Why is Dranoff Properties Getting a Huge Development Fee from L.M. Taxpayers?

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politeia's picture
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I noticed an agenda item for the township meeting tonight that should have Lower Merion taxpayers very concerned.

One should always look over large and important agenda documents closely that are given out to the public the Friday evening before the Wednesday township meeting, with the assumption by Lower Merion Township that nobody will read the agenda and documents when they are posted on the township website Friday evening or over the weekend, they will be busy with work Monday, and by the time they get around to reviewing it Tuesday or Wednesday there is so much information overload it is easy to sneak things by the public Wednesday night.

That's what happened to me. I am just getting around to reviewing this today.

The proposed Development Agreement between Carl Dranoff of Dranoff Properties and Lower Merion Township states at 5.1:

The Budget provides for a development fee of two and one-half percent and a general and administrative free of two and one-half percent of the cost of the entire Project (collectively, the Developer's Fee) to be paid from both public and private sources to Dranoff in consideration for the services to be rendered by Dranoff relating to the Public and Private portions of the Project under this Agreement.

(My emphasis in bold)

Note that this means Carl Dranoff, a private developer, will receive an unkown but large fee from Lower Merion taxpayers (and also from private sources but the wording of 5.1 is not precise on percentages or amounts) to develop and administer both the public (garage and train station) and private (Dranoff's seven story mixed-use building with retail on the first floor and hundreds of apartments above with an underground garage) portions of this development project in Ardmore.

Now, I expect Carl Dranoff to make millions, if not tens of millions of dollars off his private development that comes part and parcel with the public train station development that Lower Merion Township and its commissioners handed to wealthy Gladwyne resident Dranoff on a silver platter.

On top of that, Lower Merion Township and its commissioners, who were supposedly elected to serve the interests of the citizens and taxpayers of Lower Merion, have proposed (in what certainly appears to be an attempt to sneak this by Lower Merion citizens per my first two paragraphs above) that Dranoff receive 5% of development costs in fees.

Let's assume both public and private portions will cost $100 million to develop (by the way, what are the projected development costs? Are they hidden away on the township website or have they been openly discussed and made available to citizens and I missed it or have they not been released to the public even though a Development Agreement is being proposed? They should certainly be known and available to the public at this point in the project.)

That means Dranoff will pocket $5 million, with an unkown percentage of that being Lower Merion taxpayer monies on top of the tens of millions of dollars Dranoff should make on the private portion that he is developing that is essentially a gift from Lower Merion Township.

This is insane and demonstrates once again that L.M. commissioners have no problem tossing taxpayer dollars down the toilet. Yes, developers are known to take fees from investors who back a project, but this is not your typical private development.

This is essentially government corporate welfare to Dranoff Properties. Most, if not all of the management fees are an unnecessary waste of the hard earned money of Lower Merion citizens. This is nothing more than crony capitalism and corporatism by the L.M. commissioners.

Assuming this project works out and as I already stated, Dranoff will make millions off the private portion. If it does not work out, he as a private developer should make nothing. That's the risk you take as a developer. Seems as if Lower Merion Township and its commissioners who are supposed to represent us are seeking to give Dranoff millions to cover possible losses and if the private development really works out, he still makes millions from taxpayers on top of what he will already make.

You ask me, Lower Merion Township and our elected commissioners who work for the township (instead of the People they were elected to serve) should not be paying a "Developer's Fee" at all. Dranoff has in essence received this project as a gift from Lower Merion Township and I would have assumed the opportunity to make a lot of money on the private portion would cover any need for "Developer's Fees" on either the private or public portion by taxpayers.

