Downtown Indy Hotel Workers Sue For Unpaid Wages

First the downtown Hoteliers hid behind the skirts and aprons of Indy's hotel workers in order to fight for the right of the Capital Improvement Board (CIB) to get even more tax money.  No matter that the CIB gives millions of dollars every year to the Indianapolis Convention and Visitors Association (ICVA).  By all rights the ICVA should be funded entirely by those downtown businesses that benefit from the organization, not the taxpayers.  The ICVA, among other things, pays to discount hotel rooms for convention-goers.

Then the downtown Hoteliers outsourced their maid services.

Now we learn that the outsourcing service, Hospitality Staffing Solutions (HSS), is being sued by hotel workers who claim they have not been paid for all of the hours they actually worked.

Here is the text of the press release written by Unite Here's Sarah Lyons:

WHO: Thousands work in hotels downtown, more and more through subcontracting agencies at minimum wage with few or no benefits. Now, a number of hotel workers are coming forward to blow the whistle on mistreatment and wage and hour violations they experienced while working at area hotels through the subcontractor, Hospitality Staffing Solutions, (HSS). On Monday, these hotel workers will be filing a lawsuit in a federal court against Hospitality Staffing Solutions (HSS) and ten major hotels for wage and hour violations.  

This landmark lawsuit is the broadest wage and hour case in the history of the Indianapolis hospitality industry. If the lawsuit is certified as a collective action, eligible employees as a group could be entitled to as much as ten million dollars in back pay. Workers in the lawsuit allege that HSS and area hotels regularly fail to pay them for all the hours they work and force them to work off the clock and without breaks.

Indianapolis city government has invested over one billion dollars of taxpayer money in the downtown hospitality industry with the hopes of rebuilding the area economy. Sadly, Indianapolis hotel workers are some of the lowest paid in the nation. Hotel workers here start at $7.25 per hour and are offered few or no benefits. Now, some hotels that the city has chosen to subsidize are being accused of illegal activity--of not even paying their employees the minimum wage. During the Super Bowl, room rates in downtown hotels are expected to cost over $1000 per night. Hotels are slated to make millions of dollars each during the week of the Super Bowl alone.

When will Indianapolis turn its focus toward the people who live and work here?  Not the corporations that, through second hand means, accept tax dollars and then send their profits elsewhere.  I've said it before and I'll say it again...  Indianapolis should be as great a place to live as it is to visit.

ICVA - Seems More Money Wasn't The Answer After All

You all remember the logic dominoes that were set falling about two years ago -- the convention center has been enlarged and we added all these additional hotel rooms to the downtown inventory (all with the ever generous support of the taxpayers) so now we have to spend even more money on the Indianapolis Convention and Visitors Association (ICVA) to market that new space and new rooms.

Here's a reminder of the vast increases in taxpayer and private dollars that have gone into the ICVA in the last year and a half.  This is part of a report from the January 28, 2010, IBJ article by Scott Olson entitled "ICVA receives $5.4 million gift":

The Indianapolis Convention & Visitors Association announced at its annual meeting Thursday afternoon that it has received a $5.4 million gift-its largest from a private donor.


The contribution, which will be used to promote the city's tourism and convention business, came from the Dean and Barbara White Family Foundation Inc.

Dean White is the founder of Merrillville-based White Lodging, the developer of the $425 million, 1,600-room Marriott Place hotel complex downtown. The flagship 1,000-room JW Marriott is expected to open in February 2011.

"It's fantastic news," ICVA Executive Director Don Welsh said. "With the funding that we have, and the great product that we have, basically any excuses not to be successful are gone."

The grant from the Whites is to be spent over the next three years and totals nearly half the ICVA's $13 million annual budget. In a typical year, the association receives about $700,000 in private contributions.

The Indianapolis Capital Improvement Board funds 70 percent of its budget. The CIB, which operates the city's Indiana Convention Center and professional sports venues, increased the ICVA's funding from $6.9 million to $9 million in 2010.

Thursday's announcement follows a pledge Mayor Greg Ballard made earlier this month to give $1.5 million to the ICVA from funds returned to the city by companies that failed to meet job-creation promises tied to tax breaks.

