There's another downtown development project in the works. Grab your wallets. A $65 million redevelopment plan by a politically-connected developer will cost Indianapolis taxpayers more than $20 million. That's right. An entity controlled by one of the principal partners of Kosene & Kosene, Market Square Garage/Ops Partners, LLC, will purchase the old Bank One operations center adjacent to the old Market Square Arena site to construct a $30-$35 million mid-rise, 600-unit apartment building and receive a 10-year tax abatement for its investment. City taxpayers will be asked to purchase the existing parking garage for $18.5 million from the development under an installment loan agreement.
[UPDATE: Yesterday, the Star's John Ketzenberger's online story identified Kosene & Kosene as the developer. His story in today's Star identifies Tadd Miller, "a one-third partner in Kosene & Kosene", as the the developer of this property. "Kosene, which is not part of Miller's new development, has struggled with a high-end development in Florida that opened just as the real estate market crashed," Ketzenberger writes. "This is an opportunity to have market-rate apartments near the core of the Downtown for very little incentive from the city," Ketzenberger quotes Deputy Mayor Nick Weber as saying." Both Miller and Kosene & Kosene have been big political contributors according to campaign finance records posted online.]
The city's payment to the development magically will equal the developer's loan payments to Regents Bank, its lender. The garage is currently owned by Kanawha, LLC, an entity headed by Lewis Smoot. The City, in turn, will sell 600 parking spaces to the developer for an amount equal to $100,000 a year, plus an amount equal to any property taxes abated. After ten years, the parking fees will fall to $100,000 a year for the next 10 years. After 20 years, the developer agrees that property taxes and payments to the City combined will equal $600,000. The City plans to use parking revenues from the balance of the parking spaces in the garage to pay down the cost of purchasing the garage. Oh, and did I mention that the developer gets to operate the parking garage, which supposedly will provide 1,000 spaces to the public at market rates? Or that the developer can, in turn, enter into an operating agreement with a community development corporation to operate the garage? And then there's this kicker. After the development goes foward and if the City decides it wants to purchase part of the property for a public safety facility, it will pay market value to the developer for the property it purchases, which should have escalated nicely by that point.
This proposal goes before the unelected Metropolitan Development Commission for approval this Wednesday. It is an absolute outrage that the Ballard administration is proposing yet another multi-million dollar give-away to a politically-connected developer at a time the City is struggling so much financially. If the purchase of the garage is economically-feasible, then why doesn't the developer team up with Denison Parking or another private garage operator to make this deal happen? Would the City even consider a deal with this developer but for the large political contributions the principals have made over the past several years? It's the same pay-to-play bullshit that has brought this city to financial ruins. $25 million for Kite's Conrad Hilton, $20 million for the Simons corporate building, plus a parking garage, and now $20 million to Kosene to purchase a garage to finance the development of another apartment development downtown. Where does it end?
I would tell you to contact members of the Metropolitan Development Commission, but they won't talk to you outside the meeting. At least a couple of the members, however, read this blog regularly. If you want to let them know how you feel about this deal, you'll have to appear at Wednesday's hearing and ask to speak at the appropriate time. The purchase agreement and tax abatement resolutions should still be subject to approval of the City-County Council following the MDC's action, which I can assure you is already a fete de compli because the administration supports it. I hope someone on the City-County Council questions the wisdom of yet another multi-million dollar give-away to a big political contributor.
Lest we forget that today brought news of GM's official bankruptcy filing and the announced closing of the big auto maker's Indianapolis stamp plant next year, meaning the loss of more than 1,000 high-paid manufacturing jobs. “I am disappointed that General Motors’ bankruptcy will result in the Indianapolis stamping facility being closed by December 2011," Mayor Ballard said in a press release today. "GM has been a part of our community for decades, and its Indianapolis employees have positively contributed to our City in immeasurable ways." "These employees and their families are undoubtedly experiencing great uncertainty right now, but they are the reason we continue to work to position our City for new growth and economic development." "This is a sad chapter for GM, but Indianapolis is much more economically diverse than it used to be, and continuing our efforts to diversify will help our community and our capable workforce weather current and future business downturns.”
UPDATE: Stop The Hijack blog has a post on another questionable resolution before the MDC on Wednesday. Neighborhood concerns are being raised about a plan to turn over several parcels on Martin Luther King Drive to UNWA CDC, which will partner with a private developer on a senior housing project. The blog notes that these are the same parcels the City purchased from the CDC a year ago.
UPDATE II: An updated story by the IBJ's Cory Schouten describes the deal accurately.
