Carmel City Council Member Plans To Vote On $17 Million City Center Expansion Incentives For Business Partner

Carmel city council member, Kevin Rider, joined the council in 2008. Three years later, he opened a new restaurant in the first phase of the City Center project developed by Pedcor, which is owned by two businessmen who are close friends and political supporters of Mayor James Brainard. From the beginning, Pedcor received generous subsidies from the City of Carmel courtesy of an expansive TIF district created to support development projects in downtown Carmel for the City Center project. Although Rider already owned a restaurant at the time, he included three top executives of Pedcor, Bruce Cordingly, Gerald Pedigo and Phillip Stoffregen, as business partners owning 49% of his Divvy restaurant (not to be confused with the bike sharing company called Divvy). Rider leases the space for Divvy from Pedcor. Why that didn't raise all sorts of red flags back in 2011 is anyone's guess.

The Carmel City Council is now poised to approve another $17 million bond issue to pay for a new parking garage, road and other infrastructure improvements as part of a proposed $100 million expansion of the City Center project by Pedigo. Because the bond issue may not pass without his vote, Rider has announced that he plans to vote on the bond issue on the side of the developers, of course. “Legally, I am not required on any level to recuse myself,” Rider told the Indianapolis Star. “If I do it, it could have a huge effect on City Center being built .”Rider has been assured by Carmel's city attorney, who wouldn't know a conflict of interest if it jumped up and bit him in the ass, that his business relationship with Mssrs. Cordingly, Pedigo and Stoffregen poses no legal obstacle to him voting on the bond issue because he won't directly receive income from the bonds. Other legal ethicists contacted by the Star says it goes up "right up to the edge" but does not cross the legal line of a conflict of interest.

“By law, in Indiana, for there to be a conflict of interest, I would have to be invested in Pedcor and therefore benefit financially from their success,” Rider said. “I do not make one dime from Pedcor’s success. This seems to be nothing more than an attempt to damage my reputation in my hometown.”

Rider said his business relationship will not influence his vote.

Rider said he has the controlling interest in Divvy and is the only one who can make decisions regarding the future of the restaurant. He said he doesn’t receive a salary or a share of money as the owner. His wife, he said, receives a salary as the chef.

In regards to the space he leases, Rider said he is in the third year of a renewable five-year lease with Pedcor. The company, he said, can’t arbitrarily change the terms of the financial arrangements behind the lease. Rider said he also can break the lease at any time without ramifications.

It seems to me that the legal issue with which Rider is confronted is being analyzed in the narrowest sense to his benefit. The question in my mind goes back to the council member's original investment in the Divvy restaurant. Pedcor's business success and reliance on large subsidies from the City of Carmel were well known by all, including Rider, when he decided to open a new restaurant in City Center. As an experienced restaurant owner, why did he involve his landlord as a 49% owner of his new restaurant? Or perhaps the better question is why did the landlord want to become a 49% owner of its tenant's business? Would they have been interested in investing in Divvy if Rider wasn't a member of the city council? Is the Pedcor's 49% stake in the restaurant in consideration for money they loaned to Rider? Unless the public is allowed to view the formation documents for that business, including the lease between Divvy and Pedcor, how can we know whether it was even an arm's length transaction? It stands to reason that Rider's financial success is now deeply intertwined with his landlord's ability to continue to grow and expand City Center with the help of generous subsidies from the City of Carmel. Rider's suggestion that he can break the lease at any time without ramifications tells us right away that his lease agreement isn't of the sort a Simon Property Group makes its tenants sign.

The truth is that the Carmel City Council wouldn't even be discussing a $17 million bond issue to aid in the expansion of Pedcor's City Center if it hadn't earlier voted to bail out the Carmel Redevelopment Commission, which faced insolvency due to all of the debt it ran up on the City Center project, the Palladium, the arts center and other downtown-related redevelopment project. That bailout put Carmel property taxpayers on the hook to backstop the repayment of about $200 million in debt if TIF revenues proved insufficient to pay off the debt. Presumably, Rider also voted in favor of that bailout, which paved the way for Mayor Brainard to propose more public subsidies for the development pursuits of his greatest political benefactors, who were white knights of sorts for Rider's business endeavor. This is just the latest in many examples of why people living in Indiana should have no confidence in their government. The incestuous relationships between government decision-makers and the recipients of government largesse is beyond reproach, right?