Here is a question to ponder.

Is it a good idea for an elected offical marching in a parade to be riding in car provided by a car dealer for the event?

Oneman

Both Openline and The Beacon have the latest on the Hi-Lite 30 Saga, it appears we had a developer interested in developing the property. They met with the city on Monday, and the plan was in the hands of the Beacon by Wednesday and the developer is saying the plan is dead because since someone leaked the details it killed their negotiation position with a landowner they needed for the plan.

From the Beacon

"Disregarding professional agreements, (and may I suggest, ethics?), a member of the mayor's office leaked the private notes to the press before certain aspects of the proposal could be finalized," Kerz said. "In essence, due to their short-sightedness and lack of vision, the mayor's office has killed our ability to execute this concept at the Hi-Lite 30 Drive-In."

But Vaughan said that the documents presented were never deemed confidential, and that in his opinion, they contain nothing that could have endangered the concept. The preliminary plan, as well as a memo from Vaughan, appeared in the council members' packets, prepared for Tuesday's meeting, and he said he believes they were public documents from the start

Umm Mr. Vaughan I would argue that unless something is scheduled to appear before a committee as part of public business you should assume any development discussion is confidential.

OneMan

Did some more math this morning. To get a 10% internal rate of return (IRR) on the plan, using the numbers specified below it would have to be a lease starting this year and ending 1-Jan-3034.

If you just go 1-Jan-06 to 1-Jan-25 the IRR is 7%, that would be less than the state plans to make on the 'trust fund' money. If you increase the profit margin to 40% it then goes up to a 9% IRR (FYI, raising the profit margin up to 40% takes the lease from from 2006 to 2034 to an 11% IRR). So in order to get the rate of return on the shorter lease above what the state expects to make on it's money it lottery would have to take in a 40% profit.

One of the options that was floated was doing an IPO of the lottery, that's an interesting idea. However even using existing casino valuations can't really help this calculation since no casino that I know of has a 40% margin on the bets.

The Sun Times Story had this little quote.

Blagojevich's budget director, John Filan, downplayed the risks. The plan sets up a task force to address long-term funding strategy.

"We have four years of certainty here," he said. "In year five, we'll look for revenue sources."

Yeah, thats finacial planning at it's finest, when I run out of money I will figure out where to get some more.

OneMan





OneMan

Ok, so we might be leasing the lottery. Interesting idea. I was kind of curious what the Net Present Value (I actually use the XNPV calculation) of the Illinois Lottery was today based off of cash flows.

Using the following assumptions (all of which have some risk).

A 3% inflation rate.
A 5% growth in annual sales.
Expense and payout ratios the same as FY 05 treating the amount transfered to the school fund as the profit.
The full 'profit' comes on the first day of the year (makes the math easier). That is the cash flow I base my NPV calc off of.
FY 05 Revenue of $1,842,000,000 ($144 for every person in the state)

If you want a copy of my spreadsheet to run your own numbers (where you can play with renvue growth, payout ratios, etc) send me an e-mail. I think everything is accurate, but it has been a while since finance class.

That being said, it appears the net present value of the Illinois Lottery for FY2007-2032 (a 25 year lease) treating the school fund transfer as the cash flow is about 24 billion dollars.

That is 37 billion in estimated 'profit' over 25 years is worth about 24 billion today. It takes 111 billion in revenue to produce that 37 Billion in profit.

I am using 25 years for the lease because it makes the math workable within Excel and a longer lease opens up larger risks for the buyer that become harder to discount.

So with all of the assumptions above at if someone were to pay the state 24 billion for a 25 year lease with the lottery it would be a break even proposition for them. Obviously whoever leases the lottery then would likely pay something less than 24 billion.

Unlike leasing the Tollway or Skyway there is no real physical asset involved, you are basically leasing a franchise (the right to run a lottery). So the cash flow is the primary motivator behind what you get when you lease the lottery so that's why I am using the value of the 'profit' to calculate the value.

Some of the risks a buyer faces include.
Changes in how they taxed or their product is taxed by any entity of government in the state.
Changes in law that impact their abiltiy to sell.
Changes in the marketplace (more casinos)
Changes in public opinion about the lottery
Changes in my regulatory environment.

So if I were leasing the lottery here is some of what I would expect to have in the contract. If I don't get these issues addressed within the contract the amount I would pay for the lease would go down, perhaps significantly.

