A former mayor of Pittsburgh finds it "gutsy." A New York real estate attorney calls it "extremely unusual.""We don't intend it to be an everyday practice," Kintner tells Swiatek. Just a practice for people who stuff Ballard's campaign re-election committee with big bucks, buy him expensive meals at upscale restaurants and give him free memberships to country clubs. Former Mayor Bart Peterson, now a V.P. at Lilly, is having a good laugh at Ballard's expense at how easy it is to get Ballard to do unpopular things that will ensure his defeat in next year's election, while paving the way for his former deputy mayor, Melina Kennedy, to regain control of the mayor's office for the Democratic Party.
They're referring to Indianapolis Mayor Greg Ballard's proposal, revealed last week, to guarantee an $86 million loan to build a hotel, apartments and office and retail space near Eli Lilly and Co.'s headquarters on the south edge of Downtown.
In essence, the city would be taking on the role of banker by financing the privately developed, mixed-use project. Few cities are willing to go that far.
And, perhaps, for good reason.
The move is fraught with risk, putting taxpayers on the hook for the success -- or failure -- of a $155 million development at a time when there's an oversupply of hotel rooms and office and retail space and most lenders are avoiding new commercial real estate . . .
Ballard's proposal would make the city the mortgage holder on the proposed 14-acre development, called North of South, and guarantee its construction loan with property tax revenues from Downtown tax-financing districts.
In past public-private projects in Indianapolis, such as Circle Centre mall and the JW Marriott hotel, the city became a minority equity investor or financial partner, but it has never backed the main loan with its taxing power on a private project of this size.
"The risk of not doing it outweighs the risk of doing it," said the executive director of the Indianapolis Bond Bank, Deron Kintner. "It just made sense here. We don't intend it to be an everyday practice" . . .
The city has rejected other requests for similar city loan deals from other developers, said Cagann, whose company several years ago submitted a proposal to redevelop the former Market Square Arena site.
"We're encouraged the city is considering alternate financing mechanisms with the current situation in the market," he said, but "it puts a project with city backing in competition with everyone else. I don't understand how they (the city) go about selecting this one over other things proposed."
Tuesday, October 05, 2010
Ballard's North Of South Taxpayer-Financed Deal Fraught With Risk For Taxpayers
It's all about making the city look good for the 2012 Super Bowl and raising money for his re-election campaign. Indianapolis Mayor Greg Ballard could give a damn less how much he is putting taxpayers at risk in a proposed $155 million development project that includes a high-end hotel especially designed to serve Eli Lilly's needs, apartments and retail space called North of South on the southern edge of the downtown area. Despite this being everything against what he stood for as a candidate in 2007, Ballard sees nothing wrong with pouring out tax dollars into a private development and even making taxpayers serve as the principal guarantor. Experts tell the Star's Jeff Swiatek the deal is "stacked with risks" and "highly unusual."