Why the taxpayers should say no to IRG on Airport deal

Yesterday, I posted documents showing City employees structuring a deal for IRG so UPS could get out of a long-term lease for a very valuable building that sits on city property.

IRG stands to put a few million in their pocket right off the bat, with the city asking for a couple of years of escrowed lease payments. Then IRG can take the assets of the building- strip what they want, and later walk away.

Why can’t the city just take a one-time payment from UPS to get out of the deal- and hand the building over to the taxpayers, who then can contract with any developer who is willing to pay the city?

Or, use the building as an incubator – instead of building more buildings in Tech Town?

Maybe, it’s because the people who structure deals for the city don’t know how to structure deals at all? Remember the Wayne Avenue Kroger fiasco?

The City Commission should put this vote on hold until they have time to study this deal carefully.

Something smells pretty bad about the deal as presented.

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36 Responses

  1. larry sizer April 26, 2011 / 2:00 pm
    David, keep up the great work of keeping the public informed to the City of Dayton nefarious dealing. It is no wonder that the City does not want you to be on the City Commission, as you would be pulling the covers off the villainous corrupt bumbling leaders.
  2. Brew Meister April 26, 2011 / 3:04 pm
    David, well stated.  Keep the pressure on.  Hopefully your message can reach enough people to make a difference.  The citizens of Dayton need to wise up to the reasons their city looks like a ghost town with buisness fleeing away leaving an industrial wasteland behind.  Narrow-minded and self serving fat cats on the city council could care less as long as they can cut thier short range deals.  They have no vision, no passion, and no care for the future state of the city and it’s people.  How many deals have they cut with groups like IRG?  How many renovated commercial Business parks, buildings do we need when you have no prosperous business growth in the city of Dayton?
    Stay on watch, give them their notice.
  3. David Esrati April 26, 2011 / 10:25 pm

    And here the paper even writes- the city risks $3 million to do this deal:

    http://www.daytondailynews.com/business/city-risks-3m-to-end-ups-lease-hopes-new-group-will-bring-jobs-1145868.html

    Why not just take the money from UPS direct- then pay IRG fess for renting the place- anything in excess of what they got from UPS?

    There is ZERO reason to take a $3 million hit on this- unless someone is getting paid off.

    IRG has only done local shell game moves with their other local “investments” moving MedWorks to the old Delphi site- and now to move Kramer Graphics to the GM truck plant.

    Show us a real deal please.

  4. Civil Servants Are People, Too April 27, 2011 / 2:10 am
    Mr. Esrati, you left out the good parts of the DDN article…
     

    Documents obtained by the Dayton Daily News through a public records request show the city and UPS both were intrigued by Herres’ plan, but weren’t comfortable with his ability to execute.
    UPS officials asked Herres for a business plan multiple times in 2010, but claim he never provided one.
    In a letter sent by UPS to Herres dated April 30, 2010, Keith Steinbrecher, the company’s real estate coordinator, wrote: “You have not presented us a professional business plan that contains the requisite details that would enable us to present the project to our board of directors as well as have the city of Dayton’s endorsement … As a result, we must respectively decline to discuss any project further until such a business plan is produced.”
    Herres claims he’s never received the letter and took multiple tours of the building with UPS officials after Steinbrecher’s letter.
    Steinbrecher referred questions to a company spokesperson who said UPS officials gave numerous tours of the facilities to almost anyone who showed interest.
    At no time did Herres have a contract or memorandum of understanding to lease the building, UPS officials said.
    Herres still had not produced a valid business plan, according to Riordan and a UPS spokesman on Tuesday.
    Riordan reiterated it was UPS who chose IRG over Herres and the city is only involved because it owns the land.

     
    Again, I’ll ask – what experience does he have with solar and industrial development?   Maybe it’s there, I just don’t know, but no one has demonstrated it publicly yet.
     
    Instead of taking shots at IRG, tell us what he brings to the table other than a vague amount of “experience” as a developer and a lot of lawsuits in the county records.
     
    Sometimes “no” is a valid answer.   Tell us why Dayton should say yes to Mr. Harries.
     