1) Protection from any legislative changes that would impact my ability to sell tickets. For example, making sales at bars illegal.
2) Some consideration if gaming is expanded in any way within the state, be it new casinos, slots at racetracks, etc.
3) Any change in the way my revenue was taxed (I saw what you did to the casino people)
4) Protection for any change in the way lottery winnings are taxed.
5) Protection for any changes within MegaMillions that impact me differently than any other state.
6) Protection for any changes within the state pension program for my employees if I have to keep them in the state plan.
7) I want the current marketing restriction on targeting groups lifted. I want free reign to market to people over 18.
8) I want to be and want my retailers to be protected against any local taxing change. So if Chicago decides to tax lottery tickets I am covered.

There would be a much longer list but this is just some of the concerns I would have.

OneMan

If I were ever on trial for something I would hope the Sun Times' Jay Mariotti was on my jury. It would appear that the reputation of the victim of something can make what happens to them ok.

So in Jay's world it's ok for guys like me to hit guys who are not so nice without warning if I think they might be doing something that might upset someone. It would be OK since I have a good rep and they have a bad rep.

Then again I think he writes stuff like this sometimes because it gets folks talking about Jay.

OneMan

The hits keep coming.... Today the Sun Times has a story about some fired IDOT workers and their federal lawsuit. The interesting thing is the fired workers want to get the attorney the governor hired to help take politics out of hiring to testify about what she may have found out investigating their case.

The State in part has this response.

Blagojevich spokesman Abby Ottenhoff said Leahy "did answer questions," referring to Leahy's responses during the deposition about her experience on the governor's transition team.

But Ottenhoff underscored the governor's position that Leahy's tenure with the administration is off limits.

"Attorney-client privilege is sacrosanct," she said. "By suggesting the state or Ms. Leahy should take the extraordinary step of waiving that privilege, it seems like you're carrying water for the opposing attorney."

Sorry Abby, in this case the truth should be sacrosanct, also as I understand it, this attorney was not paid for by Friends of Blagojevich, but by the citizens of Illinois.

So using Abby's logic if Leahy found evidence that a violation of Rutan occurred she has no obligation to reveal it under oath because of privilege?

OneMan

The Sun Times is reporting that

Gov. Blagojevich's office kept a clout list of hundreds of state employees recommended by lobbyists, lawmakers and major fund-raisers -- despite the governor's repeated statements that politics doesn't influence state hiring....

The newspaper used state records to confirm that at least 274 of the 292 people on the list have or had state jobs.

But of course the list had nothing to do with influence as Abby points out.

Blagojevich spokeswoman Abby Ottenhoff said she wasn't familiar with the list the Sun-Times obtained and insisted that all vacancies were filled "within the guidelines of the law." She also denied that jobs were doled out in hopes of reaping political favors later on.

I guess my first question is if she isn't familiar with the list how can she know that jobs were not doled out in hopes of reaping political favors?

With the way political hiring has been done and perceived within the state it is mind blowing that they figure anyone is going believe that they were just keeping track of this without any sort of expectation of reaping political favors?

In the best possible light the administration looks really stupid.

I bet a grand jury or two is going to get to learn more about this.

OneMan

That's right it's all the Trib's and John Kass' fault, no wrong doing in city hiring at all.

Perhaps they will blame Republicans and George Ryan tomorrow.

OneMan

Rich has a lot about the latest in the state employment saga. The Trib also has some additional information today about hiring as well a little bit on some shredding.

I wonder if you can file FOIA to get information about a civil service commission filing.

The thing that bothers me about this stuff in some ways is it ends up painting all state employees in a negative light.

Suffice to say I think as this stuff comes out you will see a lot more "Rod is Cool, Judy Sucks" ads.

The story from the Trib today

In addition, John Gianulis, a top personnel official with the Blagojevich administration and the Rock Island County Democratic chairman, said he was unaware of any attempt from the governor's office to apply pressure on behalf of job applicants. "I just can't conceive it happening," Gianulis said.

Well John, I sure can.

OneMan

I have to admit, when I heard about the NSA having all those phone records, the database nerd in me started thinking about interesting queries to run and how I would implement a database that large.

I guess my question about this is, if the whole thing is why can't they just get warrants for the phone numbers they want to watch, then warrants for the numbers that call or are called by the watched numbers.

OneMan

One reason the state may be having some financial issues. OneMan's check for his state income taxes was mailed on April 17th ( I owed some money) it cleared yesterday.

Seriously, let the department of revenue hire some temps or something.


