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Fair and Breezy ~ River stage: 23.48 Falling Tuesday, Feb. 9, 2010 |
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Are The Wymans Too Big To Fail?
Posted Friday, July 24, 2009, at 11:19 AM<< Previous | Read comments | Respond | Email link | Next >>
Who knew that Jell-O could run for City Council in Cape Girardeau?
At least I think the City Council is made of Jell-O. Or I suppose they could be jellyfish, or maybe a worm. Whatever they are, they're definitely something without a spine. That was my initial reaction when I read that the council granted Mollie's Restaurant a liquor license this week even though the owners of the business, John and Jerrianne Wyman, along with the company they own -- Merriwether Investments -- have yet to pay a large part of their 2008 property taxes. To be fair, they have paid some. But as of Tuesday, they still owed nearly $68,000 in property taxes on 26 downtown properties and the city ordinances on granting liquor licenses are pretty clear. It says: "No liquor license shall be issued to any person, until all personal property taxes, merchants license taxes, ad valorem taxes, wholesalers license taxes, manufacturers license taxes, occupation license taxes, sewer service charges, water service charges, solid waste fees, or other city taxes, fees or charges, including special tax bills and assessments of the applicant therefor, due and payable, shall first have been paid in full, together with any interest and penalties." That pretty much covers everything. It is interesting that it doesn't specifically mention property taxes, but then the phrase "other city taxes" is pretty inclusive. The Wymans appear to have gotten around this rule by forming a Limited Liability Corporation -- Mollies, LLC -- specifically for the restaurant. It's a company, not a person and the ordinance does say "any person." And while the Wymans do own a lot of downtown property, they don't own the building where Mollie's is located, just the business. According to the story in the Wednesday Southeast Missourian, the city is treating Mollie's LLC as a "new separate legal entity." However, paperwork filed with the Missouri Secretary of State shows that this brand-new business, Mollies LLC, and Merriwether Investments, Inc., which is legally responsible for a large part of that approximately $68,000 tax bill, have the exact same physical address -- 400 Broadway Suite 200. They might now be two legally separate business entities, but anyone can see that it is the exact same ownership. This is baffling. What the heck was the bowl full of Jell-O that occupies the city hall every other Monday night thinking when they approved this liquor license? But then the answer occurred to me. The Wymans are our GM. They're our AIG. They are Cape's own miniature version of Fannie May and Freddie Mac. And we certainly don't want another Renaissance Aircraft debacle. We should recognize that the Wymans are just too big to fail. They own a lot of downtown commercial property. If they were to go under from not paying their property taxes, their tenants might not survive. And if enough of their tenants failed or relocated, it could devastate the downtown district, making it a perfect breeding ground for -- Dare I say it? -- a homeless shelter. And if the Wymans are financially stretched from the dismal state of the economy and from owning too many properties with too little cash-flow, then we all need to cut them some slack and overlook the obvious truth that this is the same business with the exact same ownership and believe what the lawyers tell us to believe, that this is all perfectly legal and above-board. So I guess my initial reaction was wrong. The City Council is not being spineless. They're just being prudent and proactive. And for that reason, I'm planning on toasting them for being so far-sighted the next time I'm at Happy Hour. City Council, this Jell-O shot is for you! Comments Showing comments in chronological order [Show most recent comments first] |
Brad Hollerbach is the Director of Information Technology for the Southeast Missourian. He writes this blog primarily for his own amusement and to parody the absurdities of the world we live in. He lives with his wife and cat in Cape.
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Too big to fail?? What's that old saying? "The bigger they are, the harder they fall?" Madoff not only failed, he also went to jail. Clients suffered before Madoff failed, and still are suffering. Does that mean the court should have just absolved his criminal sins, because it won't bring those poor folks money back?
A little perspective here Brad. Big, Small, Medium...we're all required to pay our taxes. Shouldn't matter if you're AIG, GM (which was forced to go bankrupt) or the Wymans. Everybody has to pay, and the Wymans are no exception. Truth be known, they probably copped a Commander Premier, and got another glorious Klink tax/rent absolvsion
Grandpa_Sassy, I agree with you. No business is too big to fail. If they fail, they fail. Then smarter businesses pick up the pieces.
