The Case Against Prop 15

Tonight the Indianapolis-Marion County City-County Council is poised to vote on Prop 15 - which would expand the consolidated downtown TIF district in two directions for a total addition of 1.1 square miles.

There are three components :

A) 112 acre easterly expansion, less than half of which runs along Mass Ave (see "What's Wrong With This Picture - The Proposed Mass Ave TIF" for maps of the proposed TIF) all supposedly needed for the development of 0.8 acres.

B) 604 acre westerly expansion (see "Proposed Bush Stadium TIF - Google Aerial View" for maps of the proposed TIF) all supposedly needed for the development of a couple of block area.

C) Also pasted on top of the expansion TIFs are three programs - a $2 million microloan, a $10 million microloan, and a $1.5 million job training program - to be funded by the TIFs.  It must be noted here that TIF funds may only legally be spent on projects within the TIF boundaries and these programs run significantly beyond boundaries.

These are the reason that come readily to mind as to why Prop 15 should be defeated.

1) Prop 15 is dead --- Council rules require that any proposal that is tabled for more than 6 months be removed from the list of pending proposals.  This is exactly what happened to Prop 16, another TIF proposal, which had been introduced and tabled on exactly the same dates as Prop 15.

2) There is a lawsuit pending against the Council for taking any action on Prop 15 because it is dead.  It should give any member of the public pause as to why the Council did not simply follow its own rules and reintroduce the proposal under a new number.  It would only be two weeks from now, before it would be back to the full Council.  Likely, they did not want the TIF Study Commission recommendations (Prop 316) to beat it into law.  This brings me to 3)....

3) The TIF Study Commission recommendations (Prop 316) (see "Finally, TIF Study Commission Recommendations At Committee"), which would require full disclosure of the underlying finances of the proposed projects and the abilty of the TIF to generate adequate revenue to make payments on any debt incurred.  The way I have been framing the need for information is so that the Council and the public could see for themselves - Why a TIF?  Why this location?  Why this project? Why this footprint?  Clearly, the rush on Prop 15 is because there is a concerted effort to avoid full disclosure.

4) The Mass Ave area is thriving, if not downright booming, and has at least 3 large projects already slated for 2013 and 2014 - needing no public dollars.  (Well, suddenly the developers are supposedly telling Deron Kintner, deputy mayor for economic development and director of the bond bank, they think they might need public dollars after all.  Believe him if it makes you feel better.  Many Councillors, who know for a fact that Kintner has previously lied to the Council and to the press, will be citing his words when these TIFs don't work out well.  But, I digress.)  Creating a TIF here is ass backwards from how TIFs are supposed to be created.  The intent is to create a TIF to fund a project to spark development with private dollars.  Instead, the Mass Ave TIF is being created to cannibalize tax revenues from development made with private dollars.  By all rights those tax revenues should be flowing to the schools, library, IndyGo, etc, instead of to a TIF fund.  This is how you set up a thriving slush fund - not a beneficial TIF.

5) The Mass Ave TIF contains three 'nodes' - two along Mass Ave and one abutting the current consolidated downtown TIF.  At least half of the 112 acres is contained in this mystery node.  I have only heard one question asked in a public venue about this huge footprint.  Councillor Zach Adamson (who ultimately was the lone, brave, vote against Prop 15 in committee) asked why that node was needed.  Kintner's answer was that he could not divulge that information at this time.

6) One of the bids responding to the RFP put out by the City to solicite plans to relocate the Mass Ave fire station, actually offered $2 million to the City to buy the property and did not request any public dollars. This proposal was rejected.  The three proposals still in the running curiously all ask for a TIF to be established and for public dollars to be invested in the project.  Now, why would a developer care where public dollars came from?  Really !  This is an example of exactly how stupid and gullible Kintner and the Vaughn/Grand/Ballard administration think the public and the Councillors are.

7) I have not heard one question asked as to why there must be 604 acres of TIF to support a couple of blocks of infrastructure improvements in the Bush Stadium area.  This is the only project publicly acknowledged by the administration.  Obviously, the Councillors have no answer to why this footprint is necessary and wise.  Instead, they focused their attention on getting residents of the area to speak in favor of the TIF because their neighborhoods need help.  Mark Fisher of Develop Indy worked to turn out the residents.  While any caring human being wants to help, we have no gauge for whether or not this TIF is the answer, whether or not other public funds can address the issues, and where this area lands on a prioritized list of neighborhoods in need.

