Wednesday, July 18, 2007

Harrison Square may face legal challenge

*EXCLUSIVE*

Below is a copy of a letter submitted by John Kalb to various parties today. I have put the letter in italics. I am publishing this letter with Mr. Kalb's permission. Please read it.

From : John B. Kalb July 18, 2007
3720 Mulberry Road
Fort Wayne, IN 46802

To: Fort Wayne Redevelopment Commission
Attn: Christopher Guerin
David Wright
Steve McElhoe
Karen Goldner
Quinton Dixie
Cc: John Wernet, Commission Attorney

Subject: Your resolutions # 2007-49 and, because of interrelationships, #2007-48

Commissioners:

I am writing to ask that you NOT approve the subject resolutions, which pertain to the baseball stadium license and management agreements, because I think that Indiana state law mandates that you may not enter into an agreement for the management of a public facility without first making a public request for proposals. In particular, I direct your attention to IC 5-23-2-2(which defines “board” and which definition I think encompasses your Commission), IC 5-23-2-7(which defines “operating agreement” and which definition I think encompasses the proposed Hardball/ stadium agreements), IC 5-23-4-1(which grants the Commission the authority to enter into an operating agreement for the management, maintenance, etc. of the stadium) and IC 5-23-5-1(which requires that the proposed agreements be preceded by and pursuant to a public request for proposals).

I also refer you to a recent Indiana Court of Appeals decision of Stuller vs. Daniels, issued on July 16, 2007, which confirms that a public-private agreement for the operation or management of a public facility is illegal if the governmental entity does not first make a public request for proposals.

At a minimum, I respectfully request that you delay any decision on the referenced resolutions until you have obtained COMPETENT legal counsel assuring you of the legality of these agreements, have made such opinion, if any, known to the public, and have provided time to consider any contrary views. The entire Harrison Square project has aroused much public suspicion and any premature and illegal action on your part at this time will only add to the public cynicism.

I will say that if you approve these resolutions at your scheduled special meeting on 7/23/07, I intend to file suit challenging and enjoining your actions.

I have enclosed a copy of IC 5-23-5 and a summary of the judicial decision that I have referenced.

Thank you for your consideration.



Signed John B. Kalb
Cc: blanka@jg.net; kquilligan@news-sentinel.com; each of the nine Fort Wayne Common Council members plus attorneys: Tim Manges, Joe Kimmel, Joseph Bonahoom and Philip Larmore

As many of the readers of this blog know I am NOT an attorney. I do not claim to have much knowledge about the law.

I am certain that The City has not put the current proposed Baseball Stadium Management Contract our for bid.

My cursory review of the Indiana Code sections cited leads me to believe that Mr. Kalb is correct and I will be interested in seeing how the Redevelopment Commission responds.

I will be especially interested in how Karen Goldner responds to this. She is currently running for City Council in my district and I am looking forward to seeing how she handles this.

Mike Sylvester
By at

19 comments:

Jeff Pruitt said...

John,

The Redevelopment Commission has violated state law numerous times w/o any retribution or even investigation from the city council.

Why would they stop now?

18 July, 2007 23:52
Richard said...

IC 5-23-2-7
"Operating agreement"
Sec. 7. "Operating agreement" means an agreement between an
operator and the governmental body for the operation, maintenance,
repair, or management of a public facility.
As added by P.L.49-1997, SEC.34.

IC 5-23-2-11
"Public facility"
Sec. 11. "Public facility" means a facility located on, or to be
located on, real property owned or leased by a governmental body
and upon which a public service is or may be provided.
As added by P.L.49-1997, SEC.34.

IC 5-23-2-14
"Public service"
Sec. 14. "Public service" means any service customarily provided
by a governmental body.
As added by P.L.49-1997, SEC.34.

----------

Isn't Hardball providing the baseball and not the city?

Personally I feel as though this isn't a "Public Service" such as waste removal or another type of utility or service.

19 July, 2007 08:47
John B. Kalb said...

Richard - I read it the way you do - after all we still use English in our governmental paperwork! John B. KaLB

19 July, 2007 12:02
Richard said...

What i was indirectly saying John is that a bid process wouldn't be needed since no laws were broken.