There should be no "Developer's Fee" at all. Any typical private project Dranoff takes on may have a fee paid to Dranoff from private investors, but I am very surprised in this case in regards to taxpayer monies being used. Even giving allowance for a "Developer's Fee", why an open-ended 2.5% "administrative fee" for a public project? What if his administrative costs are only 1.5%? Dranoff gets to pocket a lot of tax dollars. In my mind, administrative costs should be capped at a certain percent but ONLY paid out as a reimbursement of those exact administrative costs based on receipts for the public portion and not paid out on the private portion at all. A 2.5% "development fee" on the public portion seems standard (more on that later), but there should be none from taxpayers on the private portion where Dranoff should take the risk as he has the opportunity to make a lot of money. There should be no 2.5% “administrative fee” on the private portion and the “administrative fee” on the public portion should not be 2.5%, but again - rather a reimbursement of a capped amount of exact administrative costs based on receipts so taxpayer dollars are not wasted.

If taxpayers were to be paying a "development fee", it should be for the public portion only, and according to 5.1 of the Development Agreement, Dranoff gets a "development fee" for both the public and private portions - as worded in 5.1 for the "entire project" from "the Budget". This needs to be clarified more precisely in regards to where those monies are coming from.

Again, since Dranoff will make a ton of money off the publicly gifted private portion that he chose to develop - and assuming it works out, why are Lower Merion taxpayers footing the bill for a 5% "Developer's Fee" for the public portion?

Note I wrote "assuming it works out". Also note how long it has taken the township and commissioners to get to this Development Agreement that should have been hashed out long ago.

Remember that one private developer the commissioners picked already backed out on this project. One has to wonder if Dranoff was having reservations in this bad economy, that is why it took so long for this now hurried Development Agreement to come to fruition, and the commissioners gave him such a sweet deal on fees with other people's money (our tax dollars) so Dranoff would not back out with the commissioners then having a lot more egg on their faces.

Who knows what really is going on with all the secret and illegal closed door meetings L.M. commissioners are always having?

If anything, there are a lot of questions to be answered and this Development Agreement with a very questionable and taxpayer funded "Developer's Fee" should not be shoved down the throats of the citizens of Lower Merion by the commissioners at 1am - or any other time tonight. More time is needed to review, digest and get questions answered.

The first thing this Development Agreement needs to do is spell out the amount of monies Dranoff will receive from public vs. private sources and what the precise (or best estimate) taxpayer burden will be in a dollar amount. Then it needs to clear up whether taxpayers will foot any bill for the private portion. For the public portion, "administrative fees" should be paid on a reimbursement basis based on receipts as opposed to a percentage. As for "development fees", is 2.5% standard for the public portion for this type of project? If so, perhaps Dranoff should be willing to accept 2.0% or 1.5% or even 0.0% for the public portion since the cash cow private portion was handed to him by the township on a silver platter?

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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carla's picture
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I received the following feedback via e-mail today:

ARDMORE

Sequencing: Are we going to end up with a garage but no mixed use residential project? There's about $20 million of taxpayer money committed to this project now; since SEPTA is in charge of these funds, they will be committed to the garage, not the "private" part of the project. This Agreement makes it a default if Dranoff doesn't secure complete funding for the Garage and start construction of the Garage; BUT there is no default provision going the other way, i.e. requiring full funding and commencing construction on the residential/mixed use building. In other words, there is nothing here that ensures that the private component (which is the only piece that actually might bring some revitalization to the area) is an integral and essential part of the whole. Without the private component, this project should not be built. There should be an additional default provision covering this.

The co-called "budget" attached to the Agreement projects the need for $50 million for the "private" part of the project. Is there any indication that Dranoff can raise this in the foreseeable future?

Zoning changes? What changes are being contemplated and why?

Residential parking was going to be under the residential/mixed use building. This has changed? This Agreement calls for underground parking under the commuter garage, to be controlled solely by Dranoff.

This five-year exclusive for Cricket and the [confusingly named] "Ardmore West" doesn't seem like a good idea. It is tying those up without knowing whether or not the Station project will be any good. Why is it necessary? If Dranoff's station project is a success everyone will be happy to let him go ahead on those two township lots; if not, he shouldn't be able to hold them hostage.

