Is Dayton City Hall getting smarter?

Where were the guarantees of performance that should have of been in place for the Wayne Avenue Kroger and the “Ballpark Village” “development” debacles?

Before investing our tax dollars the city should have some kind of guarantee in place that the developer actually has to follow through or make the city whole after it does the developer’s bidding. Apparently, Miller-Valentine doesn’t think it’s worth it to put up its money before asking for a handout from taxpayers for its proposal to commercially develop about 150 acres of the 527 acres of land at the city’s Dayton-Wright Brothers Airport:

In a letter last week, the city told Miller-Valentine Partners Ltd. II that the proposal was rejected because it failed to meet Dayton’s requirement that any development proposals be accompanied by a $1.5 million letter of credit as a guarantee of performance for obtaining a land lease with the city for the development.

Under the city’s terms when it requested proposals from development companies, any developer selected ultimately could lose the $1.5 million if the company failed to initially develop at least 20 of the 150 acres to generate land-lease payments to Dayton within three years.

via Rejected? airport? plan need $1.5M credit, says city.

Of course, the cozy relationships developers have had with politicians were a lot easier to pull off when the politicians were fat with cash.

Maybe Miller-Valentine would have had the money to put up if it hadn’t had their former president Michael Grietzer got off-book with his little side deal for himself, using info that he gained as a development partner with the City of Franklin.

It’s time that any private business that asks for tax dollars or special deals start putting up performance bonds so that the taxpayers don’t end up with nothing after “investing” in future jobs, development or pipe dreams and promises not worth the paper they’re written on.

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14 Responses

  1. Will Brooks April 6, 2010 / 11:53 pm
    Cool.

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  2. Civil Servants Are People, Too April 7, 2010 / 12:45 am
    Nah, just a completely unrealistic requirement.    No bank would give a letter of credit for a speculative development with no tenants, especially before they have any rights to the property or any specific plans.   It makes no sense to even ask for a letter of credit in this stage of the game.
     
    That’s like asking for a deposit just fill out a job application.   Not happening.
     

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  3. David Esrati April 7, 2010 / 9:18 am

    @CSAPT- you don’t appear to understand how real business works. You have a business, it has a proven track record, you have relationships and a business plan. You go to a bank or to your investors- and you get backing-

    then you can start selling your money making venture- and it should earn the payback.

    That’s how real investment and business works.

    Not where taxpayers hand over the store, and let you stock the shelves and sell without guaranteeing that you’ll pay rent.

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  4. Jesse April 7, 2010 / 9:28 am
    David,
     
    It has happened again. You explained capitalism.  I am so proud.
     
    Stay on this anti-economic-fascism kick and I will not even have to post anymore.
     
     

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  5. Will Brooks April 7, 2010 / 11:31 am
    Admittedly, David has redeeming qualities….lol

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  6. Gene . . . April 7, 2010 / 12:56 pm
    It’s time that any individual or business that asks for/or receives any tax dollars or special deals start putting up performance bonds so that the taxpayers don’t end up with nothing after “investing” in that person or  in future jobs, development or pipe dreams and promises not worth the paper they’re written on.

    We need to apply it to everyone, every business. Welfare is bad in any form.

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  7. Robert April 7, 2010 / 1:47 pm
     If one reads the conditions  of the RFP it is easy to understand why there was little interest from the development community. CSAPT is correct.  

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  8. jstults April 8, 2010 / 12:26 pm
    We’re talking about a Performance Bond here right?  What’s wrong with that?

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  9. Steve April 8, 2010 / 4:16 pm
    This is a bit different than a performance bond. It’s a lot riskier because it depends on external factors that MVG doesn’t have control over (economic conditions, feasibility of the project). Most performance Bonds aren’t a problem because they’re pretty sure they can get the job done.  I can’t imagine a bank that would float that to any commercial speculative development.  MVG apparently thinks it’s a bad risk to even float that to themselves.

    Here’s something for COD to remember…   Wayne Ave Kroger, Ballpark Village, Austin Pike.  Which of these 3 doesn’t belong? What’s the golden rule in Real Estate?  This is a much lower risk proposition than the others.  Just drop the unnecessary credit requirement and it will go soon enough.

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  10. Robert April 8, 2010 / 7:01 pm
    Steve got it right.  There were several proposals discussed with the Airport for this land prior to the RFP.  The inclusion of the bond requirement  for this parcel is unnecessary, but was probably included due to the mistakes made in the Wayne and Ballpark Village negotiations. The difference, in this case ,  is the City of Dayton already owns this land.  They are not spending funds to option or purchase land on behalf of another party. The bond requirement is to protect the decision makers from themselves. The city has repeatedly been embarassed by their economic development people  making bad decisions on developers and their ability to perform….  The DDN article put a nice spin on the story for the city. They could have focused on the fact that this was probably the only response they received. The city owes MVG a big thank you for submitting their proposal……  If the city wants this land to generate revenue  they should rethink their position on this one.    

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  11. jstults April 8, 2010 / 8:08 pm
    CSAPT:

    No bank would give a letter of credit for a speculative development

    Robert:

    I can’t imagine a bank that would float that to any commercial speculative development.  MVG apparently thinks it’s a bad risk to even float that to themselves.

    Steve:

    The city has repeatedly been embarassed [sic] by their economic development people  making bad decisions

    You gents sure make a convincing argument that the city should get out of the business of speculating with tax dollars.  The future is Tool Town!  No, wait Tech Town!  No, wait its…aw hell, let’s just cut the frequency we pick-up trash…
    Robert:

    The city owes MVG a big thank you for submitting their proposal…

    WTF!?  Where I come from a proposal like that is called unresponsive.  Submitting a non-responsive bid is a service to the city?  Dayton is so lucky to have such civic minded developers…

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  12. Robert April 8, 2010 / 8:58 pm
    js…  The” unresponsive proposal” , at least, explains that there is interest,  but not with the conditions outlined in the request.  Isn’t this better than thinking there is no demand?  In the case of the airport, what tax dollars are being speculated?……….Tool/ Tech Town does not have a private developer and is being promoted by a cluster of public economic groups and double dipping private consultants.    

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  13. jstults April 8, 2010 / 9:35 pm
    Robert:

    explains that there is interest,  but not with the conditions outlined in the request.  Isn’t this better than thinking there is no demand?

    Sure, that’s a swell public service announcement, but do you really think the folks in city gov needed a reminder that local developers are interested in doing development?  Being unresponsive sends a message right?

    …a completely unrealistic requirement
    Just drop the unnecessary credit requirement…
    … rethink their position on this one

    Seems like business as usual (solid use of Web2.0 for your astroturfing btw), each side trying to get the best terms it can.  No one is owed a “big thank you” for any part of it.  If the deal doesn’t work under acceptable terms, it doesn’t work.  No shame in “no deal”.

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  14. Robert April 8, 2010 / 11:20 pm
    js, No shame in no deal. The shame is structuring a RFP  that guarantees no response.

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