  5. David Esrati April 27, 2011 / 4:56 am

    @CSAPT- I’m sorry, you do know the story of Fred Smith- who got a “C” on his business plan- the one that went on to become FedEx?

    The point is- of course UPS prefers IRG- and has no interest in Mr. Herres plan- because it doesn’t let them off the hook for the property. It doesn’t involve a one time payoff to IRG, so they can get out of the 9 years remaining on their lease. CSAPT are you that frakkin stupid?

    I don’t give a flying kite about Mr. Herres’s business plan in this deal- what I care about is the City offering to write off $3 million dollars of guaranteed income based on handing a piece of real estate over to vultures who have ZERO dollars in this deal.

    Why doesn’t the City just offer the same deal to UPS and keep all $5.75 million? Please answer that question you smug idiot. (and yes- I’d 5am and I’m calling you names because you obviously are intentionally missing the main point here).

  6. somedude April 27, 2011 / 5:28 am
    “We have a large proven developer with personal guarantees” is the key phrase in the DDN article this morning foretelling the rip-off of Dayton.

    I will personally guarantee Mr. Riordan a gaggle of unicorns.

    Lynn Sullivan is a partisan, corporate hack.

  7. David Esrati April 27, 2011 / 5:52 am

    @somedude- I believe you mean “Lucas Sullivan” from the DDn.

    As to the “Large proven developer with personal guarantees” should be read as “IRG has personally guaranteed to pay some people off”- since they have offered ZERO of their own money- and have not created a single “new job” on any project in Dayton other than $ for themselves.

    Riordan and Dickstein have already proved themselves incompetent to work with developers- all one has to do is look at the “Kroger deal” at Wayne and Wyoming.

  8. somedude April 27, 2011 / 7:50 am
    Thanks for the correction. Sullivan took a partisan shot at the guy in his story by giving him scant mention of “someone who has owned landscaping businesses.”

    Sound like a familiar propaganda trick?

    The spin in favor of power in the DDN is astonishing.

  9. djw April 27, 2011 / 8:46 am
    @CSAPT:
    Do you see any problem at all with the message this sends to local entreprenours? It seems pretty clear to me. You have a creative idea that might make you some money and do the city some good, you convince big corporation X to go along with it. Lots of spec work developing the plan, negotiating with UPS, etc.
    Then the city comes along and undercuts you in an effort that provides corporate welfare for two large corporations–neither of which have any significant investment in the City of Dayton.
    The message here is clear–please don’t bother trying to invest in our city, unless you know the right people. In my short time here, I’ve heard that story again and again. It’s absolutely stunning that you don’t see how toxic this is.
  10. Hall April 27, 2011 / 9:54 am

    We have a large proven developer with personal guarantees that has a track record dealing with this.
    IRG wants the deal completed as soon as possible because they claim to have two interested tenants, airport officials said.

    IRG said it plans to bring 900 to 1,400 jobs to the facility…

    Personal guarantee, Mr Riordan ? Will it be a money-back guarantee ? :-)

  11. somedude April 27, 2011 / 10:58 am
    What we are seeing with this deal, and others like it that litter the landscape in America, is the same old story of the power class taking advantage of the reigns.

    The power class in Dayton know that Dayton is dead. What we are seeing is those who are left picking at the bones of its remaining wealth, attempting to sap whatever nutrition remains.

    They are part of the same systematic kleptocracy that has robbed and pillaged America and the world.

    They are our local version of what Rolling Stone’s Matt Taibbi referred to as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

    If you see them on the street, pelt them with rotten cabbage.

