Ted Siefer's City Hall: MDC loan to city restaurant cooks up heated debate
The debate raised a couple of key questions: Should the MDC be in the business of helping out a restaurant that, based on a leaked chain of emails among its board members, was clearly facing some financial distress? And should the MDC even have to answer to the aldermen?
However, according to documents on file at the Secretary of State's Office and the IRS, "the making of any loans by the Corporation" does require the "prior approval" of the sole member of the Manchester Development Corporation, which is the City of Manchester, "acting through its governing body . the Board of Mayor and Aldermen."
The point at Tuesday's meeting, however, seemed to be that, from its founding, the MDC was supposed to have a fair degree of autonomy. And the MDC can point to a spate of successful redevelopment projects over the years, such as the renovation of the Chase block, which now houses Margarita's restaurant.
Most of the aldermen, by voting, 11-2, to support the loan on Tuesday, seemed to be inclined to support the MDC's judgment on the matter.
Mayor Ted Gatsas echoed the view that it was "their money." And he clearly was not pleased that the internal deliberations of the MDC board had become public, including one email that speculated that the mayor would "respond positively to the submission" of the loan.
Ward 12 Alderman and mayoral candidate Patrick Arnold has seized on the issue as part of his larger critique of the mayor's handling of economic development matters. He questioned the claim that the MDC was handling its own money.
The "seed money" for the MDC accounts, as Owen explained, came from land deals many years ago, including the development of the airport and Millyard. The organization's revenues come from the interest on loan payments and investments.
While voting to support the loan, Alderman At-Large Dan O'Neil was dubious about the claim that the MDC was not required to seek the approval of the aldermen for such matters. "I think Bill Cashin would be jumping out of this chair," O'Neil said, referring to the former alderman, who was around when the MDC was organized in its current form in the mid-1980s."
"I was shocked when I read the news," Cashin told me. "As far as I know, the purpose was never to bail out a restaurant. I think it's setting a bad precedent."
Lost in all the debate over the loan is that XO On Elm is a pretty cool place. It has live music on the weekends and good food and drinks. The restaurant's owner, Rosa Paolini, and its general manager, Steven Thompson, reached out to me on Thursday to give their side of the story and explain why they sought additional financing.
"There were a lot of lost weekends," she said. "It affected everybody, every single restaurant. That left us with a short cash flow."
As for critics of the loan, she said, "I'm disgusted how specific politicians used this to get publicity for themselves and tried to bring down a business in the city."
"Of course," Paolini said. "A lot of members of the city do. He takes prides in seeing us doing well and improving the city."
Back to the budget. Aldermen Joyce Craig, Ward 1, and Pat Long, Ward 3, received a lot of props for their proposal that managed to send an additional $1 million to the school district, fund city severance and use a chunk of the sizable surplus to bring the tax rate below the tax cap limit.
Perhaps it's the improving economy that should get the most credit for producing a larger-than-expected surplus.
The sense that the city's financial well-being is improving may have contributed to the untimely death of a proposal to increase building permit fees. No sooner had the hikes made it out of committee than the aldermen rejected them at Tuesday's meeting.
City Hall's work is never done. The coming week will again be busy, with a full school board meeting Monday and a special meeting of the aldermen Tuesday.
And then Wednesday is the Mayor's Senior Luncheon. The event will take place at the downtown Radisson on June 12, from 12:30 to 3:30 p.m. This year's event has a tropical theme, so pull those Hawaiian shirts out of the closet.
Ted Siefer may be reached at email@example.com. Follow him on Twitter @tbsreporter.