Those funds also will enable the ICVA to better market the city both as a tourism and convention destination. The recent windfall is welcomed by John Livengood, president of the Indiana Restaurant & Hospitality Association.

"That has been our priority, to make sure [the ICVA has] the money to market Indianapolis," he said.

The ICVA has argued that it needs additional money to attract more conventions to the city. A $275 million expansion of the convention center, set to be finished early next year, adds 420,000 square feet to the mix. Including Lucas Oil Stadium, the ICVA will have 1.2 million square feet of convention space, 65 percent more than it had in the convention center and RCA Dome.

I love that quote from now Chicago resident, Don Welsh - "With the funding that we have, and the great product that we have, basically any excuses not to be successful are gone."


Fast forward to today.  This item in the current IBJ again by Scott Olson, entitled "ICVA expects to fall short of 2011 room-night goal":

The Indianapolis Convention & Visitors Association likely will fall far short of its aggressive goal of booking 725,000 hotel room nights this year for future conventions.


New ICVA CEO Leonard Hoops cautioned members of Marion County's Capital Improvement Board on Monday that, through April, the association is pacing at about 75 percent of its target.

“My goal is to get us back to where we were last year,” he said. “So I might as well fire that warning shot right now.”

ICVA sales staff met their goal in 2010 by booking 650,000 room nights for future conventions, but in doing so tapped most of their prospects. As of the end of April, ICVA had booked about 165,000 room nights.

“To get to that 650,000, the team worked very hard to close that out,” Hoops said, “and we started the year with nothing in the tank.”

You just cannot throw enough money at these guys.  And what's even better, there is nobody holding them accountable.

Don Welsh Leaving For Chicago

The IBJ is reporting that ICVA executive director, Don Welsh, is leaving Indy for a similar post in Chicago. Welsh came here in 2008, from Seattle. A search for his replacement is to begin immediately. Michael Browning, Chairman of the ICVA Board of Directors, is quoted as saying:

“With Indianapolis’ strong tourism product, including the expanding convention center and the coup of hosting the [2012] Super Bowl, we know this position will be extremely sought-after by numerous top-level executives both in Indianapolis and across the country,” Browning said.

Not in the report, but true none the less - During this past year, Welsh was able to secure millions more taxpayer funding for the ICVA, even as the public library was forced to cut its budget and curtail their hours.

MDC / CIB Interlocal Agreement

I just got a copy of the MDC / CIB Interlocal Cooperation Agreement that commits $8 million a year from the Consolidated Downtown TIF to the uses of the CIB. While the Indianapolis Convention & Visitors Association is mentioned liberally, it is clearly a straw dog created to validate the $8 million price tag. It was approved by the Metropolitan Development Commission at their September 1, 2010, meeting.

I uploaded the agreement [edited to add page 5, which is missing from the other document] , if you care to review it. The terms of the agreement begin on page 7. Briefly, the agreement is for $8 million annually to be provided to the CIB, and requires 6 months notice or the agreement will automatically renew year to year.

While the stated purpose of the agreement is "to protect, further, increase and enhance the benefits that result from the operation of the Facilities and the activities of the ICVA", the agreement specifically states that the ICVA is not a third party beneficiary of the agreement.

With this agreement, property tax dollars are now flowing to the CIB. These are new dollars. They amount to $8 million per year on an ongoing basis. The only new expenses of the CIB are the operation of the expanded convention center and the $10 million cash gift to the Pacers. It is completely reasonable to connect these dots and see property tax dollars flowing from the City of Indianapolis to the Pacers.

These property tax dollars could be used to pay off the bond obligations of the TIF district early, or to promote $8 million in new projects. Such a project could even include upgrading parking meters in the downtown area.

But, no. The Pacers are given higher priority by Mayor Ballard, than being fiscally responsible in paying off debt, or fiscally responsible in crafting an upgrade to the parking meter project, or underwriting some other deserving project in the downtown area that would actually make Indianapolis a better place to live. The Council should reject the $10 million gift in the 2011 CIB budget and let the CIB and MDC unwind this agreement.

The DMD Budget Hearing - Say What ?

The 'great catch award' goes to Councillor Brian Mahern for his persistence in questioning at last night's budget hearing for the Department of Metropolitan Development, on an item that turns out not to be in DMD's budget at all -- the $10 million gifted to the Pacers by the Capital Improvement Board for 2011.

