So much for the state law requiring units of local government to conduct a public referendum and allow voters to decide when government wants to borrow money and pledge tax revenues to build new buildings. Zionsville, like Westfield's grandiose decision to build an indoor soccer arena at Grand Park in a sweetheart deal with a politically-connected developer, will do the same thing to build a new town hall. Westfield turned to Holladay Properties to build its indoor soccer arena and lease it back to the city for 25 years at a cost of $53 million before taxpayers will take ownership of the facility that cost about $25 million to build. Zionsville is turning to the politically-connected Keystone Realty Group owned by Indy Eleven owner Ersal Ozdemir, to get its new town hall.
When Zionsville officials first started talking about plans for a new city hall, the building cost was estimated to be about $6.5 million. Now that they're closing to inking the deal, those costs have grown to $10.2 million. As Barnes & Thornburg's Bruce Donaldson explained the financing of the new town hall to town council members, "It would be sort of like if you bought a house on contract from a seller." What this deal actually involves is a build, operate and transfer agreement, which is governed by Indiana's Public-Private Agreements Act. That law requires these opportunities to be publicly bid through an RFP process. I've seen no mention of an RFP process that led to the selection of Ozdemir's Keystone Realty Group. But, hey, since when does a silly law get in the way when it's time to reward someone who has been very generous in contributing campaign dollars to the politicians? Keystone is also a client of Donaldson's law firm, but I'm sure the interim mayor/town council member, who is also a former partner of the same law firm, is aware of that.
A financial adviser at Crowe Horwath, Angie Steeno, told town council members the plan is to make biannual $284,572 payments to Keystone Realty Group, or about $570,000 annually. The funds, of course, weren't included in the town's 2016 budget. No problem, the town will tap county option income tax revenue, food and beverage tax receipts, its cumulative capital development and its TIF funds to piece together money for the payments. So at the end of the day a town hall that was originally going to cost about $6.5 million to build will in all likelihood cost at least $20 million. I suspect there's other payments beyond the lease payments that will accrue to Keystone Realty Group's benefit for operating and managing the building, but those details aren't mentioned in the Current In Zionsville report.
Gary, I saw an article in IBJ recently about this and thought the same thing... where was the RFP? Who else was considered besides Keystone? Has Zionsville actually selected Keystone, or did Keystone approach Zionsville with the alternative procurement proposal? I searched Zionsville's past meeting minutes and agendas and found nothing. A "blank check" resolution is on the town's 2/1 meeting agenda. Zionsville residents ought to be pissed!!!
A big problem with this proposal, aside from the fact that it is a rip off, is they are locked into a deal while their town and its needs continue to rapidly grow and change. How much do you think Keystone will charge them in 5 or 10 years when the town realizes it needs to move some walls or add on?
The 2.75% interest rate is a gimmick. The developer's million dollar plus fees are built into the principal, kind of like buying down your home mortgage rate by paying points. Total price tag for a building that was supposed to cost $7M is now $14M.
It sorta looks like business as usual to me. I feel a bit like a broken record but this only works in places with a disengaged electorate. If you're an elected official, you play the envy card (WestfieldCarmelndy has one and we're better than they are or Cincinnati has an NFL team so we should too). After that, it's easy. As the previous commenter noted, you roll outrageous fees into building cost estimates, you reward your incestuous friends and the same fools you played the envy card on write you a blank check. I'd be outraged, but people stupid enough to tolerate this deserve what they get.
Post a Comment