The “budget” seems like some numbers that somebody made up on the back of an envelope. (As of Monday Doug Cleland said that the budget exhibit had not been finalized; it was posted on the website yesterday.) Is there detailed back-up for those numbers? Is the back-up publicly available? Could somebody please explain these numbers?

50 public spaces are projected to be lost from Cricket lot and some significant number will be lost from Schauffele Plaza if and when Dranoff redevelops those. How many net public, non commuter spaces are we going to end up with? It seems to be trending towards a net gain of 0. Again, lack of coordinated planning typical of development projects in the Township is a problem. There is no overall strategy, as usual.

The following provision was in the Memorandum of Understanding (June 25 2009) but, unlike many provisions in this new Agreeement that have been cut and pasted from the MOU, this one has been dropped:

The Developer will work with Suburban Square to address the traffic congestion problems on Anderson Avenue between Lancaster and Montgomery Avenues, and the Township will, to the extent permissible and consistent with the Township’s legal obligations, require the owner of Suburban Square to work with Developer regarding the same issues.

In connection with this, the environmental assessment for the project states:

Anderson Avenue appears to be operating at capacity during peak hours and any increase in traffic will create significant issues. Further expansion of Anderson Avenue is not feasible due to the width of the existing railroad overpass.

Continuing to pretend that there is no Anderson Avenue problem is a serious mistake. Saying that it will be dealt with in Land Development is just another way of saying that it won't be confronted at all. The fact is, there is no solution to it other than to not load more traffic on to it.

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"Well behaved women rarely make history" - Laurel Thatcher Ulrich

bobguzzardi's picture
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Why are we not surprised to find that The Fogotten Taxpayer is paying private developer Dranoff. Now we know why the Democrats on LMBOC, led skillfully by President Commissioner Reed, voted against "no taxpayer money" for Dranoff project.

Five year exclusive is anti-competitive and prevents any other developer from building. Not a good idea.

Good work, politeia.

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ChickenSandwich's picture
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awesome post, politeia!

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dmuth's picture
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Frontpaged. Good work.

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I agree.

As an aside, I've come to expect that a post by Politeia will be excellent.

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carla's picture
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It doesn't matter what any of us want, the Reed Kabal is in control, correct? On the candidate front, Steve Lindner is a Reed boy, and he wasn't very impressive in his go to meeting outfit last night, and he did not do a very good job poaching my Amtrak stormwater runoff issue in his comments last night as he talked in "we" did he? Who is "we"? Ardmore Progressive Civic that runs like a secret society and never interacts with others? And that is the legacy the 4th ward is faced with? A political lap dog who thinks that if people don't get why he doesn't come to things "oh well"? You see when he made a rare, campaign induced visit to part of the 4th ward recently I saw him, and while I think he's a nice person, is he kidding me? He says he is too busy (basically) to come to First Friday Main Line ever, and oh yes, totally sidestepped the billboard issue which is HUGE to a chunk of the 4th ward.

And also ending up in the Reed Kabal? And this is so incredibly disappointing because I had hoped for better out of this woman whom I thought was smarter and more savvy - but alas, she got sucked in. Look at her election committee, it says it all:

Friends of Anne Umbrecht Campaign Committee
....Hon. Bruce Reed

Honorable? That's a joke. I find it ironic this candidate has Teri Simon on her committee if she is now in the "club" because everyone knows Bruce Reed wants to boot the best person on the planning commission off, true? Once upon a time, I actually respected Bruce Reed. Now from his political actions to (from what I hear) messy personal life, can we say I just find him smarmy? And any candidate aligning themselves with someone who tried to engineer bot primary commissioner races and the school board races, well now?