The questioning and answering was dispersed throughout the budget discussion - so I noted the timestamp in case you'd like to fast forward to these segments -- timestamps 45:00 - 49:00, 50:30 - 52:40, and 1:00:50 - 1:05:50 on the Channel 16 broadcast (click here, then on 'video' for September 13, 2010).

Mahern was following up on an IBJ article by Scott Olson last month (see also my blog entry "CIB Says Its Budget Increase Isn't What It Looks Like") where it was first disclosed that $8 million in funding for the ICVA would come "from downtown-development funds", freeing dollars that the CIB usually sends to the ICVA. The CIB was then able to build a budget within which they could donate $10 million to the Pacers.

Upon reading that article previously, I had assumed this was money from the Sports Development Area, that was created, and recently expanded, to provide funds for the downtown sports and tourist industry. Wrong ! These "downtown-development funds" are actually coming from the downtown 'consolidated TIF' area. So, now we have expanded the footprint of the tax dollars being redirected to these endeavors that really should be self sustaining.

The information illuminated last night was that the Metropolitan Development Commission has the authority to dispense TIF revenue any way it pleases, as long as it abides by the parameters set up for that TIF area by the Council. It pleased the MDC, evidently, to send $8 million to the ICVA. (David Reynolds, City Controller, actually called it an 'opportunity' to fund the ICVA.)

Mahern made a particularly salient point, when he referred to last year's increase in hotel tax. He noted that the Council amended the ordinance with a provision that the hotel tax could not be used to enrich any sports team.

Mayor Ballard and that clever lot on the 25th floor, struck a deal with the Council to get the hotel tax increased, then quickly engineered a way around the deal, it would seem.

The municipal corporations committee, Chaired by Councillor Barbara Malone, will consider the CIB budget on October 11 at 5:30 in room 260 of the City-County Building. It is worth repeating, the CIB-Pacers agreement gives an out should the Council not fund that item in the CIB budget for 2011. The Council can just say 'no' to gifting the Pacers with the 2011 installment of $10 million. And they should.

City Council Meets Monday

The Indianapolis-Marion County City-County Council meets this Monday night. Unfortunately, the Council link to this agenda does not work. Nor are any of the proposals to be introduced Monday night available on their website.

So, all I can mention here is that two Proposals that are of interest to my eye, that are indeed set for a vote tomorrow night, are the consolidation of Franklin Township Fire Department with IFD (Prop 43) and the appropriation of the $5 million abatement clawed back from Navistar (Prop 35). Prop 39, the guns in parks proposal authored by Councillor Ed Coleman, is on the Parks committee agenda for Thursday night, February 25, at 5:00 pm in room 260 of the City-County Building.

If you live in Franklin Township, you might want to take a thorough look at Prop 43, as it appears that the Township loses assets, retains debt, and loses a portion of the County Option Income Tax revenue stream to IFD. It also must pay to change the decals on the equipment and the signs on the stations. IFD does appear to be required to assume all pension obligations.

Prop 35, passed out of committee last week with a vote of 4-1. Republican Councillors Cardwell, McQuillen, and Malone, were joined by Democrat Moriarty-Adams. The lone no vote was cast by Democrat Councillor Evans.

This proposal appropriates $5.5 million in abatement money that is being returned to the City by agreement with Navistar. I have addressed this issue before in "Abatements -- Scary Loopholes Need Closing". The short of it is that when a company is granted an abatement, certain goals in hiring and/or investment are set. Should the company not meet those goals, some portion of the forgiven property taxes are to be paid back to the City.