OneMan

Had the last night of dance class tonight, part of it involved going dancing in public. More on this to come. It wasn't as bad as I thought but trying to swing dance at a club that has had swing dance night for the last 7 or 8 years is a bit tough.

It is sort of like learning how to swim in a month then going to a water ballet club.

OneMan

Have to give the G-Nad credit, this was a smart way of dealing with it. Then again I think the question some of us have is 'Where can I get one of those shirts?'. Seriously, if the U of I CR's are selling them I would put and ad up for them....

OneMan

From today's Sun Times

After the state took aggressive -- and some say unnecessary -- steps to shut down a Joliet landfill, a hefty campaign contributor to Gov. Blagojevich looked into buying the business.

Read the story....

During the telecast of David Blaine's attempt to hold his breath for nine minutes the host said "Don't try this at home" during the part where Blaine was underwater with scuba gear.

As my brother pointed "Yeah that's what I do all the time with my human sized globe and scuba gear".

OneMan

The Beacon today had a story about an Egyptian man who is having issues with his Mexican wife and child custody while they were visiting Aurora. Strange story about conflicting law and trying to play by the rules.

Read the story I have written about 3 summaries and none of them do the story justice.

At least sons of Republican office holders had to win primaries before taking over their dad's positions. First Dan Lipinski and now Stroger.

Seriously has this concept of children of politicians going into the family business gone to far in Illinois?

I don't know about you but if I had new competition in my business it would be nice for the state to tax my competitors and give me the money...

Earlier in the day, the intense efforts of horse-racing interests paid off when lawmakers passed a proposal to give racetracks an annual subsidy of more than $32million paid by the state's most prosperous riverboat casinos. Blagojevich worked on behalf of the measure to take money from the casinos and said he would sign it into law.

More on the budget to come including a list of MOU's hopefully.

From the Trib

Rep. Patrick Kennedy crashed his car near the Capitol early Thursday, and a police official said he appeared intoxicated.

Kennedy said he returned to his Capitol Hill home on Wednesday evening after a final series of votes in Congress and took "prescribed" amounts of Phenergan and Ambien, another prescribed drug that he occasionally takes to fall asleep.

At least he was alone and their wasnt a bridge nearby......

Because the mayors twin brother is the perfect guy for the job as the Trib Reports

Dolton (where OneMan grew up) hired Robert Shaw brother of current Mayor William Shaw as inspector general who will get paid $70,000 a year and be issued a city car in the newly created role of Inspector General.

Jay Stewart of the Better Government Association called the job "a $70,000 farce" and said the setup was riddled with conflicts of interest."It would be like if [Chicago Mayor] Richard Daley hired his brother Bill as inspector general," Stewart said. "Apparently Robert will be his brother's keeper. It's like a bad `Saturday Night Live' skit."

OneMan

Eric Zorn , Archpundit and some others have blogged on this. In particular Zorn and Arch have talked about the IFI extending the deadline for petitions and perhaps seeing it as a sign they are having problems.

Let me toss another theory out. They have plenty of signatures but every name and address on a petition is another name for the IFI database and the day they say no more petitions the growth of the list stops as well.

Especially at the end with a deadline, those folks who are passing and spending the coin to FED-EX the thing in are obviously motivated to get the job done and would be very good names for IFI to have in their database as activists. Just from the names of last minute circulators you can build a good grass roots list.

Regardless of if this thing ever ends up on the ballot, at the least IFI ends up with a list (they can likely rent out) of over 200,000 (at least over 100,000) self identified 'family values' voters. Think about how much that is worth in influence over the process in the next 2 years. At best they get this on the ballot (it has won every place it has been on the ballot).

Here is a what-if to think about.

They file and a challenge is filed against the petitions by some group that has at best loose ties to the Democratic party (like they give money to some candidates) . IFI turns around and starts mailing out items about how the Democratic Party does not want you to have a say in the issue. Might be a good way of getting 'family value' voters who would not be motivated to go vote for Judy to get to the polls in November.

The one perspective we were truly missing on the imigration debate has finally appeared. If you want to know what Sneed's dog walker and brother-in-law think about things check out her column. I takes a heck of a reporter to do the deep investiagtive reporting to talking to the dog walker and reading an e-mail from their brother-in-law.

I understand tomorrow that her cleaning lady and her third cousin will be offering up their thoughts about the George Ryan verdict and next week the guy at the local White Hen will provide her with some thoughts on Sen. Meeks proposed run for Governor.


OneMan