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Civic Skinny

Two quit the board of planned convention hotel. Eddie Mauro has a chance. More on bar exam.

5/18/2016

Two of the seven board members of the planned downtown convention hotel have resigned just as the hotel gets ready for its groundbreaking this week.

Cynthia Eisenhauer and her husband — retired Chief Appellate Judge Larry Eisenhauer — are moving to Kansas City to be closer to their family (and to the Kansas City Royals), and Susan Voss says she just doesn’t have the time to serve.

The two are the only women on the board, and both are politically savvy and super smart. Eisenhauer was head of the Iowa Department of Management and chief budget adviser to Gov. Tom Vilsack and ran Iowa Workforce Development under Gov. Terry Branstad. Voss, now the general counsel of American Enterprise Co., was state insurance commissioner under both Vilsack and Branstad.

Voss didn’t elaborate, but usually when a person says she doesn’t have the time to serve that isn’t the real reason. (See: Andringa, Mary; Board of Regents.) Either the person disagrees with the direction of the place or has a clash with others or just doesn’t want to be associated with the organization. Serving on the board of the nonprofit hotel does not eat up a lot of time. There have been nine meetings since the board was formed a year ago, but from now on meetings will be quarterly, according to County Manager Mark Wandro.

The 330-room Hilton hotel is a high-risk undertaking by the elected supervisors and council members in which everything has to go perfectly or else county and city taxpayers will be left with some pretty hefty obligations on bonds that are being guaranteed or sold by the two governments. (It’s a great deal for Hilton, though, and some of the business leaders who have been pushing the project could also benefit.) In all, there are nine different issues of bonds and notes, totaling around $107 million. The financing is nothing if not complex.

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The city is issuing $14.2 million in bonds or notes and is guaranteeing another $8.5 million of hotel borrowing. The county is lending $30.6 million (backed only by a subordinated lien on the hotel’s net operating income) and is guaranteeing another $4.8 million in hotel borrowing. The county previously contributed the land, which is valued at about $4 million and is adjacent to Hy-Vee Hall and the lyrically named “Community Choice Credit Union Convention Center (Veterans Memorial Auditorium).”

One way or another, property taxpayers will be on the hook if the hotel doesn’t meet projections — which are pretty optimistic. An analysis last year by Johnson Consulting of Chicago put the average room rate for downtown hotels in Des Moines at $122.48 and the average occupancy at 62 percent in 2013 — a rate that had hovered between 55 percent and 65 percent for nearly 10 years. But to make the hotel work financially — even with its extra 3 percent room tax — the room and occupancy rates will have to be higher. The recent addition of a half dozen hotels downtown will make that difficult.

The city bond issue will put Des Moines at or over its self-imposed debt limit of 4 percent of the appraised value of taxable property in the city. So some of the $14.2 million might have to be issued as “annual appropriation notes,” which means that they would have to be reauthorized each year by the then-city council — an added risk that means the financing scheme is never solid. And by hitting the bond limit, the city is precluded from selling bonds for other needed projects until some existing bonds mature or are called in.

The county has said that it could use money from Prairie Meadows if need be and, in fact, has extended for two years an events-center-complex bond that is being paid off by rent money the county receives from the racetrack. But use of racetrack money for the hotel means either that the county will have less money to give to charities or else taxes will have to be raised to offset the diversion.

And the Internal Revenue Service’s challenge of Prairie Meadows’ tax-exempt status further clouds the issue, posing a threat to the money stream that flows from the racetrack to the county and city. (The hotel, too, is set up as a tax-exempt, nonprofit entity, which is highly unusual.) All of this poses political risks for supervisors and council members. Prairie Meadows has been toxic before. (See: Brannan, Red; Rasmussen, Clark. 1990 county elections.)

Voss was the appointee of County Supervisor Angela Connolly, and Eisenhauer was the pick of Supervisor Steve Van Oort. Each of the five supervisors had a pick, and the city of Des Moines had two picks. Remaining board members from the county are Gerry Neugent, the head of Knapp Properties; lawyer Mike Galloway from the Ahlers firm, and R&R Realty’s Adam Kaduce. The city’s two appointees are Allen McKinley, former finance director of Des Moines, and Grant Friesth, a banker at Wells Fargo.

Noting the resignations, one skeptic close to the project emailed Cityview: “Interesting that the two women leave the board. Who says women ‘don’t get it?’ ” …

Eddie Mauro has a chance of ousting fellow Democrat Jo Oldson in the June 7 primary for the Iowa House seat covering portions of the city’s west and south sides. Oldson has held the District 41 seat since 2002, and there seems to be no reason to toss her out other than the fact that Mauro wants the job.

Mauro is a nephew of Polk County Supervisor John Mauro and state Labor Commissioner Michael Mauro, and his last name alone (none of his signs mention his first name) will guarantee that he carries the south side precincts. But those account for just 22 percent of the district’s electorate, so he’ll have to cut into Oldson’s west-side constituency and run a strong write-in campaign. He’s doing the latter, and a surprising number of Mauro signs are showing up on West Side lawns.

Mauro’s signs say “Fearless,” whatever that means — no one has ever said Oldson is fearful — and he is working hard. Given Oldson’s tenure and the layout of the district, it’s an uphill fight for Mauro. It all depends on the absentees, says one guy who knows the district well. The primary winner is all but certain to win the general election; no Republican even challenged Oldson two years ago. …

It seems like just last week that we were talking about the Iowa bar exam and the low pass rate. Here’s more: If you take the Uniform Bar Examination — which Iowa and 16 other states have, and which more states are moving to — you can instantly apply for admission to the bar in any of the other participating states.

But not all states have the same threshold for passing; indeed, that threshold varies widely, from a score of 260 to 280. In Iowa, it is 266. (A perfect score is 400.) So if you take the exam in Iowa and get between 260 and 265, you can get admission in any of the four states that have a lower threshold. And, in fact, one person who flunked this spring did score between 260 and 265 and could be admitted in Minnesota, Missouri, New Mexico or North Dakota.

Similarly, if you flunked in a state with a higher threshold than 266, you could be admitted in Iowa. And, in fact, three of the 23 people who requested admission to the Iowa Bar this spring by a transferred UBE score were not admitted in their original states.

All of this is of no importance to anyone reading this column — unless, of course, the person’s lawyer wasn’t smart enough to pass the exam in Iowa. It’s just kind of interesting. And it raises a question: Why not have a uniform minimum score for passing? Or another question: Who cares? CV

 

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