8) The language added to Prop 15 to satisfy some of the neighborhood leaders' interest in tearing down the old Bryant Heating & Cooling facility, is slipshod and may not be enforceable. Lets see if anyone introduces an amendment tonight to clear up the language, or if the Councillors are content to leave it in doubt.

9) There has been no financial data or analyses introduced that would justify why a TIF, why this location (although some need was demonstrated), what project much less why that project, and why this footprint for the proposed Bush Stadium area TIF.

10) The $2 million microloan and the $1.5 million job training programs would be made available to anyone within a 2 mile perimeter of the outline of the two-way expanded consolidated downtown TIF. The language is so poorly written that the recipients may not have to be low income, and/or may not have to have a business located in a low income neighborhood.  Promises have been made to nearby neighborhoods and the Indianapolis religious community at large, that these programs are to help the residents within or abutting the TIF area.  These promises are false promises - if you go by the agreement that has actually been reduced to writing.

11) Expending TIF funds, or swapping TIF dollars for other City dollars, to pay for the $2 million microloan and $1.5 million job training programs outside of the footprint of the TIF would be illegal.

12) The $10 million microloan program has no details except it would be funded by the TIF and spent throughout Indianapolis.  Expending TIF funds, or swapping TIF dollars for other City dollars, to pay for the $10 million microloan program outside of the footprint of the TIF would be illegal.  The City could use $10 million to fund raises for IMPD and IFD, and/or a recruit class for IMPD and IFD.  Money the administration insists is not available.  What will be sacrificed for this microloan program, if the law is actually followed and TIF funds are not used for the program?

13) There has been no consideration given to the question, how many TIFs are too many TIFs for Indianapolis and Marion County.  Already 11% of all taxable property is contained in a Marion County TIF, 33% of all taxable property is contained in a Center Township TIF, and 22% of all taxable property is contained in an IPS district TIF.  Prop 15 seeks to add another square mile of TIF to each of those jurisdictions.  Prop 15 will cannibalize taxes that would have flown to the schools, library, IndyGo, Health & Hospitals, Townships, Fire, IMPD, Parks, as well as the City and County government.  Prop 15 will decrease the tax revenues that flow to these units, as well.

For completeness sake, I recommend the following blog entries as well -- "TIF Fact #1 -- We've Been Bailing Out TIFs for Years", "TIF Fact #2 -- $490 million of property value was transferred from the base to the increment this year", "TIF Fact #3 -- TIFs Cause Higher Property Taxes For Everyone and  Cause 41% of Circuit Breaker Penalties To The Taxing Units", "TIF Fact #4 -- TIFs Comprise 11% of All Taxable Property In Marion County - How Much More is Prudent?",   "TIF Fact #5 -- 16 of 40 Marion County TIFs Have Seen Their Base Driven to Zero Value",  "TIF Fact #6 -- 5 of 6 TIFs Comprising the Consolidated Downtown TIF Have Seen Their Base Driven to Zero Value", "TIF Fact #7 -- 33.3% of All Taxable Property in Center Township is Contained Within a TIF -- How Much is Prudent?", "TIF Fact #8 -- 20% of IPS Taxing District Contained Within a TIF -- How Much is Prudent?", "TIF Fact #9 -- Most TIF Districts Underperform County as a Whole" )

There are many excellent reasons for Prop 15 to be voted down tonight.  But, instead, what we will witness is greed, ambition, threats of retaliation, blackmail, and willful ignorance drive the Council to pass this retched dreck.

The CIB Is Working Hard For the Pacers

Time is tight for me today, so I will be sending you to read some good blogs arising from two IBJ articles on the CIB and its finances. Short story is that the CIB is crowing about how well it turned around its failed finances; so much so they are pulling a profit now and don't need the State's gracious offer for a $27 million loan at 5 % plus interest rate. All that despite the partially successful 'end times for downtown' campaign they waged all year to secure wads of money that at times added up to $50 million this year and another $50 million this year and every year going forward. A few short hours later the CIB is reported to be eyeballing that loan and talking about that $15 million gift per year, every year going forward, to the Simons and Pacers to run Conseco Fieldhouse. The Pacers already get 100% of all revenue from the Fieldhouse, but you know how hard it can be to pull a profit when you can't fill the seats for your home games because you picked players whose antics turned the community sour on your franchise.