  12. JeffB April 27, 2011 / 11:20 am
    What some dude said. Give the man a prize because he hit the bulls eye.
  13. bobby April 27, 2011 / 11:29 am
     The City and Citywide development are presented “creative” ideas almost on a daily basis. (One of my favorites was the citizen who wanted a grant, not a loan, to convert the arcade into a water park.) Many of these self proclaimed developer/entepreneurs lack the financial wherewithal, experience or network to follow through with their idea. CSAPT’s reference to lack of experience and county records makes it much easier why the City decided to go another direction.
      IRG should produce letters of intentand all related coorrespondence from prospective tenants that are not currently in the region before the City agrees to this release for UPS. If they can not, or the tenants are local, the City needs to slow this deal down. Time is on the side of the City.   
  14. David Esrati April 27, 2011 / 11:33 am

    @Bobby- time was on the side of the city- until they handed the check over to IRG this morning. Only the Mayor stood up and said no. http://daytonmayor.blogspot.com/2011/04/trials-and-tribulations.html

    How does Stuart Lichter get to sit down to play poker without putting any cash on the table?

    Payoffs is the only answer- unless we have total idiots running this city.

  15. bobby April 27, 2011 / 11:43 am
    “Payoffs is the only answer-unless we have total idiots running this city”

        I’m not sure about the former,  but could agree with the latter.

  16. bobby April 27, 2011 / 11:59 am
    David,  If the bank that Joey Williams works for held the land lease on this building, do you think they would have accepted this deal? Me thinks not. That is why Lichter gets into these deals with no equity and cash at closing. He negotiates with politicians and bureaucrats who are spending OPM. Smart guy.
  17. Hall April 27, 2011 / 12:12 pm

    And start to wonder why the other 4 voted yes.

    I know why ! ’cause they want to remain in office !! Sadly, if things like this continue, I don’t foresee Gary running for a 2nd term. He can’t do a lot or make much progress when votes are 4-1 too often…

  18. Allison April 27, 2011 / 3:58 pm
    Why would IRG be able to “ask for a significant decrease in lease payments based on the land’s depreciation” if they are only leasing the land?

    The airport, though City of Dayton property, sits in Vandalia and Tipp City. If this really works out (slim chance), it might make up for Dayton chasing off the Trapshoot and the millions of dollars they spent in the surrounding communities each year. The Trapshoot grounds, which the airprot claimed they needed for expansion years ago, sits empty and run-down today. Maybe Nan will get around to tearing down the eye sore.

  19. David Lauri April 27, 2011 / 10:40 pm
    @Allison: The airport’s website claims it was annexed into the City of Dayton in the 1980s:

    Throughout the 1980s, the Airport became a unified parcel of real estate when it was officially annexed into the City of Dayton.

     
    Ohio law allows for cities to annex international airports they own, even if the property is not contiguous to the rest of the city. See Ohio Code – 709.19. Payments to compensate township for lost tax revenues; authority to annex international airport.
     
    Fortunately for Dayton, its airport still had international flights when it decided to annex it.

  20. Gary April 28, 2011 / 9:18 am
    Isn’t IRG after the Moraine GM Plant building, too?  Look out Moraine!  David, good presentation at the City Commission meeting yesterday!  However, I don’t think the Commissioners nor Miss Lavendar heard a word you said. ;-(  Maybe you should wear your mask next time!
    The two IRG gays, I mean guys, reminded me of Fannie Mae and Freddy Mac without their makeup on, ha ha.
  21. Rufus April 28, 2011 / 2:26 pm
    Why has no one mentioned the fact that the city was previously hamstrung by the FAA condition of 100% Aviation use- and yet, now IRG gets to only meet a 10% requirement? Uh, you don’t think that makes marketing the building a wee bit easier?
    UPS just wanted out of the lease- and got an easy payoff- why the city didn’t take the money directly is a mystery.
  22. Civil Servants Are People, Too April 28, 2011 / 6:45 pm
    @Why doesn’t the City just offer the same deal to UPS and keep all $5.75 million? Please answer that question you smug idiot.

    So… you are suggesting that Dayton should control more property and take a bigger stake in the real estate market?   I seem to remember some ideas that indicated otherwise…

    @The city has been in the business of buying up real estate for too long.

    @ We should be trying to sell our trash-collecting (or cargo hub?) systems to suburbs, offering them package deals- including taking over their road crews, water delivery, trash collection etc.

    @ What if there were zero incentives for new construction, instead, only offering incentives on projects that either reuse and adapt (like a cargo hub?), or increase population density?

