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The Journal Gazette

December 02, 2016 1:00 AM

Legacy Fund safe? That's a bill of goods

Craig Ladwig

George C. Parker, a character to whom you will be more fully introduced later, would relish the ongoing discussions of how supposedly earmarked or set-aside funds can be spent by Indiana mayors. Few issues are so loaded with misconception, a specialty of Mr. Parker.

It is an assumption of our municipal governments that city officials cannot hide behind walls of legal and accounting abstractions to lie about public finance. That assumption is being tested in the case of Fort Wayne’s so-called Legacy Fund.

In 2012, the city established two ostensibly independent funds. Fund A was the corpus of $30 million. Fund B was where the annuity was to go. Fund A was for saving, Fund B was for spending. Written down in black and white. What could be more simple?

Indeed, the Legacy Fund was referred to as a landmark of good government, a bridge to the future. A councilman, a close associate of the mayor, said at the time, “Fund A will be invested in the future” and it would be “keeping in perpetuity for some time.” A deputy mayor was asked, “Where is the sweet spot of what is saved and what is spent?” He answered, “Again, the $30 million we recommend be set aside.”

A month later, the deputy mayor expanded on that view. He said that both funds were to be retained separately with an “emphasis on $30 million being kept kind of separate.” Joining him was an attorney for the mayor who said setting it up this way would “create a secondary firewall before the $30 million is tapped,” requiring “more thought before invading Fund A.”

The firewall held for about a year. Administration attorneys in arguing for an ordinance combining the two funds implied there was confusion about whether the $30 million “legacy” could be spent or not, the central tenet of the original agreement.

One alarmed councilman, Russell Jehl, successfully added a provision to the mayor’s ordinance that said, “Notwithstanding, should a proposed spending provision cause the corpus balance to dip below $30 million, the spending proposal will disclose such when presented to the Common Council.”

At about that point, someone should have been boning up on the history of a man who made his living promising the security of public property. His name was George C. Parker, and in the early 20th century, he sold and resold the Brooklyn Bridge, Madison Square Garden, the Metropolitan Museum of Art, Grant’s Tomb and the Statue of Liberty, among other New York City landmarks.

Mr. Parker’s spirit was in the room earlier this month when Fort Wayne’s mayor remarked incredulously: “I don’t know who came up with that ($30 million figure).” Nor did the new deputy mayor have a clue, telling councilmen that he was unaware of any guaranteed $30 million balance. Nor was the previous deputy mayor said to have any notes in that regard.

Fort Wayne citizens, it appears, do not actually own that bridge to the future, that landmark of good government, their supposed legacy. All the paperwork with its Fund A and Fund B assurances is being treated as a forgery, worthless bills of sale.

That councilman who saw all of this coming, Jehl, is now council president and has put his concern into the form of a more stiffly defined ordinance. It blocks spending the fund on a crony favorite, riverfront development, until integrity is restored.

“That the City Council shall not vote on any other Legacy Fund appropriations until it has been presented with a funding request from the administration for the initial phase of Riverfront Development. If the administration does not present Council with an actionable Riverfront Development funding request by the end of this calendar year, this resolution and policy shall sunset.”

Just in case, though, he will want to make sure the signature at the bottom doesn’t read “George C. Parker.”

Craig Ladwig is editor of the quarterly Indiana Policy Review.