Here are the originating IBJ article links:

http://www.ibj.com/cib-finances-improving-though-concerns-remain/PARAMS/article/11031

http://www.ibj.com/cib-may-accept-27-million-state-loan-after-all/PARAMS/article/11050

And the great blog entries by Paul Ogden and Gary Welsh:

http://www.ogdenonpolitics.com/2009/11/cib-likely-to-accept-27-million-loan.html

http://advanceindiana.blogspot.com/2009/11/cib-sees-surplus-but-will-still-borrow.html

Let me just add, all the seats for the Capital Improvement Board of Managers are ended January 15, 2010 -- this by the same legislation that allowed the City Council to increase the Hotel Tax by 1% to capture another $4 million a year and expand the Professional Sports Development Area to capture another $8 million a year, and offer the $9 million a year loan for three years from the state to the CIB. The same old people can be reappointed, but hopefully the appointing bodies will not be so lame in their decisions. Top of my list to be gone are Bob Grand, who represents the Pacers and has always had a clear conflict of interest, and Pat Early who has served on the CIB for nearly a generation and helped negotiate the original Conseco Fieldhouse contract and who has been the prime cheerleader for giving the ENTIRE store away to the Pacers, just like he voted for the ENTIRE store be given to the Colts.

All of this sudden burst of energy directed to the benefit of the Simons and the Pacers may be so that their work is done before a responsible Board takes their place. Well, I would hope a responsible Board takes their place. That awaits the list of appointees and some time for their ambitions to be assessed.

CIB Budget in the Black - WISH TV Reports

Mike Corbin of WISH TV, channel 8, reports that the CIB budget is in the black - so much so that Bob Grand, President of the CIB, says they may not have to take receipt of the State of Indiana's $9 million loan for this calendar year.

Cuts at the financially-strapped Capital Improvement Board may have come to an end for now.

The head of the group that oversees the Indiana Convention Center and Lucas Oil Stadium said major cost-cutting has put their budget back in the black.

"We got the emergency loan from the state to take care of our potential one time deficit which would've essentially put us under," said CIB President Bob Grand.

That loan is for $27 million over three years. But, Grand said the CIB may not take this year's scheduled $9 million payment.

"Which we're not sure quite frankly that we're going to need at this point given the reduction in costs and all the things that we've achieved in operational savings," Grand said.

Grand said about a dozen layoffs and other reductions have saved about $12 million. The CIB's operating budget is now $62 million.

The logical question I would have to ask Grand is, "So, you don't need the loan, but you said the CIB would have gone under without it. How does that make sense?" But, of course, Don Welsh of the ICVA is still on the hunt for his $3 - $5 million increase over the roughly $9 million they already get from he CIB. Corbin's report continues:

But, the Indianapolis Convention & Visitors Association, which itself cut eight jobs, said it desperately needs at least 5 million dollars of that budget to keep other cities from stealing away two key conventions.

"We're in ongoing negotiations with Fire Department Instructors Conference and Dealer Expo, two of our largest, top five conventions that we bring into Indianapolis annually," said Bill Benner of the ICVA.

With both contracts up by 2012, the city is speeding up work on the new Convention Center.

Then Corbin pulls out the old malarkey numbers that really should be vetted by somebody besides Welsh, whose $400,000 salary plus benefits does not qualify him as an independent expert on the subject. Here's what Corbin reports:

So why should you care whether or not the city is able to lure conventions?

Well, leaders say tourism accounts for $800 million a year and if the city didn't have that money property taxes would go up $100 a year per household.

Leaders say it's the age old issue: cut costs or raise taxes.

"I'd be willing to pay more if it's for incentives for conventions because that'll help overall I think," said Indianapolis resident Michael Warshauer.

"A lot of my friends are out of work. So, I don't think that would be an alternative. I think there are other places the city can look to cut," said Carol French.

I'd like to know what cuts Ms. French would have made to keep Mr. Welsh in high cotton. But back to Corbin's report:

Grand said the CIB is deferring decision on the loan until December 31.

They're now working with the city-county council on a long range financial plan that would include other localities. A new committee will be looking into that option within the next few weeks.

So, while the taxpayers get a small boost in that the CIB may actually say "thanks but no thanks" to at least the first $9 million loan from the State, the push for more and more money continues.

You Are Invited To Speak Your Mind About the CIB Bailout Plan

Proposal 285 will be heard by the Rules & Public Policy Committee of the City County Council. Public comments will be taken.

Where: Room 260, City-County Building
When: 5:30 pm, Tuesday, July 28, 2009
What: Presentations and Public Comments on Council Proposal 285, 2009 followed by a vote by the Committee on whether to pass it to the full Council for a final vote -- expect public comments to be limited to 2 minutes per person
Who: all members of the public are invited and urged to come speak your minds - otherwise only those people who have a financial interest in the outcome of this vote will attend

FAQS

Proposal 285 would do three things: increase the hotel tax by 1%, increase the Professional Sports Development Area (PSDA) to include hotels abutting the convention center, and accept a $9M per year loan from the State to the CIB for years 2009, 2010, and 2011

Increasing the hotel tax would likely generate an additional $4M per year that would be directed to CIB operating expenses.

