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Archive for Friday, March 29, 1991

PENNY DEFENDS AD ON COSTS OF MALL

March 29, 1991

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City Commissioner David Penny is standing by what he said in a political advertisement this week saying it accurately makes the point that the city needlessly spent money on a downtown mall project while opposing a suburban mall.

Penny, however, also said that a point about city legal costs in the advertisement may have been inaccurate.

Penny is one of two incumbent commissioners running to retain his seat in Tuesday's election. The ad was criticized Thursday by Commissioner Mike Rundle, who is not seeking re-election.

Penny said today the figure he quoted in the advertisement regarding the legal costs incurred by the city while defending itself against a Cleveland mall developer's lawsuit may have been incorrect. He said the "only thing that may be inaccurate is the $100,000 in insurance,'' a reference to his statement in the ad that the city is spending more than $100,000 in legal fees to stop the building of a suburban mall.

But he said he still worries that legal costs covered by insurance could ultimately mean higher premium costs for the city.

He said his figure about legal fees ". . .came from a private conversation with (Former City Manager) Buford Watson'' at the time the suit began in 1988. Watson died in October 1989.

BUT PENNY stood by the rest of the figures in the advertisement, which came from a city staff memo and was available to all commissioners. He said the ad was intended to outline costs needlessly incurred by the city in development of the Riverfront Plaza while refusing to allow a mall in south Lawrence.

"I wasn't calculating in this thing whether there was a net gain to the city, I was comparing two types of malls," he said. "I'm talking about extra costs to the city that the downtown mall incurred versus the suburban."

Under the heading "DOWNTOWN MAULS vs. SUBURBAN MALLS," the advertisement said the city was spending "over $5 million of YOUR tax dollars" for improvements surrounding the Riverfront Plaza, which opened in April 1990.

Penny said today the figure was calculated from a March 22 city hall memo relating to the development. Based on a 10-year debt service schedule included in the memo, the city will pay $5,055,864 for the bonds through Sept. 1, 1999.

ANOTHER LINE in the advertisement regarding "millions of your tax dollars" being abated for the Riverfront Plaza was his own calculation based on figures in the memo, Penny said.

Penny took exception to Rundle's assertion that Penny typically supported tax abatements for most other industries but questioned the use of abatements for the Riverfront development.

"The thing that is probably the most disturbing in all this is that we are granting abatments on a commercial, not an industrial, development," Penny said. "Yet they are competing with other people in town who have to go out and do it without . . . tax abatements."

Rundle said Penny's advertisement was misleading because it omitted the revenues the city received from the Riverfront Plaza.

THE MARCH 22 city hall memo on which Penny based his figures said the city's annual expense was offset by an estimated $130,000 per year in parking receipts, $120,000 per year in in lieu of property tax payments and an anticipated $150,000 to $200,000 per year in sales tax receipts from the plaza.

"I don't think that's right. . . . I just don't see the revenues coming in," Penny said. "If they want to dispute the deal on the revenues, you might be down to $4 million."

The city's revenues from the plaza also would be reduced by unusual expenses that had not been accounted for in the original study, such as the city's purchase of a parking lot sweeper, he said.

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