GARY — The Common Council listened Tuesday night to concerns about misconduct allegations against one of its financial advisers, but declined to back away from a controversial $40 million bond the adviser and Gary Mayor Karen Freeman-Wilson are proposing to keep city government running.
The city’s finances, so troubled a minister mentioned them in his prayer for divine intervention, dominated the council meeting at ArtHouse: A Social Kitchen on 5th Avenue.
The mayor, who wasn’t present, has asked the council to borrow as much as $40 million using the city’s public safety building at 5th and Polk Street as collateral.
The city would sell the building for upfront cash to a nonprofit organization. The nonprofit and its investor would require the city to repay them over the next 22 years through lease payments for the city’s continued use of the public safety building.
The city is willing to pay 8% percent interest, an amount well above the prime interest rate.
The city hired Comer Capital Group LLC and its managing partner, Brandon L. Comer, last year to advise the council on how to conduct the sale and leaseback arrangement.
Councilwoman LaVetta Sparks-Wade said Tuesday she was concerned to read in The Times that the U.S. Securities Exchange Commission is now accusing the Comer firm in a civil suit of failing to protect another client — the Harvey, Illinois library district — as the firm advised on how to borrow money for a construction project.
The government alleges because of Comer’s failure to look after the library district’s interests properly, the district is being overcharged more than $500,000 in loan expenses.
The government is seeking civil penalties against Comer, who has yet to respond to the allegations, according to U.S. District Court documents.
Sparks-Wade, who had previously opposed the sale/lease back agreement, said Tuesday night she found it "unsettling."
“There is a better way. When we have information like this we have to act. Come on, guys. We can put a team of people together to ensure the city of Gary does not go bankrupt,” Sparks-Wade said.
However, Council President Rob Brewer said he reviewed the complaint against Comer and believed there were no similarities in the cases. He said he was confident Comer has done a good job getting information to city officials over the proposed loan.
In other business, the council gave permission to operate day care centers in houses located in the 1900 block of Arthur Street, the 3600 block of West 11th Avenue and the 400 block of East 47th Place.
Some residents complained there were too many day care centers in residential neighborhoods and they could become nuisances by generating too much noise and car traffic.
The council deferred until its July 16 meeting a request to approve a another day care center in a house in the 500 block of Miami Street to give the day care manager time to speak to neighbors about their opposition to opening a business there.