The liquor store debacle continues to unfold. A few more facts for the public to understand. The three Council Members that voted for this project did so on the most dubious set of facts. The quote provided for the expansion was based on numbers CM Johnson gathered. The numbers he received was from one contractor and was not in the form of a binding quote. The other salient fact is it was for only a portion of the project. The quote did not cover any mechanical work (electrical, heating, plumbing), the sprinkler system, parking lot or landscaping work, signage or any equipment. My understanding is this portion was a guess by CM Johnson.
So the majority of three voted to start the expansion project without any way of knowing the true cost of the project. They did not even ask staff to gather proper quotes before they decided to fund the expansion.
This is of course on top of the fact they did not decided how they were going to fund it. I asked staff after last week's 3-2 vote to provide me with the city's options and the cost. The cost provided by CM Johnson state $600,000 for the whole project. I find this to be dubiously low considering all the items that we do not have actual quotes for. Lets use $700,000, which still may be low but considering the architecture fee alone is $37,500 it looks to be closer to the truth.
$700,000 cost minus $200,000 in cash from the Liquor fund leaving $500,000 to be financed. Total financed cost of $548,200 spread over 15 years is $36,546.67. Now the three voting in favor of this motion said the new liquor store sales will easily pay for this. Ok, well lets see how much in new sales it would take. Our liquor store has had a 7% net profit the last couple years, State average of off sale stores is 8% per the 2005 State Auditor's report. So from $100,000 in sales we bring $7,000 to the bottom line. $36,546.67 divided by $7,000 is 5.22. That means we would need over $522,000 in new sales to pay for the project, or roughly a 28% increase in sales.
These are the numbers I am comfortable using. But lets say we can use $300,000 out of the liquor fund without hurting tax payers to much, the increase in sales still has to be $430,000 or a 23% jump in sales. The assumptions being made here are just that. They seem fair ones though...5% interest on the money borrowed and using historical profit levels. Again maybe profits margins will increase but with the fundamentals we have, they would need to increase dramatically.
This scenario is to just break even on the store expansion let alone add any value to the city taxpayers. Perhaps the cost of the expansion will be lower and profits higher. We simple do not know because the proponents of this project have not provided any actual numbers or assumption nor have they asked staff to calculate anything. I am pressing hard for answers and transparency.
I am baffled how anyone could vote to spend over $600,000 with no proof that the numbers are real and no explanation as to how it will be paid. Maybe they are right and I am wrong. If this project goes forward I hope I am very wrong or the city tax payers will be losing money once again because of an irresponsible spending spree.
About Me
- George
- I have served the City of Isanti as Mayor since 2007. We have accomplished great things together and I look forward to building on our success. United, we move forward to a better future. You may contact me at 763-442-8749 or e-mail me at george@georgewimmer.com.
5 comments:
How can something be passed on false numbers and assumptions? It there not a legal means to squash the whole thing?
Who knows maybe there will be an nice pickup in the housing market over the years that the loan is out an those people that move here will be heavy drinkers. Then all we have to worry about is funding all of the police and such we will need to keep the drunk drivers off the street.
Hopefully some of the members that voted to pass this can review the actual figures and bring it up for a vote again. If I remember correctly, anyone on the winning side of a vote is open to bring the item back up for discussion and another vote, correct?
The item can be brought again by any member. The Council will be voting 2 or 3 more times on different aspects of process that could halt it if the majority decided to do so.
So if this was brought up to vote without proper information, how can the vote even still be valid? What is the purpose of having procedures to follow when even the people that are on the top of the list can't follow them? This just tells me "Hey, you don't have to clear your sidewalk because it's only a policy, and those don't really mean anything!"
This is a joke, and I can guarantee you, I will NOT by anything from the liquor store if this goes through
The Council should not have voted in favor of this without accurate information.
There is nothing here related to procedure. The Council for years would vote to spend money and have no idea how they would pay for it. I have been trying to stop that...it has allowed a tremendous amount of debt pile on to the city. We are now faced with making the tough decisions on how to pay for it.
Expanding the liquor store when there is no economic need is only going to suck away cash on hand and put another long term debt on the city's books....
I have done a great deal more of research on this topic and so has staff. I will be writing about this Saturday. Their numbers are even worse than mine. No one in their right mind can vote for this....but than again I thought that last time...
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