The returned money should be allocated back to the taxing units by the same formula as property tax revenues are allocated. In this case, the Navistar plant is in IPS territory and just over half of the $5 million should go to IPS, in my view. But, the City is taking advantage of the lack of governing law or policy on where returned abatement money should go. Also, no matter how much the City spends of these funds, they surely should not be spending it on the Indianapolis Economic Development, Inc., and the Indianapolis Convention and Visitors Association. The former is the group that funds Mayor Ballard's trips abroad and now a clear line links tax money to Ballard's trips. The ICVA already gets almost $10 million a year in tax payer funds to operate. Meanwhile we have potholes, streets, and sidewalks that need repairing - and Mayor Ballard has appointed a task force to look at raising money for those needs, including the sale of assets owned by the taxpayers. Meanwhile we have a Parks budget that was slashed by $5 million this last year. Meanwhile crime prevention grants to be announced tomorrow night, will total $4 million - down from the promised $5 million 'because we just don't have the money'. Meanwhile we have a City-owned water company looking to raise rates by 35% on top of its recent raise in rates. Meanwhile we have a mass transit plan being hawked around the region with its concomitant increase in sales taxes and diversion of money we use to repair streets. Meanwhile we have people living under bridges in our fair city. Meanwhile we have a whole lot better things to do with that money than toss it to IEDI and the ICVA.

I'll post more on the proposals to be introduced once the Council website issues are fixed. This is unusual for them, so I'm guessing it will be taken care of Monday morning.

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.

Council Committee Votes 5-1 Do Pass on Prop 285

Warning: Rant ahead

Last night, the City-County Council Rules & Public Policy Committee voted 5-1 to move Proposal 285, 2009, to the full Council with a do pass recommendation. Aye votes were from Councillors Lutz, Cockrum, Plowman, Malone, and Pfisterer -- all Republicans. The lone nay vote was from Councillor Mansfield, the only Democrat Committee member present.

The meeting, Chaired by Councillor Bob Lutz of Wayne Township, was a grueling 4-ish hour affair that was an orchestrated parade of 'invited witnesses' with unlimited time to disgorge all of their thoughts, followed by a brief public comment period where speakers were limited to 2 minutes (more on that below) but who were 'graciously' allowed to dribble over that time limit in 5 second increments. Of the parade of maybe two dozen 'invited witnesses', all save three had a personal financial interest in more money being thrown at the Capital Improvement Board and all save two were in favor of the Proposal.

At the conclusion of the public testimony, Councillor Lutz feigned a let's get this over with and let the chips fall where they may attitude, fully knowing he had the votes to get this out of committee. Why did he know he could accomplish his goal? Because two Democratic Councillors, Sanders and Gray, were no-shows. Lutz had indicated he would likely not take a vote last night, but re-convene in a week to give the Committee members time to mull over the testimony they had heard. This probably was because the Committee is composed of 5 Republicans and 3 Democrats; certainly the Committee most likely to produce a positive outcome for the Proposal. Even so, Lutz could not count on Councillor Malone to vote do pass. With all three Democrats present, that could have caused a tie vote which would leave the Proposal in Committee. But, with the two MIAs, the math moved in his favor and he was guaranteed that his reliable 4 votes would serve his needs.

Some random thoughts:

The public deserves an explanation from Councillors Joanne Sanders and Monroe Gray for their absence on this critical Committee meeting and vote. I see that the blog, Indianapolis Times, which is the mouthpiece of the County Party, remains silent on the hearing, in contrast to their seeming interest leading up to last night (see here, here, and here). This makes me to wonder if Sanders and Gray are holding their aye votes in the wings for a last minute save of Prop 285 at the full Council. Politics as usual - play 'smart' at the public's detriment. But, I don't know why they were not there and maybe there is an explanation - we deserve one. [edited to add: I have received word that Sanders has been out of town on business and was unable to attend.]

The public was done a disservice, as is usual when more than two people show up, in the public comment period. Chairman Lutz' should have given the public the same time limit as his parade of invited witnesses. His handling of comment time may have been generous by Council Committee standards, but that bar is set very low. In all of these committees it is as though the public point of view is not as worthy as that of proponents of a proposal. From my perch in the cheap seats it often seems as if the attitude of the Chairmen is that the problem with the public comments is that they drag the meeting out too long. While the Council does the public's business, I believe they need to be much more accommodating of the time in which they give the public to express its views. As I mentioned in a comment to Paul Ogden's blog, I challenge Committee Chairs to try to speak to an issue for 2 minutes with buzzers going off every 5 seconds thereafter.

