Should city officials pay apartment developer?
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Columbus Mayor Kristen Brown opposes the use of public funds to pay $300,000 to the developer of The Cole apartment project, a sum considered key to the 2009 deal by individuals involved in the negotiations.
Payment to Buckingham Companies was earmarked for architectural fees.
According to documents reviewed by The Republic, the payment was authorized by the Columbus Redevelopment Commission and offered by Columbus Downtown Inc., the private company that works on behalf of the commission.
A sticking point is the fact that wording doesn’t specifically describe who should pay.
The initial document signed by former CDI board member John Burnett says “the City” is obligated to pay the money. Brown, also a member of the five-person Columbus Redevelopment Commission, said she is concerned that the wording means the city of Columbus, which would mean an expenditure from the city’s general fund. She said CDI has no legal right to obligate the city to pay any amount of money.
However, Burnett said it means the Columbus Redevelopment Commission would pay the money, and it would do so with tax-increment financing (TIF) district funds.
A city ordinance states that the Columbus Redevelopment Commission needs approval for expenditures from the Columbus City Council only if they exceed $500,000, Brown said.
Two documents signed by CDI members, one in 2009 and the other in 2011, make reference to the $300,000 payment to Indianapolis-based Buckingham, which is working to complete the $18 million apartment complex at 200 Jackson St. It is targeted to open Jan. 30, wrapped around the city’s Second Street parking garage. Buckingham received land plus tax and bond incentives to develop the apartments.
The Sept. 2, 2009, document, signed by Burnett and Buckingham representative Bradley Chambers, states, “The City shall remit $300,000, when available, but in no event later than eighteen (18) months from the date of this Agreement to offset the cost of the Project, remitted pursuant to statutory authority.”
The memorandum also grants a perpetual access and parking easement to Buckingham, with the exclusive use of 200 parking spaces, out of the 700 total in the garage, for which Buckingham would pay CDI at a rate of $17 per space per month. Those payments would begin early next year.
The second document, signed Sept. 23, 2011, by CDI member Ann DeVore, states that the parking rent would not exceed $50 per space per month. The document also says that if the $300,000 payment is not made, Buckingham can withhold its monthly rent payments as a way to recoup the $300,000.
The $300,000 was supposed to be paid to Buckingham by March 2011. It has not been paid, nor has Buckingham requested it, said Stan Gamso, attorney for the Redevelopment Commission and CDI.
The issue came up during the Sept. 17 Columbus Redevelopment Commission meeting, when Gamso advised Brown and other members of the commission not to pay the money because of legal questions pertaining to the two documents.
No signatures of any city officials are on the documents, and the money never was legally appropriated by the Columbus City Council, Gamso said.
“I can’t advise you to spend $300,000 you did not sign up to do,” Gamso told the commission members at that meeting.
“As mayor of Columbus, I can say absolutely we won’t pay it,” Brown said.
City officials would prefer the issue be resolved soon because of the possibility that a lawsuit could be filed. Gamso said he has been talking with attorneys for Buckingham about settling the issue.
What payment is for
CDI is a private company that was created by the Columbus Redevelopment Commission under the administration of then-Mayor Fred Armstrong. Its role was developing the downtown by making agreements, acquiring property and signing leases.
CDI’s structure was necessary to negotiate details of leases that businesses didn’t want made public, former CDI and CRC members said previously. However, the structure also allowed CDI to use public money that remained outside public view.
Brown campaigned last year about seizing control of CDI, transferring all of its assets and leases to the public Redevelopment Commission and dissolving CDI.
Susan Thayer Fye, named president of CDI this year by Brown, said the current CDI board members found no mention of the $300,000 during a search of CDI and Redevelopment Commission minutes.
Minutes of Redevelopment Commission meetings, posted online at columbus.in.gov/redevelopment/meeting-minutes/, also make no mention of the $300,000 for The Cole, or reflect any vote on that sum.
DeVore said she could not recall what the $300,000 was for, and the sum didn’t stick out to her.
“I truly can’t remember what all went on back then,” she said.
The documents themselves do not specify what the money was to be used for.
