On today's Metropolitan Development Commission docket, is the North of South sweetheart deal. It is in the form of an MDC resolution that will allow the loan of up to $86 million to Buckingham Cos. to develop about 11-14 acres just north of Lilly's corporate center. The resolution is posted here. (Again, you will need to log in with a Google account. If you prefer, just email me at hadenoughindy@gmail.com and I'm happy to send you the document.) I have also uploaded the MOU (memorandum of understanding) between the City and the developer. And, the Council Proposal 292 working through the City-County Council is posted here.
This particular document was quite a slog when I read through it. It formally modifies a bond resolution from 2004 - but without fully incorporating that resolution. So, it runs from noted modification to modification, without giving an understanding of what remains in the old resolution.
What is obvious from the resolution, though, is that the MDC is tangentially approving the deal and the project, even before considering the merits of a rezoning of the property. In the resolution there is mention of a loan to the developer and the issuance of bonds. In addition, the document does note that these bonds will be secured with TIF revenues - presumably from the consolidated downtown TIF. However, there is NO mention of the developer's obligation to repay the City, NO mention of the amount of the loan, NO mention of a first mortgage on the project, NO mention of the amount of the bond issue, and NO mention of the use of property tax revenue derived from the project to buy down the repayment obligation of the developer.
It continues to stun me how incomplete a picture this administration is willing to pass on to the decision-making entities.
Beyond what the MDC is voting on, the City is pledging to repay a $14 million loan to Lilly, who will turn that over to the developer, put in $9 million of infrastructure, and rig what amounts to a 10 year, 100% abatement on the property. It is the latter point that I actually find most bothersome of all of the bothersome aspects of this deal.
When an abatement within a TIF district is granted, there are goals and clawback details agreed to, there is a vote by the MDC, but also a vote on that abatement by the City-County Council. By doing an end run around the abatement rules, the Ballard Administration can parse out pieces of the entire deal to separate entities, with a connection between the decisions, but no real overlap on the actual pieces being decided. The MDC votes on the use of TIF revenues to secure bonds, the project, and the loan, while the Council votes to float the actual bonds.
By calling the property tax revenue generated by the project a 'credit' to be applied to the developer's repayment of the bond, the Administration is seeking to avoid the checks and balances written into the laws regarding abatements. In fact, I can find no place where ANY body, not the MDC and not the Council, actually will vote for this use of the property tax revenues.
This deal is just the latest in a long string of bad deals for the taxpayers of Marion County. In addition, the City puts itself out as a financial institution, putting the taxpayers on the hook for a project that no bank will touch, and simultaneously absorbs all of the financial resources of the consolidated downtown TIF. At no point has the Ballard Administration mentioned an analysis of the benefits and risks of this project compared with paying off the existing TIF bonds as soon as possible, nor compared with applying the same deal to the development of the old MSA site, which is owned by the taxpayers and would spur more private investment and City renewal than the No-So deal can spur.
You have to wonder why Ballard would put the taxpayers on the hook for nearly $100 million, while the developer of No-So only has to come up with $6 million. There is something not right about this deal.
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3 comments:
They do it because they can; when private individuals can get the government to steal from them with legal machinations and financial gimmickry, they will do it every time. Cities should not be developers and they should not fund developers. If there is no demand for development, no development should occur. If Banks, with the phony money created by fractional-reserve banking will not fund this development, then why should the taxpayers.
By the way, the Snyder requested that a secondary reserve fund of 6.9 million have a personal guarantee by Brad Chambers. Kitner, after a brief hiatus, indicated that a cash deposit or personal guarantee would be made. Snyder said that no bank would do this deal without a personal guarantee. Obviously, it is hard to understand what was going on without having researched and examined all of the documents etc. But Kitner was comical as usual.
Am I reading this correctly, that the City is going to loan money to the "company" - NOS Innovation Partners, LLC ?
Did we repeal the state constitution ?
State constitution Art 10 Sec 6:
"No county shall subscribe for stock in any incorporated company, unless the same be paid for at the time of such subscription; nor shall any county loan its credit to any incorporated company, nor borrow money for the purpose of taking stock in any such company; nor shall the General Assembly ever, on behalf of the State, assume the debts of any county, city, town, or township; nor of any corporation whatever."
A11S12:
"The State shall not be a stockholder in any bank; nor shall the credit of the State ever be given, or loaned, in aid of any person, association or corporation; nor shall the State become a stockholder in any corporation or association.However, the General Assembly may by law, with limitations and regulations, provide that prohibitions in this section do not apply to a public employee retirement fund."
Yes, Unigov, it is exactly and specifically a LOAN.
Deron Kintner, head of the Bond Bank, said in reply to a question in that same regard, that the City is barred from signing for a loan that the developer would arrange, but could actually make a loan.
I will leave it to the lawyers, and perhaps that includes you, to parse out.
But, to put this deal in the best light possible, it is just another example of Ballard's people sidestepping the protections that are built into our laws to protect the taxpaying public.
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