OK, I'm going to try to tackle the Lynn Theater issue here in town. Mind you I've spent a lot of time contemplating this before I wrote because honestly I've been a bit torn on the issue.
Let me start with the simple stuff, Mr. Collins hasn't received a dime from the city or county in cash to line his pockets. It's one of the biggest complaints I've heard. "How much more are we going to give him?" The answer is not a dime. He hasn't gotten a dime, and not about to get a dime from the city or the county. As a matter of fact he has spent a good deal of his personal money fixing up the mess that he took over. So unfortunately it's a misunderstanding that Mr. Collins has received anything from the city, county or any other organizations.
Now let me move on to what I consider a huge mistake by Mr. Collins. In an effort to appease all Mr. Collins took over the previous owners business with debt included to the tune of about $400,000. The business worth is less than 1/2 of that. It was a poor decision on his part to accept the current debt, but in the interest of fairness to GEDC and the citizens of Gonzales County and the City of Gonzales he did it. It was a decision that has haunted his ability to make ends meet.
In addition Mr. Collins agreed to accept a list of demands by the boards that as a business owner I would never have agreed to. Business owners need to be flexible and the list of demands, while I understand where the GEDC was coming from, are unreasonable.
Now comes the messy part. We have almost $300,000 in loans by the City of Gonzales through GEDC and an additional $85,000 by the County of Gonzales that are unsecured. Now this is like a house loan where the money went to pay off previous owners and debt holders, not to line Mr. Collins pockets. So what does the rest of this mean?
First of all it means that the County of Gonzales has no recourse what so ever in collecting their money. If Cal Collins for any reason defaults, you and I, the taxpayers will be 100% out that money, no if ands or buts about it. And don't think it doesn't effect you, if you live in the City of Gonzales you are also paying taxes for the County of Gonzales. It doesn't matter if those taxes come out of your left or right pocket, we are still paying the taxes to cover that loss. It also means the County will be less likely in the future to make loans to bring jobs and other businesses to the county in the future.
Second the building and business that the Lynn sits in has been valued at less than $150,000. So anyone in the future who would be looking to purchase the building would not be willing to pay more than $150,000. The city at that time will be out $150,000 in their loans.
So any closures by the city will cost you and I over $235,000 in real cash lost. This is money that every taxpayer in Gonzales will be stuck with. No going back, no chance of recovery, just gone. Did you hear the toilet flush, because that's where the money is going.
Now lets consider some of the other options that could occur here. Mr. Collins could declare bankruptcy chapter 11. This means that the city, county, and all others that are owed money will be put on hold indefinitely and Mr. Collins will be able to operate without anything the powers to be can do. We, the lean holders would probably get pennies on the dollar, and Mr. Collins would still wind up with the theater in the end. This is still an option for Mr. Collins, regardless of what the City of Gonzales has done.
Mr. Collins could declare Chapter 7 and take months or years to settle up the debt. During that time neither the city or Mr. Collins will be able to do anything with the Lynn Theater. It will remain a vacant building as it has for many of the 15 years I've lived here.
Last Mr. Collins could allow the foreclosure to happen without fighting it in some form or fashion. This would take time, possibly years to get the deed back so that the city could resale it. It would also be very unlikely as Mr. Colins has a personal interest in the outcome on his financial.
Now one last thing on what Mr. Collins has agreed to. He's agreed to limitations on what he can do inside and outside of the building. Any major changes have to be approved so that the city keeps the Lynn Theater sign up and lit for the citizens of Gonzales. It's a great icon for the town square. Any new owner could come in and immediately remove it. They are not obligated to keep it as a theater, either live or movies.
So I've been bothered with giving a guy a second chance. But have found out a couple of more things. First of all prior to bringing anything to GEDC or the City Council there were studies done by the Small Business Administration on feasibility of running a theater in a town with our demographics. This group worked with Mr. Collins and GEDC to come up with a way to make this work for everyone involved. Business 401 if you will was used here to make sure that anything that was purposed would actually work.
Second I found out that prior to opening up Mr. Colins caught up all the taxes and utilities bill that the previous owner had left. He had also spend a substantial amount of cash in renovating the theater out of his pocket that the SBA has confirmed since the closure trying to get ready to reopen.
Last I found out how much time our GEDC has spent making sure that the citizens of Gonzales and the county had the best chance of recovering the money on the loans they've issued. Part of my point here is why do we have a board that has been picked by the council if they aren't going to look at all the facts? These guys unanimously agreed that the best interest of the City of Gonzales, also taking into consideration Gonzales County, to give Mr. Collins a second, more educated chance, to make this work.
