TIF Study Commission Recommendation # 2 : Protect Taxpayer Investment With Clawback Provisions

My second choice for common sense recommendation of the TIF Study Commission is providing claw backs in the agreement with the chosen developer who is benefiting directly from the TIF dollars.  Goals and claw backs are used constantly for abatements.  But, with abatements you also have the aspect that the 'forgiven' taxes are on increased assessed value that will come with private investment.  So, lower investment, lower assessed value, lower amount of forgiven taxes.

A TIF financed deal is different.  With bond proceeds flowing straight to the project, either for mere infrastructure or directly to the developer to suit their own needs, and future TIF dollars set as collateral to pay back those bonds, there is no protection to the taxpayers that the goals will be met.  So, currently when the developer and, frankly, city officials make promises of private dollars invested or jobs created at such-and-such average salary - they are made in thin air with nothing to protect taxpayers from statement inflation or simple error in judgement.

By enumerating and specifying the investment and jobs goals for the TIF money, and by crafting a way to determine how much money the developer owes back to the City if they don't reach the goals, the taxpayers gain some protection.

Its well past time that the taxpayers stop being left holding the bag when TIF funded projects don't work out as well as City officials and developers say they will, in order to get their hands on the money in the first place.

Here is the wording of this recommendation (click here - page 19 of the pdf):

j. Include claw back provisions in project agreements that are subject to effective oversight and ensure that non-performing projects are quickly remediated through the return of TIF funding when performance goals are not achieved.

Don Welsh Leaving For Chicago

The IBJ is reporting that ICVA executive director, Don Welsh, is leaving Indy for a similar post in Chicago. Welsh came here in 2008, from Seattle. A search for his replacement is to begin immediately. Michael Browning, Chairman of the ICVA Board of Directors, is quoted as saying:

“With Indianapolis’ strong tourism product, including the expanding convention center and the coup of hosting the [2012] Super Bowl, we know this position will be extremely sought-after by numerous top-level executives both in Indianapolis and across the country,” Browning said.

Not in the report, but true none the less - During this past year, Welsh was able to secure millions more taxpayer funding for the ICVA, even as the public library was forced to cut its budget and curtail their hours.

IDI Gets Curious Contract for 2009

I was kicking the tires on the City's new contract database, when I stumbled upon a curious contract between Indianapolis Downtown Inc. and the Department of Public Works in 2009.

For those unfamiliar with this new feature of City government, it has a copy of every contract with a City or County department, going back a couple of years. You can access the database by clicking here and typing the word "public" in the password field and click "login".

The search dialog box will pop up. To play along at home with this IDI contract, you can enter "5955" in both of the boxes to the right of "contract number". If you haven't used this site before, you will have to download some software in order to view the contract.

In 2009, IDI landed a contract for $120,000 from Indianapolis Department of Public Works.

The contract is for "Consulting Services" (with 3 pages of specific action items) and the agreement declares that the term shall be from January 1, 2009 through December 31, 2009. The total amount was not to exceed $120,000, which was to be paid out in 12 equal installments of $10,000.00 "after receiving appropriate invoice and status report".

To get quickly to the good part, those playing along at home should take a look at page 9, which has all the signatures. What caught my eye were the dates -- Dave Sherman, Director of DPW, signed the contract and the Board of Public Works authorized it, both on November 11, 2009, and Tamara Zahn, President of IDI, signed November 9th, 2009. With less than 2 months to go in 2009, a contract was inked down for the entire calendar year.

So, you know I filed an open records request to see all of the supporting documents and invoices.
One invoice, only, was submitted for $120,000, dated November 13, 2009, which was approved for payment six days later. Provided to me also, were 12 'Activity Report's, one for each month, including one for November and December, neither of which could not have been completed before payment was asked for and received.

These activity reports are not limited to those items performed to fulfill the contract. They include attendance, presumably by anyone associated with IDI, at any meeting - neighborhood, board, committee, or legislative hearing. It includes work done by subcontractors; mentioning every time a planter was planted, weeded, or inspected for insects and plant diseases. It includes preparation for the IDI board meeting and going to said board meeting. It includes calls made to code enforcement, DPW, or parks to attend to some matter discovered by someone at IDI, or their subcontractors. The reports list the bike patrols and meetings with public safety officials. It even lists time spent on crafting and submitting an application for a 2010 crime prevention grant (which they ultimated obtained). etc. etc. etc.

