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Thursday, June 23, 2011

Tammy Sakry reports in ABC Newspapers about the last Ramsey city council meeting.

This link. And there was citizen input, as Sakry reports in ending the item. Read about it there. Beyond that aspect, Sakry begins and explains:

Anonymous letter accuses city of corruption in The COR project
GOVERNMENT, NEWS - WEDNESDAY, JUNE 22, 2011 3:58 PM BY TAMMY SAKRY


At the beginning of June, several Ramsey residents received a letter from the Citizens Summit of Ramsey Corruption. The group, whose membership remains a mystery, claims that corruption is taking place in The COR project, which is costing the taxpayers money.

The letter is full of outright lies, said Mayor Bob Ramsey at the June 14 Ramsey City Council meeting.

It has very few facts and the group did not have the “cojones” to sign it with their names, he said.

With that prelude, the report continues where citizens can distinguish "outright lies" from where hair-splitting distinctions can be made, but without any real difference:

According to the letter, the Ramsey City Council paid $6,760,000 for the vacant land once owned by the Ramsey Town Center (RTC), LLC.

In fact, the city’s Housing and Redevelopment Authority (HRA) paid $6.75 million for 150 acres and the Minnwest Bank Central, which held the $35 million foreclosed mortgage, was required to pay $1.25 million in back taxes on the property, said Deputy City Administrator Heidi Nelson.

A $60,000 difference, less than a 1% discrepancy, reporting continuing:

Although the Citizen Summit claims the purchase costs the 6,000 Ramsey households $1,300 per household, Nelson said the group’s facts are wrong.

Ramsey has 8,100 households and the city did not issue any bonds to incur debt service to purchase the property, she said.

So-

This may be the nub of disagreement, the report continuing:


Development manager

The anonymous letter also claims the taxpayers pay $80 per year for the city economic development director and Landform Professional Services.

According to the letter, “the city council pays about $100,000 to a director of economic development. Because of (the) COR, they now have hired a private development company – Landform – which charges the city $480,000 per year.”

The city’s economic development/marketing manager’s salary is $73,000, said Nelson.

Landform, which has been working on The COR project since 2010, receives $15,000 month for administrative fees from the HRA, which has a $375,000 levy and $10,000 in monthly incentive advancements for the first year.

“The advance on incentive compensation is deducted from incentive compensation due at the time of the (land) transaction,” Nelson said.

[...] While the letter’s claim that Landform has not sold any property in The COR in 18 months is true, there are two properties that are scheduled to close this summer.

The land sale to Flaherty and Collins for the 230-unit market rate luxury apartment complex, The Residence, is expected to close in late July and a land sale to TOTI Land Development for a 85-unit senior housing project is expected to close in August, Nelson said.

There are also approximately eight to 10 active development deals on which the Landform and the city are working, she said.

“Contracts on many of these deals are expected to come forward in the coming months,” Nelson said.

Counting chickens before they are hatched looks like eggs to me. And as widely known, Flaherty and Collins decline to buy without millions of public dollars put at risk, for their rental gamble. And their proposed building, if ever bulit, promises to be an eyesore. Reporting continues:

Flaherty and Collins

The Citizens Summit letter also highlights Flaherty and Collins Properties, its recent track record and city subsidies for The Residence.

According to the letter, the Indianapolis company “… has driven two properties into bankruptcy.”

Flaherty and Collins Properties, which has been in business since 1993 building, constructing and managing multi-family housing in nine states and has 90 properties, totaling 12,000 units, has had two projects go into bankruptcy in recent years.

In October 2009, the company filed for Chapter 7 bankruptcy on a 48-story, 419-unit condo tower it was constructing in Charlotte, N.C.

It was followed seven months later when the company filed for Chapter 11 bankruptcy on a 274-unit apartment complex in Raleigh, N.C.

“The bankruptcies happened at a time when real estate values deflated because of the economy and (changes in) credit market,” said Jim Crossin, Flaherty and Collins development vice president, in December 2010.

The Raleigh project had been completed, but the mortgage market situation made it difficult to get permanent financing to pay off the construction loan, even though the complex was 93 percent filled and was already making money, he said.

The project was later sold and everyone was paid, Crossin said.

Then there is the hanging cloud - the great unknown - how much will Flaherty and Collins hose the city for, in round number millions, worst case scenario. Reporting is:

City subsidies

The Citizens Summit letter also claims Landform promised Flaherty and Collins almost $8 million in subsidies for the apartment complex and a free parking lot for the residents.

The group claims the subsidy is more than $1,200 per Ramsey household.

At this time, the city has no idea how much it could be asked to subsidize as the project is still being negotiated by Flaherty and Collins and its bank, said Mayor Ramsey during the June 14 HRA meeting.

“We don’t even know if we are going to be subsidizing it yet,” he said.

It would be a bellweather statement, "We will pay no subsidy." Any bets on that secenario?

I participated in citizen input after the Nelson statement was read into the record [read it online, here, see related commentary, here]. Also providing citizen input was former council member Margaret Connolly, who did a better job of things than I did in terms of the emperor's clothes.

Again, either wait for a month until formal city meeting minutes are put online, or simply read the Sakry synopsis which is factually accurate (no matter what posted minutes may later state); this link.

_______________UPDATE______________
Sakry also summarizes council comments in reaction to the anonymous mailing. To the effect that there have been no misdeeds. The thing was reported as frustrating to mayor and council because they worked very hard on "The COR." My take on that, hard is not necessarily smart; and as to good faith, everyone should agree that unsound judgment, alone, is not a crimes.