Hugh Gordon was FABULOUS when he spoke not once but twice last night, and bravo to all the other speakers (like Charles Scott, people from Merion Civic Association) who outlasted the meeting that put me to sleep before it was over. And thank you to Cheryl Gelber, Lew Gould, Phil Rosenzweig, Brian Gordon, and Lance Rogers for remembering WHY they were elected: to serve the best interests of the people. Scott Zelov might have made that mention if I did not feel he was hurting himself riding both sides of the fence last night. Angela Murray was looking very Cruella De Ville and Doug Cleland, poor man has that whole Jack Sprat aura, and Chris Leswing? Total doll, but Chris, if you are going to keep doing developers' jobs for them, maybe the township should charge an extra fee for all your hard work?

And I say the Inwood farm drama is the one to watch for on Montgomery County Court Dockets, because it sure seems that those neighbors are taking everyone to court. Not that I blame them since who the heck needs another development in that part of Gladwyne?
Main Line Times > News
LM commissioners moving to fast on Dranoff Properties
Published: Wednesday, September 23, 2009

_____________________________________________________________
L'homme est né libre, et partout il est dans les fers/Man is born free, yet he is everywhere in chains.–Jean Jacques Rosseau. The Social Contract, 1762

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And thank you, Carla, Citizen Journalist, for hosting this blog and keeping us informed.

I was not able to attend. Hugh Gordon is a Lower Merion treasure.

Commissioner Cheryl Gelber, as you know from other emails, is very responsive and provided us with good information. From Commissioner Gelber: "There is a special B&P meeting on a conditional use hearing on the 29th at 6:30, there is a special Budget workshop on the 30th at 6, there are committee meetings starting at 6 on Oct 7th and 14th and an ad hoc Ardmore meeting on 8th of Oct, probably at 7:30."

Doug Cleland is a good man and gives accurate information. I think he is squeezed by a Board intent on no limit spending and doing whatever the majority wants without regard to consequences. The Dranoff project is very complicated and rife with unintended and conflicting consequences.

The Dranoff fees are a big surprise and, obviously, Commissar Reed knew about this as, I would think, Commissioner Rogan. Ther seems no limits to Debts, Deficits, Spending or Taxes.

And "transparency". It seems to have no meaning with LMBOC's ruling majority.

I would like to see the entire check register online. and it would be a good idea if reasonable amount of time be given to public to review some of this relevant documents.

Also, like Radnor, the Commissioners meetings should be online so that relevant portions can be excerpted

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carla's picture
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Bob, Doug is your host, I am but along for the ride...thanks!
_____________________________________________________________
L'homme est né libre, et partout il est dans les fers/Man is born free, yet he is everywhere in chains.–Jean Jacques Rosseau. The Social Contract, 1762

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PS to quote you in the public email you sent "And what do we get out of all of these as the public? NOTHING." succinct and accurate and I think you speak for many.

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politeia's picture
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LOL. That reminds me of a Past Post I made.

I'm out of town. Anyone know if they passed that Development Agreement as is or put it off?

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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No, I don't know. It seems that Debt was not discussed nor spending cuts and taxes seem to be overwhelmed by Dranoff. The Developer's Fee of 5% and Administrative of 2.5% Fee can only add to the deficit. What are the residents, households and businesses getting out of this. Even if the project fails, Dranoff succeeds. We take the risk and he gets the rewards. This is not how it is supposed to work. Let developer take risks, then he is entitled to reward. The Township is a government and seems now to be acting as a private owner paying a fee to a contractor. My understanding was that there was not to be any taxpayer money expended.

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politeia's picture
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With any developer the township would hire to build the public portion - the train station and garage, one would expect that developer to paid in the form of fees for a public job where the developer has no financial stake to make money on a publicly owned project.

Thus, for any stand alone developer, a development fee of 2.5% of project costs as payment fine. However, Dranoff has been handed a private project by the township where he should make millions upon millions of dollars, so in this instance I do not see the need to pay him a development fee for the public project.

