Friday, December 19, 2014
Ballard Explodes In Anger Under Questioning About ROC Lease: Everybody Wanted It!
Fox 59 News' Liz Gelardi tried to question Mayor Greg Ballard about e-mails finally produced under court order by his administration that showed former Public Safety Director Frank Straub strongly opposed locating the Regional Operations Center ("ROC") at the former Eastgate Mall due to cost and suitability concerns and only relented in choosing the site after enormous political pressure was placed on him by Mayor Ballard's office, City-County Councilor Ben Hunter and State Sen. Jim Merritt to choose the site, one of whose owners was politically-connected to the Mayor and the local Republican Party. Ballard erupted in anger at Gelardi's questions.
"What happened? . . . The ROC is working," Ballard angrily shouted at Gelardi. "Everybody wanted it at Eastgate. That's why I wanted it at Eastgate," Ballard claimed, ignoring questions raised by the e-mails proving Straub and others had serious doubts about the Eastgate site. The City's former controller, Jeff Spalding, doubted the fiscal sustainability of the project relying only upon existing revenue sources. He and the city's corporation counsel both refused to sign the lease despite legal authority requiring them to sign off on a long-term agreement like the 25-year, $18 million lease obligation represented by the project. "There's always something that goes wrong," Ballard said. Incredibly, Ballard referred to the long-term costly lease agreement as merely "a small local lease to a local landlord." See the video clip of Gerardi's interview with Ballard by clicking here.
Advance Indiana first reported more than a month and a half ago that newly released e-mails disclosed the depth of Straub's opposition to the Eastgate site before being forced by the Mayor's Office to go along with it. The ROC Investigating Committee held its first meeting in months Thursday evening at which the council's counsel, Fred Biesecker, gave committee members a summary of what the newly-disclosed documents show about the background and mechanics of how the one-sided lease agreement came to be.
Biesecker traced the first talk of the Eastgate Mall site all the way back to a March 2010 e-mail from Councilor Ben Hunter to Straub making a pitch for the Eastgate Mall site. Later e-mails from Homeland Security Director Gary Coons noted then-Marion Co. GOP Chairman Tom John, the same lobbyist hired by a French-led consortium to press for approval of a $1.75 billion, 35-year agreement to build a new criminal justice center, also contacted him to put in a good word for Carroll's property, along with other e-mails from State Sen. Jim Merritt pitching the site. Straub, who had only started his new job two months earlier, immediately expressed doubts about the site after viewing it, noting there were more suitable sites already under consideration. Biesecker played a clip of the testimony of former EMS director, Jim White, discussing a much more suitable site identified near the airport and his grave concerns about the poor conditions of the property, which he likened to the war-torn conditions in Iraq where he had recently returned from a tour of duty.
The e-mails reviewed with the committee by Biesecker traced Straub's repeated doubts about the Eastgate site, which had led him to rule out the site by early 2011. Straub had decided the City would either stay in the existing location of the EMS operations on State Street or choose an alternative site, such as an E. Washington Street site still in Hunter's district where the City's traffic court was already located. Hunter, Merritt and the Mayor's office immediately pounced on Straub's decision, placing enormous pressure on him to reconsider. It was clear Hunter, in particular, was not interested in the E. Washington Street site in his district; he was insisting upon the Eastgate Mall site regardless of the financial and logistical challenges it posed. It's worth noting that all of the Republican council members in attendance at last night's meeting, including Hunter, walked out of the meeting early, except for Councilor Aaron Freeman, who used the closing minutes of the meeting to chastise Democrats for continuing what he dismissed as a pointless investigation.
The actual moment Straub reversed his decision is not clear, other than e-mails in March 2011, one month before the proposal went to the council's Administration and Finance Committee for approval reflected a final decision had been made to go with the Eastgate site as proposed lease terms started to circulate among DPS staff members. That original lease called for more than 210,000 square feet of lease space. A DPS analysis showed a financial hole being created of at least $1 million annually in DPS' budget. Homeland Security Director Gary Coons warned of potentially deep cuts elsewhere in public safety to make up the difference. Coons and DPS' counsel, Jonathan Mayes, made the first presentation to the Administration and Finance Committee, which went badly when the officials lacked answers concerning key questions council members had about the proposal. After the committee postponed consideration until the next meeting, the lease deal was drastically reworked.
The amount of lease space dropped substantially from over 210,000 square feet to a little more than 75,000 square feet, or about a third the original size. In between meetings, Spalding candidly admitted that he was anxious to see a fiscal analysis of how the lease would be funded despite his role as the city's chief financial officer. As Biesecker explained to committee members, a Coons e-mail to Merritt had described the financial terms of the agreement with Carroll were made more workable for the City by effectively taking on the role as Carroll's financier under a credit-tenant lease agreement, which allowed Carroll to get his $1.4 million outstanding mortgage with M&I Bank paid off and a much larger sum refinanced under much more favorable, long-term 5% mortgage backed by the City's credit. Unfortunately, Biesecker said council members were only told about the upside of a credit-tenant lease and not the less favorable, "hell or high water" terms that essentially locked the City into a long-term lease with no recourse or remedies in the event it became dissatisfied with the landlord's performance. In addition, a development agreement inked between the City and Carroll's company in March was never disclosed to the council prior to its approval of the lease.
It was not only the downside of the credit-tenant lease arrangement that was not disclosed to the council prior to approving the lease. Biesecker pointed to financial information the administration shared with council members which omitted substantial costs required to sustain the project, including IT capital costs and ongoing IT maintenance agreement costs, which had been included in its earlier financial analysis it provided at its first committee meeting, to make the sustainability of the project appear more palatable.
Biesecker also bemoaned the fact that under the terms of the lease agreement, the City relied on Carroll's financial advisers, architects and construction company for fulfillment of the project. When defects were later uncovered that forced Straub's successor, Troy Riggs, to order DPS employees evacuated from the ROC property, Carroll used the one-sided terms of the lease to his full advantage. The City eventually entered into a settlement agreement with Carroll under which the City absorbed a substantial amount of the costs to repair the defective work. Biesecker noted the administration had still not turned over invoices detailing all of the costs the City has incurred to date on the project despite last July's court order compelling the administration to produce those documents.
The ROC Investigating Committee plans to reconvene early next month to begin hearing testimony from key officials within the administration. Unfortunately, Straub is now living in Spokane, Washington where he serves as that city's chief of police and won't return for a hearing. Straub's chief of staff now resides in Florida and will also be unavailable for testimony. Councilor Freeman criticized the Democratic leadership for scheduling meetings early next month when he said several members won't be able to attend. Freeman also took a shot at Biesecker for relying upon another outside counsel, Andy Mallon, to assist him in his work. Biesecker explained that Mallon had already been under contract with the council for other matters and no additional costs would be incurred under his contract for the work he provided to the committee.