Is There Enough Oxygen on the 25th Floor?

What's with the folks who reside on the 25th floor of the City-County Building? Mayor Greg Ballard's Office, by the way. Is there enough oxygen that high up? Maybe we should send in some testing equipment.

I tell you why I am concerned. Its that wacky, light-headed way they have for figuring out how to generate new revenues for our City. Well, that's the ideas that are generated on the 25th floor, not those thought up on the lower floors or, even better, outside the Building altogether.

Good idea : Raising fees to cover costs in the new Office of Code Enforcement (OCE). I actually support this effort. There was an analysis done to calculate cost of services performed and the fees were set to those calculated costs.

Bad idea : The Mayor not standing up to the Greater Indianapolis Chamber of Commerce (GICC) and supporting the new Office of Code Enforcement THAT HE CREATED and which was always envisioned to be fee-supported. The introduction of this ordinance has been held up because GICC is supposedly worried about the cabbies. LOL !!!! Complaints about taxis are the number one category of complaints to public safety. Vehicles in poor condition, failure to speak English, refusal of credit cards, overcharging/surcharges, refusing short trip fares, lack of directional knowledge, illegal parking, unsafe driving, and failure to return lost goods are the topics of those complaints. According to OCE, IMPD and the hospitality industry cites cabs as a major downtown concern. Well you can't fix the problem with no money. Pretty simple.

Good idea : Raising fees to cover costs of zoning, variance, and related petitions in Current Planning of the Department of Metropolitan Development. Well, this one could have been funded in other ways. But, at budget time it was decided they would go fully fee funded just like OCE. Again, there was a cost of services analysis which was used to establish the individual fees. This new fee structure was approved by the Metropolitan Development Commission and the three Boards of Zoning Appeals after Councillor Lincoln Plowman and the Marion County Alliance of Neighborhood Associations spoke in favor. The Mayor sent nobody to support what HE DECIDED SHOULD HAPPEN.

Bad idea : Selling off parking meters and letting future downtown parkers pay exorbitant prices to park. Sounds like a sure fire way to get businesses who like having customers to move to the burbs. Idea generated on the 25th floor. See what I am saying? Paul Ogden over at Ogden on Politics has an entry on this proposal today.

Bad idea : Supporting a 35% hike in water rates so that you can build equity and privatize the company for an up front wad of dough. Water rates should be dependent upon the cost of delivery of said water. There should not be another increment to bankroll a privatization deal. Even if the expenditure of that wad of dough is on neighborhood infrastructure - which we really cannot count on. More likely the infrastructure in front of businesses will get the lion's share of any expenditures by this administration. All for the economic development thesis that spending tax money on businesses and granting abatements to businesses will, in some unspecified distant day, make Indianapolis better for its residents. I hope the IURC protects the water company customers from any portion of the rate hike that is not directly tied to the delivery of safe drinking water.

Bad idea : That wacky abatement deal with TM Miller Enterprises where the City would become owner of a downtown garage for more than it cost to buy that garage. Again the tag line is economic development. Again, an idea from the 25th floor. By the way, my recent inquiry for a copy of the deal came back with the response that the deal still is not finalized. Maybe there is hope for the 25th floor yet.

Bad idea : The latest loophole in the laws governing abatements seems to have been discovered - on the 25th floor !! The City has the legal right to grant abatements to businesses with the approval of the MDC, and in the cases of abatements in Tax Increment Finance (TIF) Districts, with the additional consent of the City-County Council. When an abatement deal is constructed, the business agrees to certain jobs goals or investment dollars in return for the abatement. Should those jobs goals or investment dollars not be met, they have to give back a pro-rated share of the property tax dollars forgiven -- its called the 'claw-back clause'. Property tax dollars are distributed to the schools, the library, the City-County, and the Townships, etc., in proportion to their tax levies. The Schools get more than half and the City-County gets about a fifth. But, the 25th floor is claiming that when an abatement deal goes belly up, IT should get ALL of the money clawed back from the business. Now, it might be legal, but it ain't right. Furthermore, what ain't also right is giving that money to the Indianapolis Convention and Visitor's Association and the Indiana Economic Development, Inc., instead of fixing sidewalks and putting in sewers and any number of infrastructure improvements that are always in the 'some day when we have more money' category of City priorities. Gary Welsh at Advance Indiana has a blog entry on this issue today.

Funniest idea : You have to admit that the spectacle of KFC vs PETA both vying to advertise on IFD smoke detectors and fire extinguishers is classic urban theater. Got to love it !! I'll even give the 25th floor props for the levity generated for only $5000 in freebies.

So, another day and another wacky idea from our most powerful floor of the City-County Building. But, really, is there enough oxygen up there?