As for administrative fees, they should not be a set 2.5% for the public portion as Dranoff could then rip-off taxpayers if his administrative fees only come in at, say, 1.5%.

As I posted above, administrative fees should be capped at 2.5%, but only paid on exact administrative expenses as shown through receipts so Dranoff does not rip-off taxpayers by keeping administrative fees low and pocketing the difference from the township suggestion of a flat 2.5% administrative fee.

I agree that with the cash cow private project Dranoff was handed on a silver platter by the commissioners that I did not expect any taxpayer fees at all for him on the public portion, but rather his profits on the private portion would cover that.

What citizens of Lower Merion really need to see are the projected costs and revenues (a complete multi-year cash flow analysis) for the private portion, and Dranoff should reveal that as this is a public/private venture and Dranoff would not have the private project to do if it were not handed to him by the commissioners and the township.

If Dranoff wants to keep his numbers and projected profit on the private portion secret, then he should receive absolutely NO taxpayer monies for any portion of the project - including the public portion. That means absolutley NO adminstrative fees or development fees paid by taxpayers until the public sees how much money Dranoff is going to make on the private portion.

If the bad economy has made it so taxpayers have to help foot the bill for Dranoff on a project where Dranoff will still make millions down the road, then the project should be put off until the economy improves.

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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Super points. everybody should know what Dranoff is making on the private side before he gets any tax dollars.

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5% Developer Fee on $100 million adds $5 million expenditure to budget deficit of $5.5 million and if the project is $150 million as I am hearing then this adds $7.5 million that we don't have.

How do we spend money we don't have. Hammer the The Forgotten Taxpayer on Fixed Income, that's how. Hammer the investor, that's how. Comm. Brown has been pointing to the spending deficit and borrowing deficit and Comm. Reed and Comm Rogan and their team refuse to restrain spending or borrowing. They have deceived on us on use of taxpayer money for the Dranoff Project.

Comm Reed and his obedient team have repeatedly defeated a resolution to prohibit use of taxpayer money for Dranoff Project. Now we know why.

Beware, though, of the Republican Old Guard. In my view, the only trustworthy person is Jenny Brown with Lance Rogers close behind but Jenny is the leader. Please support her in her endeavors to bring some rationality to this spending.

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Para I requires Township to put up 20% of Amtrak Septa up to $7,000,000? Won't this increase the $5.5 budget deficit and what is the return to the taxpayers for this portion of the project? It also appears yet another consulting contract with A&E Consulting has been entered into? What is the cost of this? This improvement is getting very expensive. My original understanding was that there was no Township Taxpayer money ( County money is, in part, paid by Lower Merion taxpayers).

"The Township has entered into agreements with SEPTA and Amtrak with regard to the Transit Improvements. Such agreements include, without limitation, (a) an Agreement dated August 15, 2005, between the Township and Amtrak regarding the provision of services by Amtrak and reimbursement of costs to Amtrak in relation to the Project (the “Preliminary Engineering Agreement”); and (b) a Funding Agreement dated May 8, 2006, between SEPTA and the Township, as amended (such agreement, as the same has previously been and may hereafter be amended, the “Funding Agreement”), pursuant to which SEPTA has agreed, under and subject to a Master Funding Agreement, to fund a portion of the FTA Grant No. PA-03-0385 to the Township, on a matching basis pursuant to which SEPTA would fund up to 80% of the Public Project costs and the Township would fund up to 20% of such costs, up to a total amount of $7,000,000.

J. The Township has engaged A&E Consultants and intends to engage such other architects, engineers, contractors, building managers and other consultants as may be necessary for the planning, design, development and operation of the Public Project (any such persons or entities engaged from time to time by the Township, the “Consultants”)."

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Here's one of the many problems - why do taxpayers even have to ask how much this is going to cost them this far into the project?

Should not taxpayers have been told before the commissioners approved the project? Shouldn’t the commissioners have known how much it was going to cost taxpayers before they approved the project?

