We learned last week from the city that Encore was late, perhaps five weeks or longer in making its first payment in lieu of taxes for about $6 million to the city.
This is a scheduled payment made quarterly during each year that adds up to about $25 million and then there is an additional payment of $5 million for odds and ends that brings the total to the agreed upon $30 million from the casino and hotel giant for the year.
To imply the city is in need of these payments to be made promptly is an understatement.
To imply, as the mayor often tends to do, that Encore is made out of money and can make these payments the way some of us pay out the cashier at Market Basket during a food run is an absurdity.
His thinking must be corrected – and this late first payment is a sign that Encore is as mortal as all of us when it comes tom paying its bills. If the money is not there, Encore cannot pay its bills in a timely fashion.
If revenues are less than expected by $200 million in a year, as Encore is now expecting during this first year of operation, meeting all its fiduciary obligations absolutely on time is made more difficult.
Not impossible, just more difficult.
Income and profits govern everything for companies like Encore and for city’s like ours.
If the city treasury is short $5 or $6 million, the funds must be found somewhere or raised somehow to meet obligations that come due.
Defaults are frowned upon. Late payments spanning many weeks can ruin the city’s credit and its beloved bond rating as well as causing grumbling from our creditors. Late payments or no payments from Encore once or twice can do the same and in this first instance of being late have poisoned the well of good feeling just a bit between city officials and the company.
Bottom line, Encore is as human as the rest of us and must operate with a checking account that cannot be overdrawn.
The reason they didn’t make the Everett payment on time while making the smaller Boston payment on time is a simple matter of probably not having the money or having it and wishing to hang on to it until the city complained, and then making the payment.
That’s the way it is for all of us working with our budgets.
It is hard to imagine this is the way it is for Encore…but it is.