Spurned of late by Wall Street, Angie's List has turned to Indianapolis taxpayers for an investment in the company's future.
A City-County Council panel on Monday will consider up to $18.3 million in public assistance that Angie's officials say is critical to the consumer rating service's planned expansion on the Near-Eastside.
Leaders in both parties say there's a lot to like in the proposal. Angie's promises to add 1,000 jobs, for starters. On top of that, it plans to relocate 800 more to its headquarters on East Washington Street, a run-down corridor that serves as a key gateway to Downtown. And it would transform the old Ford assembly plant back into the economic engine it once was.
In return, the city would spend $2 million on streets and other infrastructure work, plus as much as $16.3 million in tax-increment financing funds to build a parking garage and relocate an Indianapolis Public Schools warehouse from the Ford building.
But ironically for a company that makes its money off of consumer ratings, the biggest hang-up may be others' recent reviews of Angie's.
Since its founding in 1995, the company has never turned an annual profit, a red flag that until recently investors had largely been willing to overlook thanks to steady growth.
But against a backdrop of disappointing earnings, controversies and lawsuits, the company's stock price has plummeted over the last year and a half. It dropped to what was then a record low in July and continued to tumble, settling Thursday at $5.22 per share.
That's less than a third of the $15.80 the stock fetched at its initial public offering . . .Just four years ago, then-Gov. Mitch Daniels and Mayor Greg Ballard announced more than $14 million in public assistance to Angie's List based on a promise to create 500 news jobs that never materialized. The company's CEO and co-founder, Bill Oesterle, formerly served as Daniels' campaign manager and has lavished large campaign contributions on the Republican Party and its candidates. While the company has racked up hundreds of millions of dollars in losses during its 20-year history, Oesterle and the company's name sake, Angie Hicks, have become multi-millionaires. Those old buildings the company bought on the near east side were purchased by a company controlled by Oesterle, who leased them for years at inflated prices to Angie's List before later selling them to the company at inflated prices with money Wall Street investors foolishly pumped into the company.
Imagine if Ponzi schemer Tim Durham had been able to use his political clout with state and local officials prior to the FBI's raid on his offices after potential investors began to sour on his businesses to get a multi-million dollar infusion of public tax dollars. It really is no different. Yet one City-County Councilor after another stumbles over one another to sing the praises of the company in defending their planned decision to invest money in the company Wall Street wouldn't invest, including Zach Adamson (D), John Barth (D) and Mike McQuillen (R). Until you start getting in the faces of these elected officials and making them fear for their political lives, they will continue to ignore you and your concerns and give away your public tax dollars to take care of the people who are stuffing campaign contributions in their pockets.
Democratic mayoral candidate Larry Vaughn wasn't too far off the mark when he told Indianapolis City-County Councilors at a recent meeting that Angie's List does little more than "sell bumper stickers with a syndication on the side." It's pretty sad when a guy they call crazy and laugh at when he speaks at council meetings makes more sense than the elected representatives we've entrusted to spend our tax dollars.
UPDATE: No vote tonight. Angie's List asked to continue consideration of its public subsidy until a February 23 meeting of the committee to allow it to gather more information regarding its plans.
Let them go. I've been a member for years. They are clearly failing....
ReplyDeleteWell I was always wondering where Angie's List next cash infusion was going to come from.
ReplyDeleteThe "management" team has tapped out the public market and tapped out its borrowing capacity. I guess the next logical place is to beg for a public taxpayer based handout.
This idea is currently in its death throes and if our elected representatives can't see that then they are morally and ethically blind.
See, the politicians can't just steal the money out of the public treasury. They need someone to give them that money, so they give the public's money away to a reliable partner, knowing that the partner will give them a good chunk of that money right back, either through campaign donations, salaries to friends, investments in the politicians' businesses or projects, hiring friendly contractors, etc.
ReplyDeleteThe partner accepts the strings, because the partner gets to keep a good bit of the cash.
We might save money if we let the politicians steal directly from the public coffers but forbid giveaways.
Here's why Angie's List is so coddled: Indianapolis is deathly worried about being seen as a loser on the national stage. Columbus, a peer city, is roaring away as a home for national headquarters.
Indianapolis, however, comparatively struggles. Indianapolis carefully manages its image as painstakingly as the USSR. That's why every last media outlet in Indianapolis speaks with the same voice on all matters concerning Indianapolis' image.
