Monday, January 13, 2014
ROC Investigative Commitee: Little Progress In Unraveling A Major Scandal
The special council committee tasked with investigating the controversial lease agreement that we are led to believe that former Public Safety Director Frank Straub unilaterally entered into with a company controlled by businessman Alex Carroll for space within the former Eastgate Consumer Mall for the Regional Operations Center met again last week. As I noted in a previous post about a news story by WTHR's Sandra Chapman, the City has still not turned over the most pertinent documents related to the highly unusual lease agreement. The corporation counsel's office and the Office of Finance & Management didn't review the legal documents before they were signed off on by Straub, the City-County Council and the Board of Public Safety. According to the Office of Corporation Counsel, files related to the deal went missing when Straub departed the City so it has become necessary to obtain those documents from third parties. OCC says it needs another 30 days to track down the documents that have been sought by the committee for months now. Interestingly, the council's counsel, Fred Biesecker, also informed members of the committee that when he sought the archived video of the relative meetings of the Board of Public Safety where Straub discussed the ROC deal with members of that board, he learned that no recorded videos exist for those meetings.
The meeting last week was quite lengthy. I've provided the video above of only Biesecker's presentation of what he's learned about the lease agreement to date given that all of the key financial documents are still missing. As he notes in his presentation, the agreement is more akin to a borrowing agreement than a true real estate lease, which is why the lease agreement reads more like a bond indenture. The City obligated itself to this borrowing agreement before it formally entered into the lease through the execution of a development agreement with Lifeline Construction Services, LLC under which the City began advancing funds to Carroll for the build-out of the tenant space before the lease agreement received final approval that detailed a more than $14.2 million project that mentions a $1.1 million upfront payment to Carroll's business entity. As soon as the lease agreement with 401 Public Safety, LLC was executed, Carroll assigned his interest in the lease to Wells Fargo, which advanced him an unknown sum of money at the closing in consideration for the City signing some long-term financial commitment to repay the funds advanced to Carroll's business entity. The City is on the hook to pay at least $18.2 million in lease payments over the life of what is essentially a 25-year credit lease agreement; however, when you factor into consideration other financial obligations with respect to the leased space, the obligation is closer to $24 million. Particularly troubling are the "hell or high water" one-sided terms of the deal outlined by Biesecker in his presentation that gives one cause to question whether anyone representing the City's interest was present at the table during negotiations.
As a Republican, I'm appalled by the dismissive attitude and seemingly stone-walling attitude of several of the Republican committee members appointed to this investigative committee. In the case of a couple of the council members participating in the investigation, it is the equivalent of permitting E. Howard Hunt and G. Gordon Liddy to investigate Watergate and their actions to date as members of the committee only serve to reinforce that notion. Let there be no mistake. This a major scandal that has not been accorded the attention it deserves by the local news media, particularly the Indianapolis Star, which is asleep at the wheel as usual when it comes to good investigative journalism. It is unimaginable to me that this is not a criminal matter. There are no indications that either the Marion Co. Prosecutor's Office or the U.S. Attorney's Office has opened an investigation of the ROC, which is equally troubling given the amount of money taxpayers are on the hook to pay. It's just sickening how easy it is for some people to defraud the taxpayers in this city on a regular basis without any threat of criminal prosecution. Keep in mind that these are the same people who want you to entrust them with using a private developer to build, own and operate a new criminal justice center for Marion County using a similar mechanism.