Shelby Board railroads taxpayers with Cherry Creek decision

The decision made by the Shelby Board on 2/5/2013 to allow tax
concessions for operators of the Cherry Creek golf course has taken the phrase
'breach of fiduciary responsibility' to a whole new level. The Board
presentation of the costs/benefits behind this decision looked like something
out of an old Andy of Mayberry skit where Goober, Gomer and Aunt Bee were
debating over the increased cost of haircuts at Floyd's barber shop. And this
reflects on the character of this Township- like we are some backwoods
enterprise ever so slowly transcending into the 21st century.

Here is the gripe:

1) The total size of the tax abatement (they say deferral) has not even been consistently communicated. Numbers being thrown around are $125,000 per year and $175,000 per year, yet if one uses the published claim of $1,300,000 involved in this tax abatement (deferral) over an 8 year period, you come up with an average of $162,500 per year. As that is the only number where the math stars seem to align, I have used that in this article. If it is marginally incorrect, it clearly does not affect the gist of the message here.

2) There was no detailed financial analysis with charts and
year-over-year cash flow analysis revealing bottom-line net costs to either
justify or not justify this tax abatement (they label it deferral).

3) There was no analysis that used a present value assessment of
these cash flow streams using different economic scenarios over the next 8
years.

4) There was no timeline that showed improvements (cash promised
to be spent in any one year) vs. cash outlays spent in same year (the opportunity
cost of rent not received)

5) There was no required accounting by the operator to document
and verify Cherry Creek improvement expenses are made in any year over the next 8 years (because the claim is only investor money is being used for improvements)

6) There were no details behind the simple time line for these improvements being implemented with matching expenses against the same timeline for everyone to see during each of the next 8 years

7) There were a whole lot of 'fluffy, shallow, right-brain comments' by Board Members prior to voting including... "this is an investment in the Township", 'this is a good deal for the residents of Shelby", "it makes a lot of sense", "the Township has no risk in this", "other golf courses in other communities lose money, but we are making money", etc. But I ask, how can you make the assertions this is a good financial deal without due diligence in points 2-6 above? And I conclude, they either didn't do any of the above or did it and decided to use a spin to present it... the shell game approach.

Simply reviewing their own presentation and adding expense timelines helps expose what a raw deal this is between just now and the end of 2015.

Taxpayers handout by end of 2015: $162,500 x 3 years = $487,500
(tax concessions+ $30-$50k when PV of cash flow loss added)

Taxpayers receive by end of 2015: (Improvements based on Operator time lines)

a) Tree trimming and removal (select areas)

b) Cherry Creek entrance beautification at 24 mile

c) Redecorating of two (2) banquet rooms

d) New 16" x 130" patio behind Lakeview Room

e) Construction plans for the real improvements scheduled between 2016
and 2020

So over the next three years $487,500 (plus the opportunity cost of not being
able to use same funds and/or receive investment income stream from such funds which adds another $30-$50K to the total effective cost) is effectively spent and we get trimmed trees, a nicer entrance to Cherry Creek at 24 mile, some club house decorations, a new patio and a plethora of construction plans.

I'm not sure how much construction plans cost but adding the other
improvements, one would be hard pressed to say the cost is over a couple
hundred thousand dollars and that is probably way on the high side. So, where
is the rest of the money going I ask? I guess I can't ask as that is the
operator's business and not ours as taxpayers.

The rest of their promised improvements are all between mid 2016-
2020, so we will not see the glitzy improvements (meaning a new club house as
promised... actual course enhancements with white tee re-positioning, parking
lot renovations, etc. for at least 5 years. It is a back-end set of promises
which we the taxpayers are being asked to front-end the money to make this
happen.

That is the untold story here and I assert that is why there was
no detailed presentation of cash flow and expense analysis. Perhaps, just
because the numbers would suggest this is indeed a Great Sweetheart Deal - but for which party(s)?

Add to this, that the presentation looked like it just came off the back of someone's napkin over dinner and the Board's adamant posture that accounting controls to monitor this over the next 8 years are not relevant because it isn't our money, and the phrase backwoods enterprise really begins to take root.

And a very specific... Shame on you Mr. Flynn ....for allowing this all to happen. The residents of Shelby had a clear choice last Fall when we were presented with Dumb and Dumber as our two candidate choices; Perhaps Mr. Flynn was the lesser of bad alternatives, but this fiasco clearly shows again that the Treasurer's position needs a Professional with MiCPT, CPA, CFA or MBA credentials to run this office and to understand, analyze, assess and present financial data.

As the Taxpayers of SHelby have 4 years left with the current Treasurer and indeed he is quite good at announcing upcoming youth events, perhaps the Board should keep his job description limited to these activities and lets hire some outside specialist as needed when important financial decisions come up in the future to prepare and present what is really in the Taxpayer's vested interest.

And shame on the rest of us, (as a Community) if we allow a
similar breach of fiduciary responsibility to repeat itself over the next four
years. We were duped by a shell game that ended up in a railroaded decision to
be made as if time was a pressing issue for these benefits to come to fruition...
when in reality we are talking about a lot of money flowing out over the short term and many years in the future, if ever, to see any benefits.