For those of you who don’t enjoy my sparkling prose in general, or just to save yourself some time? Skip to the Big Reveal. 🙂 Some people have told me that they find it somehow inappropriate to post my opinions off the dais. I would point out that, unlike other cities, we are generally not afforded the opportunity for open discussion after such presentations. Therefore, this article is the reply I would have given from the dais if our Council Rules were more like those in other cities.
Could we get a copy of those numbers to council member Harris and Councilmember Achziger just so they have them for the rest of us before the end of the meeting? That would be great.
At the beginning of our 25 August meeting, the City Manager gave a glowing progress report on the first thirteen days of our ferry pilot program. At the end of which, Mayor Mahoney wanted to make certain that I received a print-out of the fare box report after thirteen days of service, which Bonnie Wilkins printed out and handed me as I was leaving. (Now that’s service. 😀 )
This is success?
Now, I do have a visual disability which prevents me from seeing these presentations on the big screen–and the City Manager just refuses to provide them ahead of time. But my ears still work. And this was the third time I’d heard the presentation, which had been given at 4:00PM for Chair Nutting’s Economic Development Committee and then again at 5:00PM for also Chair Nutting’s Municipal Facilities Committee. So I pretty much had it memorised. 🙂 And what I heard was this: We’re already losing at least as much money as I forecast in my first article on the topic, This Is Insane.
| Week | †Bookings | Potential Pax | Actual Pax | Δ | Subtotal | Tax | Potential Revenue | Actual Revenue | *Estimated Cost | *Profit (Loss) |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 1024 | 2,480 | 2,752 | 111% | $0 | $0 | 24,800 | $0 | $20,685 | ($20,685) |
| 2 | 815 | 2,480 | 1,943 | 78% | $11,182 | $1,133 | 24,800 | $11,695 | $20,685 | ($8,990) |
| 3 | 548 | 2,480 | 1,391 | 56% | $7,701 | $780 | 24,800 | $8,230 | $20,685 | ($12,455) |
| Totals | 7,440 | 6,086 | 81% | $74,400 | $19,925 | $62,055 | ($42,130) |
Some random observations:
- We may have a huge Blues & Brews rush in Week 3. And the holiday weekend may also be pretty good (fingers crossed.) But we are not making money, because it’s impossible to make money.
- And because I’m nice, my profit formula is waaaaaaaaaaay too generous because I’m not including fuel. Granted, since we’re selling it to ourselves, it’s cheap fuel, but it is definitely not free fuel. And, I am not including over $200,000 in consultant fees, plus another $85,000 in marketing costs..
- First week, 2,780 pax. Which is fantastic, but also a bit weird since the boat has 62 seats and had 40 sailings–which is 2,480. OK, so who was water skiiing? 😀
- Second week: $11,200 from 1,943 pax. Which means we generated $5.75/seat. And just to be clear, our revenue potential is $24,800. Maybe we’re handling mostly seniors?
- Bookings are down each week.
- And also, if your marketing pre-spend is $70,000 (including half-pagers in the Sunday Times) and you give it away for a week? If your initial ridership was not fabulous I’d be surprised.
- I wonder if we’re tracking walk-ons.
- I wonder if we’re tracking parking at Marina.
I wonder a lot of things. 😀
Visitors Guide
I’m just a dumb engineer, but when you run ads with QR codes that do not work, and only think to offer a restaurant guide or street map for visitors after the Week 3, I gotta wonder about our marketing efforts.
(I would also remind the public that there is already a presentable a Restaurant List, with PDF, for visitors here at https:/takeoutdesmoines.com.)
One Time Money For One Time Expenses
During his presentation, and without naming moi, the City Manager pointed out an error I have been making in my blog. The Council had not been advised as to the source of the funds we are using to pay for the ‘beta’. So, I had been speculating that it was in the $2.5M of ARPA money allocated to ‘the marina’. Apparently not. We learned tonight that it is, in fact, from our Capital Projects fund.
That fund is meant to set aside the one-time money we get from construction. The idea is to use that for our own long term projects such as Parks.
So my other main objection also remains. We’re still using one-time money to test a project that will have ongoing expenses which are waaaaaaaay beyond this thing’s revenue potential. How can we fund something like this on an ongoing basis with one-time money?
This use of funds goes against the purpose of that capital fund and I object that it was used as a funding source without obtaining authorisation by the City Council.
The phrase “one-time money for one-time projects” is considered a cornerstone of good municipal budgeting. (It was the mantra of former Mayor 3Dave Kaplan.) It’s bad practice to use one-time money for ongoing expenses because one-time money is unpredictable. If you depend on one-time money for ongoing expenses, if the one-time money runs out (for example if there’s a recession and construction stops)? You can no longer pay for those ongoing expenses.
So good practice is to only use sustainable revenue–money you can count on every month–for ongoing expenses. For example, property and utility taxes are among the right ways to pay for salaries.
Now, most of you have heard by now about our city’s long series of financial crises–and how the current majority ‘saved the city’. And in fact, when things began to turn around, Mayor Dave and then Mayor Pina swore that bad practices like using one-time money for ongoing projects were over for good.