"A proposed incentive deal designed to kick-start development adjacent to the former site of Market Square Arena calls for the city to fund the entire purchase price of two prime parcels," Schouten writes. "He’s developing the project as his first solo project, but said he may eventually bring Kosene onboard as an equity partner. A project timetable estimates the city and developer will close on the garage deal and the loan by July 31." "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 pricy 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." Go here to comment on Schouten's Property Lines blog post.
26 comments:
I am by any empirical measure the most ardent hater of Bart Peterson ever recorded. I ran bartpeterson.com. I made fun of his every move.
But now all I can say is, Buck Fallard. I've had it. This is corruption on a level that would make Chicago sit up and take notice.
Unless the Dems nominate an animal molesting Nazi in 2011, I will not only vote Dem I will actively work for them.
Pardon my language.
I agree with what you wrote, but if they MUST continue on with these tax abatement fiascos, they should knock them down to 3-5 years. I fail to understand why '10' is always the magic number.
Give them a little time to get up and running - then either make or break it on their own.
My calculation on parking:
600 spaces x $90/mo x 12 months = $648,000
So the parking ALONE is worth more than what the entire package is being priced at. (And I used what I think is probabluy a lowball monthly parking rate)
But I fail to see how we can possibly come up with $18M to fork over on this, when the CIB is in need of $47M
Wow, this really stinks of rotten pork.
DI, it particularl incenses me when they privatize something then hand out a 10 year contract. The whole idea of privatization is to instill competition into the delivery of government services. You give a company a 10 year contract and you've given them a government protected monopoly.
OMG! I loved, loved, loved BartPeterson.com !
I also loved it that Bart was so stupid he didn't buy his own name.com
What a retard.
That site was great!
What time is that meeting on Wednesday?
Here's another link for you:
http://eyeonindianapolis.blogspot.com/2009/06/just-when-you-think-things-cant-get.html
I'm all for doing something with that former Bank One Ops Center eyesore. But for $20 MILLION??? Holy Schmoly!
I think if I ever win the Powerball I am going to donate a lot of money so that I can get in on the kick backs. I guess it's like giving to PBS. Give 6o bucks and you get a card and a mug, give 100k and get a free parking garage. It's good to be king. All Hail King Fallard!
The meeting is at 1:00 pm in the Public Assembly Room on the 2nd floor. The MDC is prepped on these resolutions at a pre-meeting and usually have already made up their minds. I knew this was going to happen and there is almost zero chance of it being defeated, but if no one speaks up, nothing will ever change. Of course, everyone will ask whether we would rather have a gravel parking lot as if the existing situation is and was the only option for this property. It is a gravel parking lot, because the city won't put the property on the open market; the city does not help development; it hinders it by rewarding thievery. The problem is that certain people believe that we should have a downtown consistent with the 13th largest city, despite the fact that we are really closer to being the 40th largest city (Metro area size means so much more than consolidated city-county boundaries).
Council will not look at the abatements; those are approved by the MDC. Council will have to sign off on the entire theft package. Theoretically, the abatements could be in place without the rest of the deal (theft).
By the way, city employees park in that garage, so the spaces being counted as revenue for the city would actually be an expense to the city. So, unless the city workers get thrown out of the garage, the cities contribution will be much larger than indicated. As of now, that garage is usually closed on weekends, not even the Pacers, being a little more than a block away, generate the need for this garage, so I am not sure where the revenue will come from even if the city workers are gone. I suppose the gravel parking lot parkers might use it, but if I were them, I would seek other alternatives.
I would add that the downtown apartment market is extremely strong. Why is our city government subsidizing the development? I don't have a problem with government improving infrastructure, but when they start giving taxpayer money to private business, that's different story
I thought this involved the Market Square site; so apparently an even worse deal will be coming down the pike for that property, since the garage was supposed to be tied to any development of that site. And, by the way, the downtown Ponzi scheme continues as this subsidized development begets a subsidized development of a yet-to-be determined scope.
Deja Vu
Here we go again trying to have the City become a business entity by buying concrete. We can no longer blame past administrations for the current crisis. No thinking has changed. Oh, how many freebe parking places will be set aside for the city-county employees. Hmm, very convenient walking distance to the City-County building.
As far as your update, Gary, why is Maury Plambeck, still working for the Ballard adminstration as head of DMD? He was appointed by Peterson. Plambeck is the one who signed off on the Pan Am giveaway that cost taxpayers $6 million as the Peterson people were on their way out of office after his election defeat.
Paul, Plambeck doesn't make these decisions involving large public investments. Those decisions are made in the mayor's office and always have been under every administration.