Dramatic Week for 450 E. Market Street (Bad) Deal

No doubt the Mayor's Office was celebrating its victory over common sense this week.

The abatement and horrible deal surrounding it passed a Council vote and a vote in the Metropolitan Development Commission. Now all that awaits is inking down the deal, which even after much ado made about how a delay would cripple the financing, may not happen until late December.

The deal is for the City, and its taxpayers, to assume repayment of a loan for $19.5 million that is being arranged by TM Miller Enterprises with Regions Bank to buy the whole city block at 450 E. Market Street and the parking garage just north of it. TM Miller Enterprises will take ownership of the block for free while the City, and its taxpayers, take ownership of the garage for the full price of $19.5 million.

To abide by state law, the City had two appraisals done for the garage. Unfortunately for the taxpayers, current value appraisals weren't going to get the high numbers Mayor Ballard needed, so he authorized future values; clearly twisting state law and circumventing the intent of the law to prevent overpaying on taxpayer purchases - whether the intention be good or the intention be nefarious. The last sale of the garage in 2004 was for $10.5 million, which matches its assessed value for tax purposes. The $9 million disparity between actual value and purchase price was a problem for many who cast votes against the deal this week.

The deal is very complex in construction, but it all adds up to the fact that the City will take all the risks and TM Miller Enterprises will get a city block for free. In fact, he also gets to buy one third of the garage back from the City for $2 million -- when the City just paid $7 million for that same third, for an immediate loss to the taxpayers of $5 million.

The taxpayers also take a hit with the closing of the two gravel parking lots on the old MSA site that provide the CIB with about $790,000 a year in profits. This is the CIB for which Mayor Ballard has spent the good part of 2009 trying to get more and more tax money. Someone tell me where the logic is here on Mayor Ballard's part? The only consistent logic I can see is if Mayor Ballard just assumes there is always more money that can be wrestled from our pockets.

The deal has been documented by the Star (Jeff Swiatek), WTHR (Mary Milz), FOX59 (Derrick Wilkerson), the Indianapolis Business Journal (Scott Olsen), and an editorial in today's Star. You can view Monday night's Council hearing, which technically was on the zoning for the parcels, and Wednesday afternoon's MDC hearing, which was on the abatement at the core of the deal, on Channel 16's archives. For the Council - click HERE - then on 'video' for October 5, 2009. For the MDC - click HERE - then on 'video' for October 7, 2009.

The reason I am logging all these citations is because I have this huge nagging feeling that there are shoes waiting to drop. Whether it is in the list of names of future investors in this project, until now firmly held secret, or the word that the City's projections for paying off the garage loan are not coming to fruition, or something else entirely.

While I have disappointments in the obvious politics that took place in the 13-12 Council vote to support the zoning and in the 7-2 vote by the MDC to approve the abatement, I must say that I am rather more encouraged than disappointed. The risk will play itself out and what happens will happen. Mayor Greg Ballard will have to shoulder any shortfall for the CIB budget in 2011 and somehow explain to the taxpayers why we should bail them out yet again when Ballard himself saw no problem in undercutting their ability to raise revenue on their own hook.

Those Councillors who voted against the deal were Republicans Lutz and Hunter and Libertarian Coleman, who joined Democrats Bateman, Brown, Evans, Gray, Lewis, B. Mahern, D. Mahern, Mansfield and Oliver. Those who voted for the deal were Democrats Nytes and Moriarty-Adams, who joined Republicans Cain, Cardwell, Cockrum, Day, McHenry, McQuillen, Pfisterer, Plowman, Scales, Smith, and Speedy. Councillors absent were Sanders, Malone, Vaughn, and Minton-McNeill. Councillors who wish to cling to the idea that they were voting merely on a zoning matter, either authentically so or just for public cover, surely knew that killing the zoning would kill the deal.

The two Commissioners who voted against the deal were President Randy Snyder (Council appointee) and VP Jim Curtis (County Commissioners appointee). Voting for the deal were Mayoral appointees Diana Hamilton, Tom Morales, Dorothy Jones, and Lisa Kobe, Council appointees Tim Ping and Jason Gaines, and County Commissioner appointee Scott Keller. Commissioners who wish to cling to the idea that they were merely voting on an abatement, either authentically so or just for public consumption, surely knew that killing the abatement would kill the deal.