Now I'm not going to excuse Mr. Collins for not communicating to the GEDC when he ran into trouble. It's been my experience that when I've had large loans the I was required to give the bank a monthly or quarterly financial statement along with my payments. I'm sure this would of been a wise agreement to start with.
As for Mr. Logans antics on "will Mr. Collins please come down", let's get real! Mr. Collins has sent, I'm sure at his cost, a representative to most of the GEDC meetings. This is not Mr. Collins primary business, and while it's important to him, no business man in his position would have attended those meetings. When I ran Kactus Korral I was the one that sat with Pat Frost during all the meetings when we were negotiating loans through Frost Bank. Mr. Jenkins, the owner, didn't get involved except when it was time to sign papers. It's how business works.
Would it have been prudent for Mr. Collins to show up at the City Council meeting this last month? Yes, without a doubt. Part of what Mr. Collins has to understand is in a town like ours, your handshake, and your word are as important as your signature. It's one of those learning curves he should pick up quickly if he wants to make it in a town like ours.
As for the GEDC looking for another buyer at this point it's pretty simple, WE DON'T OWN THE BUILDING! The deed is to Mr. Collins with the City being a lean holder. GEDC trying to sell it would be like the City saying they are going to sell your house. They don't own it either.
So where from here? First of all the City Council could reverse it's decision. It could follow the recommendation of GEDC and at the next Council meeting reverse the motion they made.
They could stay on course and years from now the building will revert back to the city and we can start the process to sell the building again.
Along those lines there are rumors going around that there is a group that is expecting to take over the building. Notice I said take over, not purchase. It would be a rent free or grant type arrangement. The sources of this murmurs are reliable enough to scare me. That would not only put the City of Gonzales years out, but $400,000 down that toilet we spoke about earlier, and we'd still not have a movie theater.
So as much as I hate to admit it the best option for the citizens of the City of Gonzales and the County of Gonzales is to let Mr. Collins attempt to make a go of the Lynn under the new arrangements. Might we wind up here again in the future? Yes we might. But if there is ANY chance of recovering the most money out of this deal it's with Mr. Collins.
The worst that can happen is that Mr. Collins doesn't make it and we have to go through the above mentioned options, foreclosure or bankruptcy on Mr. Collins part. The best that could happen if he is given a second chance is that we recover 2x in cash payments than we will ever have a chance to recover otherwise.
One last thing, the Lynn has analogue projectors. It's a dying technology that will not be supported forever, heck it's not going to be support for long. That upgrade is a $200,000 upgrade. Do you really think someone would purchase the existing Lynn Theater and keep it as a theater knowing what they'd have to sink into it to make it profitable? Not very likely!
This is a bad situation all around. Not even in my furthest reaches can I not fault Mr. Collins for some of his actions. But bottom line is that as taxpaying citizens of this great town, our best option is to try to work this out with Mr. Collins and support him when he opens back up. It can still happen, but it's going to take some work.
Our council will have to be business like for the moment and look at the information that SBA and GEDC have put together on how this can work with some modifications to the current agreement. Is it the perfect situation? Nope, but I'd rather have a chance to collect on the $400,000 than have no chance at all.
God Bless
Dennis Nesser
Dennis,
ReplyDeleteYou make some good points. There are some lessons to be learned here, though. How in the world did this guy (and GEDC, etc.) ever expect this business to generate over $5,000/mo in operating profit just to cover debt service? That being the case, why was the money loaned in gthe first place and what lessons have we taken from this? If the stated purpose of GEDC is Economic Development I would like to suggest that they employ some standard costing to determine the cost of jobs that will be developed by any investments they make. How many jobs were generated for a $300K investment and at what salary? I would be willing to bet the payback on this investment is measured in multiple decades, if ever, when looking at cost of money and opportunity costs. Simply put, GEDC sunk too much money into this. It was a bad investment from the start with no chance of success. Secondly, Mr. Collins did, I believe, make a good faith effort to turn this around. But he made some critical mistakes. Waiting unitl he was past the point of no return to make people aware of his problems is inexcusable. While not excusing Mr. Logan's histrionics, Mr. Collins, as you noted, should have made a personal appeal. On one hand we are being told this may result in his personal bankruptcy but on the other he didn't have time to make an appearance. Check out Cal Collins of San Antonio on Google. Not sure we weren't sold something of a bill of goods here.
