Marion TIF Funds Provided To Mayor's Business Partner, Later Let Off The Hook Financially

The Marion Chronicle-Tribune exposes more transactions involving the use of tax increment finance district funds by the city that benefitted businesses owned by the business partner of Mayor Wayne Seybold, who is seeking nomination at next month's state GOP convention for the office of state treasurer. In the latest disclosure, the Chronicle Tribune reveals two transactions where loans backed by TIF district revenues were made to two businesses, Western Place and Active Properties, both owned by Jim Swan. According to the newspaper report, Swan co-owns with Seybold a portable ice rink company, Ice Rinks 2 Go. Swan is also a member of the city's Board of Public Works and Safety, whose board members are appointed by the mayor.

In December, 2008, city officials approved the use of $1 million in TIF loan proceeds for Western Place to make improvements to retail property that was later used for Moe's Southwest Grill and Culver's frozen custard franchise. The restaurant franchise is a partnership involving Swan and several other partners, while the Culver's is owned by Swan and another immediate family member. The portable ice rink company co-owned by Swan and Seybold is located in a building adjacent to the building where the TIF funds were invested by Swan. Swan's Active Properties also received $1.6 million to redevelop what is described as a brownfields site. The loan proceeds helped with environmental clean-up to make the property which formerly housed a factory operated by Active Products suitable for reuse. Swan leased the property to JSG Processing, a company which processes spent limestone for reuse. It is owned by Christoper Gandolfo of Fort Wayne. JSG Processing also received $500,000 in TIF funds.

The Chronicle-Tribune reports that although the original bond documents listed Swan's companies as the borrower responsible for repayment of the loan proceeds, the documents approved by the city's Redevelopment Commission, most of whose members are appointed by the mayor, pledged TIF revenues to repay the borrowed amounts. Swan's companies were only expected to repay loan proceeds to the extent TIF funds were inadequate to repay the bond debt. Swan defended the investment of the city's TIF funds in his businesses, noting their use for out-of-town interests. "If we're giving increment to people coming from out of town," he said, "I need that competitive (edge)."

The newspaper previously reported that Marion officials had provided $2.5 million in funding to a Korean businessman, Michael An, to redevelop a former YMCA building for a mixed use. Mayor Seybold's brother worked for a company that An established to redevelop the building. The City's building commissioner, Larry Oradat, also owned a construction company that performed work on the building. An's project later failed to come to fruition, and his property was ordered sold at a sheriff's sale after he failed to pay taxes on it. Oradat's construction company has filed a lawsuit against An's company for money it claims it is owed for construction work it performed on the building. The Chronicle-Tribune previously reported that city officials refinanced the debt owed on the YMCA project as part of a larger bond issue and relieved him of all liability for the $2.5 million in loan proceeds provided to him for his project. Marion city officials were unable to account for how over $2 million in bond proceeds issued to An were spent.

It turns out that the bond refinancing deal in 2009 for An's debt also included a refinancing of the prior bond proceeds that benefitted Swan's projects. Like An, Swan's businesses were released from any liability for repayment of the debt as part of the bonds issued to refinance the old debt. Swan told the newspaper that he was unaware that the debt had ben paid off until he got a letter saying that it was done to obtain a better interest rate for the city. The Chronicle-Tribune cites city council meeting minutes where the city's attorney, Barnes & Thornburg's Bruce Donaldson, had assured council members otherwise. "The city would not have any liability on it," Donaldson told council members at the time the TIF funds were approved in 2008 for Swan's Western Place. "If that (TIF) doesn't generate enough to pay them, then the company would be on the hook for the difference."

Seybold is favored to win his state GOP nominating race for state treasurer next month where he will be opposed by businessman Don Bates and treasurer's office employee, Kelly Mitchell. Seybold is backed by many party leaders around the state. Democrats are expected to nominate Mike Boland, a former Democratic lawmaker from Illinois who moved to Fishers, Indiana from the Quad Cities in Northwestern Illinois in 2012. Boland represented a district in the Illinois House of Representatives for 16 years before losing the Democratic primary race for lieutenant governor in 2010. He also lost a 2012 state senate primary race in Illinois before moving to Indiana later that year.