At NAC, we're still scratching our heads over Develop New Albany's well-documented failure, when asked, to take a stand on bridge tolls.
In sidestepping the issue, DNA cited non-profit organizational restrictions that may or may not apply to the strong probability of an involuntary tax on mobility harming DNA's "Main Street" by reducing an influx of consumer money from Kentucky, while at the same time taking money out of the pocketbooks of local residents.
Expressing such a logical sentiment about dollars and sense, especially given the ongoing and inexplicable absence of an small business economic impact study from the clerely unreliable Bridges (Tolling) Authority, could not possibly be construed as political -- could it?
It is curious, then, that after indicating an institutional reluctance to be involved with "politics," DNA now regards the controversial River View riverfront development project as conflict-free fair game for announcing an opinion.
Accordingly, DNA turned out in force at the April 4 city council meeting to show the organization's support for Mainland Property's proposed use of anywhere between $12 and $18 million in captured TIF tax revenue to build a parking garage to serve as collateral to complete the developer's for-profit condos and shops. As we've pointed out time and again, supporting a similar public-private partnership for the YMCA is one thing, and for a for-profit firm quite another ... especially when DNA's former president and current membership chair, Mike Kopp, is listed in the "about us" section at River View's website.
This is by no means "personal," even if New Albanians as a whole insist on believing that differing viewpoints constitute epic blood feuds. They do not. All I'm saying is this: There was a palpable stench when council person Bob Caesar, whose business is a member of One Southern Indiana, vigorously advocated giving economic development money to 1Si.
Granting the existence of varying interpretations of conflict of interest, is it not fair to note in the most general of senses that Mike's involvement with both the project's developer and the non-political organization touring the development is, shall we say, unusual?
Even if the answer is "no," why aren't we discussing this aloud? Let's at least hope that Mike abstained from the vote -- if there was one.
Michael Kopp
Founder and Principal Broker of Blue Sun Real Estate Services. Michael “Mike“ Kopp, has served the Indiana and Kentucky commercial real estate markets since 2003. Prior to becoming a Commercial Real Estate Professional, Mike held positions of supervisor, plant manager and general manager in the environmental field for 15 years handling hazardous and non-hazardous materials.
Mike served as President of Develop New Albany during 2009 – 2010, and as an active member since January of 2007. Develop New Albany is a not-for-profit Main Street Program, whose mission it is to preserve the history and architecture of the local downtown area and revitalize the downtown businesses. Mike encourages everyone to join Develop New Albany (or like organizations) within their communities to help build and grow their community to make it a better place to live for all.
I think Mr. Kopp needs to explain EXACTLY what his relationship is with this development. And when did it start?
ReplyDeleteUntil then, I will withhold judgement on the ethics of the situation.
I believe DNA didn't begin its advocacy of RV until months after Mike's term as president ended. Currently, Mike is not an officer of DNA.
ReplyDeleteFurthermore, given the broad, broad base of 1SI, I don't see the huge conflict of interest with Bob's vote. I disagree with it, but I don't think it was much more of a conflict of interest than a YMCA member voting for a downtown YMCA.
There are plenty of examples of conflicts of interest on the CC, but Bob's 1SI vote is at the bottom of my list.
Dan,
ReplyDeleteWhile you have a point about Bob, Mr. Kopp is currently listed on the "leadership" page of DNA. Not a minor point, IMO.
My bad. The relationship is listed on Riverview's website.
ReplyDelete"Questions regarding condo pre-sales, retail leasing, and office leasing should be directed to:
Mike Kopp
Blue Sun Real Estate Services"
What I assumed but now know. Except for when his relationship started.
As I've said before, the sort of conflict you describe between a non-profit and a for-profit, ala DNA-RiverView-M.Kopp, is unfortunately business as usual here. Any "deal" you take apart at city hall is the same.
ReplyDeleteIn a democracy the free press would whistle-blow this sort of stuff. There would also be attorneys who work in the public interest who can use the legal system to challenge these unethical arrangements...except here, where there are no public interest lawyers.
As is plain to see, all the lawyers are too busy trying to game the government, ie. taxpayers, for their living. Those that can't make it on the gov't tit go into chasing insurance companies... what a world.
Dan, please help me clear this up.
ReplyDeleteWas River View somehow part of the new markets tax credits application a while back? I know you did a lot of work on this.
