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Five in the running to manage City-County Building

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Indianapolis Mayor Greg Ballard’s office is reviewing proposals from five commercial property managers that want a crack at running the City-County Building for the next 30 years.

One of the bidders, who did not want to be named, said most of the proposals would provide the city with a substantial upfront payment—without increasing the city's annual cost of occupying the downtown high-rise. But the official who has been in charge of the building for decades doesn't see how the city can get cash out of the deal without an increase in costs elsewhere.

“How can anybody do that?” asked Ron Reinking, general manager of Indianapolis-Marion County Building Authority. “There are so many costs that are going to be fixed. I’m not sure how you can squeeze anything else out of that.”

The building authority, which has managed the City-County Building for the past 50 years, is making a strong bid to keep its job. The building authority shared its proposal, which is one of five under review, with IBJ. Other respondents could not be reached for comment or declined to disclose details of their proposals, which came in response to a June 6 request for information.

Ballard decided this summer to open the City-County Building to private management because he opted for the city to take title to the building Aug. 1. Previously, the building authority held the title and leased the building back to city and county agencies, which include the Marion County court system and the Marion County Sheriff, which has a jail in the building.

City Director of Enterprise Development David Rosenberg hoped the prospect of entering a long-term pact with a reliable tenant would be so attractive to commercial property managers that they’d offer upfront cash. The city would spend that money on other infrastructure improvements.

At the same time, Rosenberg said Ballard does not want to raise the cost of using the City-County Building.

Rosenberg declined to share the five proposals, which he said are still under review. He also wouldn’t comment on how many of them offer cash in advance.

"We were generally encouraged by the creativity and effort put forth by the respondents,” Rosenberg said.

Four national firms are in the running: CBRE Inc., which expressed an interest back in June; Jones Lange LaSalle; Cassidy Turley; and Colliers International, according to a person close to the bidding process. Gordon Hendry, first vice president at CBRE, confirmed that his firm submitted a proposal, which he said remains confidential. “We’re very excited about the [proposal]. We think it’s the right step for the city to be exploring this.”

As a quasi-governmental entity, the building authority could issue tax-exempt bonds to provide the city with upfront cash. A 30-year bond for $10 million, for example, would require a rent increase of 78 cents per square foot, according to its proposal.

The city last year paid $4.85 million to lease the 731,000-square-foot building, plus a 621-space parking garage, from the building authority.

After subtracting common spaces such as hallways, that rent amounts to $7.29 per rentable square foot, a substantial discount to the going rate of $19 per square foot for downtown Class B office space, the building authority says in its proposal.

The building authority argues that it would beat any market-rate rent, even after accounting for the fact that it doesn’t pay real estate taxes, because of its expert management, cost controls and lack of a profit margin.

The building authority’s rental rate includes unlimited utilities and 24-hour access to the parking garage. The rent has been flat for the past three years because of the city’s ongoing budget crunch.

The building authority’s pitch doesn’t only rely on low costs. It also proposes to improve the south plaza so that it ties into the Cultural Trail on Washington Street. The building authority would pay for the improvements by setting up a separate not-for-profit organization to collect private donations.

“It’s kind of walled off. It’s very formal, and we would want something that would be much more inviting to the public," Reinking said.

The idea is to make the plaza a “wide spot” in the Cultural Trail, which is already a gathering spot for Megabus riders. That stretch of Washington Street will see more foot traffic if the city follows through with its plan to turn a parking lot on the south side of the street into a transit hub.

The building authority also suggests that Ballard broaden the request for proposals on the City-County Building to include all governmental office needs for the next 50 years.

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  • Building Authority better for the city
    Just like history we tend to forget all the good that was done in the past not just the bad and every time it takes more time to get back to where you were that was the right choice to begin with and for what, to make some sort move like fixing something that is not broke, it's a big time mistake. I have a great relationship with the city employees in all areas and I must say Ron the G.M. for I.M.C.B.A is and has always went above and beyond to solve problems these people are trying to say needs solved, Ron has already done that. Thanks readers Richard S Whyde
  • Crminal
    Was part of the Ballard "mandate" the right to tie the hands of the next two generations? Or just to grab as much cash as possible now to cover incompetence of the first four years?
  • What's Next
    Is there any asset that this Mayor will not sell off so some private company can cash in at the expense of taxpayers? This reminds me of the parking meter deal. ACS gets 70% of the revenue off parking for the next 50 years. We can't get out of the deal. The Mayor had 10 year out provisions put in, but if you look at them you find they can't actually be exercised. What are we going to have...a 50 year management contract so the Mayor can get more upfront cash while the costs to taxpayers goes up? Is he going to give naming rights to the building. I can see it now, "Keystone Construction Government Building."
  • how stupid
    a governing group that cant even run a road,parking lot, or any program should be as dumb to set and collect taxs on us is ponzi government scam on the pubic (government cant do their job so privatise it because their unemployed buddies can do it better then public servants-right on scam),if you break down their thinking we should understand a corperation doing such thinking is they failed to operate and are auction off when they can function-so a non functional governing group are social failures or possible scammers to be polite,but a 50 year sentence-a contract is a crime on indiana's citizens who lost what they invested in. waite and see total recall thinking for air food water hec bring in those solent green politicans when they feed us the dead on a plate again?
  • need to learn
    Need to learn waht happend when we signed a long term contratct on the toll road. That moneyt is almost gone now and their still a LONG - LONG time left on that lease!! How soon we forget. My man Mitch will be leasing Mackey Arena soon to IUPUIFW for their home games soon. The Lady and men Boilers will play more games on the road to ensure that Mackey is available.
  • uh huh
    "Indianapolis Mayor Greg Ballard’s office is reviewing bribes..." Damnit. I meant "proposals". Sorry. I forgot my political language decoder ring.
    • if it sounds too good...
      "Cash upfront without an increase in cost for going forward" -- this reminds me of how they sold their parking deal to the public, except the rates went up and hours were extended. And then they said that the city was making more money this way. Well, I would hope so. And what's up with constant lack of transparency?
    • 30 years
      How dare this mayor restrict commerece for 30 years. The republican way is to payoff the politics is to give a company a long term contract, or to pay his buds with angie list cash or a huge pay increase.

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    1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

    2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

    3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

    4. If you only knew....

    5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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