Indy really wants publicly traded companies to be headquartered in it, and it would die from national embarrassment if one of its few such companies failed.
Just like with the Colts and Pacers, no expense will be spared to prop up the home team.
A main job of local government is to create the economic conditions for economic development. It is just as much a player as private enterprise in this regard. As other jurisdictions up the ante in development, cities like indy can either keep up and outdo them or make a decision to let things go to pot. Sometimes, like with Angie's, private business has to kick the government in the ass to get things done that need getting done. Like improving roads and infrastructure to allow business to move in and grow. Like financing the building of a parking garage to accommodate 1800 new employees to that side of town, and redeveloping an unused Ford plant. What Angies' is proposing sounds like it will pay off for all parties. If this deal helps the near Eastside start coming to life and increase the value of homes in that area and spurs development down the Washington Street corridor over the next 20 years then I don't care if Bill Oesterle or anyone gets rich in the process. I would hope they and others would come out winners here. Clearly the residents of Indianapolis, especially on the eastside, would be winners, too.
ReplyDeleteIf we did thing your way, nothing would get done and all of Indianapolis would be desolate wastelands of asphalt, poverty, and hopelessness, with boarded up businesses everywhere and no one of means living here.
"A main job of local government is to create the economic conditions for economic development."
ReplyDelete"Conditions" are just that, conditions. What Indianapolis is doing isn't creating "conditions," it's putting points on the board for certain companies.
By directly funding a company, each and every Indianapolis resident is de facto engaged in competing with the other companies in the hand-picked company's market.
What you're advocating, Mike, isn't a light regulatory framework in which to attract and grow companies. Your direct intercession in the market is called "fascism." Many people in Indiana think fascism is a pretty good idea.
You're forcing me to have my tax dollars used to compete against services I use and enjoy such as TripAdvisor or Yelp. If the cost of living in Indianapolis is compulsory funding of Indianapolis' most cherished companies, people will move elsewhere.
"If we did thing your way, nothing would get done..."
Mike, refer to William Pitt the Younger:
"Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves."
Getting something done is hardly a compelling argument.
"Conditions," Mike, are such things as streets and the regulatory framework. Parking garages, however, are not "conditions," but the business, itself. The government has no place aiding the balance sheet or capital needs of any particular business.
11:01.
ReplyDeleteC'mon. No one is giving Angie's list any money. Did you read the article? Do you know how this kind of development works?
This isn't about fascism or William Pitt (rotflmao).
This is about the normal stuff that local governments do and ought to do to help develop areas like this. Did you see that Angies list is investing $40 million itself?
No one is writing a check to Angie. This is much like the stuff that Mutz and Indiana did in the late 80s to get Subaru to come to Lafayette. Now they have plants there and in Lebanon.
Get your facts straight. Sounds like you want to reverts the economic revival that has already occurred in the Holy Cross neighborhood.
I suppose you are OK with the prison and jails taking up valuable real estate in and near downtown instead of moving them to the GM plant. God forbid someone should make money and get "rich" developing east downtown and the near eastside so Indianapolis can grow.
I choose to live in Realityville, where tax money needs to be raised and spent to attract business, redevelop blighted areas, and encourage job relocation. The benefits outweigh these expenditures.
They have already. Whether through infrastructure improvements, guaranteed financing, tifs, matching funds, tax incentives, etc, Indianapolis is a much better place to call home than it was when I moved here in 1982.
Now it has to encourage people to move here and live here. Middle class people. That comes with development like this, as well as the state kicking in tax credits to help middle class people rehab homes on the eastside, and improvements to IndyGo. Maybe even a commuter tax so Carmelites will pay their fair share to a city that provides them the economic engine that makes their jobs possible.
MikeC is a member of our City Council.
ReplyDeleteI know exactly what's included in the deal. Over $16 million of it will be made in direct payments to Angie's List to build a new parking garage for their employees and to pay for the cost of relocating IPS from the old Ford building somewhere else and fixing it up for use by Angie's List. This is not what economic development used to be about. It used to be limited to providing tax abatements for a fixed period of time based upon the commitment to build new improvements and create new jobs that would provide new tax revenues to fund city services. We're now using TIF money to give away to private businesses, and when they eventually start paying property taxes on those improvements, the money stays in the TIF fund where its recyled to give away to other businesses within the one-mile square. The new development never generates tax revenues to help pay for city services; only wealth transfer payments to the politicians' pay-to-play pals.
