Saturday, April 17, 2010

Navistar Clawback Cave Another Mayor Ballard Sellout for Immediate Financial Gratification


Ever notice how politicians who make the most references to doing things for "our children" or for "our future" are often most eager to sell out that future for their immediate political benefit?

Take Greg Ballard. Literally.

The Citizens Gas water deal? You've heard me ad nauseum on how we're mortgaging future water rates for sidewalks now.

But I predict you’ll see a similar story on downtown parking meters soon. The City wants to lease them to a contractor. Such a deal could pay a percentage of total dollars collected each year or a flat fee each year. But I foresee the mayor taking a lump sum up front in exchange for a lease term lasting the remainder of his permissible time in office times two.

(Maybe that’s why the Mayor is so confident that he won’t use the Cit Gas money to pay the $15 million in Conseco maintenance costs for the Pacers. He knows the money train is choo chooing into town).

But there are other indicia of Mayor Ballard's short-term fixation.

A few weeks ago, the Indianapolis Star’s Ted Evanoff reported on the City’s Navistar “clawback.” For the uninitiated, when city officials kowtow to business owners by giving them tax breaks, they do it frequently under the condition that a certain number of jobs will be created.

Indianapolis gave Navistar $18 million. When Navistar tanked and laid off 1,000, the City went to get its money. Navistar said no.

From the story:

When Navistar refused to repay the money, the city faced a long dispute in court. Rather than run up a big legal bill, Mayor Greg Ballard’s administration agreed the city would accept $5 million from the company.

First, the Office of Corporation Counsel is all sunk costs. The City pays the same amount to its lawyers whether anybody in the office works or not. So what the Mayor is admitting is that nobody in his office can litigate a contract case? Yow! That’s scary.

But for the sake of argument, let's run with his idea that his folks are too incompetent to handle this. Say litigating the case could have earned Indy an additional $4 million, or half of what we were promised. If so, eight Indy attorneys billing $250 per hour could each spend 10 hours per week every week for two entire years, and we'd still double our money.

Can any attorney out there conceive of how a contract interpretation case could have required more work than that? I can't envision how one would cost more than $250,000.

In short, the Mayor could have gotten the City a LOT more money, but he took pennies on the dollar. What good would more money do him if it didn't come until his successor occupied the 25th floor of the City-County Building?


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1 comment:

Paul K. Ogden said...

You said:

"Can any attorney out there conceive of how a contract interpretation case could have required more work than that? I can't envision how one would cost more than $250,000."

Response: You are exactly correct. It's a straight case of intrepreting a contract. It's not a long drawn out case. Then again, we're talking about a very inexperienced attorney that is head of the litigation division. Jonathan Mayes quiet simply doesn't know what he is doing. The man had just two years experience when Ballard appointed him head of litigation. How many of us attorneys were experienced enough at two years to head up a litigation division of a major city? I would venture to say none. I'm 23 years in and I'm still learning things.

You said: "In short, the Mayor could have gotten the City a LOT more money, but he took pennies on the dollar. What good would more money do him if it didn't come until his successor occupied the 25th floor of the City-County Building?"

Response: Are you saying that Mayor Ballard is willing to settle for a lot less than what the city is entitled if he gets the money now during his first, and last, term? Surely you jest.