ON THE AVENUES: They didn't ask.
A weekly web column by Roger A. Baylor.
(There was a special edition of this column on Monday: ON THE AVENUES MONDAY SPECIAL: River View's sweet dreams are not enough)
After the rear wall of the 153-year-old Peter Weinmann building at 8th and Culbertson crumbled early in 2011, there was an Indiana Landmarks-led rescue effort. Something about it kept bothering me.
Having previously served a stint on the board of the Urban Enterprise Association, I had a hazy notion that elements of “our” program for the zone might have applied to the situation with the deteriorating structure, but being out of practice and otherwise distracted by work, I couldn’t piece it all together.
Eventually I asked my question to the UEA’s director, Mike Ladd, and he filled in the blanks. I wanted to write about it then, but readers must understand that everyday life for the UEA during the final year of the England/Malysz administration’s last-ditch, crony-empowering megalomania was exceedingly difficult. While the 8th and Culbertson situation was discussed often here at the blog, I remained generally cautious, worried lest the tottering administration’s clear assault on the UEA worsen in intensity.
Now it’s 2012, and in spite of the big flush at midnight on New Year’s Eve, the UEA’s future remains almost as unclear as before. Once again there have been proposals at the state level to dismantle the program, which in my view would be a foolish mistake given what the zone is capable of providing to the community.
Here in New Albany, both council and mayor must finalize their UEA board appointments; without these, there can be no board, no meetings, and among other things, no pay packet for Mike Ladd – which is profoundly unfair to him, although just a bit outside my reasoning for covering this material today.
The question I asked Ladd last year was this: “Was there a better way to save the building at 8th and Culbertson?”
Here is his response, tardy but thought-provoking.
"Being inside the Urban Enterprise Zone, the building at Eighth and Culbertson is eligible for the EZ-2 Investment Deduction; meaning that the purchase price and any subsequent improvements are eligible for the tax credit, as long as a private party makes the purchase.
"However, the EZ-2 does not work for Indiana Landmarks, which now owns the building. The reason is because Indiana Landmarks is a nonprofit organization and this deduction applies to for-profit entities only.
"The best-case scenario would have been for the purchaser to buy the building in its then-collapsed condition. The purchaser then could have applied to the county assessor’s office for a new (and probably lower) assessed value. Had we been involved, we would have assisted the purchaser with that effort.
"Currently the property is assessed in the $74,000 range. The purchaser could have bought the property for $20K (which is the price Indiana Landmarks paid), gotten the property reassessed and then begun his or her improvements. This new assessed value ($74,000 or lower) would have been set as his assessed value for the next decade once he claimed the EZ-2 Investment Deduction.
"As it stands now, the taxable portion of the stabilization costs actually increase the assessed value of this building, thus reducing the potential savings the new buyer could have claimed. The purchase price under the increased assessed value plus his improvements will now be all he can claim. Just to make it clear: any purchaser has lost out on the savings he could have realized without anyone stabilizing the structure.
"To further illustrate the point: We know that it costs $80K ($20K for purchase plus $60K for stabilization) to put the building into usable condition. This $80K has the effect of increasing the final assessed value at the time the private purchaser makes the buy. Now we’re looking at an assessed value of $154,000 instead of $74,000. (I’m talking theoretically on the assessed value here, but it illustrates the point. I doubt the assessed value will be $154,000, but the stabilization costs will definitely increase the assessed value significantly.)
"The stabilization costs are going to add to the increased assessed value because Indiana Landmarks, Redevelopment Commission, Horseshoe Foundation and the Enterprise Zone are all non-profit or governmental entities, and are not eligible to apply for the EZ-2 investment deduction and therefore not eligible to apply at this time (or any other) for this deduction.
"The bottom line is that any purchaser has been deprived of additional savings he could have realized over a decade-long period; limited funds from the public and non-profit sectors have been diverted from (arguably) other important projects."
In December of 2011, the News and Tribune quoted Greg Sekula of Indiana Landmarks:
"Sekula said a contractor signed an intent-to-purchase agreement to buy the property if the structure can be upgraded within a certain time frame, and there’s other interested parties in the building as well."
To be sure, it’s far too late for this question, but in light of what the UEA might have been able to do to help prospective buyers of the Peter Weinmann building, and owing to fundamental considerations of transparency, surely it’s fair to ask whether any of these zone mechanisms were mentioned during the original closed-door meetings, which led to the quintessential New Albanian “rescue” plan by power-broker’s diktat?
It’s because transparency is important, and in this case, there was none. It’s because we always should learn from our experiences, so as to avoid past difficulties and promote better future decision-making. It’s because the UEA already has a toolbox, and doesn't it make sense to use the UEA toolbox as part of a pre-emptive, pro-active plan, as opposed to casting around for convenient ATMs to be plucked when a crisis like this finally comes?
Of course, it also makes more sense to enforce the ordinances we already have as a city, so our elderly buildings and the people in them are not neglected to the point of collapse … but one miracle at a time, please.