ReplyDeleteWell, I've lost my last shred of respect for Mr. Adamson and he will never again receive any support from me. That a quasi-business person like Zach Adamson would actually be in favor of giving more taxpayer monies to a pretend company that has never made a profit in its entire existence proves Adamson should not be on our Council.
ReplyDeleteAnyone who paid attention to this classic crony insider deal from the days of David Brooks and Samantha DeWester helping pack the CCC with the likes of Angel Rivera used to vote for just such crap taxpayer giveaways knows such deals are ROTTEN TO THE CORE.
How much are the Angie's list Principals paying the politicians and the political handlers?
"Did you see that Angies list is investing $40 million itself?"
ReplyDeleteAngie's List does not have $40 million to spend.
"I choose to live in Realityville, where tax money needs to be raised and spent to attract business, redevelop blighted areas, and encourage job relocation. The benefits outweigh these expenditures."
You're advocating fascism. I'll agree with you on making wide streets with working stoplights and traffic signals, but I suspect you see the public treasury is to be used for far more than that.
"They have already. Whether through infrastructure improvements, guaranteed financing, tifs, matching funds, tax incentives, etc, Indianapolis is a much better place to call home than it was when I moved here in 1982."
You're committing the post hoc, propter hoc fallacy. Indianapolis is better than 1982, only because of the immigrants from other cities who demand better things. Giordano's is opening in a couple of weeks and not because they want access to the native Hoosiers.
Indianapolis is not better off because of fascism. After all the billions of public spending on downtown, the area is still not economically viable and requires public funding for every project.
The areas where the people naturally want to be see very little fascism. Carmel, Fishers, 82nd Street are all progressing without fascism. Carmel is correcting US31 to what it should have been, all along, and that improved road is the good purpose of making the right "conditions" for an economy.
Unfortunately, US31 ends at 465, and Indianapolis foolishly does not continue it at Interstate specifications all the way to downtown.
Indy has wasted so much on Downtown and the nearby areas that it has let the rest of the city go fallow. I wouldn't live on the East Side if I lived in a pill box with .50 cal. turrets. Nobody wants to be the next Woodruff Place murder victim. Everything I need can be found in other areas of the city, so there's no need to shop on the East Side or to spend much time, at all, out there.
As a consequence of wasting all that money on the areas that won't ever be much, Indy has held back the areas that are decent and have hope.
If Indy wanted to tear up Washington St. and make it six lanes, limited access, from downtown to German Church, that would be something that would improve the "conditions" for real East Side development.
I do agree with you that Indianapolis residents should pay Carmel a tax for Carmel doing all the work to give the metro area what respectability it has. Nobody would consider moving to Indy if Carmel didn't exist.
If Indianapolis is going to reap all the benefits of being in the Carmel/Indianapolis metropolitan area, Indianapolis should pay something for the service.
For all the jokes about Carmel, finally the truth.
ReplyDelete"Indianapolis residents should pay Carmel a tax for Carmel doing all the work to give the metro area what respectability it has. NOBODY WOULD CONSIDER MOVING TO INDY IF CARMEL DIDN'T EXIT."
Where the hell do Mr. David Brooks and Mrs. Susan Brooks live? Carmel. Where the hell does Bob Grand live? Carmel. Where the hell have I seen Indianapolis City County Councilors hold their money-grubbing fundraisers? CARMEL.
Democrat and Republican operatives turned Indianapolis into a hollowed out shell much like Detroit. The decay is every where for those with eyes wide open.
Not only did DB engineer Avachino Reeves' defeat in favor of Brooks' puppet Rivera, DB's former "assistant" may well have had a hand in turning tails on her own community by helping dump Chino for Angel. Anything DB and Mrs. DB did was fine with that s AM "Assistant to the Chair" along as they got her a photograph with any purported Republican rockstar she could put on the mantle of her rented Forest Manor area home.
ReplyDeleteWhy hasn't the Board replaced Oesterle?
ReplyDeletehttp://www.marketwatch.com/story/3-stocks-with-almost-no-redeeming-qualities-2014-12-22?page=2
Angie’s List
While there are plenty of recently IPO’ed tech stocks that have seen volatility lately, Angie’s List stands out in the crowd, both because its roughly 55% decline in 2014 puts it among the worst performers on Wall Street, and also because it continues to suffer under an ugly balance sheet and confusing corporate strategy.
