Tourist dollars won’t pay for new City Hall

I have to tell you I couldn’t disagree more with Steve Smith’s Daily

Pilot article advocating fiscal irresponsibility with respect to the

proposed City Hall project (“Newport’s dinosaur eyesore,” Wednesday).

The idea that potential tourist revenues brought on by increased

image and stature alone is simply not enough to justify this expense.

One only has to look at the very recent problems in Honolulu to

see the holes in his argument. After 10 years of expensive

beautification projects, Mayor Jeremy Harris, in an attempt to build

his own stature as a gubernatorial candidate, has left the city of

Honolulu with a thriving tourist economy, higher property values and

a mountain of debt, where 1 in 5 tax dollars now go just to service

debt payments. The city is left with no funds to enhance services or

maintain these lavish expenditures, and will soon be forced to raise

taxes on the hotels and other businesses as the only temporary

solution to their problems. This will more than likely impact an

already cyclical marketplace and drive those tourist revenues

downward.

Honolulu’s problems are very reminiscent of the problems New York

City had in the 1980s, when high hotel taxes forced travelers

elsewhere, destroying that city’s economy and driving crime sky high.

Comprehensive financial management is the core of any sustainable

entity, be it a private company or public municipality.

In Smith’s own example, if his building landlord spent excessively

on building aesthetics, she would have to raise rents to make the

same return necessary to make the building cash flow adequately. This

would drive tenants who couldn’t afford the rent increases to move

out, would increase vacancy rates, and ultimately, if these tenants

could not be replaced, lead to her financial demise.

In business and government, as in all aspects of life, there is a

healthy balance.

I am glad to see the city aggressively inviting residents into

City Hall to hear the facts and voice their opinions. That is the

right way to approach this issue.

If the numbers work out, top to bottom, where spending wisely

today will increase revenues and limit ancillary maintenance and

other costs down the road, then the city should proceed with the

project as a wise investment in the future.

However, Smith’s dot-com mentality of “build it and they will

come” without thorough and complete financial analysis is destined to

cost this city dearly and pass a huge debt onto future generations of

residents of Newport Beach. Perhaps it is of less concern to him as a

resident of Costa Mesa.

J.P. HANNAN

Crystal Cove