Monday, February 14, 2011

IBJ Thinks Tad Miller's Deal Is Just Swell Now That Glick Is Involved

Remember that insider sweetheart deal to develop the old Bank One operations center next to the City-County Building that Tadd Miller got approval on in a New York minute before our esteemed Metropolitan Development Commission? As I described how the Fantasyland played out back in June 2009:

It's called the Metropolitan Development Commission, but it could just as easily and more accurately be called "Fantasyland." It's a place where a young man with a shell of a company, an idea for "redeveloping downtown" and the right connections can walk away an instant multi-millionaire without speaking a word. That's exactly what happened this afternoon when the MDC voted 7-2 to approve an $18.5 million investment in a downtown parking garage and 10-year tax abatement deal worth $6.6 million to spice it up so the young Tadd Miller can assemble a team of equity investors and line up financing for a $30-$35 million, mixed use development on the site of the old Bank One operations center adjacent to the abandoned MSA site.
There were all kinds of unanswered questions about the deal. Miller had no experience developing a real estate project on his own. His business partners at Kosene & Kosene were struggling financially. There were no definitive drawings for the project. He had secured no financing for the project, and he could identify no investors in the project other than himself. I noted at the time he shouldn't have any trouble at all finding equity investors after the MDC approved his sweetheart deal given how much taxpayers were subsidizing it. We learned numerous laws were broken to make the deal happen, but that didn't seem to bother anyone. We were assured by the Ballard administration the short notice the public had been given before the deal was approved--all of about 48 hours--was not problem at all because Miller was being given a very short timeline to line up financing and commence construction on the project or the deal would be nixed.

Twenty months later, construction has still not commenced but we're told by city officials a $30 million high-end residential apartment project will commence on the blighted site later this year. We also learn for the first time that the powerful Glick family is behind the project and has been since day one although the public was told no such thing when the proposal first appeared before the Metropolitan Development Commission. While the Indianapolis Business Journal had been at the forefront in questioning the deal from day one, with news that the Glicks, who are close friends and past business associates of IBJ Publisher Mickey Maurer, are now a part of the deal, the business publication now appears fully on board. The IBJ's Cory Schouten writes:

The lead developer on a long-delayed proposal to redevelop the former Bank One Operations Center has landed a powerhouse partner: apartment developer Gene B. Glick Co . . .

The project—which the city approved in late 2009 as part of an unusual public-private partnership—ran into delays as Indianapolis-based Milhaus worked to secure financing so the city could close on a deal to privatize publicly held parking assets, including thousands of metered spaces . . .

The plan for the former Ops Center calls for Milhaus to acquire the building, surface parking lots and an adjacent parking garage from a private owner for $18.5 million. Then Milhaus will sell the 1,680-space garage to the city for the same price.

City officials have argued the deal will provide a boost to a blighted area and give it control of enough parking to support the future redevelopment of the former Market Square Arena site—all without any upfront cash, no issuance of bonds, and an automatic tenant for the garage. The developer would take out a loan to buy the property, and the city would make the payments over 20 years using revenue from the garage.

The deal calls for Milhaus to buy back 600 spaces in the garage over 20 years by repaying $6.6 million in tax abatements and pitching in additional payments to the city totaling $2 million.

Milhaus Principal Tadd Miller said the project will begin six to nine months after the city closes on the parking garage. He said Glick will use its decades of experience in apartment development and management, while Milhaus' contributions include its creativity in designing a public-private partnership to pull the deal together.
The Glick name appeared on none of the original documents the city put forward proposing this deal when it was first aired publicly to the MDC back in June 2009. "[Miller] said Glick has been on board as a partner in the Ops Center redevelopment since Day 1," Schouten reported. If that is the case, then why didn't Schouten or anyone else who has covered this issue from day one know that? Why did Miller's attorney tell the MDC he was still looking for equity investors when the MDC considered the proposal? And why did city officials lie about the status of the project and conceal transactions that had taken place when IBJ reporters and bloggers inquired about the deal over the past year? Schouten also suggests in his story the 9-month timeline to commence construction was pushed back by the City, not Miller, because of the City's push for the corrupt parking meter privatization deal with ACS that raped taxpayers even more than Miller's sweetheart deal.

As I pointed out at the time of the deal, the city valued the parking garage that is a key part of this deal at $18.5 million even though the politically-connected owners of the garage, Smoot Construction, paid only $10.5 million for it a few years earlier. The City used a bogus method of valuing it based upon its future value post-development, an appraisal method that is not permitted under Indiana law. You may recall the sweetheart deals former Mayor Steve Goldsmith had with Smoot Construction during his administration that raped taxpayers. He even allowed them to operate their business in the City-County Building rent-free. Goldsmith, who is now a Deputy Mayor in New York City, has played a key role advising Mayor Ballard since he became mayor in 2008. There have been rumors he helped put this deal together behind the scenes. Goldsmith never registered as a lobbyist before city-county government as required by city ordinance so we don't know who all he represented when advising the mayor behind the scenes on the 25th floor.

I guess we can't expect any good investigative reporting from the IBJ on the corrupt manner in which your public assets have been used to make Tadd Miller a multi-millionaire now that Mickey Maurer knows his good friends the Glicks are in on the action. That makes all the difference in the world whether it's a bad deal or a good deal for the public apparently. If Tim Durham had only known, he could have avoided all the hits he's taken from the IBJ that helped unravel the more than $200 million Ponzi scheme he had going on with his Ohio-based Fair Finance Company.

Speaking of Ohio, former Colts quarterback Art Schlichter, who has been plagued by problems associated with his gambling addiction, has run afoul with authorities again this time in Ohio for allegedly misappropriating $1 million from an elderly woman. He should have consulted with Durham before he decided to help himself to that poor woman's money. He would have learned that if you grease the palms of the right politicians, prosecutors, attorneys, bankers and other insiders in Indianapolis, you can avoid criminal prosecution like Durham has so far been successful in avoiding. Or else Art should have just figured out a way to become the Columbia Club Foundation's treasurer where he could have stolen the money and avoided prosecution simply by promising to repay it.

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