The Truth About the 504 Project: No Skin in the Game First off, I think we should discuss the definition of investment in the city. Traditionally, when people refer to investment in a city, it involves individuals or companies bringing something to the city. It usually involves them bringing their capital and other resources to the city in which they claim to be investing. But most unfortunately in Gary, what this administration recognizes as investors are individuals willing to conspire with them to fleece the taxpayers and their constituents. The investors that this administration prefers to woo are sketchy types that will act in concert with them to devise schemes to drain what little resources this poor city has left to steal. (In this case, its ability to issue bonds.) The last thing this administration wants to see are legitimate investors with their own money coming to the city. Why? Because real investors would not be willing to share with them. What is happening at this 504 project is divestment. This is an example of a conspiracy between elected officials, appointed officials, and private interests to bleed the City of Gary’s citizens and taxpayers out of an enormous amount of money—money that they will be on the hook to repay for many, many years to come. This fleecing will not only adversely affect them, but it will also affect their children’s quality of life in the city. All the money that gets thrown down this rathole of a project, could have otherwise gone to any number of things that would directly improve their quality of life today. When the 504 project was first introduced to the public, the group asked for and received 2.875-million dollars. They also clearly stated that this was only Phase I. They stated that Phase II of the project would require them to come back to the feeding trough and ask for another 41-million dollars. But they are not asking for a loan. They have no intention of paying this money back. In fact, the deal they are getting does not even require them to. This is how we know they are in cahoots with city officials. The first 2.875-million and the second round, the much larger 41-million-dollar round, are to be paid back through TIF funds. They indicated that the taxes the 504 building will be paying will go towards paying off the loan. Are they kidding? At present, the tax bill for the 504 building is around $35,000.00 per year; so at that rate, it would take 82 years just to pay back the small loan of 2.875 million. At this rate, it would take 1171 years to pay back the 41-million-dollar loan. And this does not take into account interest. But to be fair, let’s assume that after dumping 41 million into the project, the assessed value of the building were to increase to 10 million. Now the building’s tax bill would be nearer to $350,000.00 per year; so instead of taking 1171 years to pay it back, it would only take 117 years. But as everyone who has ever had a mortgage has learned, is that the repayment of a mortgage or long-term loan means that the borrower winds up paying double or triple the amount that they actually borrowed. So clearly the 504 team will not be making much of a dent in the amount they plan to “borrow”. So who then will be on the hook for this enormous liability? Every other taxpayer in Gary! Because of the way that these bond issues are set up, they will likely respond that it is only properties in the TIF zone up and down the north part of Broadway that are obligated to direct their tax proceeds toward the repayment of the money that the 504 team is getting (and has already gotten); but this same area will require services and maintenance just like every other area of the city. And since now all of the tax money is obligated to the repayment of the money this administration is tripping all over themselves to give to their 504 team “partners”, it will require tax money collected from all of the other areas of the city to pay for taking care of the Broadway corridor. Another thing to bear in mind: the majority of the properties up and down the northern portion of the Broadway corridor are owned by the City of Gary; so there will be very little property tax collected to pay down the mountainous debt that this “gift” to the 504 team will load onto the backs of Gary taxpayers. And make no mistake: it is a gift. They do not have to pay back a penny. They have to pay the taxes on the building either way. And let’s just pretend for a minute that the data center scheme was real. (I realize that this will require you to suspend reality and all good sense for a minute.) So the building is now fully occupied with data center tenants. The 504 team is collecting premium rent for the top 5 floors of the 504 building. (This is what they announced the plan to be.) So let’s take a guess at what the annual rent might be for this amount of space. I don’t really know what data centers rent for, but let’s assume it is at least $20.00 per square foot. This means that the 504 team would be collecting $1.7-million per year in rent. (I really think that it would be a lot more than this, but I want to be conservative.) But here’s the part everyone is going to love: They, the 504 team, get to keep it all! None of it has to go towards paying off the huge loan (gift). They get to keep every penny while the loan (gift) stays on the backs of all other Gary taxpayers. This is not a loan. This is a gift. Loans generally require the borrower to pay them back. This gift to the 504 team requires US to pay it back! If this were such a great deal, why aren’t their pals over at Centier Bank lending them the cash? A real bank wouldn’t go near this deal with a ten-story pole! The 504 group has absolutely no skin in the game; they never did. We the taxpayers even paid for this building—the grist for their scheme. We the taxpayers paid for everything they have done so far. We the taxpayers will be footing the bill for every little thing they will be doing in the future. So once this deal goes south, and it will go south, (it’s just a matter of when) the 504 team can just walk away. They can just disappear. But the city and its citizens and taxpayers will be saddled with the repayment of this massive debt load for decades to come. Meanwhile, the 504 team and all of their co-conspirators will be sipping fruity drinks with umbrellas stuck in them on some sunny island getaway. The good citizens of Gary need to stop this project before it is too late! Has everyone already forgotten about the Baseball Stadium fiasco? This project cost the taxpayers over 50-million dollars and will continue to bleed money for years to come. Has everyone forgotten about the County Market debacle? This cost the citizens and taxpayers 15-million. How about the Dusties Buffet? That cost the taxpayers 5-million dollars. We cannot afford any more projects like these! So speak up people—your future is at stake. And stop this before it’s too late!
Posted on: Sat, 29 Nov 2014 12:50:30 +0000
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