Investigation of CIB Practices

Previously I called for a study of the City of Indianapolis' goals for downtown and how to reach them. I now call for an investigation of the money management practices of the Capital Improvement Board over the past twenty-five years. I think it could illuminate how we got to this point in the CIB's financial mess, but it might also bring to light debt management issues that should be questioned more broadly than just the CIB.

Here are some areas I can think of, that should be looked into. You can add your own.

Many are making generalized statements about deficit spending by the CIB since 2000. The documents available online at www.capitalimprovementboard.org show detailed comparative data only since 2001, due to an accounting method change. Much of the public focus on the CIB's financial mess has revolved around the new Colts contract with the City (2005) and the operating expenses for the new Lucas Oil Stadium. There is no doubt all of that should be gone over with a fine toothed comb. But I would add that in the late 1990's, then Mayor Goldsmith renegotiated the contract with the Pacers - guaranteeing them a median league income no less, and built them a new stadium, Conseco Fieldhouse, whereby they could make money beyond what their team alone brought in. How did these additional costs affect subsequent annual 'profit and loss' statements?

Also, have the bonds to build the old Market Square Arena ever been paid off or were they rolled into other bonds? We know that the old Hoosier Dome - turned RCA Dome - is now gone, yet we, the taxpayers are on the hook for $70,000,000 when it originally cost only $55,000,000 to build. Have we done the same thing with the MSA? Why was debt allowed to grow like this?

According to the Conseco Fieldhouse website, it cost $183 million to build. Yet, information provided by the Indianapolis Bond Bank that covered the CIB's bonds, show two outstanding bonds for Conseco Fieldhouse. Still due as of June 30, 2008, was $191 million and $14 million. There is a third bond entitled 'Conseco Fieldhouse Cash Flow Funding' with an outstanding amount of $34 million. What is that? Is it related to the $34 million still owed to the Circle Center Mall investors, or are we looking at an additional $34 million on top of the bonds? Not to leave well enough alone, there is a fourth bond for the Virginia Avenue Garage, built primarily for the Pacers along with Conseco Fieldhouse, and part of the City's contract with the Pacers. At an initial cost of $25 million, the outstanding amount was $5 million last year. All taken together, CIB debt related to the Pacers as of June, 2008, was $244 million for facilities that cost a total of $208 million to build ten years ago. And, it is not clear if the Circle Center Mall investors' $34 million has been accounted for in this tally.

The same document shows two RCA Dome bonds. Again as of June 30, 2008, $45 million and $25 million were still outstanding. Recapping, we have an outstanding debt of $70 million for a building that cost $55 million to erect.

In addition to the Lucas Oil Stadium bonds, which are held by the Indiana Stadium & Convention Center Building Authority, the Indianapolis Bond Bank floated a $74 million bond/loan on behalf of Jim Irsay so he could fulfill his $100 million 'contribution' to the cost of building the LOS. That bond was floated in 2007 and not one dime in principal had been paid by April 1 of this year (2009). Those bonds need to be examined as well.

The Convention Center costs may have had an alternate fate - actual reduction of debt. The best I can find online is that the Convention Center cost $26 million to build in 1984, and the 2001 expansion cost $84 million. As of June 30, 2008, the CIB still owed $21 million and $59 million on two bonds that are labeled 'Convention Center'. So, $80 million owed for a building that cost $110 million to build. One still must ask why only $5 million has been paid off the original cost from 25 years ago.

Those of you who take advantage of the only sports venue that is actually affordable for most of us living in Indianapolis, Victory Field, rest assured that only $5 million was still outstanding on a bond for that facility as of June last year.

Debt in general and debt management needs to be examined in Marion County. But, an investigation of the finances of the CIB could lead the way.

The taxpayers deserve clear answers of how we got to where we are today when it comes to our sports teams. We need to know that the mess can actually be put behind us and is not going to explode in our faces yet again due to long term disregard for the actual costs of operating these facilities, sweetheart contracts to retain professional sports teams in a small market, and irresponsible debt service.

Setting Goals and Limits

Every time we turn around in the mess that is the Capital Improvement Board's finances, we have to hear about 66,000 hospitality jobs on the line. Now, I would like to think that the personalities hiding behind the maids and the cocktail servers and the janitors and the ticket takers really worry about the quality and quantity of those particular jobs. But, I'd like to see some salary breakdown. How much aggregate money goes to these 66,000 hospitality workers and how much aggregate money goes to the ball players and ball club owners? Which number would be larger? Who gets health insurance, dental benefits? Who doesn't need a second job to make ends meet?