Citizens of Lower Merion were first sold on this project by a developer the commissioners approved who indicated this would not cost taxpayers any money.

That developer dropped out and then the commissioners approved Dranoff without even telling taxpayers this would now cost them millions. I saw that coming and that's why I asked the commissioners to Show Me The Money in the meeting they approved Dranoff, and amazingly they had no idea how much this would cost taxpayers when all but one commissioner voted for Dranoff - and they still don't seem to have a clue as to how much this project will cost taxpayers! The only thing we do know is that wealthy Gladwyne resident Dranoff will pocket millions in fees on top of the untold millions he will make on the private portion - and I'd like some concrete dollar figures on those numbers.

How many hundreds of thousands if not millions of taxpayer dollars have already been spent on planning this thing and bringing in all these consultants? And the commissioners still have no idea what the tax exposure for the construction is!?

Fiscal irresponsibility of this magnitude by the LM commissioners with taxpayer dollars should be criminal.

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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There is Budget and Development meeting tonight at 6:30 pm at Township Building ♠and I will try to raise these questions with my Commissioner, Cheryl Gelber, to get some specific answers. Your post "show me the money" explains that $20 million dollars of additional spending are being proposed. I think Comm. Brown will, once again, attempt to determine if LMBOC is willing to impose any limitations on Debt, Deficit or Spending?

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Thanks Bob. I'm out of town for another week, but I will have pointed questions in the October township meeting - and they will be damning statements if the LM commissioners sneak a huge tax burden in before then.

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Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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Thanks Politea. Your interest and insightful and detailed commentary has encouraged me to think there is a chance to turn this around. I hope some of the November candidates will make this an issue.

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Hate to say it, Bob, but fat chance - and especially with the November candidates. There is one I could see making some noise and I hope that candidate steps forward, but since 13 of the 14 commissioners voted for this fiasco, I expect all the candidates to tow the township line regardless of how badly it harms taxpayers.

This will get rammed through by the commissioners. They could obviously care less about the taxpayers in Lower Merion, but it is certainly worth putting up the good fight.

=================

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~ As we must account for every idle word, so must we account for every idle silence.

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From Commissioner Jenny Brown Budget Meeting September 30 .....

Friends,

I apologize for the late notice – I have been ill for two weeks and am just getting back to commissioner duties. Please be advised that the Board of Commissioners is having a meeting tomorrow evening, Wednesday September 30, at 6:30 on the second floor of the Township Building at 75 E. Lancaster Ave. in Ardmore, to discuss the 2010 Budget.

The agenda is below.

Township staff will be giving updates and the public will be able to comment. The Commissioners will be giving their input on the 2010 Budget. It should be an important meeting, especially given the economic times our residents are facing and the large gap that has been projected between expected revenue of nearly $50M and planned spending of nearly $55M.

There will also be a Finance Committee meeting on Wednesday of next week, October 7, where I expect that the budget will be discussed as well.

I hope you will be able to attend one of these meetings.

Many of you have asked what you can do to voice your objection to Township spending-as-usual and additional tax increases. One easy way to note your objection is to email or write a letter to the Main Line Times Editor, Susan Greenspon. Her email address is . Letters can be short and sweet and still make their point. Many of the emails that you have sent me could easily be turned into a short letter to the Editor noting the difficult financial circumstances and your expectation that the Board will reduce planned spending increases at this time. Please copy me on your letters or emails.