Most interesting, though, was the inclusion of items reflecting the pursuit of taxpayer funds for IDI's operations. Under the action item category "2009 City/IDI Contracts" in each month's activity report we have the following (I have highlighted the most interesting items in red):

January:
a. Department of Metropolitan Development: Attended commission meeting.
b. Department of Public Works:
i. Met with K. Walker, M. Williams and D. Fishel for bimonthly update.
ii. Attended board meeting.
c. Indianapolis Local Public Initiative Bond Bank: Attended board meeting.
d. IndyParks: Attended board meeting.

February:
nothing mentioned

March:
a. Department of Metropolitan Development: Compiled and provided completed projects report from 2002-1st quarter 2009 to J. Byrnes.
b. Department of Public Works: Met with M. Williams and D. Fishel to update contract activities and payment.
c. Indianapolis Local Public Initiative Bond Bank: Attended monthly board meeting.

April:
b. Indianapolis Local Public Initiative Bond Bank:
i. Attended board meeting
ii. Provided Downtown Economic Indicators to K. Taylor.
iii. Oriented J. Goss, board representative.

May:
a. Presented 2008 Economic Indicators to City-County Council Economic Development Committee.
b. Addressed Dept. of Public Works and Parks contracts and funding.
c. Attended Indianapolis Local Public Initiative Bond Bank board meeting.

June:
a. Received signed 2009 DMID contract and purchase order.
b. Attended Bond Bank and IndyParks board meetings.
c. Met with D. Reynolds, Controller.

July:
a. DPW: Reviewed proposed reduction in current contract.
b. Indy Parks: Met with L. Purcel and P. Pinko.
c. Indianapolis Local Public Initiative Bond Bank: Attended board meeting.

August:
a. Resolved contract status with Mayor’s Office.
b. Attended Metropolitan Development Commission meetings.
c. Attended Indianapolis Local Public Initiative Bond Bank board meeting.
d. Provided contract information. Discussed 2010 replacement funding with Mayor’s Office.

September:
a. Attended DPW and Bond Bank board meeting.
b. Met with Mayor Ballard and P. Okeson to discuss 2010 funding.

October:
a. Attended Department of Public Works board meeting.
b. Attended Indianapolis Local Public Improvement Bond Bank board meeting.

November:
a. Department of Public Works (DPW): Attended board meeting to support approval of revised 2009 contract.
b. Indianapolis Local Public Initiative Bond Bank:
i. Provided market information to D. Requiz.
ii. Attended board meeting.
c. Met with D. Wu, Mayor’s Office, to discuss Downtown issues and opportunities.

December:
Attended Indianapolis Local Public Initiative Bond Bank board meeting. Oriented B. House, new IDI board member, representing Bond Bank.

There is no mention of any other contracts between the City and IDI for 2009 in the City's new database except for the contract discussed here and one for $142,144 with DMD (Department of Metropolitan Development). That one was signed by IDI's President, Tamara Zahn, in January, by DMD Director, Maury Plambeck, in March, and by City Controller, David Reynolds, in April. The June entry "DMID" could be a simple typo.

I could not find any mention of the Indianapolis Bond Bank at all in the contract database, so it is possible that IDI had a contract with them during the year. IDI certainly seemed to spend a bit of time with Bond Bank personnel and attending their board meetings.

But the most interesting of this discussion thread in IDI's activity reports, is the contact with the Mayor's office regarding an apparent reduction in IDI's expected proceeds from it 2009 contract with DPW, and its efforts to secure funding in 2010. Reading between the lines, one could conclude there was a good little tussle going on in City government over taxpayer subsidies for IDI.

The very fact that 2009 IDI/DPW contract wasn't signed until November, with payment issued shortly thereafter and not in accord with the schedule put forth by the contract, says that the contract was nothing more than a ruse to funnel taxpayer money to IDI. The least they could do, though, is not make it so obvious.