Wednesday, July 27, 2011

Council President Ryan Vaughn Claims Broad Ripple Parking Garage Will Have Two-Way, Buy-Sell Option; Vaughn's Claim Strains Any Credibility

Proposed Broad Ripple Parking Garage
WRTV's Kara Kenney continues her fine reporting on the proposed Broad Ripple Parking garage with a followup story today.  I found the comments by Council President Ryan Vaughn to be the most interesting.  Vaughn appears to be claiming that there will be a two-way, buy-sell option, something that I as someone who has done considerable work in real estate law has never seen:
Indianapolis leaders are negotiating an option with the developers of a proposed Broad Ripple parking garage that would allow the city to purchase the structure for a nominal fee, 6News has learned.

...
City-County Councilor Ryan Vaughn told 6News' Kara Kenney on Wednesday that the city will have some options under the agreement, which has yet to be finalized.

“If at any point the garage becomes a profitable venture, the city reserves the right to buy the garage back," Vaughn said. "Economic development is the biggest thing. If we have an opportunity to grow the business base there and we need parking, we might want to wrap that up in a deal."

...
Vaughn said that while the city reserves the right to purchase the garage, the developer will have the right to sell the garage to the city for a nominal fee, likely $1.

"They would sell it back if they continue to lose money or if we're holding the rates artificially low," Vaughn said. "In order to drive revenue, they may not find it's a profitable venture at all and send it back to the city."
To read the rest of the story or watch the video, click here.

It appears from what Vaughn is saying that:  1) if the garage makes money, the City has an option to purchase it for a $1;  2) if the garage loses money, Keystone has the option to sell it to the City for a $1.

Council President Ryan Vaughn
The BS meter just went off watching Kenney's report.  By definition, the garage will 1) make money; or 2) lose money.   Let's look at the two options associated with those scenarios.

CITY'S OPTION TO PURCHASE:   If the City could truly buy it for a $1 if the garage made money, why would Keystone Construction invest a dime in the structure?  No company is going to invest in a project that, if it proves profitable, can be taken away for a $1.  If you look at the details on this supposed option, I'm sure you'll find that it is impossible for the City to ever exercise it.

This reminds me of the 50 year ACS parking meter deal.  They added an every 10 year opt out provision so they could talk up the option to the media.  Once the details surrounding the 10 year opt out provision were examined closely, you realize it was impossible to ever exercise that option.   I bet it will be the same thing with this supposed option of the City to purchase a profitable garage for a $1.  It is just about having talking points for Vaughn and the Ballard administration.

As a side note, Vaughn claim regarding this option further validates my guess that the only money being spent to construct the garage is the taxpayers' and that the private partners aren't putting up anything.  If Keystone were investing millions in building the facility, would there even be a claim by Vaughn that the City could wipe out that investment with a $1?

KEYSTONE'S OPTION TO SELL:  This option would give Keystone the right to dump the garage back on the City if it is not making money.  Now that option I totally believe is part of the deal.  It is exactly the kind of sweetheart deal this City's leaders are renown for handing out.

I get the sense sometimes that Ryan Vaughn thinks everyone around him is so stupid, they'll believe anything he says no matter how big the lie.  Vaughn's claim of the two-way, buy-sell option on the parking garage is yet another example of Vaughn's arrogance as well as his complete disregard of the best interests of Indianapolis taxpayers.

6 comments:

Gary R. Welsh said...

I believe it was also revealed that Keystone isn't even purchasing the real estate from the owner; rather, it's entering into a long-term land lease.

Paul K. Ogden said...

Gary, it's mind-boggling the schemes they try to pull at the expense of taxpayers.

Indy Student said...

Kara Kenney said to me on her Facebook page that the land will be purchased, not leased. Then again, since the actual contract hasn't been released, it could've changed or her sources lied to her.

Gary R. Welsh said...

The Ballard administration lied for more than a year about the terms of the deal it had cut with Tadd Miller on his deal downtown so I don't believe anything they say until the actual proof is laid out there in black and white. They are hiding the relevant financial details of this transaction because of just how badly the deal stinks. I suspect there has been some concern that there is a Justice Department task force looking at public corruption in Indianapolis that may have them rethinking the terms of this deal.

Paul K. Ogden said...

IS,

I've heard both. If it is being purchased, who is purchasing it? How much are they paying for it? I don't know why they can't give straight answers on this deal. Gary's explanation makes a lot of sense. This deal stinks.

CarmelParisRome said...

Paul:

This little scheme is similar to one recently pulled off by Mayor Brainard and the Carmel Redevelopment Commission and a NFP entity the 4CDC with the Energy Center for the Center for the Performing Arts.

The Energy Center, is a separate building, housing the mechanical systems for the Center for the Performing Arts (Palladium, Tarkington Theater, etc) and was to be use to also provide such service to the City Center Project (a public/private partnership between the City and Pedcor).

When Pedcor, decide to back out, this left a facility, with no means of paying for it's day to day operations ...

Enter Mayor Brainard and his creative deal making.... long story short, the CRC sold the Energy Center, to the 4CDC for around $7-8M, who inturn sold it to a private entity from Minnesota for the same amount, who then sold the Energy Center back to the City for $17M to be paid back over the next 20+ years with interest.

The kicker, the City has decide to use the excess capacity, to provide HVAC to the City Hall, Police and Fire Stations .... at an anticipated cost to the Carmel Taxpayers of $3-4M a year, plus the cost of repaying for the purchase of the Energy Center .... something, whose construction had supposedly been bought and paid for .... which we get to pruchase again, and get to pay for it's operation with tax dollars.

Just an FYI .... Keystone Construction has been a major contributor to Mayor Brainard's re-election campaign fund.