The proponents of Prop 285, save one or two, hid behind the skirts and aprons of the service workers in order to shill for more tax money for the CIB. As I mentioned earlier, these folks have a personal financial interest in the ever increasing investment of more and more tax money into the sports/convention business. Folks like Tamara Zahn of IDI, Susan Williams of ISC, Barney Levengood of the CIB, and Bob Welsh of ICVA are even more outrageous, as they haul down fat salaries derived almost exclusively from tax revenues. As reported by Paul Ogden, Zahn makes around $200,000 a year while IDI has squirrelled away over $7M in savings living lavishly off the public dole, and Welsh makes about $350,000 in salary and benefits while the ICVA had 'only' $4M in assets in 2007. Meanwhile Williams makes over $130,000 (poor thing) with ISC holding assets of nearly $7M in 2007, and Levengood makes $221,000 per year while the CIB takes in over $100M in taxes each year. These folks are pulling down the more than generous salaries from the public trough and have little real accountability for how well they do their jobs. Compare that to the maids who average a mere $15,000 a year in Indianapolis. To pretend that this CIB bailout is for the little guy, is bold faced lying. Its to keep the good times rolling for a select few living large off taxpayer largess.

There has been and will be NO examination of how the CIB got into this mess. Each Councillor is apparently quite content to believe it is the Mayor of the opposite political party, or the Governor, who caused this supposed catastrophe. This attitude will never identify the problems with the CIB in its fiscal and policy structure that will continue to bleed the taxpayer. The Councillors all acknowledged last night that this is only a two year 'fix' and ignored the obvious conclusion that it is therefore not a real fix of the real problems. Only Councillor Malone expressed an opinion that indicated that a real fix was important to her - enough to influence her vote at the full Council.

There is no interest in doing the public a service and creating a plan to make the sports/convention/tourist/hospitality industry self-sufficient. Speaker after speaker tossed around numbers in the range of hundreds of thousands to billions of dollars. I kept thinking - so why aren't we rich already and why are these guys back begging for more tax revenues?

Passage of the hotel tax and acceptance of the state loan, if successful at the full Council meeting on August 10, will trigger the necessity to increase two more taxes, car rental and ticket, in 2013. This is putting the onus on the next Council. Quite irresponsible in my view and it smacks of politics. The public good should count for something and it never seems to be weighted very high when elites have their hands out for the public dole. The public good is all the rage as a foil when the discussion is more money to help those who struggle to put a meal on the table or clothe their children or what to do about those pesky panhandlers who inconvenience us at stoplights. It takes the EPA to force Indianapolis to fix the sewer overflows that push human feces into our river and streams like some third world cesspool. But, all it takes for the wealthy overseers of our sports empire to get more, is to claim a need for an additional $47M on top of the $100M they already get and the only topic for discussion among our elected officials becomes how to land that money for them. Again, no request for an examination of what the CIB did wrong to put it in the position it is in now. That is the only way you can determine what to fix.

Blame decisions past and push problems forward seems to be the name of the game. But, make sure you get the CIB all the money it wants.

I hope the significance of the August 10th Council meeting is not lost on the Councillors. Mayor Ballard will present the 2010 budget proposal with something like $30M in cuts. Proposal 285 will be voted upon with its increase of $12M of tax revenues and a $27M loan from the State to add to the $100M in tax revenues the CIB already gets. Contrasting what City services are to be cut with the bailout of our sports empire, will shed a clear white light on what is really important.

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.

The CIB - An Example of Bad Government In Action

The Capital Improvements Board (CIB) budget shortfall is causing no shortage of outrage and angst in Indianapolis. For the purposes of this blog entry, lets not go into the merits of that debate. Rather, lets look at what the CIB illuminates in how really perverse and structurally unaccountable our government can get.

The CIB is classified as a Municipal Corporation tied to Indianapolis-Marion County government. It provides a political 'arms length' between the duly elected officials - the Mayor, the County Commissioners, and the City-County Councillors - and the decisions of the CIB. These elected officials all appoint members to serve on the CIB, but the Mayor gets 5 of the 9
CIB members and it is really his organization to steer. The CIB has the authority to float bonds and has done so, although they have also used the services of the Indianapolis Bond Bank for other bonds. Part of the CIB budget is reviewed by the City-County Council which must approve that part of the budget. The state law that set up the CIB gave it the authority to levy a property tax, with the prior approval of the City-County Council to do so. So far the CIB has not dipped into that well.

