Why is Dranoff Properties Getting a Huge Development Fee from L.M. Taxpayers?
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:
(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?
~ As we must account for every idle word, so must we account for every idle silence.