19 July, 2007 12:31
Jeff Pruitt said...

Richard,

I don't think baseball is the service John is referring to (although he can certainly speak for himself). I believe the issue is that HC has an operating agreement with the city to run the baseball stadium and this agreement was never put up for public bid

19 July, 2007 13:08
Anonymous said...

Richard - You have lost me- why does a law have to be broken to require that bids be public? John B. Kalb

19 July, 2007 14:04
Karen Goldner said...

As City Council was told Tuesday evening, this arrangement is much more similar to the agreement regarding the Colts stadium in Indianapolis than it is the privatization of a public service. The Redevelopment Commission's attorney is drafting a response to Mr. Kalb and that response should be done before our meeting Monday evening.

I know that many opponents of Harrison Square do not agree with the Commission's attorney's opinions as to anything about the project. I respect people's right to oppose this project, and obviously you have a right to challenge its legality. However, I trust John Wernet (our attorney) and his advice on these matters.

John has been Redevelopment Commission attorney for over 20 years. He has worked on a lot of redevelopment transactions including the Grand Wayne Center, the original Standard Federal Building development, Summit Industrial Park, the Ren Square development, Southtown Mall, etc. He is an extremely knowledgeable and respected advisor to the Commission. I do not believe that there is someone in Fort Wayne who is more capable of interpreting and advising on Indiana redevelopment law. On the Commission, we ask his legal advice and then follow it, and I believe that is the correct thing to do.

19 July, 2007 16:04
LP Mike Sylvester said...

Karen:

Please let me know at least ONE instance where I have questioned the legality of Harrison Square prior to posting a copy of Mr. Kalb's letter.

Mike Sylvester

19 July, 2007 16:31
Karen Goldner said...

I wasn't talking about you, but Mr. Kalb and Mr. Garvin have repeatedly questioned the legality of the project.

19 July, 2007 16:52
Anonymous said...

Karen - Please review the information that I left for your look-see with the receptionist at Development office. Keep in mind that in all legal suits, one attorney is normally right and one is wrong. How can you be so sure that Mr. Wernet is correct? I read english text as well as most people, and I think he is wrong. I also think that Mr. Wernet is not calling the shots on this- it is coming from the Baker & Daniels group since they stand to make a pile of money on the lease/bond for the project. John B. Kalb

19 July, 2007 17:41
Anonymous said...

Karen-

Do you have the exhibits that go with and are referenced in the various Harrison Square agreements? The Redevelopment Commission kindly gave me copies of the agreements, but claimed that they have no copies of the dozens of pages of exhibits. I contacted two City Councilmen, but they also were not given the exhibits.

I assume that the Commission members do get a chance to review these, and I would like to do so as well- in advance of your next meeting. Can you be of assistance? Is there some reason why the public cannot review them?

Mark Garvin

BTW- certainly Mr. Wernet's experience in these matters is much greater than my own. If he disagrees, so be it. I would suggest that you ask him a second question: in the unlikely event that his opinion is wrong and Mr. Kalb is correct, are the consequences large or trivial? In my opinion, the consequences are potentially quite large. On the off chance that Mr. Wernet agrees with me on this point, what would be the downside to asking Mr. Wernet to seek a second opinion from an equally experienced attorney? Mr. Kalb raised his issue only 24 hours ago, and you seem quite comfortable dismissing it completely and without any explanation as to why Mr. Kalb is so far off base. Perhaps explaining wht he is wrong would avoid the litigation he has threatened.

I'm sure judge Boyer, who has years of experience and is certainly most capable, believed her decision concerning the need for public bidding for management of the Developmental Center was the correct one right up until July 16, when the Court of Appeals reached a contrary conclusion.

Thanks for the help with the exhibits.

19 July, 2007 18:27
Karen Goldner said...

John,

Yes, I did read what you left for us.

I read English, too. However, I haven't spent 4 years in law school and 25 years practicing real estate and redevelopment law. There are many parts of Indiana code that deal with how the Redevelopment Commission operates, and the fact that on a given page it says something doesn't mean that there is not some other part of the code that changes the meaning of the words on that page. Lawyers disagree on many things (everything?) and they base those disagreements on interpretations of often complicated laws. I mean no disrespect when I say this, but I am more comfortable relying on the opinion of a lawyer experienced in this area of the law than I am on people who are trying to find any argument they can to fight a project with which they disagree. My personal non-lawyer "opinion" is that there are a number of ways to address your concern (one of which is to open bids to anyone who owns a minor league baseball franchise in Fort Wayne) but I'd really rather hear John's explanation first.

It is clearly your right to oppose Harrison Square or any other project or policy of the government. I appreciate your bringing up a number of issues for the Commission's consideration. However, I believe that we are operating entirely and appropriately within the law.