But, even if there wasn't this duality, should we not ask - at what price do we continue to throw more and more taxpayer money at an industry that does not ever seem able to stand on its own two feet?

I would suggest that we pull together a group to study the downtown hospitality/entertainment / tourist industry. That would include hotels, restaurants, theaters, art galleries, malls, stadiums, and maybe even cross the river and pick up the zoo and gardens. The study group should not have ANY lobbyists on it. It should, however, have regular taxpayers, elected officials, and some folks with particular expertise, like accountants. There should be far more representatives of the funders than representatives of those who want the funds, so that preordained outcomes are avoided.

The purpose of the group would be to ask and answer these questions:

How much taxpayer money has been spent with what results?
How much more money does the taxpayer owe currently?

What is the goal of funding the downtown tourist/hospitality industry?
Is it to provide sports teams to a small market City?
Is it to provide a living wage to lots of people?
Should it be the City's goal?

How do we measure success in the goals?
Can this industry stand on its own and thrive?
If so, how do we reach that goal?
If not, is this the best return on investment industry to target with a forever stream of tax revenues?

What is the structure through which tax money is funneled presently?
Is this the optimum structure to reach the goals?
What is the optimum structure to reach the goals?

Which segments of this industry would produce the best overall results with any funds provided - sports, arts, entertainment?
What mix of funds vs. segment would provide the optimal strategy for meeting the goals?

I'm sure there are other questions and answers that could be derived.

All of this information would be given to the public for input on what they are willing to pay for a thriving downtown. Ample time would be given for comments - not just 2 minutes per person so officials don't have to be up late listening to their constituents.

The haphazard method used for 30 years now does not seem to be doing any more than wrecking havoc on the taxpayers' pocketbooks. The public deserves clear goals, strategies, and standards by which success can be measured. I'd say the public deserves all that BEFORE one more penny of tax money is funneled to the CIB.

Deep Pock'-et

deep pock'-et 1. n. what the Indiana State Legislators, particularly Senators Luke Kenley, Teresa Lubbers, James Merritt, Patricia Miller, and Michael M. Young, think the taxpayers of Marion County have.

deep pock'-et 1. v. act of shielding a bill under consideration by the Indiana State Legislature from a fair vote on the floor example: Speaker of the House, Pat Bauer, sensing passage of the popular bill to put tax caps in the state constitution, deep pockets it.

HB 1604 - CIB bailout bill - how they voted

HB 1604 which authorizes the City-County Council to increase a variety of taxes, the revenue from which is to go to the CIB, has passed out of the Senate with a vote of 33 aye and 17 nay.

Those voting nay were:

Jean Breaux (D, District 34)*
Johnny Nugent (R, District 43)
Marlin Stutzman (R, District 13)
John Waterman (R, District 39)
Mike Delph (R, District 29)*
Lonnie Randolph (D, District 2)
Karen Tallian (D, District 4)
Richard Young (D, District 47)
Sue Errington (D, District 26)
Earline Rogers (D, District 3)
Greg Taylor (D, District 33)*
Lindal Hume (D, District 48)
Connie Sipes (D, District 46)
Greg Walker (R, District 41)
James Lewis (D, District 45)
Tim Skinner (D, District 38)
Brent Waltz (R, District 36)*

* = part of their district falls inside Marion County

HB 1604 - CIB bailout bill - fiscal impact analysis

The Legislative Services Agency (LSA) does a fiscal impact analysis of all bills before the State Legislature. Here is what the LSA considers the new taxes proposed in HB 1604, if implemented, would generate for each of the next three years.

The LSA leaves the revenue prediction for parking fees as 'indeterminable'. The total revenue for all remaining tax increases combined are:

2010 = $19.2 million
2011 = $23.5 million
2012 = $26.8 million

The CIB claims they need an additional $48 million annually to make ends meet. Even if you support the claims of the CIB and the tax increases, this still leaves a sizable gap in revenues.