The reason I am more encouraged than discouraged is the effort Councillors Brian Mahern and Joanne Sanders put into trying to get a review of this bad deal before the Council. Mahern in particular did a yeoman's job of getting on top of this complex deal very fast. His summary of reasons to vote against it would have won the day, had party politics not been in play. Furthermore, I see real energy now to try to convince the State Legislature to give the Council the ability to review abatement decisions of the MDC, in the same manner they now review any zoning decisions of the MDC. We desperately need that legal capability for checks and balances on any Mayor of Indianapolis. And, we need for the public to be able to raise concerns that will be heard by an elected official. Right now we get little to no notice of pending abatements. Even the MDC got 48 hours notice of this one. We, the public, are denied documents simply to keep us in the dark as long as possible while the abatements are rammed through the MDC as fast as possible. In addition, there is energy to try to get State law changed so that these appraisals are not shielded from public review. I would further like to see energy behind changing State law so that future value cannot be used in appraisals, solidifying the protection of taxpayers from this scheme in the years to come.

So, a long, frenetic week capping a bad deal proposed by Mayor Ballard's office back in early June. Its good to be Tadd Miller. Its bad to be a taxpayer in Indianapolis.

MDC to Hold Public Hearing on Abatement for 450 E. Market

The Metropolitan Development Commission is slated to hold a public hearing this Wednesday, September 2, on the proposed abatement for 450 E. Market Street. You may recall that this abatement is the central feature in a complex deal between the City and TM Miller Enterprises to rehab the old Bank One Operations Building into apartments and retail. Through the deal the City would become owner of the parking garage just north of the block TM Miller Enterprises would get for free.

Even if all goes as hoped for with the planned development, there will be a net loss of property tax revenues reaching over $1 million in the first two and half years and a net loss of property tax revenues of $43,000 each year after. In addition, the Capital Improvement Board stands to lose $800,000 per year in revenue from the surface parking lots it owns on the old Market Square Arena site, if the City gets its wish that a variance to avoid paving those lots is denied an extension. It is unclear how profitable the parking garage can be without the surface lots closure, driving customers to the garage. More on how these number are calculated in a later blog entry.

See here for a description of the deal. The hearing would begin at 1:00 pm in the Public Assembly Room of the City-County Building.

MDC Public Hearing on TM Miller Enterprises Abatement

The Metropolitan Development Commission will hold its public hearing regarding a proposed abatement for 450 E. Market Street on July 1 - 1:00 pm in the Public Assembly Room of the City-County Building.

This is a continuation of the effort by the Ballard Administration to craft a complex deal with TM Miller Enterprises that would leave the City to pay the loan for the acquisition of both the 450 E. Market site and the garage just north of it. The proposed abatement would be for 10 years and amount to about $6.7 M. In a twist, TM Miller Enterprises would return the abated taxes plus $100,000 per year to purchase 600 spaces of the 1677 space garage.

A number of citizens spoke against the purchase of the garage during public comments before the MDC on June 3rd.

I am still awaiting information from the City regarding their authority to use future market value instead of current fair market value of the garage in determining the fiscal propriety of the purchase. In addition, I still await information from the City regarding their authority to make the purchase while avoiding the requirement of a public hearing on the purchase AND review by the City-County Council.

Although the abatement is the central feature that makes the whole deal work, it is not yet finalized and cannot be finalized until the public has had a chance to give input. That, as mentioned above, is set for July 1 at this time.

IPS 2nd Biggest Loser in Proposed TM Miller-City Deal

The public is certainly the biggest loser in the proposed deal for the City of Indianapolis to aide TM Miller in developing the abandoned Bank One Administration Building into apartments and retail spaces. In the deal, the City would purchase the 1600 parking space garage across the street by making all the payments on a $18.5M loan for both parcels. The City would grant TM Miller a 10 year abatement that would amount to $6.7M in that time. Meanwhile, TM Miller would purchase from the City, 600 parking spaces - paying the amount of that year's abatement plus $100,000.

It has been extremely curious to me why that circulation of the abatement money is part of this deal. I haven't settled on anything at this point. But, it is clear that the 2nd biggest loser will be IPS.

Abatements are a forgiving, if you will, of a percentage of the property tax bill owed on a parcel. In this case a 10 year abatement would begin in year one with 90% of the bill forgiven, followed the next year by 80% forgiven, followed by 70% forgiven, etc. This straight line frontloads the tax benefit to the property owner.

In Marion County, roughly half of all property taxes collected go to the schools. So, over 10 years, about half of the City's generous abatement offer to TM Miller would actually come out of IPS's cut. There are two more complicating factors here to consider. In the pre-tax cap days, granting of abatements just increased the tax on the rest of the taxpayers, so IPS would not be out a dime. But, with the tax caps fully engaged in 2010, it would not all be recouped by higher taxes on all taxpayers, since many would have hit the cap.

So, it is difficult to say without a complex mathematical model of Marion County property, but IPS will surely see a drop in property tax collections due to this deal. It would be anything up to $600,000 in the first year and up to $3.4M over 10 years. That's just this one deal. Keep adding deal upon deal upon deal.

It is incumbent upon the decision makers to find the real hit IPS would take and to seriously consider the impact.