Mark,

No, I've not seen the attachments. I have been told that they will be provided before the vote. The attachments are certainly very important - for instance, one of them delineates what items are maintenance (the responsibility of Hardball) and what items are capital (to be paid by the Maintenance Fund established by the City for future improvements). I cannot speak for the other Commissioners, but I will not vote on the agreements without seeing the complete package including the attachments.

And unrelated to HS, Mark, but as long as we're blogging here - following up on the point you raised to me after last month's meeting regarding the $150,000 that the Commission provided to a developer to provide appropriate access to commercial property on Illinois Road near Jefferson Pointe, Greg Leatherman has obtained written confirmation from the developer that the money will be returned to the Commission in the event the project does not move forward. I didn't get a chance to mention this to you Monday night.

19 July, 2007 18:41
Anonymous said...

Thanks much Karen and I'm pleased to read your thoughts about the exhibits. I'm interested in seeing the same ones you mentioned.

I know the question you are referring to (I know I was at the meeting), but I don't recal being the one who asked it. Possible that I was as memory fades as age advances. Thanks for the courtesy regardless.

Mark

19 July, 2007 18:48
Anonymous said...

Karen - Who manages Memorial Stadium? It is not the Wizard's owners - it is the Allen County War Memorial Coliseum, Randy Brown, chief executive. They are a "public" entity. Hardball Capital is not - they are a "private" entity - and that is why IC 5-23-5-1 applies - it covers any public-private operation or management agreement.

Karen, please take the time to read through the ruling on the Stuller vs State of Indiana case from the Indiana Court of Appeals - you can access it: www.indianalawblog.com page down to Monday, 7/23/07. Then mentally substitute "Kalb"for "Stuller",
"F.W. Redevelopment Comm." for "FSSA" and "Hardball Capital" for "Liberty" and see if you don't agree that this makes the two resolutions you are voting upon appear to be very illegal. The language is very non-lawyerly once you get past the Latin terms. Especially read pages 20 through the top of page 23.
If you feel that you cannot make an independent judgement on items you are presented with in your commissioner's role, especially when the monitary amounts involved are as large as being considered in this case, why are you on the commission? The city could just have Mr. Wernet call all the shots and save your valuable time. I do appreciate the fact that you do question things and are visably trying to perform the job you have been asked to fill for the benefit of all the city taxpayers.
I will see you Monday afternoon. John B. Kalb

19 July, 2007 20:46
Karen Goldner said...

I apologize for not being clear, John. Let me try again: I am not going to get into a lawyer debate with you on this before I hear what our attorney says. I am not qualified to practice law, and neither are you. After I hear Wernet's opinion I can decide whether I agree with his assessment or yours.

Sole source purchasing decisions can sometimes be justifiable and even be more efficient, and under certain circumstances are allowed under the law. For instance, the Coliseum board outsourced its security to a private company in a no-bid contract. I don't know the details of their decision but I'm sure they felt it was in the best interest of the Coliseum.

19 July, 2007 21:03
Anonymous said...

Karen - The whole point of the Appeals Court case was just that - A management agreement is NOT a purchasing document and 5-23-5-1 applies to it - not the one used for sole source purchasing. I still think you should look at this before your Monday meeting. I will print out a copy and have it with me then, just in case. John B. Kalb

19 July, 2007 21:46
Jeff Pruitt said...

I for one do not share Karen's confidence in Mr Wernet. He lost all credibility with me on this project when he proclaimed that the commission didn't need to get appraisals before purchasing the land because they did not use eminent domain - that is flat wrong and you don't need a law degree to know that.

In fact it's now my understanding that Mr Wernet and company were no longer making that claim in a recent meeting w/ council members.

I certainly respect the fact that he has a lot of experience but that doesn't make him infalliable. In light of his statements on eminent domain I would suggest the Redevelopment Commission seek a secondary opinion...

19 July, 2007 22:54
Richard said...

Sorry Jeff, I never responded to your comment --

I feel as though "operating agreement" doesn't fall in line with all of the definitions.

Ballparks are not a service customarily provided by cities. If this can be argued as a public service, then I do agree that the city screwed up.

This is what I believe the city's attorneys are arguing.

20 July, 2007 15:32
Anonymous said...

Richard - That's exactly what they are contending - I heard this directly from one of our city attorneys- And they are wrong!!!
John B. Kalb

20 July, 2007 15:59

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