Jenny

Jenny Brown
Lower Merion Township Commissioner
Ward 2 – Gladwyne/Penn Valley

AGENDA
1. Overview of Budget Schedule (2010 Operating Budget and 2010 – 2015 Capital Improvement Plan)
2. 2010 Budget Workshop Review of Preliminary Capital Improvement Plan (2010 – 2015)
3. Review of General Fund Financial Forecast (updated as of June 2009)
4. Review of Past Cost Containment and Expenditure Reductions
5. 2010 Budget Workshop Review of Township Operating Budget
6. Board of Commissioners Input on 2010 Budget Balancing Ideas
PUBLIC COMMENT

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I did not realize 13 of 14 voted for this. Who is my hero or heroine? Like Ludington, they all vote to spend time studying whether to spend money we don't have. The context is state and national and even county that is debasing the currency with unsustainable amounts of debt. The unemployment and employment figures tell a story and it appears Social Security is going negative for 2010 and 2011, well before the anticipated 2017. I think LMBOC lives in a bubble or maybe all of Lower Merion.

http://apnews.myway.com/article/20090927/D9AVHRDG0.html

WASHINGTON (AP) - Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.
The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

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politeia's picture
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Lew Gould either voted against it or abstained. Forget which one.

However, I think Gould's stance was more out of deference to his friends over at Suburban Square. In my mind, his motivations could not have been more transparent.

Gould went ballistic when the Saturday Bryn Mawr Farmers' Market was voted on because he said it would supposedly compete with the Ardmore Farmers’ Market at Suburban Square.

However, Gould had no problem voting for a taxpayer gouging Taj Mahal renovation of Ludington Library (I support renovating Ludington within reason) with a cafe/food court that would also be a government subsidized business competing with nearby taxpaying businesses that also sell food and coffee.

That hypocrisy makes me believe he was trying to prevent competition for his friends at Suburban Square from Dranoff rather than voting on principle.

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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Lew Gould is from the Republican Old Guard and not Free Market advocates. I hope you will consider signing Jenny Brown's petition on Debt, Deficit and Spending and we will remind her that the best way to reduce spending is to reduce spending. Thanks for your information. Moving along.

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politeia's picture
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So I just got a report on this meeting (I'm out of town).

In regards to Dranoff there seemed to be some confusion from a friend who was watching. This 5% developer's fee was said to not affect the budget, but no commissioner stated it would not cost taxpayers dollars? If so, that sure sounds like doublespeak to me.

Some consultant stated several times that developer's fees are generally 3-5%, yet Dranoff somehow usually commands 15%? Was this just said by Dranoff to make it look like Lower Merion is getting a deal?

Apparently some budget numbers were handed out but I have not checked the township website for them.

No commissioner brought up the concern that perhaps Dranoff should receive no developer's fee for the public portion because he is having the private portion that will make him a lot of money handed to him on a silver platter by the commissioners.

I still have that big concern. Maybe the township handed out a pro forma cash flow analysis of the whole project that demonstrated the need to pay Dranoff a developer‘s fee for the public portion given the money he should make on the private portion, but if not, who knows how much Dranoff is being enriched when taxpayers could save some money instead?

With so many commissioners either directly or indirectly involved in real estate development (apparently several touted their real estate knowledge), I can sure see this helping their business careers by the goodwill they would gain in their respective business communities by handing Dranoff a huge bone.

Call my cynical, but this whole thing still seems shrouded in mystery to me. I'll be checking the township website to see if the township handed out some numbers that will actually help citizens understand what is going on from a financial standpoint.

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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civic virtue's picture
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At tonight's meeting, three Commissioners raised various and substantive issues about the agreement. Those three Commissioners voted against the motion to enter into the agreement. They all expressed concern about LMT taxpayers, the developer fee and the many unanswered questions among other things. The rest rushed to approve the agreement despite the unanswered questions.

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1) The 5% Developers and Administration fee will be paid with taxpayer money but not with Lower Merion Taxpayer money. As you know, the funding includes taxpayer money from a variety of sources including federal and state taxes.

What will impact the budget is $900,000 of reimbursable costs that LMBOC will spend in 2010 despite an unequivocal statement that no taxpayer money will be used for this project. 2.6 states in full "2.6 Township's Contibution and Financing Obligations The Township's sole financial obligation to contribute to the cost of the Project shal be to apply the an amount equal the Land Payment actually received."

