...it appeared that we should get ready to hire a brass band and celebrate a really good news story. The IBJ headline (1/30/12) read "Purchase lifts effort to develop MSA site."
After all, two different mayors have had ten and one half years since Market Square Arena was demolished. Neither has been able to rid the city of this property tax white elephant. Are we really going to get the job done?
Well, maybe. Reading a bit down into the article we find Deputy Mayor Huber’s statement: "It’s possible that a solicitation could go out sometime in 2012." And then, "Market Square is not necessarily next on the list (of developments), Huber said."
Still a little later, he referred to another proposed development in the northwest quadrant of the Mile Square. An IBJ article about that deal appeared in the same issue as the MSA story. That deal’s a little strange, too.
For that project, as we understand it, the developer needs several surface parking lots owned by OneAmerica Financial Partners, Inc. For some unexplained reason, "To make way for the development the city would foot the roughly $13 million cost of building a 930-space parking garage for OneAmerica...." It will be done with Tax Increment Financing (TIF) property tax money!
Apparently in reference to that article, Huber says, "When someone else owns the property, deals take on a different character." We don’t know what that means, but perhaps it is why we are not told why the developer is not paying for the garage. Nor are we told who will own the garage and claim its revenues. And we are only left to guess why the city should be involved at all.
But, to get back to MSA, the "purchase" referred to in the headline is land lying between Washington Street and the MSA site. It was bought by Circle Area Community Development Corp. (CDC), a non-profit organization which "...exists to carry out City Hall’s vision for downtown development." (We’re not told whether the land will be subject to property tax under CDC ownership.)
The director of the bond bank is quoted as saying this purchase is "speculative" and therefore made more sense for the CDC than the city. No reference to why this amount was too "speculative" while throwing about $90 million at the currently named "City Way" project which was rejected by the usual financial markets.
According to the IBJ story, with an assessment for property tax purposes at $2.2 million, the land was appraised at $4.4 million. The CDC got a loan from a Louisville bank for 80% of the purchase price. Indianapolis Downtown Inc. (IDI) "...supplied a $1 million down payment as a secondary lender."
The mission of the IDI is defined as making sure "...downtown is successful and continues to grow." (We can remember when this was the mission of a local chamber of commerce, an ongoing program paid for with member dues rather than tax dollars.)
The director of the bond bank is also chairman of CDC. The IDI receives $600,000 - TIF property tax dollars - of its annual budget ($3 million) from the bond bank. With $8 million in reserve, IDI borrowed $1 million and "...then lent the money to Circle Area CDC at a higher interest rate of 7 percent."
The vice president of marketing and communications for IDI says: "We believe we elevate the product so the TIF district is more successful." We don’t now about the work of the IDI, but the TIF program is certainly successful to the point of making available "surplus" funds to be donated in such huge amounts.
And don’t forget, it is possible that some kind of arrangement may yet be made - after ten and a half years - to put the MSA property back on the property tax rolls.
Don’t you just love it when a deal comes together?
This one is a little complicated for me to follow, but it sure doesn't smell right!
Posted by: Leslie Baker | February 08, 2012 at 12:17 PM