A friend of mine suggested that in this case the delay in payment was a business decision, that it was cheaper to pay the county its penalty rather than take out a loan on existing property and pay the property taxes in a timely mannner.
But I did the math on the property tax penalties, and it's no bargain. Currently the interest rate on those delinquent properties is about 22%.
By the way, my property taxes are escrowed by my bank, and my wife and I dutifully pay our personal property taxes every year between Christmas and New Years.
Thanks for reading.
Brad,
I also escrow my taxes (which seems to be the smart thing to do) Look at us, two pioneers of business smarts and making under $100,000 a year.
I escrow my taxes and insurance and including them in on the cost of the mortgage seems like a no brainer to me.
Obviously you can opt-out, but I don't see the point. I'm sure some of these get-rich-quick-in-real-estate gurus that you see on TV probably advise NOT to let the banks escrow YOUR money. After all it is YOUR money. Why save it in an escrow account to pay for things like taxes at the end of the year, when you can be leveraging that money to buy more property?
Pardon if I come across a bit cynical. I guess that's why I'll never be a real estate millionaire.
TFR
Brad: Not using an escrow means you can have that money sitting in the bank collecting interest until the date your taxes or insurance are actually due. It is the same thing as income taxes you can either pay extra to make sure you end up with a sizable refund or you can adjust your withholding so you can hang on to your money until April 15th. The wisest course of action (assuming one is not totally irresponsible financially) is to keep the money yourself until you have to pay. The interest collected might be small but having the extra liquid assets can be very valuable as an extra emergency fund.
Not to mention usually you have to pay additional fees for an escrow which makes it the more expensive option. Escrows are nearly always a worse deal for homeowners.
Nil, considering other costs that occur at the end of the year besides property taxes -- personal property taxes, insurance, The Holidays in general -- it's a convenience my wife and I don't mind.
I'm not saying it's for everyone, but it works for us. The key to not escrowing as you pointed out, is not to be financially irresponsible.
TFR
Since I spend my days rolling around naked in $100 bills, I just scoop up an armload of 'em and take 'em to the courthouse when my taxes are due. I usually put clothes on since it's cold out in December.
Smart move, Just__Me. Frostbite is never a good thing, especially... well you know where.
TFR
Jello, more like Smell-o! I think our City's leaders cooked this creative legal solution up for these find property owners.
Honestly, as long as ALL other business owners that find themselves in the same situation are treated with the same respect, then I see nothing wrong with the situation. BUT there lies the problem, I seriously doubt the city would offer legal advice or bend over backwards to offer a liquor license to most other businesses in this situation. Thus, WHY are these folks so special?
Perhaps Brad is right, because they own many properties? But "should" that really make a diffence? I don't think so, but what do I know. (And honestly, not sure why I care...other than an intriguing/interesting situation.)
Just Me, "I usually put clothes" Er...thank you? :-)~
Mel,
You probably care, because you pay your taxes. Pretty reasonable if you ask me.
Brad. Have you ever heard that you might have a face for radio? Well, obviously, you don't have an intellect for newspaper writing. That said, the law is the law. A liquor license elevates you you to a new level. Think about the children. If you can't pay you your taxes, well... There is a social responsibility component that you all are missing.
Mel I think that is the crux of the matter. Would the city do the same for another business owner.
What if a bar had a couple run ins with the city or the police and were turned down for a liquor license? Based on this precedents, that bar ownership could simple change their corporate structure -- but not their ownership -- and be OK for another liquor license. They would be a new business with a clean slate.
This could open a can of worms.
TFR
Girardeaud, I'm well aware of the poor, poor children. No one is saying that the Wymans are not going to pay their taxes, they just pay them slowly. The schools do eventually get their money although I'm not sure who gets the interest and penalties.
If you think I don't have the intellect for newspaper writing, that's OK by me. Think what you want. I don't care. I do this blog strictly gratis.
The intent of many of these blogs is for entertainment -- starting with me. I make no claims that these are a well-balanced editorial or op-ed pieces. Often times they are drivel that happen to make me laugh.
TFR
Brad- what if Drury's stopped paying their taxes or downtown business owners decided if the wymans can do it so can I?