Ah, he's just a tool used by those in power then. Sort of like Ryan Vaughn.
Actually Maury Plumback was a Goldsmith appointee held over by Peterson...and then held over by Ballard....
FROM HFFT site:
Tax Activists needed to RAISE HELL tomorrow at 1pm - City Hall
What: Metropolitan Development Commission Public Hearing
Why: Proposed $20 million to give to Kosene & Kosene Developers
Where: City County Building - 2nd Floor Public Assembly Room
When: Wednesday, June 3rd @ 1pm
Yep, this is short notice, but we need you to spend your lunch hour at the City County building Wednesday at 1pm to raise hell with the Metropolitan Development Commission. The MCD is a board of non-elected appointees who are itching to spend your money again.
Even though the CIB is coming up $47 million short without raising taxes, our so-called "People's Mayor" Ballard thinks we've got $20 million to give to a private real estate developer!
The city wants to give away another $20 million of your money to Kosene & Kosene, to develop property near the old MSA site. Kosene & Kosene is known as a pay-to-play developer according to Indy Star reporter John Ketzenberger's sources. Who knows what Kosene and Ballard's people are doing behind the scenes to get this deal moving so quickly.
HFFT has begun to alert the media who will likely be there. Make sure you are there and together we can stop this by making a big stink in public about it!
It's up to us to stop it. We CAN do this!
Wouldn't it be nice if they would take that money and apply it to something like the City Market? I would be much more willing to pay more taxes to fix an institution like that than a development that might or might not work out.
And...Republicans...next time a candidate has a slogan saying "Had Enough?"...ask more questions.
Why is the MCD not elected? Are they appointed by the Mayor? Seems like a board responsible for spending tax payers money would/should be elected and accountable for their actions to the citizens they "represent"....On a side note, I'm learning quiet a bit from this blog and all the posters. Keep up the great work!
Sounds like the taxpayers are buying when they already bought, ie, land that MSA sat on until it was blown up.
Am I wrong?
We keep buying the same things over and over here, don't we, and yet, we can't use or get into the places we've bought unless we pay MORE money.
For example, MSA. We paid to build it, we paid to blow it up, and in between we paid to go see concerts in the place that we couldn't hear well because the acoustics sucked.
For eample:
See Hoosier Dome
See Conseco
See Lucas Oil Stadium
For all I know the taxpayers, us, are still paying for the canal project that failed in the 1800s.
"Sadly, the rest of the Central Canal never saw water. The state had borrowed the money to fund the Mammoth
Internal Improvements Act from bankers and investors at five percent interest. From 1837 to 1839, a severe
depression and financial panic gripped the nation. By 1841, Indiana could not even pay the interest on its internal
improvement debt, much less the principle. The state was bankrupt."
http://www.indianamuseum.org/uploads/docs/Central_Canal.pdf
Think, I-69 extension...
Plambeck became DMD director under Peterson after becoming Administrator of the Division of Planning. He became a section (part of a Division) administrator under Goldsmith.
Who is the city paying to purchase the property? So we're buying property and giving it to a developer?
A couple of points - I have been told that the MDC will not take public comments on the purchase/deal as they are not required to do so. There will be a public hearing on the abatement, likely in two weeks on June 17 - regularly scheduled 1:00 meeting.
There is however, a little known economic development committee of the MDC that will hold a meeting to gather information about the proposal at 11:00 am in room 2160 of the CC building. That is a public meeting. There is the usual 'pre-meeting' of the MDC where they get updates on a variety of issues over lunch. Same room, noon. Also a public meeting. I know they do not allow comments from the public at the noon meeting, not sure about the 11:00 one.
As for contacting MDC Commissioners, the public is banned from contacting them about zoning matters, but not about other matters. In addition I suppose that a Commissioner could ask for the public to be heard on an issue, even if it is not required by law or procedure.
The Commissioners are appointed by three bodies - 2 by the County Commissioners, 3 by the Council, and 4 by the Mayor.
Sorry, forgot one more important point. The City-County Council gets NO say in any of this.
There was legislation to allow review of abatements by the Council, but that failed.
As for the $18.5M deal, it somehow is immune from both public comment and Council review.
Jon,
You have a good point about the "Had Enough" slogan. I would point out that both parties have been $elling out the $ity for quite some time. Any Democrat on the Council can make a stink about this. But do you think any of them will? Absolutely not. So you can't just blame the Rs
Paul, we've agreed on this before. When it comes to privatization, the emporer is wearing no clothes. Privatization is sold to the public as a cost savings measure, but in reality, it is nothing more than privatizing the profits while making the losses public.
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