The [Centerstage] foundation’s fundraising efforts are critical to local arts groups that hope the money will offset rental costs for those performing in the city-owned facility that’s been financed, in part, by a $25 million investment from the city and millions more in state and federal tax credits.

It’s unclear what donations will total for the fiscal year ending in June, but the foundation raised $2 million in private money in fiscal 2008 compared with nearly $20 million in 2007.

Read that last part again, and then consider this: When private donations are down, that means more public money must be introduced to offset the difference.

And City Council, in all of its wisdom, recently took away all of the safeguards and protections that would have forbidden the Foundation from asking for more public money. Because that’s just the kind of thing city politicians do for their richest friends.

Um, anyone over in Shockoe taking any notes on this? This arts center thing was originally supposed to be “privately financed” too, with only a little “seed money” from taxpayers (and here’s a fun fact that will make you scratch your head: The foundation’s plan has never been submitted to a single independent feasibility study during any of its many incarnations).

But don’t think for a moment that anyone associated with the project is panicking or getting a sense of urgency or anything. Quite the contrary:

Next week the CenterStage Foundation, the facility’s nonprofit fundraising arm, hits the one-year mark for running without an executive director.

“We’ve begun the process and hope to have that person on board before the end of September,” says Jay Smith, a spokesman for CenterStage. He says the foundation is not yet actively hiring because its members haven’t settled on “the skill set, expertise and experience that we want this person to have.”

Well, we sure know the “skill set” that they’ve employed up until now.

Any CenterStage Executive Director job listing would have to look something like…

FULL TIME EXECUTIVE DIRECTOR WANTED

The CenterStage Foundation is seeking a full-time Executive Director of its long-running, publicly-funded boondoggle. This person will be responsible for leading and directing staff in the attainment of excuses toward not meeting stated fundraising goals, and will spearhead efforts to find the lost “reams of evidence” that support the economic viability of the project (we think they fell behind the filing cabinet). Experience in highly creative accounting practices is a must. In addition, the director will train, develop, motivate and evaluate a team of fundraisers to put the squeeze on public officials (in the city of Richmond only, counties are strictly optional) in order to receive unlimited public funding for the next 99 years with little or no taxpayer oversight.

The successful candidate must have the unique ability to ghost-write reports for local politicians and then, somehow, to wait on pins and needles to see what those reports have determined. The successful candidate will be asked to produce and present magical marketing presentations that can turn $1 million bank balances into $68.8 million fundraising miracles. The successful candidate must be willing to pay outside consultants large sums of money to come up with recycled and shopworn ideas culled from neighboring cities. This chosen director must also be ready to award no-bid contracts to out-of-town management firms with little or no experience in running top-notch performing arts centers.

Excellent verbal and written communication skills are required — the ability to utilize words like “Fun” and “Wow” are a must. Are you able to churn out catchy catchphrases like “Smokescreen of Semanics”? Can you, with a straight face, blame private fundraising shortfalls on external factors such as a.) The previous economy b.) Summertime c.) “Irresponsible bloggers” and/or d.) The current economy? Well, if so, you may be the Executive Director For us (If, in the past, you have assisted in the dismantling of long-running area arts institutions, this would also be a big plus).

A corporate pedigree with absolutely NO practical or creative experience in the performing arts is required.

Salary: Candidate must be willing to make do with either $175K a year, or $275K a year, plus benefits, depending on which news service is asking the questions (salmon polo shirts are optional). You must also be willing to say, with a straight face, that your salary does not come from public money and then feign surprise when it is discovered that it does.

If you take the job and don’t like it after a few months, feel free to quit and become one of our many highly-paid consultants!

Interested candidates with the proper “skill set, expertise and experience” should take their cover letter, resume and salary requirements and burn them. They should then dig a hole and put their burned material in the hole. Candidates should then bury their burned material and go immediately over to the National and catch the great Neko Case on April 6.

Seriously, VAPAF’ers — take your sweet time hiring just that “right” person.

After years of broken promises, $21 million down the tubes, and private fundraising currently down to its previous dismal levels of achievement, I can’t think of a single reason why instilling public confidence, and installing accountable leadership, should be a high priority for you right now.

No, wait… I can think of two million reasons why.