Gary Public Safety Facility, 555 Polk Street

Gary Public Safety Facility sale-leaseback back on the table

Contributed By:The 411 News

If the city council approves the mayor’s revised proposal for the sale-leaseback of the Gary Public Safety Facility, $40 million dollars will come into the city’s coffers over the next 3 years. “This will be the best financial situation the city has seen in the last 10-15 years,” Mayor Karen Freeman-Wilson said at Tuesday’s meeting of the Gary City Council’s finance committee.

The city needs money to pay its bills. The sale-leaseback of the public safety facility brings a large and immediate infusion of cash from investors who are willing to give the city a long-term repayment plan. It’s called a sale-leaseback because the city’s police department, city clerk and city judge will remain in the building.

Mayor Freeman-Wilson said the sale-leaseback is a part of the city’s financial recovery plan to balance the budget and pay down its capital debt.

The mayor proposed the sale-leaseback in the summer of 2018 and it was approved by the council but the measure had lain dormant until now. “We couldn’t get the best interest rate, so we waited.” The city was able to make it through the year and first 3 months of 2019 from an additional $5 million in property tax collections, a large portion of it from US Steel, the mayor said.

“We had to bite the bullet and get an $8 million temporary loan in February of this year,” the mayor said. Had the sale-leaseback been executed in 2018, the city would not have needed to borrow.

Now the city has a favorable purchaser. The administration brought last year’s ordinance back to the city council for revisions. The purchaser wants a mortgage on the facility and there is a lower interest rate. Payment would be $3.54 million annually for 20 years and the city is negotiating a 6.25 to 6.50 percent interest rate. The mayor wants to close by the end of June.

First District Councilwoman Rebecca Wyatt had concerns about the long-term debt and high price tag being placed on the incoming administration. “Have you spoken to anyone in the new administration about this?”

“We’ve reached out to Mr. Prince and provided documents. We anticipate sitting down with him. We have sat down with several members of the incoming city council,” Mayor Freeman-Wilson said.

The city will use revenues from its portion of the Lake County Local Income Tax to make the annual payments.

The revised proposal, Ordinance 2019-33 will be presented at the next city council meeting.

The finance committee also heard a request from the Gary Fire Department for a transfer of funds within its Fund 224 accounts. Ordinance 2019-34, presented by Deputy Chief Mark Jones, seeks a transfer of $50,000 from the machinery and equipment account to the gasoline account. Jones said the department is delinquent in payments to its gasoline vendors and the transfer will fund the gasoline account through year’s end.

Story Posted:05/29/2019