I don't recall this coming up when I was a member of the DNA and UEA boards (I've been gone from both for at least a year), but in my recollection, DNA (perhaps the city and UEA also, not sure) would have gotten some sort of revenue/funding from the NMTC's implementation.
Can you explain this to me? I might well be confused and would appreciate a clarification.
I dug out an old VHS copy of Tartuffe a few days ago but have been too concerned to play it since the tape seems a little brittle. Luckily, now I don't have to risk it.
ReplyDeleteRoger,
ReplyDeleteThe formal applicant for the NMTC award was a new LLC (“New Albany Redevelopment CDE LLC” or something like that) 51% owned by the city and 24.5% owned by each UEA and DNA. The application only allows for one “controlling entity.” We chose the city to control since we deemed it to have the best “resume” when it comes to big redevelopment projects. The NMTC application is broken up into four broad sections, each representing 25% of the score. Applicants with the highest scores get credits. Those with lower scores don’t. One of the four sections relates to projects that may utilize the credits should be applicant win credits. Basically, Treasury doesn’t want to waste credits on a city if there’s no projects even proposed in that city’s low income areas.
I did not assist with the 2010 application but I did much of the leg work for the 2009 application. In 2009, we mentioned six New Albany projects that may take advantage of a NMTC award. Basically, I threw in any big real estate project I could find proposed for one of New Albany’s qualifying (read “low income”) census tracks.
The six projects mentioned in the 2009 application were Lopp’s West End development, a Loop Island Tannery deal, Carl Holliday and Steve Goodman New Horizon’s deal, an M. Fine Shirt Factory proposal, one small deal ($700K or so) I cannot now remember, and Bobo’s River View. For each project, I listed (often estimated using my own calculations) total square footage, number of living units, number of construction jobs, and number of permanent jobs, and total investment. I also wrote a short paragraph telling how much progress had been made to date, such as whether the developer had an option on the land or whether a market feasibility study has been performed, etc.
The way NMTCs work is that, had our application been successful, essentially we would have had authority to award tax breaks to investors (almost always a bank) who invested cash into a qualifying project in low income New Albany areas. We asked for $25 Million in credits. We did not win but an entity controlled by the City of Paoli was awarded $50 million. Last year Louisville received another $80 million or so.
The investor in this case is not the developer. The investor typically is a bank who makes a seven year equity investment in the deal in exchange for a tax break. At the end of the seven years, what happens to be money that was invested by the bank? Well, it depends on how the deal was structured. Sometimes the controlling entity gets part of it but Treasury usually limits the controlling entity’s “take” to 3% of the investment. Treasury’s motive is to make sure that the money stays in the deal. The program is designed to give favorable financing to otherwise difficult or impossible to do deals. The money may go back to the bank as payment for having made a lower than normal interest rate low or a loan with a higher (often exceeding 100%) than average loan-to-value. So could there have been money left over for DNA, the city or UEA? Yes, maybe a few hundred thousand after seven years. However, we also could have negotiated deals with investors and developers that resulted in no money going to city/DNA/UEA and instead resulting in a lower interest rate on the mortgage.
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ReplyDeletecon't
ReplyDeleteBottom line, I decided to highlight Bobo’s project solely because I thought it would improve our application’s score. Had we received an award, the mere fact that River View was highlighted in the application did not mean the city had to use it NMTC allocation on River View. The credits could have been used all on one deal, on all six of the highlighted projects or six entirely different projects not mentioned in the application. Treasury decides if we get the credits, but had we been awarded credits, we would have decided which developments used them and along what terms. The decision on which projects would have received local NMTC funding would have been made by the five member managing committee for the applicant. For the 2009 application, that applicant’s managing committee was Mayor England, Carl Malysz, Irving Joshua, (representing the city), Larry Brumley (for UEA) and me (for DNA). Oh, CDFI Fund would have had to sign off too.
Other entities have credits that Bobo may use so RV still may use NMTCs. However, it just doesn’t look like it will be the city calling the shots on that aspect of the deal.
One more thing.
ReplyDeleteWhile (As of 2009) Treasury limited the controlling entity's "take" to 3%, your application will score more points if you take less.
If I recall correctly, I wrote that our applicant would keep 1% of the investment.
Usually, you're awarded about 1/2 of what you ask for, if anything. But had we been fully funded, that would have left $250,000 to be divided between the city (51%), UEA (24.5%) and DNA (24.5%).