Summary
- It’s a very fun thing to do and since we’ve already paid for it. I encourage everyone to give it a shot.
- But we’re losing as much money as expected.
- We paid an absolute fortune for a truly half-assed roll-out and I’m sounding harsh because for this kind of money we should not have left any money on the table for all our local businesses.
- We’re using one-time money from a fund never meant for ongoing expenses. So we’re robbing from other, proper purposes.
- And if we do continue, we have no ongoing way to pay for it without robbing from core functions or following the same bad practices as previous administrations.
The Big Reveal
OK, above I was trying to be generous. Here is something much closer to the real costs. And the red number is the more realistic loss. In truth, by early next week we’ll already have lost $100,000.
| Week | †Bookings | Potential Pax | Actual Pax | Δ | Subtotal | Tax | Potential Revenue | Actual Revenue | *Estimated Cost | *Profit (Loss) |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 1024 | 2,480 | 2,752 | 111% | $0 | $0 | 24,800 | $0 | $38,362 | ($38,362) |
| 2 | 815 | 2,480 | 1,943 | 78% | $11,182 | $1,133 | 24,800 | $11,695 | $38,362 | ($26,667) |
| 3 | 548 | 2,480 | 1,391 | 56% | $7,701 | $780 | 24,800 | $8,230 | $38,362 | ($30,132) |
| Totals | 7,440 | 6,086 | 81% | $74,400 | $19,925 | $115,086 | ($95,161) |
According to the contract we signed below we’re paying $470,263 for 43 days of sailing. I’m (again) going to be generous and remove a lot of that junk from the table since ‘marketing’ and ‘setting up ticketing system’ might be things that carry into the future. (I’m too nice, they’ll be redone, of course.) And I’ve ignored the $90,000 in ongoing/recurring ‘consultant’ fees and I threw out the other advertising we’ve done which is at least another $90k.
But everything else, $328,913 is a recurring cost. Ops. Fuel. Insurance. Moorage. That’s still $329,913 for 43 days of sailing. Which makes the weekly nut: $38,362.
Which means that again, even at 100% adult (no seniors, kiddos or freebies) ridership, we will always lose at least:
- $13,562 a week… or
- $56,960 a month.. or…
- $683,524 a year.
These are the results that caused the Mayor to be positively smug; after only 13 days of service. On one level, I admire a certain degree of confidence in any form of promotion. It called to mind the expression “fake it ’til ya make it” which I recall vividly from my time in the music biz.
River City
Speaking of which, years ago, I had the honour of playing in a revival of The Music Man, with the author, Meredith Willson, in the house. I got to shake his hand! And 1I haven’t washed that hand since. That is how much I love that show.
The Music Man is the story of a huckster, Professor Harold Hill, who comes to a certain town in Iowa with a fairly elaborate grift. He pre-sells band instruments and uniforms to locals along with a method of musical instruction he calls “The Think System.” No practicing required.
The townspeople pride themselves as practical, no-nonsense people. But their town leaders have been itching to do something for their growing town for quite some time. And this is the real point of the story. Initially, Hill is able to prey on the town, not so much because the parents love their kids, but because of their exaggerated sense of their own sophistication. He convinces everyone that having a great band will put their town on the map! They want to believe so much that they completely ignore how absurd it is. Even the prudish Marian The Librarian (the town’s piano teacher!) is taken in–because the guy is just so damned charming.
The Professor takes the deposits and tells them that the rest is due on delivery. (He does order the instruments– but COD–pockets the deposits, and plans to leave a day or two before the gear shows up.)
Of course, the town figures out it’s all a scam. At the climax, they get ready to tar and feather the Professor. But his new girlfriend Marian The Librarian 😀 leaps to his defense and demands they give him a chance to prove himself. What has he got to lose, right? So he slumps up to the podium, raises his baton and begins ‘conducting’ his new band. And let me tell ya… 2those kids absolutely suuuuuuuuuuuuuuuuuuuck. 😀
But… turns out that no one cares. When that racket commences, all those parents hear is what they want to hear. It’s their kid, in a crisp new uniform, playing a shiny new horn, looking mighty happy. When we (the real musicians) play “Seventy Six Trombones” that’s what the parents are hearing in their heads. So, the Professor becomes a hero, gets the girl (who thinks she’ll reform him 😀 ), and the town continues on–a bit poorer, and a bit more tone deaf than before.
†Bookings don’t correlate with weekly traffic because although you may book today, your trip may be three weeks from now.
1Don’t worry. I’m sure I’ve washed my right hand at least four billion times since the pandemic began. 🙂
2In this scene, you’re required to sound like a child. playing really, really baaad. One of the tougher things for a professional musician to do–you spend years trying not to sound like this.
3I am actually not crying “hypocrite!” as much as it may seem. The fact is, all City Councils are under pressure by residents to maintain services; ‘good budgeting’ be damned. Using one-time money for the current ferry pilot is far more egregious because today, there is no crisis to use as an excuse.
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