A Mix Bag

I've got to tell you with this having been first week of school and all time has just gotten away from me.  I'm not sure 48 hour days would allow me to catch up on all that needs to get done.  But one thing that does happen in my travels back and forth to customers is that I get time to think about all the things going on. 

I had originally decided I was going to talk about GCAM and what a great group of people they are over there and how they can always use our donations.  I know especially things like canned meats and fruit are always in short supply.  But there is just to much pressing to spend the time to do that right.

So back to the "what's going on....."

First the Lynn Theater.  GEDC basically told the City Council that this was their football, and while they might not be going home with it, they were going to sit on it till the city played nicely.  So in this lose/lose situation, we the citizens of Gonzales are now on the sidelines watching both sides do nothing because they can't play nicely together.  GEDC owns the note as it stands, but can't make any changes without the councils approval.  The council voted not to make changes, but have not bite with their bark.  So who looses?  We do!

If you'll remember I told you that this issue could take years and years to resolve if we don't give Mr. Colins a chance.  I personally think Mr. Colins made some poor business decisions in taking the original debt, not letting GEDC know when there were first problems, and not showing up to the city council meeting this month.  Very poor decisions on his part.

GEDC was at fault for loaning the amount they did on a property that wasn't worth that much, and that couldn't maintain the debt services that they were undertaking.  That's like a bank loaning me a quarter million dollars for my house worth $100,000.  Not good business practices. Also at fault for not demanding monthly or quarterly statements to be submitted as is standard practice.

It's times like this I wish we could put all 3 parties involved - Mr. Colins, GEDC, and the city council - in a locked room and tell them they aren't coming out till they come to an agreement.  We the people of Gonzales are going to miss out theater for a long time if they don't.

Second also involves GEDC and the city at JB Wells.  While I can't remember exactly when, I believe the June meeting the city council approved $16,000 for the 39 new RV slots.  I remember laughing at the time thinking no way in hell.  Well now at least part of the truth is coming out, those lots didn't cost us $16,000.  The city manager went over budget just a bit and asked for $40,000+ to be reimbursed by GEDC.  Now I want to point out a few problems with this $40k.

1) It's almost 3x the original estimate.  HOW CAN YOU BE THAT FAR OFF ON RV SLOTS??? This isn't a billion dollar high rise taking years to build, it's 39 slots of electric, water, and rock.

2) We still haven't gotten the $40,000 bill sitting at GVEC.  I'm not sure if I'm more upset as a shareholder at GVEC they are not giving the city the bill, or thankful as a taxpayer they aren't.  But don't think the $40,000 asked for this month was the real cost, we're at $80,000 now.

3) In Mr. Husemans presentation to GEDC he told them that the City of Gonzales and the County of Gonzales "donated" the labor.  Donated?  Really? You think that's the appropriate word for 'the taxpayers already paid that money in salaries to the individuals who worked out there'?  Donated? Now don't get me wrong, those employees deserved the money they earned working there! In some cases it was their job.  In others it was all hands on deck, so if you had two legs and two arms you were working down at JB Wells for over a week.  But what did the entire city payroll for that week run us? That's not donated, nor are they properly accounting for it on the books.  Every department in the city got charged their normal payroll even though they didn't receive the employee that went with it!  It's a way to legally cook the books and hide the cost from auditors and those wanting to know the truth.  So on top of the $80,000 we're up to, there is the payroll issue.  We're well over $100,000 (more like $150,000) at this point for the 39 slots.

4) The city (read Mr. Huseman) did not turn in any paperwork, or paper trail to backup the $40,000 request. This was more like a kid passing a note to another, "hey I forgot my lunch money, would you send me some?" No forms filled out. No documentation.  No anything except a memo requesting the money.  You nor I could get anything from GEDC that way.  There is proper protocol and procedures to follow, but I guess Mr. Huseman is above all that.

5) We have a case of putting the cart before the horse.  These spaces were built in May/June time frame and this is August by my calendar.  That means that unlike everyone else that has to ask permission to do something, the city just did it with the assumption that GEDC would give them the money.   We know what happens when you ASSUME! Right now it's the city running GEDC instead of GEDC members running it properly.  This is not the first case like this, I seem to recall a recent issue with the city manager having his name put on a contract 'on behalf of GEDC'. 

The third thing I want to bring up with GEDC and the city is this $4444 for work in industrial park.  This is for work the city should be paying for (infrastructure) leading up to a property, and for the part up to the needed location.  The city is responsible for work up to the property line. Period.  End of sentence.  That's what our tax dollars go for.  But we are NOT responsible for it after that.  Yet Mr. Huseman at the GEDC meeting when asked about it and if the city was responsible for it responded, and I quote, "sometimes".  SOMETIMES? What if you are liked by him, then yes?  If you're not then no? Sometimes? This isn't a gray area, this is a black and white area.  I'm not sure if I'm more upset at the 'sometimes' or the fact GEDC went ahead and approved the monies.

Last thing I want to bring up is the recent visit by the Army Corp of Engineers and TCEQ here in Gonzales.  Regardless of what Mr. Huseman tells the Corp or the newspapers, there are pictures of the concrete laying right where it is long before the flood came earlier this year.  It's laying right where he had it dumped, in the middle of the Guadalupe River.  Now I told you eventually this would have to come out, and after last weeks visit you and I the tax payer are going to have to pay for the removal of some of this, if not all of it.  It should of never been dumped in the first place!  There is NEVER an excuse to put pipes in the river like we did.  The Corp specifically forbids the dumping of concrete with rebar in the water.  And we've already misused our firemen and their equipment removing some of it. 

GBRA, myself and other concerned citizens filed formal complains because of this dumping, and to be clear the spot we are talking about has nothing to do with the new section that was recently built for the paddling trail.  This is where the city dumped the old St. George street and it's trash 2 weeks before the elections.

Mr. Huseman can claim he contacted the Corp for moving concrete all he wants, but he's just trying to cover his rear.  He's months to slow, and trying to take advantage of a natural disaster.  The problem is the pictures tell it all!

I'm going to put this as clear and simple as I can, Mr. Huseman is lying! He's lying to the Corp.  He's lying to you and I the taxpayers of this town that employ him.  And sadly enough it's not the first lie we've caught him in. 

So Gonzales that's all I've got time for today, but hopefully now with school in full swing I'll get back in a roll here.  So what's your role?  1) let others know what's going on, educated voters/taxpayers are what make the difference. 2) Comment here, there are plenty that read this blog, and your comments, on either side of the issues, will at least get debate going on, and who knows you might make the comment that changes someones mind or brings everyone together. 3) If you know something with the city that needs to be out there, let someone know!  You can email me at dennis@90asign.com or either of the newspapers in town.  Don't dig your head in the sand, make a difference!

God Bless,
Dennis Nesser

The Lynn Theater

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