Thursday, June 4, 2009

Concerns Linger Over Ballard's Approach to Apartment Deal

Yesterday the MDC voted 7 to 2 to approve the particulars of a deal to provide more than $18.5M in taxpayer assistance to TM Miller Enterprises to build market rate apartments and retail spaces at 450 E. Market Street. In 'return' the City would become the owner of the 1677 space parking garage across the street. A central feature of the plan is to award TM Miller Enterprises a 10 year abatement, which he would return to the City each year, plus $100,000, as payment for either lease or purchase of 600 of the parking spaces. This money would be used to pay off the $18.5M loan that TM Miller Enterprises sets up to buy the two properties from the current owner. The abatement will not be voted on until June 17.

There are many characteristics of this complex deal that should send shivers down the spine of every Marion County taxpayer and every proponent of open government.

#1. This very complex deal was approved in backward order - tarnishing, if not outright spitting on the honor of the public hearing for the abatement to be held two weeks from now. If the abatement were to be denied, the deal could not be finalized as it is the central cog in how the deal 'works'.

#2. This very complex deal was approved without any real details about the project, with significant questions insufficiently answered, and with little time to really understand the deal. During the day, three meetings were held that in part dealt with this deal proposal. At a MDC committee meeting in the morning, a number of really cogent questions were asked. Ones that I would never have thought of, but which made sense the instant you heard them. Jim Curtis, VP of the MDC, asked why the MDC should put the taxpayers on the hook for $18.5M and not have both properties deeded to the City. The Ops Center deed could be transferred to the developer upon completion of the project. Randy Snyder, President of the MDC, took that one step further posing the scenario where TM Miller Enterprises goes bankrupt. Is the City protected insofar as actually acquiring the Ops Center property or would it be tied up in court for years? It was clear that this had not been discussed among the deal makers before and an inadequate answer, amounting to 'trust us' was given. More 'minor' questions also remain - if the garage does not generate enough revenue to cover the payments on the loan without the abatement money, how does the City make those payments should the developer not get his financing or the development stalls? If the developer defaults on the deal, how could the City sell the property, given how long it has remained on the market to date? These are just examples of a laundry list of questions without answers about this project and deal. No site plans, no real particulars of the project available for review. In common parlance its known as a pig in a poke.

#3. The apartment market is at capacity downtown, with rising rents to boot. If there ever was an example of a downtown market segment the taxpayers could expect to survive on its own, this would be it. Instead, Mayor Ballard is content to toss taxpayer money at it anyway. The Market Street ramp has come down, the street scape is being improved on this block -- additional reasons why the market for apartments here should be able to be totally market drive. The upshot here is the message that nothing downtown will be developed without significant taxpayer money involved. The Mayor doesn't give a hoot about cutting the Parks budget, but he doesn't blink when a business comes to him with hat in hand for tens of millions in corporate welfare. The taxpayers of Marion County will all be broke, they will have no services left for their own peaceful enjoyment of life in Indianapolis, and downtown will still be a money pit --- because there is no plan or interest in creating a plan for downtown's self-sufficiency.

#4. The use of an abatement in this manner creates a 'mini-TIF'. The Mayor's people feel it is superior to a TIF in that it is of shorter duration (10 years vs. until the debt is paid off). But on the negative side as far as the public is concerned is the lack of public input or Council oversight. The legislation for how the City can create a TIF District puts the whole deal out in the open for public scrutiny. Public hearings are required and the City-County Council must review and approve it. Not so with this clever mini-TIF. Even yesterday, the MDC did not have to hold a public hearing on the deal, although they did so - to their credit. There will be a hearing on the abatement -- but as noted in #1, that horse has already left the barn with the approval of the deal yesterday. Mayor Ballard has indicated he wants the authority to strike abatement deals without any oversight. But the legislature did not grant his wish. The public process developed for TIF Districts is being written off the books by the use of this mini-TIF approach and the public should be concerned about that reduction of transparency.

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