You can’t trust Dayton City Hall

Arial view Dayton AirportIf you think the people running the City of Dayton have your best interests in mind, you are in for an eye opener. I warned of problems with this deal with Industrial Realty Group last week.

First, meet our local hometown hero: Mark Herres, CEO of The Builders Development Group. Mark had an idea to put a solar array on top of the former Emery air freight hub at the airport. The building, currently owned by UPS, which would cost about $380 million to build today, sits in a mothballed state until 2020.

Over the next 9 years, UPS must keep it in perfect operating condition, because of special regulations of buildings that sit on FAA grounds. The city leases the land for $657K year- and is guaranteed it until 2020. UPS pays about $185K in property taxes to the county. All in- UPS spends at least $2 million a year to keep an empty building. Included with the building is a conveyor system worth about $20 million, 5 diesel generators worth about $500K each and a fuel farm that’s worth about $15million (it’s made of stainless steel and aluminum). There is 166K square feet of IT office space built out with fiber and fast internet. There is a million square feet of warehouse space, in an International Free trade zone. It even includes the old airport tower- which, believe it or not- has nothing to do with the FAA tower that was just built. If you just scrapped the metal in the building- you’d get a cool $6 million or so.

Mark approached UPS in 2009 with a way to end up at least cash neutral though 2020- by leasing the roof for $1- supplying UPS with cheap power- and slowly filling the facility with jobs- both in green energy (solar manufacturers) and in turning the fuel farm into bio-composters. The warehouse could also house distribution for tech companies- but all this really doesn’t matter, because his deal was with UPS- and they weren’t getting out of their lease.

Mark approaches the city and has a conference call with airport director Ahmad Iftikhar, Stan Earley, Tim Riordan, Shelley Dickstein from the City manager’s office- Walter Krgowski (airport deputy director). Chris Meyer from the Dayton Development Coalition and representatives from UPS. As the lease holder, the city must sign off so the FAA can approve the use.BDG dec 10 Krygowski

Even though the lease would still be paid by UPS no matter what BDG does- this is a deal between BDG and UPS, the city asked for “Financing Details” and- at some point asked what would happen to the building in 2020 when the UPS lease was done.

UPS said that by 2020- they’d sell the building to BDG for $1 and let them take over the 20-year option.

Apparently- when that number popped up- someone saw a chance to cut themselves a deal.

On Jan. 25, 2010, Director of Aviation Ahmad Iftikhar (who is already looking for another job) wrote Riordan- about the “Emery MOU” – Memorandum of Understanding between the city and UPS/BDG and says in item 8. “At some point we would want IRG to talk to Mark Harries (sic.).” In item 3 he’s also asking Doug Hanish- a local real estate property appraiser to look at this deal. Why would an appraisal be done since this deal has nothing to do with the sale of the building which belongs to UPS? Jan 25 2010 Iftikar to Rirodan IRG

By March 1st- on city stationery, Ahmad- who is about to accept a job in New Orleans, sends the wording of an MOU to Stuart Lichter- the President of IRG in Downey, Calif., that he should use to make an offer to the city of Dayton to buy the building out from UPS and cut Herres and BDG out. Ahmad is promising to undo a deal which the city had already entered into a Memorandum of Understanding with a local player. Mar 1 2010 Iftikar to Lichter

Of course, Lichter takes a week or so- to review it- and then sends back Ahmad’s language- copy and paste: Mar 12 2010 IRG to Iftiakr

Next we have city manager – fast tracking IRG deal, asking via e-mail April 1st, 2011 to “Stuart,” as if they are best friends- where he wants to see a pro forma- asking why IRG’s deal only is through 2016 instead of 2020- and something in the agreement that indicates the UPS funds will be spent on the project (as opposed to pocketed by IRG- who has not shown any kind of plan for the building).Apr 1 2011 Riordan to Lichter

Note, IRG set up an LLC explicitly for this deal so they can take the money out and run if they feel the need. IRG also wants the fuel farm taken out of the deal- as they see it as a liability.

Lastly- we have an e-mail on April 15, 2011 where the FAA is sticking their nose in- rightfully- asking what IRG plans to do with the FAA’s investment in an aviation facility- which requires the new owner to have at least 10% aviation-related use. There is a final jab- in that if the new owners don’t comply- the FAA can pull the ownership of the building- probably after IRG has scrapped as much as they can out of it. Apr 15 2011 FAA to City

The City Commissioners were handed this- plus a lot more information on this deal today- for a vote on Wednesday as part of the city manager’s recommendations:

They are entering into a deal with IRG- doing business as “Air Commerce LLC” and walking away from a guaranteed contract with UPS.

Under the terms of the deal, UPS will pay IRG (not Air Commerce) $5,750,000 and Air Commerce will place $1,280,000 in escrow and pay the city $640K a year for a total of $3.2 million- with options. Why the rush to do a deal with a company that clears an easy couple of million right off the bat- without promising the city ANYTHING in return? Why did the city rush out to move around our local hero, BDG- who was promising jobs, innovative technologies- and not changing the terms of the lease at all? Why do we need to do a deal with someone smaller than UPS- which is what we have now?

There can only be one answer- and that is that someone at IRG is paying people in City Hall- or promising to pay them. Both people who started this deal at the airport have moved off to New Orleans.

There is ZERO reason to act on this deal this week– yet, already, almost 70 employees of UPS and their security firm etc- were already given walking papers- with a termination date of Friday. How does this benefit the taxpayers?

Questions need to be answered- because we can’t trust city hall at all. These documents prove that they are conniving backstabbers, unable to do an honest deal.




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