The supposed purpose of the CIB is to manage or operate the Indianapolis Convention Center, Victory Field (triple A Indianapolis Indians baseball team stadium), Conseco Fieldhouse (Pacers stadium), Lucas Oil Stadium (Colts), Capital Commons (a park between the Convention Center and the Statehouse), and a parking garage underneath Capital Commons.

The northern third of Capital Commons was donated by the CIB to Simons Property Group for their new World Headquarters in 2004, as part of a $23 million package of incentives approved by Mayor Bart Peterson and the City-County Council. The building is right across the street from the Indiana Statehouse. The Simons also own the Indiana Pacers.

The CIB manages and operates the facilities, but does not own them. The Indiana Stadium and Convention Building Authority (ISCBA) built and owns the new Lucas Oil Stadium and will build and own the pending expansion of the Convention Center. Both are leased by the ISCBA to the Indiana Office of Management and Budget (IOMB) which in turns subleases them to the CIB. In addition to the costs of the sublease, the CIB must pay the expenses of the IOMB - presumably only those connected to the stadium and convention center. The other facilities are owned by the Marion County Convention and Recreational Facilities Authority (MCCRFA) which also owns the ill-fated United Maintenance Facility on the grounds of the Indianapolis International Airport. The MCCRFA leases Victory Field, Conseco Fieldhouse, the existing part of hte Convention Center to the CIB. Again, the CIB pays for the expenses of the MCCRFA in addition to the lease payments.

The CIB negotiates and holds the contracts with the ball teams that play in the stadiums run by the CIB. Bob Grand is the current President of the CIB and he and his law firm, Barnes & Thornburg, represent the Simons and the Indiana Pacers. Joe Loftus, also a partner in Barnes & Thornburg, is a member of the board of the ISCBA. Barnes & Thornburg also represent the City of Indianapolis at the Indiana Statehouse.

Why is it so convoluted? Whether on purpose or not, the result is a Rube Goldberg device that makes accountability and transparency pretty much impossible.

The CIB collects taxes from a number of sources -- cigarette, innkeepers, food and beverage, admissions tax, car rental tax, and the sales taxes captured in a special district around the CIB's properties. The CIB must share a fixed percentage of the innkeepers tax revenue it receives with the Indiana Convention & Visitors Association (ICVA). The ICVA advertises the Convention and offers discounts on hotel space through its website, www.indy.org.

The much touted reason for keeping the CIB afloat is to keep the Indianapolis tourist and hospitality industry afloat. Oft repeated number is 66,000 service industry jobs. To that end, we not only find taxpayers funding stadiums, conventions centers, and advertising, but the City also has been quite generous with abatements and financing for hotels, and the Circle Center Mall was funded by carving out a TIF area. In addition to the players already mentioned, the City, through a variety of agencies, funds Indianapolis Downtown, Inc. (IDI) to the tune of about $1 million a year. Besides advertising and monitoring downtown office occupancy rates, IDI hires off duty police officers to patrol the mile square. What? IMPD can't do that? Guess not. The Metropolitan Development Commission waived a $6 million fine for the early sale of the Pan Am Plaza by the Indiana Sports Corp. (ISC) A lawsuit has been filed to recoup that money as modest payment for loss of precious downtown public open space.

The CIB has asked major investors of the Circle Center Mall project to forgive $34 million of the money they are owed for their loan of Mall profits to help build Conseco Fieldhouse. They are $20 million short for the annual operating costs of the Lucas Oil Stadium. They anticipate being $6 million in the hole for operating costs of the expanded Convention Center. They owe $17 million to the Indiana Treasurer for a loan so they could get out of some bad swap options. They need another $26 million to create a cash reserve for the repayment of bonds it holds. They are asking for $3 million more to give to the ICVA. And, they want to volunteer to take over the $15 million operating costs of the Conseco Fieldhouse now obligated to be paid by the Simons/Pacers.

The CIB has not been demonstrably successful. From 1998 through 2007 (the latest figures released by the CIB), the number of events held, the number of attendees, and the revenues generated at CIB managed properties has remained flat - despite a 2005 expansion of the Convention Center that increased floor space by one-third.

All these folks are busy busy busy. What never gets done, though, is an analysis of what it has cost the taxpayers to build this 'thriving' downtown and when, if ever, it will be successful enough to fund itself.

Let's talk.