Monday, May 24, 2010

Tuesday's City Council Agenda (part 2)

(Continued from part 1.) Tomorrow, the City Council is being asked to spend $11.5 million of taxpayer money to build a restaurant (and gift shop) business. When you strip away the hype and the bullying (and a boat dock we didn't need but are now stuck with) -- that's the essence of it.

Many might question, just on principle, the idea of taxpayer-funding and risk-taking for a restaurant business. But I think there are some serious business plan issues, not the least of which is this: There is no operator attached to this project.

FedEx Forum had the Grizzlies. But no one -- big name or otherwise -- who could show track record of success in the restaurant business, is associated with this project. Correct me if I'm wrong, but I don't think City Council has even seen a business plan for the restaurant. On top of that, other restaurants in the riverfront area have closed up in recent years, haven't they?

Frankly, no bank would consider granting even a Small Business Administration loan in these circumstances.

Why is no operator named? I think there are two reasons.

First, a "restaurant" is not what people asked for. People wanted a snack bar. As Benny Lendermon and others have endlessly proclaimed, "There's no place on the riverfront where you can get a hot dog." If the point was to have just a nearby amenity where visitors could buy a drink and a snack, then the RDC probably didn't need to find a big name operator to lend credibility and experience to the project.

I think that was the original reason, maybe five years ago. But now there's another reason. I think the RDC intends for this to be a more upscale restaurant on the water, albeit a small one (60 seats). There's no name attached because the RDC actually intends to operate it themselves, and keep the hoped-for profits.

You see, the RDC has its five-year management contract coming up for renewal soon, and there's every possibility the City Council will refuse to continue paying a subsidy (as a management fee). The RDC needs to keep every nickel and dime they can make off the riverfront. They have even been shoving out their concessionaires and taking over on Mud Island.

Rent-free use of a $12.5 million*, taxpayer-owned facility to run a business is just another form of subsidy.

Here is the question City Council really ought to be asking themselves tomorrow: Should the taxpayers be asked to invest $11.5 million in John Stokes' restaurant dreams?

[*Including $1 million from the Hyde and Plough foundations.]

Further readings:

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