Tuesday, June 2, 2009

Public Input Impeded

On a very fast track that precludes extensive or knowledgeable input by the public, the Ballard Administration is pushing forward a complicated proposal to assist private developer Tadd Miller redevelop the old Bank One Administration Building at 450 E. Market Street.

Reported today in the Indy Star by John Ketzenberger and on the IBJ website by Cory Schouten, the deal raises many many questions.

The deal must be approved by the Metropolitan Development Commission at a hearing tomorrow at 1:00 pm (Public Assembly Room, City-County Building). At 11:00 am, the MDC's Economic Development Committee will meet and discuss the proposal. That committee will meet in room 2160 of the City-County Building, should you wish to attend. It is not clear at this point, if the City Council would also have to vote on the proposal, at least as far as appropriating the moneys.

The deal appears to be that Miller, through his TM Miller Enterprises, will arrange a loan to purchase the Bank One Administration Building which includes a surface parking lot, and a 1600 space parking garage across the street, for $18.5M. The City would make the payments on the loan and become the owner of the parking garage. The City would also grant a 10 year tax abatement totaling $6.7M. Miller would have 18 months to find investors to come up with an anticipated $65M to turn the building into 600 market rate apartments and retail spaces. If that timetable is not met, the City would become the sole owner of both the garage and the building - presumably still paying on the loan.

More complications are that Miller would lease 600 of the parking spaces for $100,000 per year plus the amount of the tax abatement for that year. Confused yet?

The revenues from the parking garage would be the payment stream from which the loan would be repaid.

This begs the question: if the parking garage revenues can pay for the loan and refund the tax abatement, why does Miller need the City in the picture at all?

Ketzenberger brings up the strong downtown market for apartments and suggests that taxpayer groups might balk at abating any more apartments.

Here's how strong the Downtown apartment market is: Although more than 750 units have been added since 2000, the vacancy rate remains the same -- 5 percent. The monthly rental price has increased from about 90 cents per square foot to $1.08 in the past eight years. And rental rates at two major developments, The Waverly on South East Street and the Cosmopolitan on the Canal, are $1.35 per square foot.
"That shows there is a lot of demand," Sweeney said. [Sweeney works for Indianapolis Downtown, Inc., which compiles occupancy numbers for downtown spaces]

Schouten concludes his article with:

Yet the city's abatements and investment in the former bank properties suggest a deal to redevelop the 4-acre MSA site still could be quite pricey for taxpayers. And if the current project doesn't materialize, the city would be left holding even more downtown real estate and paying down an $18.5 million loan.

Why is the City getting involved in this deal? If apartments already represent a strong market downtown, why not let the market work? When, exactly, will downtown be self-sufficient?

As an aside, TM Miller Enterprises donated $1000 to the Ballard Campaign on September 30, 2008. No campaign finance reports for 2009 have been filed. Those are not required until January, 2010.

What does the public think? Does Mayor Ballard really care? If so, you might think that this juggernaut would be a tad slower than coming to the public's attention the day before the decision is made.

[added 6-2-09] I have been informed that no public comments will be allowed on the topic of the purchase agreement with Mr. Miller as no public hearing is required. The abatement will be taken up as a public hearing at a future MDC meeting, likely in two weeks. I have also been informed that the City-County Council has no oversight on the agreement or the loan or receipts and payments accrued from the garage. So, poof ! Here's $18.5M more debt for Indianapolis secured not only with potential receipts from this garage, but backed up, if needed, with actual receipts from other City-owned garages. Public input is not desired.


Paul K. Ogden said...

I sent you the statute that requires that the designation of a redevelopment district has to be approved by the council. That's what they're doing as part of the resolution. I don' think they'll be able to get around that.

Baloo said...

So much for the Transparent Government we were all promised when Mayor Ballard was running for Office.