The Township's sale of lot for $1,000,000 will take place well into the future and the funds will be rolled back into the project. In effect, the Township contributes the land to the project.. Yet in 2010 budget the Township is "contributing" to my way of reading this, $900,000.

To the Humpty Dumpty's on LMBOC board "no" means "yes".

2) The Library Committee meets next week. The expansion ( not the operating budget) is single largest expenditure in Capital Improvement Budget. It is proposed to be $6,850,000 and eliminating this noncore and pointless expenditure will go a long way in avoiding tax increase.

A new fire truck costing about 1/2 million was authorized. This was not scheduled. It appears to be necessary and the old truck is 24 years old. the new truck will be delivered in a year. Very interesting discussion. Firefighting is a core government service and there is not private method of providing the service unlike the library where there are many alternative and less expensive ways to deliver even the most expansive definition of library services. ( I take the view that library is to encourage reading although others see it as a community center or alternative to school even though talking is prohibited except with hushed voices).

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bobguzzardi's picture
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Commissioners who voted to accept the Dranoff Agreement are, to be polite, dissembling.

On one hand no financial obligation is to be incurred and yet, in 2010 budget, where there is a $5.5 million dollar shortfall, there is a $900,000 contribution to this very same project.
Are these commissioners channeling Humpty Dumpty?
“no” means “yes”

1) The Dranoff Ardmore Mini Mall agreement: 2.6 Township’s Contribution and Financing Obligations. The Township’s sole financial obligation to contribute to the cost of the Project shall be to apply an amount equal to the Land Payment actually received. http://www.lowermerion.org/Index.aspx?page=393

2) The proposed 2010 budget:
http://www.lowermerion.org/Index.aspx?page=944 Budget Workshop pdf shows $900,000 going to the Dranoff Ardmore Mini Mall project in “reimbursable expenses”. Township Manager, who, in my opinion, is intellectually honest, stated that $900,000 would be used for the Dranoff project during the September 29th meeting

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politeia's picture
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You are being very polite, Bob.

The commissioners are flat out lying to the citizens of Lower Merion.

=================

Brotherhood of Thieves

~ As we must account for every idle word, so must we account for every idle silence.

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bobguzzardi's picture
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The Forgotten Taxpayer is not saying that LMBOC is lying but he and she understands how you might conclude that. It does seem like a direct contradiction to say no taxpayer money is going into the project and then to allocate $900,000 to that project and the Project Agreement calls for 20% of costs up to 7 million dollars. As I read this, the Township seems to have committed up to another 7 million. The contract itself, which has now been voted on, seems to contradict itself. The Township is hiring A&E Consultants. How much has the Township spent on Consultants for this project since 1994. Millions? oh well... the wise and virtuous LMBOC knows what is good for the public otherwise they would not have been elected to make decisions on what is good for the public.

Recitals

I. The Township has entered into agreements with SEPTA and Amtrak with regard to the Transit Improvements. Such agreements include, without limitation, (a) an Agreement dated August 15, 2005, between the Township and Amtrak regarding the provision of services by Amtrak and reimbursement of costs to Amtrak in relation to the Project (the “Preliminary Engineering Agreement”); and (b) a Funding Agreement dated May 8, 2006, between SEPTA and the Township, as amended (such agreement, as the same has previously been and may hereafter be amended, the “Funding Agreement”), pursuant to which SEPTA has agreed, under and subject to a Master Funding Agreement, to fund a portion of the FTA Grant No. PA-03-0385 to the Township, on a matching basis pursuant to which SEPTA would fund up to 80% of the Public Project costs and the Township would fund up to 20% of such costs, up to a total amount of $7,000,000.

J. The Township has engaged A&E Consultants and intends to engage such other architects, engineers, contractors, building managers and other consultants as may be necessary for the planning, design, development and operation of the Public Project (any such persons or entities engaged from time to time by the Township, the “Consultants”).

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