City officials disagree with a contention by the previous Columbus mayor and a second local resident that city government cannot legally provide $1 million in Tax Increment Financing monies to renovate the new home for the J. Irwin Miller Architecture Program of Indiana University.
The Columbus City Council is scheduled to vote on the $1 million authorization at its 6 p.m. meeting today at City Hall.
A vote by the council in support of the spending would provide final approval to the measure, which was approved May 21 by the Columbus Redevelopment Commission. Any expenditure of more than $500,000 by the redevelopment commission requires subsequent approval by city council.
Former Mayor Kristen Brown and local resident Ken Fudge contend a 2011 State Board of Accounts audit states the redevelopment commission does not have legal authority to give money to a nonprofit to make public improvements to a local building.
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Instead, the redevelopment commission should do a public bidding process and do the improvements themselves, the two contend. Brown and Fudge contend the commission has no legal authority to approve paying Indiana University invoices on a project that the university controls.
The 2011 audit, which city officials say was requested by Brown when she took office in 2012, refers to a different situation, said Jim Lienhoop, a former city councilman who defeated Brown for mayor in 2015.
In the audit, an unidentified State Board of Accounts auditor offered comments about the commission’s $633,000 payment in TIF funds to Columbus Downtown Inc. for the buildout of the space for the downtown Indiana University Center for Art + Design in 2011. The audit notes the building was not owned by the City of Columbus.
The auditor commented that there was not a stated purpose which would allow TIF funds to be granted to a not-for-profit, Columbus Downtown Inc., for buildout of the IU Center for Art + Design. The auditor also wrote that officials would have been required to follow statutory processes for bidding out a public works project if using TIF funds.
The 2011 State Board of Accounts report is the only separate audit that has been done on the redevelopment commission, Clerk-Treasurer Luann Welmer said. All other audits have been done as part of an overall city audit by the State Board of Accounts.
Recent vetting process
While nonprofit CDI — dismantled after Brown took office — was an intermediary to the 2011 buildout of the center, there is no intermediary in the former Republic building project, Lienhoop said.
Lienhoop said the city’s plans to provide $1 million in TIF dollars for the former Republic building, located at 333 Second St., have been vetted for legal purposes by redevelopment commission attorney Stan Gamso, city attorney Alan Whitted, and consulting attorney Bruce Donaldson of Barnes and Thornburg in Indianapolis — and could be reviewed by an attorney for Welmer, if she asks for one as the city’s elected financial officer.
Gamso said the situation with the former Republic building, which has been vacant since December 2016, differs in that the money is going directly to a public university that is bidding out the renovation project according to state law, subject to all Indiana open records rules.
“Had amounts been expended by the redevelopment commission, as allowed within the statutes, rather than granted to and expended by CDI, officials would have been required to follow statutory processes and procedures for the bidding of public works projects,” the 2011 state audit states.
In regards to the IU building, the university will submit invoices to the city, which will be paid through the redevelopment claims at monthly meetings, Gamso said. All redevelopment commission claims are public record and may be viewed by the public at City Hall, he said.
Recent sale
Columbus Regional Health purchased the former Republic building two years ago from Rayanna Corp., a local company established by the Brown-Marshall family, previous owners of the newspaper.
Before the hospital system settled on its own plan for the building, CRH sold the property to IU as the Columbus home for its new masters of architecture program, with the city providing $1 million in renovation funding. The Community Education Coalition is providing another $1 million for renovations in a public-private investment for the project.
Lienhoop, as president of the city council in 2011, sat in on the State Board of Accounts audit report session that Brown is citing as proof that the IU architecture project is illegal.
Lienhoop said he initially wanted to contest the auditor’s comments within the report, but said he soon realized that Brown, in addition to being elected mayor, had appointed herself redevelopment commission president and controlled both the city attorney and redevelopment attorney who could have initiated an appeal of the auditor’s comments.
“I asked the auditor is we don’t challenge this, what happens?” Lienhoop said.
The answer was “nothing,” he said.
“It’s a faulty report and the conclusion that was reached is wrong,” Lienhoop said of the auditor’s summary seven years ago. “The context that something is illegal is not true. Nothing has come about as a result of the auditor’s report. No penalty. No sanctions. We did not give any money back. It’s not even the equivalent of a speeding ticket.”
Dismantling CDI
When Brown took office, she closed down Columbus Downtown Inc., which privately managed downtown redevelopment efforts, and hired Indianapolis accounting firm Crowe Horwath to audit the transactions between CDI and the city from 2008 when CDI was formed under then-Mayor Fred Armstrong to 2011, when he left office.
In a report presented in 2013, Crowe Horwath said CDI had loose control of money, improper assessment of donated property and lacked providing a paper trail for decisions, but found no indication that any of the money was used for any purpose other than the stated one of downtown development.
“As an accountant and a previous auditor, I have looked at this extensively and I see nothing illegal that was done here,” then-CDI president Susan Fye said.
Brown agreed at the time that there was no indication of financial wrongdoing within CDI’s accounts, according to published reports.
In an email to The Republic regarding her contention the IU project was illegal, Brown said she did not mean city officials were committing a criminal act by their actions in the project involving the IU architectural program.
“And just for clarification, when I say illegal, I just mean contrary to law, not necessarily criminal. If the (redevelopment) commissioners just rely on bad legal advice, it could be illegal but not criminal,” Brown said in an email.
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Columbus City Council meets at 6 p.m. today in the Cal Brand Meeting Room of Columbus City Hall, 123 Washington St. The meeting is open to the public.
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