    @Tax abatements will be offered only for covering costs of creative re-use of existing infrastructure– to aid historic preservation, to cut down demolition waste and to incentivize a “no-sprawl” policy.  (post entitled “The Esrati Plan”)

    And my favorite….

    @Also, before you ask for any kind of break, show us a viable business plan- or don’t ask us to invest. You have to have one if you’ve already got other investors as you claim.

    PS.   I’ll ignore the late night name calling.   It’s all in good fun.   That’s why I keep coming back!

  23. Gary April 28, 2011 / 7:08 pm
    Bet the City gets stuck paying for the insurance on the building, then gets stuck demolishing it–a lose / lose situation!  What is IRG’s plan for the building?  How will they create jobs there, start another Emery Air Freight?
  24. bobby April 28, 2011 / 10:11 pm
    CSAPT, Your pettiness is showing. Thanks for not posting on taxpayer’s time. 
  25. Civil Servants Are Full of Shit Calling Themselves" Servants" April 29, 2011 / 12:04 am
    What the hell does “civil servant” mean?  I get a fat pension for not doing much and acting like I’m a servant?  Bullshit.  That term may have meant something years ago, but it’s insulting to taxpayers today.  If you’re going to spout off while acting like you’re a “servant”, I’ve got two words for you:  shut the frack up.
  26. Civil Servants Are People, Too April 29, 2011 / 1:54 am
    Thank you for proving my point.    There is no respect for government anymore.  Do you really think you’re helping anyone with a comment like that?
     
    Yes, we are servants.    I truly believe that.   For every bad apple in the bunch, there are a thousand more working hard to help our communities across the country.  They are working damn hard.
     
    What exactly do you think has changed from “years ago”?   Do you believe that government work has gotten easier since the recession?   Do you think we enjoy pay cuts and furloughs?    Is it fun to be short-staffed and go years without a raise?    No.
     
    I know a lot of people in the private sector are in the same unfortunate boat, but that doesn’t make it any easier for anyone.       Why would you want to tear people down instead of lifting them up?   We rise and fall together.
     
    PS… That so-called “Fat Pension” still takes a big chunk out of my paycheck, just like anybody with a 401k or 403b.    The difference is that I have to dedicate 30 years of my life to my community in order to get it.   I think that’s worth something.
  27. David Esrati April 29, 2011 / 10:32 am

    @CSAPT in reference to your comment trying to make me a hypocrite- yep, I agree the city shouldn’t be owning property. But, that doesn’t mean turning over property that we do own for nothing, to someone we hand selected, wrote the contract for and got some people paid off to do the deal.

    Ah, and lets go back in history- did the taxpayers pay for the building in the first place? How many abatements and deals did we give Emery?

    And- there is also my position that the airport should be a bargaining chip toward regionalization- we should have handed it over to the region in exchange for say- a simple, single point of contact income tax system

    As to the viable business plan- IRG wasn’t forced to show anything- yet got the deal. Herres was. Read the Mayor’s reason for voting no.

  28. Ice Bandit May 1, 2011 / 4:27 pm
    There is no respect for government anymore..(CSAPT)
     
    …..you’re welcome……
  29. joe_mamma May 3, 2011 / 7:45 am
    There is no respect for government anymore..(CSAPT)
     
    …..you’re welcome…… – Ice Bandit
    And government does not respect the citizenry.
  30. Gary May 9, 2011 / 5:40 pm
    If IRG was smart, they’d move the conveyor belts from their other big abandoned building at the airport and put them in the Moraine facility … Why would Kramer Graphics want to move in such a big hollow box anyway, wanting 60,000 square feet of a 4.4 million square feet building as GM’s?
    Besides, I’ll bet the County of Montgomery wouldn’t give Moraine a penny anyway for economic development–politics as usual!  And why have the Montgomery County Commissioners switched seats anyway–referring to the man who was once the chief spokesman replaced by the wine lady, I cannot think of their names right off hand? (deb lieberman?) If you follow the County’s meetings, too, you’d see what I mean–what a joke!
    Here’s some more bad news for Dayton: Click here: BAE Systems to cut 200 jobs

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