Wednesday, August 08, 2012

Ballard Pushing Ahead With Plans To Auction Off City Hall

Unless FBI agents show up to the 25th floor and escort Mayor Greg Ballard out of the City-County Building in handcuffs, there may not be any city assets left before he finishes his second term in office. The IBJ's Kathleen McLaughlin reports on Ballard's continued push to privatize the CCB based on a fantasy land notion that a private management company can manage one of the City's most valuable assets better than the municipal authority that has been managing it and leasing it to city-county agencies at rock bottom rental rates since it was first built more than four decades ago.
Indianapolis Mayor Greg Ballard’s office is reviewing proposals from five commercial property managers that want a crack at running the City-County Building for the next 30 years.
One of the bidders, who did not want to be named, said most of the proposals would provide the city with a substantial upfront payment—without increasing the city's annual cost of occupying the downtown high-rise. But the official who has been in charge of the building for decades doesn't see how the city can get cash out of the deal without an increase in costs elsewhere.
“How can anybody do that?” asked Ron Reinking, general manager of Indianapolis-Marion County Building Authority. “There are so many costs that are going to be fixed. I’m not sure how you can squeeze anything else out of that.” . . . .
Ballard decided this summer to open the City-County Building to private management because he opted for the city to take title to the building Aug. 1. Previously, the building authority held the title and leased the building back to city and county agencies, which include the Marion County court system and the Marion County Sheriff, which has a jail in the building. 
City Director of Enterprise Development David Rosenberg hoped the prospect of entering a long-term pact with a reliable tenant would be so attractive to commercial property managers that they’d offer upfront cash. The city would spend that money on other infrastructure improvements.
According to the Ballard administration meme, a private property management company can afford to pay a big upfront payment to the city for the right to manage the building and charge rates comparable to what city-county agencies are paying the Marion County Building Authority. If it sounds to good to be true, it probably is. The city's lease payment for the entire building last year was $4.85 million, which translates to about $7.29 per square foot compared to the $19 per square foot rate being paid for Class B office space downtown according to McLaughlin. That includes all utilities and 24-hour access to the building's parking garage. So who is lining up to take the building off the city's hands?
Four national firms are in the running: CBRE Inc., which expressed an interest back in June; Jones Lange LaSalle; Cassidy Turley; and Colliers International, according to a person close to the bidding process. Gordon Hendry, first vice president at CBRE, confirmed that his firm submitted a proposal, which he said remains confidential. “We’re very excited about the [proposal]. We think it’s the right step for the city to be exploring this.”
Yeah, that would be the same Gordon Hendry and CBRE Inc. to whom Ballard awarded a no-bid real estate brokerage agreement concerning a one-block stretch along Mass Avenue that currently houses a fire station that Ballard wants to see redeveloped. Hendry's firm stands to make a million-dollar plus commission for work that could have, would have, should have been performed by city workers for no additional cost, but Ballard decided just to throw away a million bucks or more for the hell of it. Ballard is demanding city-county council approval of an expansion of the downtown TIF to include all of Mass Avenue so he can divert property tax revenues from other taxing districts to pass out to private developers to redevelop in an area that is already experiencing impressive redevelopment without any government handouts. As I reported earlier today, Ballard has told councilors pushing approval of domestic partner benefits for city workers that he won't sign their proposal into law unless they give him the TIF district expansion he is demanding.


guy77money said...

Perfect politics, put the city so far in debt and limit the revenue coming in so when the Democrats finally take the mayors office the Republicans will blame them for the city's financial problems. Eventually the city will have to raise taxes to pay for all of the horrid management decisions the Ballard (Barnes and Thornberg) administration has showered upon the city.

MacReady said...

I will say this much in regard to Building Authority: it's one of the best unknown things going in local government.

You can't so much as hammer a nail into a wall ANYWHERE on city property without having Building Authority do it for you. And that's at a cost easily 10 times what anybody else would charge you. Municipal entities grossly overcharging other municipal entities is a great way to essentially "launder" your way into an overinflated budget.

To an extent it's a union thing, but they don't pay their people much of anything so who knows where the money goes.

A similar thing happened in Perry Township. One of the schools wanted to expand their fitness area and update some wiring. A father of one of the children was a general contractor and did it for free. The Union-sponsored entity contractually obligated (entitled) to do ALL work on Perry Township schools was so pissed off they came in, updated some "code violations", redid it all over again, and sent the school a bill for $50k.

Indy Rob said...

MacReady, note that the money being laundered by having one government entity bill another has no net tax implications, where as hiring outsiders to do work almost always increases costs.
In the case of the building authority, they are charging for space at half of the prevailing rate for leased office space. The costs for commercial leased space is always based on demand and supply.
Selling the CC building to a commercial entity means that the city will end up paying commercial rates for the building lease and it is very unlikely that maintenance costs will decrease.

Citizen Kane said...

It shouldn't be a separate entity, whereby each division pays its own rent. It should just be a department of the city with a budget like any other.

And, by the way, they don't belong to a union; it is not the same as the schools.

Some of their workers are not of the highest quality, but there is no way it can be done for less per square foot. The city-county building operates on a shoe-string. There are no frills.

Gary R. Welsh said...

The building authority exists as a separate municipal corporation because that was the city's way of circumventing the debt limitation imposed by the state constitution. Ditto the Capital Improvements Board, Airport Authority, Health & Hospital Corporation. On the unionization issue, even if the city were to privatize the operation of the CCB, it would still be required under the law to pay the prevailing wage rate for any construction/repair work performed if the cost of the work is above the statutory threshold. If you want to complain about the union work, look at big construction project like the new Wishard Hospital which enter into these labor agreements that only permit union contractors to bid on the work.