Saturday, June 16, 2012

Ballard Now Wants To Privatize City-County Building

It's now apparent that there is no city asset that is so sacred as to not be within the grasp of Mayor Greg Ballard's political cronies to turn into a profit center. The IBJ's Kathleen McLaughlin has a story in today's edition discussing the Ballard administration's plan to privatize the City-County Building, which is currently owned by a municipal corporation, the Indianapolis-Marion County Building Authority, and leased to city-county government for $4.85 million annually, or about $7.29 per square foot, which includes unlimited utilities. The Authority floated bonds to construct the original 28-story building in 1959 for $32 million.

According to a Request for Information put out by the City, the administration thinks it would be better for it to exercise its option to assume ownership of the building at the end of its current 10-year lease with the Authority and then privatize it rather than continuing to make low lease payments to the Authority. The administration is hoping to shift cost of future repairs to the building to a third party without increasing the city's overall costs. Anyone with common sense knows that it's impossible to turn control of the building over to a private entity, expect that private entity to make necessary repairs to a 50-year old building and lease it back to the city for no more than the paltry $7.29 per square foot the City is now paying the Authority to use the space. The City is even anticipating an upfront payment from a private real estate manager as part of the deal to spend on infrastructure improvements. Apparently the City wants us to believe it is possible to have your cake and eat it too.

McLaughlin's story quotes the current chairwoman of the Authority, Abbe Hohman, as saying the Authority believes it has "offered to the city over a very long period economically attractive lease rate at the same time maintaining the building to the highest standards." The Authority also manages 19 other public facilities, including the Marion Co. Jail. Illustrative of what a great deal the city gets from its lease with the Authority is the fact that its annual lease expenses for CCB are less than half what the City is paying to lease downtown commercial space for the Marion Co. prosecutor's office and the public defender. Of course, those were sweetheart deals brokered by and for the benefit of John Bales, who has since been indicted by the federal government for corruption involving the leasing of office space for the Department of Child Services in Elkhart.

The IBJ story hints at one reason the City thinks it can have its cake and eat it too. A private operator would insist on consolidating offices scattered in other commercial buildings into the space contained in the CCB. Employees with permanent desk space would have to give their space up in favor of a shared space concept. While the City would have to pay more to lease the space from the private operator, it would hope to give up more costly leases elsewhere. There are currently 2,200 permanent workers in the building, not counting the thousands who visit the courts and government offices in the building daily. The City hasn't ruled out the possibility of a sale-leaseback. It prefers leasing the building to a private operator for a term of at least 30 years and then leasing it back from the private operator. I'm not sure why the administration simply isn't working with the Authority on a plan to achieve its objectives. It's the same way it was with the parking meter assets. The larger goal seemed to be to find a way to make a lot of money for a private company and its lawyers who shower Mayor Ballard with a lot of campaign contributions.

I found laughable a comment from David Rosenberg, Director of Enterprise Development, that the City wasn't going into the RFI with any expectations because "we don't want to bias the market." The RFI hit the street on June 6, 2012. Proposals not to exceed thirty pages are due back by July 2, 2012, less than 30 days after it hit the street. You can bet they've already met behind closed doors with the parties they want to bid on this proposal, and the RFI is all for show to make it appear the process is open and fair. They didn't even offer potential bidders an informational meeting at which questions could be posed and written responses provided to all interested parties prior to the deadline for submitting proposals. That should tell you something.


Had Enough Indy? said...

The republicans (not all, just those in power positions) pushed through Uni-gov so they could control everything. Now that those days are behind them, they are selling off everything so they get more money to spend in their last couple of years - paying back contributors. Then, when the democrats take over a broken and assetless city, they can be lambasted as incapable of leading this 'world class' city.
Just a thought.

Gary R. Welsh said...

It certainly has nothing to do with good government practices.

Southsider said...

I've always thought that when Market Square was torn down that the city should have built a 'Justice Center', having all the Courts, Prosecutor, Public Defender, Probation offices under one roof. (leaveing the CC Building for City-County offices) And by doing so eliminating high-price leases on offices elsewhere. Heck if the city had used one of those MS lots for a parking garage, it would have been privatized with the parking meters (insert smile).

Paul K. Ogden said...

I agree with Southsider. A "Justice Center" would have been a perfect use for that property and would allow them to put offices under one roof eliminating expensive leases outside of the CCB.

Once again, the administration is talking about a long-term contract that ties the hands of future administrations. A 30 year lease is not privatization. It is the creation of a monopoly by the government.

Cato said...

These Republicans make the mafia look like teenagers stealing penny candy from the corner store.

Gary R. Welsh said...

As I recall, Ballard at one point during his first run for mayor talked about building a new justice center on that site. Democratic blogger Jen Wagner poked fun of his idea on her blog. In the IBJ article, her husband, who worked in the Peterson administration and now works as a commercial real estate broker for CBRE, is quoted as touting this Ballard idea.

Citizen Kane said...

Anyone with common sense knows that it's impossible to turn control of the building over to a private entity, expect that private entity to make necessary repairs to a 50-year old building and lease it back to the city for no more than the paltry $7.29 per square foot the City is now paying the Authority to use the space.

Thievery is "common," and makes "sense," when it is done within a legal framework.