The Wyman's are too big to fail? BULL! Let them fail, I sincerely hope they do because they deserve it with all of their bad business decisions. Times are tough so people want to give them a break. But personally things are not tough for the Wyman's. They still spend money like there is no tomorrow and have you seen their expansion on their personal residence?
If Merriwether Investments fail and go bankrupt, other investers will buy those buildings and new businesses will be created. That is the American way - so no they are not too big to fail for Cape Girardeau. I would say their tax bill is too big to let slide!
frazzled63701: Why would you wish that someone's business would fail? Are you evil? Jealous? Immature? Ignorant? I certainly hope you are not out in the community presenting yourself to be a good Christian businessman or woman.
WisomSeeker:
Good Christian business people pay their taxes according to Matthew 22:21!
WisomSeeker:
"Good Christian business people pay their taxes according to Matthew 22:21!"
*clapping* Ohh Touche Yankee. Good one!
IMO Downtown was MUCH better before the Wymans came along.
I believe that those who make bad business decisions and spend money like their is no tomorrow living a lavish luxurious lifestyle while not paying taxes deserves to fail. Just like those who commit crimes deserve to go to jail.
You think I am evil because I want justice? NO OTHER business owner in Cape Girardeau is getting by with oweing $67000 in back taxes!!!!!!!
Amen Yankeestation!
But there is nothing illegal about splitting the restaraunt out separately from the real estate business. The city cannot tell someone how to organize their business.
Taxes schmaxes. By cutting off income by closing Mollies, you reduce the likelihood of them being able to pay the taxes that THEY STILL OWE. This did not get them out of the taxes. It maintained a source of income & a source of employement for 20 or more people. In addition, you have tax revenue from sales that are being gathered.
For the ump-teenth time, I see no dishonesty, special treatment, or other dasterdly deeds here. This was a reasonable & perfectly legal deal. Get off the weath envy thing. No one ever said that they shouldn't pay their debt.
Brad, ignore Girardeaud. Most of us are quite amused.
BTW, I love summer because of the decreased risk of frost bite. WEEEEEEEEEE!!!! Poison ivy can be a bugger, though.
Just_Me,
Because something is legal, doesn't mean that it's correct.
I am as vocal of an anti-tax advocate as you will ever want to meet. However, if I failed to pay even $68 of taxes that I owed, much less $68,000, I would be very up close and personal with the buisness end of the government's gun faster than I could say Premier.
And I also guarantee you that an elected body of officials would not write and honor loopholes in burdonsome, unfair, and overcomplicated tax codes for my exclusive privalege.
This issue is not about "wealth envy". It is about government being bought and handled by the elite at every conceivable level: from a hick town like Cape to Jeff City to Washington DC and beyond.
You have poison ivy growing in your field of $100 bills, Just_Me? Bummer!
Why close it down? that would just mean more unemployment and using my taxes for umemployment bennifets.They are paying their taxes, let them keep their license and stay in bussiness to pay up on taxes.
Actually, I never suggested they close down Mollies. Liquor license is separate from a business license. They could operate without a liquor license. No, they wouldn't be nearly as profitable.
What I'm concerned about is the precedence this potentially sets when the city has a bar that deserves to be shut down due to police problems or what have you. Based on the shell-game being conducted in this case, all that owner would need to do to be considered a brand-new business by the city is to form a new LLC. The problem doesn't go away, it just changes names.
TFR.
This reminds me of the game MONOPOLY. Sometimes you have to pay the LUXURY tax or the PROPERTY tax and sometimes your little thimble doesn't make it past GO and you either lose your excess amount of property to other players, the bank, or you simply go bankrupt. That's the whole point of the game to run a MONOPOLY and not go bust.
Mollies is their Park Place or Boardwalk. It's money, big money if somebody lands on it with a hotel. But the other property, the lesser property, like when you get around the board past GO to the purple and blue side of the board...yeah, not so much. But you can get rid of that to keep what's important and what's a money-maker. I mean, come on. All that property and you can't sell any of it? You raise the rent but don't raise the standards of the living or business conditions?
Karma's a b#*ch and she's ******.