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The city's Town Center numbers do not add up

July 10, 2004

Concerned citizens opposed to the Americana at Brand project believe

its business terms unnecessarily give away valuable public assets.

Project proponents, who have not demonstrated a clear understanding

of these finances, may not know what they are getting or how much it

will cost. I, therefore, set out some of the more striking terms and

invite comment from proponents and opponents alike.

The March 29 "audit" shows $77.1 million of public funds for


acquisition, preparation and improvement of 15.5 acres of prime

downtown real estate. Since some of the 15.5 acres have not been

purchased, this is an estimate; as with past estimates for the

project, the cost may go higher. The figure is already understated. A

portion of a $48-million bond issue (secured by property taxes) will

be used for land acquisition; bond interest is $25 million. The

$77.1-million figure ignores the portion of the $25 million

attributable to the project. It is clear that the actual costs in

public funds will probably be in the $100-million range.

Of the 15.5 acres acquired with these public funds, 8.5 acres will

be given free to Mr. Caruso. He also gets four acres on a $1-a-year

lease for 95 years (essentially ownership). Finally, he gets free

ownership of the land under our 1.8-acre park for underground

parking; the public retains only the top four feet. Just 1.2

unencumbered acres, improved with public funds for pedestrian access

to Mr. Caruso's project, will be retained by the public.

History tells us that the 8.5 acres and the $1-a-year, 95-year

lease can only dramatically appreciate in value. The audit states the

public will share in the appreciation only if the project is sold

within 20 years. However, before we can take our share, Mr. Caruso

gets 78% of the profits. Next, from the remaining 22%, he is

reimbursed for each annual shortfall he may have experienced in his

preferred return of investment (ROI). (Audit figures for the expected

shortfall are in the Page 21 chart; they project a $1-million

shortfall.) Only then will the city share equally with Mr. Caruso in

the remaining profit, if any.

Finally, the environmental impact report states the city must

annually spend $900,000 for an additional Fire Department emergency

medical unit and the added annual cost for seven more police

positions. The audit fails to mention these yearly expenses.

That is what is coming out of our pockets -- what is Mr. Caruso's

investment? The Feb. 14 staff report indicates it will cost him $133

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