Let’s start with the numbers. Angie’s List has never posted an annual profit, and is not projected to do so either this year or next. And while the stock has managed to increase revenue substantially since its late-2011 IPO, there have been a mere two quarters in that stretch when Angie’s List has managed to operate at break-even.
Worse, if you look at the earnings details, you’ll see that the revenue increases have come on the backs of big increases in costs. In its third-quarter report filed in October, Angie’s List reported marketing-and-selling expenses that totaled $170 million across the first nine months of the year, up from about $141 million last year and $114 million in 2012. So while revenue is rising, the company is spending big bucks on reeling in those new sales.
When you’re an unprofitable company that can’t break even but must continue to throw money at customer acquisition for top-line growth, that’s an ugly place to be.
Of course, many investors don’t expect Angie’s List to ever set the world on fire. There was a short-lived bump in October on buyout hopes, as rumors abounded that Angie’s List hired bankers to explore “strategic options.”
But the reality is that Angie’s List isn’t very attractive, either as a standalone investment or as an acquisition target. As one measure of the long-term problems facing the company, consider a disappointing “price test” in major markets last year that involved a 75% reduction in subscription fees — and one that has held back subscriber revenues big time, but is at risk of becoming a permanent price cut, seeing as it’s still in place.
And besides its challenges in growing profits on its own, there’s the management turnover, including three CTOs in two years.
Throw in the very low barrier to entry in the online-reviews and recommendations game, and you have to wonder who would bother with Angie’s List.
What happens when the 1000 promised jobs never happen? Anybody remember the United Maintenance Hub or more recently Lightbox or Carbon Motors?
ReplyDeletehttp://finance.yahoo.com/q/bs?s=ANGI+Balance+Sheet&annual
ReplyDeleteAngie's List is heavily in the red. They have serious negative shareholder equity, and the resident of Indianapolis are proposed to be their creditor?
ANGI is also bouncing along near its 52 week low.
This company needs to show it can make money with modest digs before it is given four-star accommodations.
If Angie's List needs a place to work with a garage, they should consider the old airport terminal. A great garage is already built.
What possible need could ANGI have for 1,000 more employees?
ReplyDeleteI'd like to see the business units into which these employees will be placed and at what salary range and with what assurances of job security.
As ANGI is not making money, each employee will simply drain the already negative net revenues.
What verifiable business forecast shows ANGI needing an additional 1,000 employees?
THIS FROM 2011:
ReplyDelete"The company has received city and state financial incentives to help fund its growth. For example, in 2011, it announced that it planned to nearly double its local workforce by hiring an additional 500 employees at its corporate campus on the east side of downtown. State officials pledged as much as $7 million in tax credits, based on those plans.
The city of Indianapolis also pledged about $7 million in incentives, including about $4.6 million to help buy properties near its campus."
So does the subsidy go to Angie's, or does it go to the entity that builds and operates the garage, office, etc, and leases them back to Angie's? Think about it: Angie's execs through a separate entity own the buildings and lease them back to Angie's. While this is not an uncommon arrangement for many companies, Angie's execs have gotten in a lot of trouble because they were charging Angie's a premium relative to the local market. So the separate entity controlled by the execs gets a large part of their new development paid for by taxpayers who's elected leaders intended for Angie's. Do you think the separate entity controlled by the execs leases back the new space to Angie's at a discount to effectively pass on their savings?
ReplyDeleteMikeC, who stuffs you full of the propaganda you spew? I hear and read the same arguments over and over when it comes to reasons for subsidizing private industry such as Angie's. Logic would suggest those arguments must have a source.
ReplyDeleteYour posts are void of supporting facts, you berate anyone who questions you, and you divert attention from the conversation at hand. What I don't see in your posts is an attempt to understand why folks are against subsidies for private companies in the first place. Believe it or not, there are a hell of a lot of folks I know who don't like what you're doing, it's just that most folks chose not to voice their concerns in blogs such as this.
Is anyone else floored by how arrogant our city leaders have become?
Angie List comments are not independently verified. Favorable ratings can easily be manipulated. They can be manipulated as easily as the vote by a City County Councilor.
ReplyDelete