Regular readers of this blog know I have been following closely, the details of this now-approved project since it crawled out from under a rock back in October (in particular, see my blog entries "North of South - Details of Proposed Deal", "MDC To Vote On No-So Deal Today", "No-So Field of Dreams - Lie & They Will Build It", "Council Considers No-So Deal Tonight - Hold On To Your Wallets" & " No-So Bonds - Do They Meet Standards Set By Law?")
Even trying to keep up with this lousy deal as it snaked its way through the process, I was stunned to read a couple of new 'details', expensive to the taxpayer details, in Shouten's excellent report.
One is that the value of the land that Lilly is 'contributing' to the project actually weighs in at $2 million, not $15 million.
The city also gives credit to Lilly for contributing the 15-acre site on which North of South will be built, valuing the property at $15 million. For tax purposes, though, the current assessed value of the 12 parcels set for development is $2 million.
Another is that the $15 million the City paid to Lilly to donate to the project, was in fact, not repayment of a loan long overdue. Rather, it was an early payment due in 2020, on money that Lilly was contractually obligated to put up for the rerouting of Kentucky Avenue around their manufacturing plant on the near southwest side of town. They had to put up that money because the property taxes used as collateral for the bonds the city floated for the project were inadequate to cover the bond payments.
City officials agreed in 1989 to vacate a portion of Kentucky Avenue and spend $36 million to widen surrounding roads to accommodate an expansion of the Lilly Technology Center.And, last but not least, I am beside myself with disgust at the revelation that the developer will get to sell of pieces of the project and pocket profits on those pieces, while leaving the taxpayers holding the bag on unprofitable pieces.
The city sold bonds backed by property tax revenue on the property, but starting in 1997—thanks in part to a new round of abatements, Kintner said—the bond payments due exceeded the property tax payments, triggering an agreement for Lilly to cover the shortfall.
Lilly paid about $13 million toward the bond payments over the years, and would have been entitled to reimbursement from the city of the remaining balance after the original bonds were retired in 2020.
Buckingham could start cashing in profits from the project by selling individual components before taxpayers are paid back in full.Just to remind everyone - Mayor Ballard keeps repeating that his administration values transparency. When they continue, time after time, to withhold important information on deal after lousy deal, then there is NO transparency in his administration. Its called lying by omission.
The hotel, office and apartment phases each are assigned a “base release price” at which the bonds for that portion are considered satisfied. For instance, the release price for an office component starts at about $2.4 million (and falls as payments are made on the bonds).
If the developer can sell that portion, it can pocket any profit above the release price. A potential consequence of the arrangement is, taxpayers could get stuck holding underperforming portions of the project while the developer cashes out of profitable ones.
Now, fellow taxpayers, you and I are underwriting a deal far, far, more risky than anyone ever mentioned.