Terry Brennan
Cal Collins did not do enough research before he stepped into a losing proposition. He should have done a study to see if the people of Gonzales wanted a theater or if they wanted a theater sign. Many small towns have sucessfully kept their hometown theaters open, but those small towns had one thing that Gonzales does not have...... people that will support it. Sure, anyone you talk to will say "I want the Lynn open". But how many of those actually went to a movie before it closed? Maybe one of 100. And it's always the same story, IF we had a restaurant and a bar we would go to movies. Well, Gonzales does not have a restuarant or a bar because the people won't support them either. For those that think liquor by the drink is a saviour for Gonzales, well, we shall see. It's time to take the losses, raze the Lynn building and make it a parking lot before another junk dealer can open on the square.
ReplyDeleteIt is amazing that Mr. Logan would support giving the first owner/loan $400,000 and now without full review of the SBA and GEDC data tell Mr. Collins "no" after he put a substantial amount of his own cash into the building. Goes to show that business-sense goes a long way and Mr. Logan doesn't have any. I believe only one person on the council has any business sense and no one was listening to him.
ReplyDeleteYes, Mr. Collins should have come here to meet and discuss this with the council - but was it suggested to him before Mr. Logan wanted to see him or was it talking big when Mr. Collins wasn't there to speak? Mark two points for the good-ole boys and zero for the taxpayers - again.
When you are in a hole you stop digging and call for a ladder - not call to go ahead and fill the hole with water. We are in a mess and tough descions need to be made - not walk away and lose it all.
Louise
It has been a tough issue, and again one I've pondered many nights before writing about. I know that at least one of the city councilmen have looked through the data and wished he had it prior to the last council meeting. I'm hoping that the other 2 plus the mayor will do the same.
ReplyDeleteI'm afraid though that one has his britches on so tight, and is looking for more of a shootout than a reality check. It's a shame because only the taxpayers will lose.
I haven't heard the mayor say much on the issue, and am hoping that he will take a serious hard look at the reality. But I'm not counting on that to much either.
So it leaves it down to one city councilman to sway the vote. I know the County commissioners were going to talk to him too, as the City left the County holding the bag on this one, and they are hoping that maybe there is a solution.
Again, many mistakes were made on this deal from the very start, and on both sides. So we can sit around and point fingers and whine about it or we can pick ourselves up and try to move forward in the best manner out there. I'm thinking that's to resend the order the City Council made and to move forward with the agreement with Mr. Collins.
I'm afraid Mr. Logan was just talking big at the council meeting. It's said, but his monthly antics are getting to be youtube material, and not that of a dignified city councilman.
As for this town supporting the theater, that was part of the SBA information. They were able to show demographics of more realistic support. I know my family of 6 attended the theater at least once a month when it was open. I also know that wasn't always the case with those around here. SBA has history with towns like us that are realistic and more conservative. I know I'm working with them on another project for Gonzales and know what they are showing me. But bottom line is they said that a theater can be supported in Gonzales if it's run correctly.
God Bless,
Dennis Nesser
I don't think the Gonzales city council is capable of dealing with reality any longer. One wishes he hadn't run, another not returning phone calls and e-mails, and one being the lap dog for the mayor. The other councilman seems to have a little sense, but as it was said before...no one's listening.
ReplyDeleteAt the council meeting, Mr Hille from GEDC made a wonderful point...Mr. Collins is ALREADY the borrower. We are not loaning him any more money we are just trying to recoup some of it. Did Mr collins have to pay the back taxes and utilities that Jansky left behind....No. But he did. Did Mr Collins have to assume the ENTIRE debt of Jansky....No. But he did. I dont think the council understood what Mr Hille was pointing out to them. Like one poster said, we can sit around and point fingers all day, but that does not get us any monies recouped. I personally talked to 3 of the councilmen after they made their decision and I really dont think they understood. Do I think they wanted to...YES. But I think they were so brainwashed by Logan they didnt know which way to turn. Hernandez is the only one that stood up for what he believed. Schurig and Schroeder are both new and I think they just need to plant their feet and vote they way THEY believe, not the way Logan & O'Neal tells them they believe. On a side note....why is it Logan is the only one that makes a motion and is that crap scripted before hand??
ReplyDeleteActually the motions are scripted. At least some of them are. Some motions have to be made in a manner that meets legal issues. if you will read the agenda, the motions are usually at the end of the agenda item discussion. But if you will notice, the mayor looks at a council member as he asks for a motion. It's obvious there has been an agreement before the meeting who will make the motion and who will second. That I belive is possibly a violation of the Open Meetings Act.
ReplyDeleteWell, this is how i see it. If we the tax payers are going to be the ones to get the short end of the stick if Mr.Collins doesn't get another chance. Then lets see how much Gonzales really cares about the Lynn and have a fund raiser to help Mr.Collins get caught up on what he owes and to replace the old analog projectors and sound system. Because, the way I see it we are in a lose lose situation already. I have a small party rental buisness that I would be willing to use to get this thing going.
ReplyDelete