HB 1604 - CIB bailout bill - what is in the bill

HB 1604 is the bill that would allow the Indianapolis-Marion County City-County Council to increase a variety of taxes, the revenues of which would go to the Capital Improvements Board (CIB). The bill also contains changes in taxes for CIBs in other cities throughout the State of Indiana. The Marion County CIB provisions are summarized below (taken from the HB 1604 Legislative summary):

Permits the Marion County city-county council to increase: (1) the county supplemental auto rental excise tax from 4% to 6%; (2) the county admissions tax from 6% to 10%; and (3) the county innkeepers tax from 9% to 10%.
Establishes a Marion County option to impose an off-premises alcoholic beverage tax at a rate not to exceed the state alcoholic beverage tax rate.
Permits Indianapolis to impose a new commercial parking fee.
Expires the tax increases and fee January 1, 2020.
Deposits the revenue from these increases in a new sports and convention facilities operating fund for the Marion County capital improvement board of managers (Marion County CIB).
Restricts the use of the new operating fund to paying usual and customary operating expenses that have a positive economic impact with respect to capital improvements operated by the Marion County CIB.
Allows for an addition to the Marion County professional sports development area to include a hotel complex located within 0.5 miles from the Indiana Convention Center. Provides for the deposit of the state sales taxes from the additional area in the new Marion County CIB sports and convention facilities operating fund. Adds an offset to the captured taxes from the new tax area addition if local tax and fee revenue from the increases exceed $21,000,000.
Eliminates the capture of state sales taxes in the tax area addition not later December 31, 2040.
Requires the Marion County CIB to present a long range financial plan to the city-county council before January 1, 2010.
Requires the state board of accounts to audit annually the accounts, books, and records of the Marion County capital improvement board. Requires the SBOA to do a financial and compliance audit of the capital improvement board. Requires the board to submit the SBOA reports to the Marion County legislative body.
Requires the Marion County legislative body to review the SBOA reports at a public hearing. Requires the board to post its proposed budget, its adopted budget, and the SBOA reports on the internet.
Requires the Marion County legislative body to approve the issuance of revenue and general obligation bonds by the capital improvement board. Removes the Marion County board of commissioners from the review and approval of general obligation bonds and adds a requirement for the mayor's approval.
Adds two members to the Marion County CIB who are appointed by the governor. Requires one of these appointments to be a resident of a county (other than Marion County) that has a food and beverage tax in effect that provides revenue to the Indiana Stadium and Convention Building Authority.
Permits Indianapolis to use parking meter revenue for costs associated with the acquisition, construction, renovation, operation, and maintenance of public infrastructure and improvements and securitize parking system revenues in the city.
Makes an appropriation for the distribution of various local taxes and state sales tax in the additional Marion County professional sports development area.

Senator Delph Wants Study Committee on Redistricting Process

From an editorial in today's Indianapolis Star, I have learned that Senator Mike Delph has authored Senate Concurrent Resolution 95, which would create a 'Census Data Study Committee' to examine the processes that could be used in 2011 to redraw new Districts according to the population numbers to be generated by the upcoming Census.

The editorial quotes Delph as saying, "Voters should pick their elected officials rather than elected officials picking their voters." Well said, sir. Well said.

Delph's Resolution has gained other authors; Senators Sue Landske (R, District 6), Timothy Lanane (D, District 25), and Connie Lawson (R, District 24). It passed out of the Senate Elections Committee on April 6 with a unanimous 'do pass' recommendation. The Star editorial reports that it was approved by the Senate on Monday and now awaits an uncertain future in the House.
There are two co-sponsors in the House; Representatives Matt Pierce (D, District 61) and Jerry Torr (R, District 39).

The Star sees this as an opportunity for Indiana to move past the old and tarnished practice of gerrymandering districts to ensure the incumbents retain their seats. This is the very thing that could kill this measure. The resolution does not carve out any particular aim of the study committee to bring Indiana out into the sunshine, rather it suggests

SECTION 1. That the Legislative Council is urged to direct the Census Data
Study Committee to study the topic of redistricting and to make recommendations on processes that could be utilized by the Indiana General Assembly to promote the establishment of easily identifiable boundaries that keep communities of interest together.
SECTION 2. That the Census Data Study Committee, if so directed, shall review the redistricting process and make recommendations on ways to improve the process for 2011. As part of this review, the committee shall investigate computer programs that are available to assist in the redistricting process and make recommendations on the use of such programs. In addition, the committee shall make recommendations on methods to include the public in the process, such as, holding public meetings or holding advisory meetings with community leaders.
SECTION 3. That the committee, if so directed, shall operate under the direction of the Legislative Council and shall issue a report when directed to do so by the Council.
SECTION 4. The Secretary of the Senate is hereby directed to transmit a copy of this Resolution to the Legislative Council through the Executive Director of the Legislative Services Agency.

Surely the House can find a way to support a study committee that would look at the process of determining Districts. The House Democrats in particular are being quite obstructionist in this General Assembly. Crafting only one year's budget and rolling back the referendum process come immediately to mind. Nothing will scream 'absolutely, totally, obstructionist' quite like killing Delph's Resolution.

Lets talk.