Burnett said there was a $300,000 offer of cash in 2009 “in order to secure the deal.” He said CDI made the offer on behalf of the Redevelopment Commission, and that the commission intended to pay the sum with TIF district funds.
The $300,000 did not seem excessive, Burnett said.
“On an ($18 million) project with an excellent company in Buckingham to make an investment in downtown when everything is not as it is now? ... No, it seemed like it was a very reasonable investment and a public/private partnership,” he said.
Burnett, leader of the Community Education Coalition, believes an obligation exists to pay Buckingham.
“The Columbus Redevelopment Commission, using TIF funds, is obligated to pay Buckingham, unless there are changes that were made to the original agreement,” he said.
Tom Vujovich, the Columbus Redevelopment Commission president during the deal for The Cole, said in a Letter to the Editor of The Republic, published July 31, 2010, that the $300,000 was for architectural fees.
He wrote: “The Columbus Redevelopment Commission will be considering a payment of up to $300,000 to pay the cost of architectural design. As a major project at the entrance to our community, it is important to ensure that we have a design that is compatible with the downtown. If no project is built on this site, we will have to pay for a finished exterior to the Second Street Garage at a cost in excess of $1 million.”
When The Republic asked Buckingham representatives last week why the $300,000 was needed and if it would request the sum be paid, Buckingham — through a public-relations firm — issued a brief statement.
“The Cole is thrilled to be a part of the Columbus community and is looking forward with excitement to opening the project and being a part of the positive growth of the City of Columbus,” Buckingham spokesman Erik Johnson of the Indianapolis-based Borshoff agency said in an email.
Reasoning challenged
About a half-dozen city leaders contacted by The Republic have questioned why such a large sum of money was needed considering that:
n Buckingham received the land for free. The Irwin Sweeney Miller Foundation gave the land to CDI, which in turn gave it to Buckingham.
n A tax-increment financing district, called the South Commons Residential Block Development Allocation Area, was created by the Columbus Redevelopment Commission July 6, 2009, for The Cole site. Buckingham insisted on the TIF district to move forward with the plan, The Republic reported Sept. 3, 2009. TIF districts capture property taxes generated by the assessed value of property in the district. The captured taxes can be used to fund improvement projects in the district. Property taxes collected by the Columbus Redevelopment Commission from Buckingham will be given back to Buckingham to pay its debt on the project. Vujovich said in his 2010 letter that Buckingham would pay about $180,000 annually in property taxes, and the Redevelopment Commission pledged to use 90 percent of that amount over 15 years to pay the bond.
n The city approved a $2.5 million bond to support construction of the apartments. The Columbus City Council on July 20, 2010, approved a taxable economic development revenue bond in that amount.
The loan agreement, signed by the city and Buckingham, says that Buckingham alone is responsible for repaying the bond. The city’s participation ensured a lower interest rate.
Buckingham representative Jane Hendrickson said at the July 6, 2010, city council meeting that Buckingham would not be interested in building in Columbus if the city did not back the bonds, The Republic reported the following day.
Frank Jerome, a member of the Redevelopment Commission and Columbus City Council, contended Friday that Buckingham received excessive assistance from Columbus and thinks the city should refrain in the future from providing such large amounts of assistance.
“If a project is so marginal that it cannot pull its own weight, then we are better off without it,” he said.
Jerome said that if the city had wanted to give cash to Buckingham, approval should have gone through the Columbus City Council, which would have made it public.
Buckingham should not be paid the $300,000, in Jerome’s opinion.
“If Buckingham wants to try to enforce a contract the city did not sign, I hope we do everything in our power to fight it,” Jerome said.
Who’s who
Buckingham Companies
Indianapolis-based developer of The Cole, a 146-unit apartment complex that wraps around the Second Street garage in downtown Columbus.
Columbus Downtown Inc.
Private company created by the Columbus Redevelopment Commission to acquire property, negotiate leases, develop downtown Columbus.
Columbus Redevelopment Commission
City commission that provides economic opportunities by rehabilitation of land use within Columbus. Helps in establishing new businesses and residential units while providing local public improvements.
Whom to contact
Whom to contact to share your thoughts on the Buckingham payment issue:
Mayor Kristen Brown: 376-2500
Columbus Redevelopment Commission Director Heather Pope: 376-2663
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