Income and sales taxes (up to a maximum of $8M per year) from the expanded PSDA would also be directed to CIB operating expenses.

The loan and the money from the expanded PSDA are blackmail -- if the Council does not increase the hotel tax, the state will not pass any money to the CIB from either a loan or the expanded PSDA.

The loan is PROHIBITED from being repaid until 2013.

In January through March, 2013, the City-County Council is authorized to increase two other taxes - car rental and admission tax. It is not allowed do so until then. These two taxes will likely have to be increased, if only to repay the State for its loan plus interest.

The Indiana Convention and Visitor's Association, which will likely appear at the hearing with a full presentation to the Committee, wants another $3 - $5 M per year from the CIB to advertise for more Convention business and to book discounted rooms through its website. The ICVA currently gets about $7M of its $11M annual budget from the CIB.

The CIB currently gets about $100M per year in tax revenues alone. It wants another $47M. For comparison, the entire City-County budget for 2009 is $1.1 B, including all tax revenues, grants, fees, etc.

The CIB still owes $70M for the Hoosier Dome -- which cost $55M to build and which has already been imploded. This is the type of fiscal impropriety that has caused us to be in this situation. The CIB has not been good stewards of the taxpayer's money.

Mayor Ballard says that even if Proposal 285 passes - it is not enough. He pledges he will be back to the Legislature next year, asking for even more money for the CIB.

The CIB wants $15M to take over the operating costs of the Conseco Fieldhouse - even though negotiations with the Pacers have not been reopened, the Pacers get all revenue from all events held at the Fieldhouse, and it would cost the team a penalty over $50M to break the deal. Bob Grand's position as the President of the CIB while also representing the Simons, owners of the Pacers, is a conflict of interest that is apparent to everyone except Bob Grand and Mayor Ballard.

The Councillors will find it difficult to turn away from ready cash offered by the hotel tax increase and the subsequent cash flowing from the State. But, the easy cash will only put the taxpayers in a bigger hole. They should, instead, move forward on a plan to identify the policy and fiscal decisions of the CIB that led us to this problem and change those policies and prohibit a repeat of the bad fiscal decisions; they should not pass one tax increase that leads directly to the need to raise two more in three and a half years; they should create a plan to make the hospitality-sports-tourist-convention industry self-sufficient within a decade; AND they should bar the CIB from taking over the $15M in annual operating expense of the Conseco Fieldhouse.

The members of the Committee are:

(R) Robert Lutz, Chair rlutz@indy.gov 241-4020
(R) Bob Cockrum (no published email address) 856-5549
(D) Monroe Gray mgray@indy.gov 327-4242
(R) Barbara Malone barbara_malone@sbcglobal.net 291-4359
(D) Angela Mansfield angelamansfield@aol.com 872-3306
(R) Marilyn Pfisterer cpfist1061@aol.com 244-7156
(R) Lincoln Plowman lincolnplowman@comcast.net 557-7594
(D) Joanne Sanders jmsanders@msn.com 283-6040

Plan on attending the hearing -- contact your Councillor, too -- Tell them to do what is right for the taxpayers of Marion County and fix the problems of the CIB, not just throw more money at them.

Public Opportunities to Review CIB Issues

Two opportunities are coming up in the next couple of days for the public to hear about and question issues revolving around the Capital Improvement Board.

Thursday, April 16, beginning at 6:00 pm, the Municipal Corporations Committee of the City-County Council will get an update on the CIB from Bob Grand (President of the CIB) and Barney Levengood (Executive Director of the Convention Center and Lucas Oil Stadium). Councillor Mike McQuillen (Chairman of the Committee) has told me that the public will be allowed to ask questions. That meeting will be in Room 260 of the City-County Building. Two other Council Committees will be meeting in that same room - one at 5:00 pm and the other at 5:30 pm.

Saturday, April 18, from 9:00 am to 11:00 am, the Marion County Alliance of Neighborhood Associations (McANA) will hold its monthly membership meeting. The meeting's agenda includes, as the primary guest speakers, Barney Levengood and Dorothy Henry (CIB member). After a presentation by the guest speakers, comments and questions will be taken from those in attendance. McANA meets in the basement of the North United Methodist Church on the NW corner of Meridian and 38th Sts. McANA asks that folks attending their meetings please bring a non-perishable food item to donate to the Church's food pantry.