Joanne Sanders, the Democratic minority leader, said she would rather see the money help the IndyGo bus system and the library, whose budgets have been slashed because of the recession. "We're doing this for a private entity," Sanders said, "but we have two government entities dying on the vine."The first question to be asked is what, if any, role Vaughn's law firm, Barnes & Thornburg is playing in this transaction. As we've seen with almost every major transaction undertaken by the Ballard administration, there seems to be a Barnes & Thornburg connection.
Council President Ryan Vaughn, a Republican, said the project "goes a long way to stabilizing and securing the large corporate citizens of Downtown. It breathes some life into that part of Downtown."
Next, as I've written about on many occasions in the past, Pay To Play Is The Ballard Way. Sure enough, that's the case with this deal:
Buckingham -- whose president, Bradley Chambers, donated $10,000 to Ballard's mayoral election campaign, according to public campaign records -- hopes to start construction on the 10-building project late this year. Construction would take two years, with a 152-room Dolce-brand hotel being one of the first things to open in 2012, perhaps in time for the Super Bowl that Indianapolis will host in February 2012.Is it the case as one reader asks that the public relations work for this project was being aided by Hirons & Company? That would be the same firm that hired Greg Ballard, Jr. and started getting all kinds of work from the Ballard administration, which Ballard assures us has absolutely nothing to do with his son working for the company.
We know Lilly is donating the land for this project, which the City has grossly over-valued at $15 million, sort of the way they did that parking garage for Tadd Miller's project next to the City-County building, which was supposed to get underway within 9 months (it's now been more than a year later, but we'll save that one for another post). We learned from the Tadd Miller project the City uses a bogus appraisal method in violation of state law that projects what a piece of real estate is worth post-development as opposed to pre-development.
The Lilly land, valued at $15 million and used by Lilly for employee and vendor parking, has become an "idle asset" as Lilly's work force shrinks, said Lilly's director of strategic real estate, Steve Van Soelen.
Lilly and its employees stand to benefit by having a hotel, new apartments and a YMCA adjacent to its corporate campus, he said.
Lilly also would put about $15 million into the project from money the city owes Lilly from a project done at Lilly's technology center campus off Kentucky Avenue in the 1990s, Kintner said. The city plans to pay off that debt with a lower-interest loan, and Lilly has agreed to put the proceeds from the payoff into the North of South project, Kintner saidLilly is being credited with $15 million the City owes it for the Kentucky Avenue project from the 1990s? What about all of the millions that the City is supposed to be clawing back from Lilly because it failed to meet its job creation promises after the City awarded it hundreds of millions of dollars in tax abatements and other incentives and instead shed thousands of jobs at its city facilities over the last several years. See these past headlines: "Eli Lilly Gets Indianapolis Incentives of $214 Million for $1 Billion, 7,500-Job Deal"; "Eli Lilly To Layoff 5,500 Workers Mostly in Indiana". Presumably, Lilly is putting people up at other hotels in downtown currently. What impact will the loss of that business have on those downtown hotels and has anybody bothered to factor that into this equation? And please, Lilly employees could care less about having a YMCA near their campus. Don't insult our intelligence.
The City claims its investment in the deal is relatively small compared to other recent projects:
Kintner said the city's $9 million direct investment in the project amounts to only 6 percent of the total project cost, much less than the 25 percent to 30 percent direct city investment in three other recent Downtown developments: the JW Marriott hotel, the headquarters of Simon Property Group and the Conrad Indianapolis Hotel.
The City's investment is small if you assume the developer doesn't default on the $86 million debt obligation the City is taking on with this transaction and stick taxpayers with paying it off, which is a real possibility.
Kintner said the city-guaranteed bond to the project is meant to be paid back using $7 million a year in anticipated profits and property taxes from the project.I lay 9 to 1 odds right now this project willl not yield the $7 million a year in anticipated profits and property taxes.
So how much is the big Ballard contributor putting into the project, who claims who couldn't obtain conventional financing for the deal?
Other private money in the deal is $7 million from Buckingham. The city also is working with the state of Indiana to steer $6 million into the project through a Community Development Block Grant or other federal grant.
Not bad for Buckingham. A 5% investment in a $155 million project. See what I mean when I say Welcome To Fantasyland?
We also have Lilly donating land that is supposedly worth $15 million, which we know is really worth a fraction of that amount. We have some mystery money supposedly owed by the City to Kentucky for its Kentucky Avenue project from more than a decade ago but no mention of the clawback money owed to the City by Lilly from the tens of millions in past incentives that failed to create the requisite number of jobs promises. We now know state taxpayers are being asked to kick in another $6 million for the project, even though Gov. Daniels is slashing state agency budgets and laying off state workers left and right. Like I said, it's more of taxing the poor to give to the rich. Are you going to stand for it? Or are you going to pick up the telephone and start calling your councilors and the Mayor's office to express your outrage?
UPDATE: A commenter on the Star's website has a good summary of who is paying what on this project, noting 84% of the project is being financed with public dollars:
$86 Million - Indianapolis Bond Bank
$15 Million - City of Indianapolis (Payment thru Eli Lilly?)
$9 Million - City of Indianapolis (utility/sidewalk/roads)
$15 Million - City of Indianapolis Lease of Eli Lilly Parking Lot
$6 Million - State of Indiana through a Community Development Block Grant
$18 Million - YMCA
$7 Million - Buckingham Companies
None - Dolce Hotels and Resorts
None - Wellpoint
None - Indiana Farm Bureau
$156 Million Total Project Cost
84% Government Funding - $131 Million
16% Private Funding - $25 Million