EDITORIAL: Don’t be Fooled by Freeman-Wilson Sleight of Hand

Sale and lease back of public safety building is a ruse to keep residents from looking at payment in lieu of taxes from US Steel


September 15, 2018-There is much consternation regarding the proposed sale and lease back of the Gary Public Safety Building.  According to Chief of Staff Dayna Bennett, the City plans to reap a windfall of up to $40M by transferring title to the dilapidated building and then leasing it back from the Gary Building Corporation.  The plan is full of holes and many have rightfully called the City out on the problems.  One practical fact cannot be overlooked, however.  The plan is an attempt to distract people from the fact that this Administration likely will get a $35M payment in lieu of taxes from US Steel very soon.

The fact that the City has been repeatedly sanctioned by the Securities and Exchange Commission for misleading investors in prior bond offerings makes it unlikely that the sale and lease back will get past the half-baked stage even with a clueless and complicit council.  When the City sold bonds to give 504 Broadway to Vance Kenney and Elzie Higginbottom the City paid a 10% up front premium just to get investors to bite.  That was before the recent budgetary shenanigans were uncovered.  Add to that the deplorable lack of maintenance at  the public safety facility and it seems unlikely the plan would net more than $5M.    (Perhaps the City could put away the buckets next to the judge’s desk while the appraiser is present but I would strongly suggest that any professional appraiser visit on a day when it is raining or risk an E&O claim).  Even if the City could get someone to bite on $20M or more in bonds, the Council must demand a long-term plan that closes the structural deficit prior to any new financing scheme.

The Real Plan

Karen Freeman-Wilson knows that the sale and leaseback isn’t going to happen anytime soon.  So why all the theatrics?  The real plan is to get as much money as possible in a deal for payments in lieu of taxes with US Steel.  The Mayor has already tipped her hand on this issue saying that she is working to get as much of the promised $35M up front as possible.  This is the same scheme which was utilized by the corrupt organization she previously represented-The Gary Urban Enterprise Association.  GUEA obtained $20M in US Steel property tax money from a payment in lieu of taxes.  GUEA promptly spent the $20M on everything from trips to cars to homes for family and friends.  Many of those same family and friends now work with the Freeman-Wilson administration and are anxious to get their hands on the next payment in lieu of taxes from US Steel.  By keeping you talking about the public safety building, no one is watching the real stash of cash.

What is a payment in lieu of taxes?  Generally, a payment in lieu of taxes is paid by an exempt organization such as the US Government.  The rationale is that, although locals cannot tax the federal government, there are times when government owned property needs local services.  In the case of US Steel, they are asking for a large tax break on their proposed $750M investment in the City.   Instead of paying property taxes in the future on the $750M investment, US Steel is reportedly offering $35M to the City.

Where is Council President Brewer on this?




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