The Consequences of a "NO" Vote on the Wishard Referendum

Take heart if you have been considering voting "NO" on the Wishard Referendum. Should the outcome be "NO", Health & Hospitals can continue forward and still build their new campus. The only thing that would change is that H&H would be banned from raising your property taxes to pay off the bonds. They have said all along that they can pay off the bonds with ongoing profits from Wishard. All they have to do is float revenue bonds. And, they could have floated revenue bonds without holding a referendum.

Hold them to their promise not to raise your property taxes. Vote "NO" on the Wishard question. You will not be forcing them to live with burst pipes. You will not be forcing them to live without a new campus. You will only be forcing them to be true to their word - that they will not use property taxes to repay the bonds they use to finance the project.

City-County Council to Meet Monday, October 26

The red hot smoking ban is one item on Monday night's agenda of the City-County Council. To its credit, the Council office has posted the amended proposed ordinance on its website. The full agenda can be found using this link.

The smoking ban, Proposal 371, introduced by Councillors Hunter and Mansfield, now has Councillors Evans and Malone signed on as sponsors. Prop 371 passed out of the Community Affairs Committee on October 14 with a do pass recommendation by a vote of 4-2. The minutes of that meeting are not yet posted, so I do not know which Councillors voted which way on the very tough issue. Those on the Committee include Councillors Speedy (chair), Bateman, Day, Hunter, Lewis, Minton-McNeil (likely absent), and Smith.

A not-hot and mildly worded proposal will also be voted on Monday night - Prop 378, which is a Special Resolution that "supports FedEx Express operations and the City of Indianapolis", introduced by Council President Bob Cockrum. I looked it up because FedEx is an operation situated mostly in Decatur Township, where it is shielded from paying its full due of property taxes because of sweetheart deals with the Airport Authority. The language of the Resolution is really vaguely worded, and as it turns out, deliberately so. Here is the key whereas clause:

WHEREAS, Congress is currently reviewing a 230-word provision in the FAA
Reauthorization Act of 2009 (H.R. 915) which unfairly targets FedEx Express and
could lead to disruption and job loss at the FedEx Express Hub;

Nowhere does the Resolution get any more clear than that. So, I Googled "Fed Ex Express HR 915". Turns out the FAA Reauthorization Act of 2009 would change the sweetheart deal Fed Ex has gotten for decades to be under the Railway Labor Act and not the National Labor Relations Act for the purposes of union organizing. See here for more detail. And the Fed Ex union view here. UPS is governed by the NLRA, by the way. Seems to me that any loss of jobs would be Fed Ex's doing. This is a wayward proposal that is deliberately weasel-worded to cover up its anti-organizing position. Prop 378 passed the Rules & Public Policy Committee on October 13 with a do-pass recommendation vote of 5-1. Those members present were Councillors Lutz (chair), Cockrum, Gray, Malone, Pfisterer, and Plowman. I can guess how they voted, but I do not know for sure. During the Committee meeting, Councillor Cockrum mentioned that he and Councillor Vaughn were approached by the head of the Indianapolis operations of Fed Ex to put forth this resolution that urges Senators Bayh and Lugar to vote against this provision of HR 915.

Surprisingly enough, there appears to my eye to be no thrilling Proposals in the batch to be introduced on Monday night.

Buyer's Denials Don't Ring True

On Sunday, October 18, 2009, the Indianapolis Star published a front page story about Congressman Steve Buyer's Frontier Foundation (Rep. Buyer's scholarship fund hasn't helped a single student), a foundation that has taken in nearly $1 million but expended no scholarships - the purported mission of the Foundation. Mary Beth Schneider and Maureen Groppe get high marks for finally getting Rep. Buyer to admit that it was in fact his Foundation. Others, including me here this past week (Buyer supporting fake charity), have written about the Frontier Foundation.

In today's paper we have a Star editorial about the Foundation (Let's see good deeds, Mr. Buyer), a cartoon by Gary Varvel that is none too complementary, and a letter to the editor by Buyer himself (Foundation operates legally, aims to help students).

In all of his denials and all of his they-are-attacking-me retorts, is there any truth? One more piece of information puzzles me and leads me to ask, was Representative Buyer trying to hide the fact that no scholarships were granted EVEN ON HIS FOUNDATION TAX RETURN?

If you look online at Guidestar.org, you can get access to the Frontier Foundation, Inc., 2006, 2007, and 2008 Forms 990-PF; the tax return form for private foundations. In each year, the tax form has an attachment of an application form, dated for the appropriate year, for the purported scholarship. The attachment to the 2006 tax form is entitled 'The Frontier Foundation Scholarship Application 2006' and it shows a due date of March 1, 2005. Likewise the 2007 tax form has an identical attachment, except the title has 2007 and the due date is March 1, 2006. Same situation for the 2008 tax form - purported scholarship application with a title date of 2008 and a due date of March 1, 2007.

Below is the top half of page 1 of the two-page 2006 scholarship application, chosen for its clarity.

Looks to me like the folks at the Frontier Foundation wanted the IRS to think they had an active scholarship program.

What If....

What if the Wishard project referendum fully disclosed :

the cost of the project (maximum of $703,040,000),
the term of the bonds (maximum of 30 years),
revealed that the bonds would be secured with property taxes,
the lease arrangement with the Indianapolis-Marion County Building Authority,
that there would be two or more buildings whose function related to medical care,
that there would be one or more garage and/or parking lot,
that there would be a power plant built,
that the maximum annual payment would be $54,807,604,
which could end up with a maximum increase in the property tax rate of $0.1474 per $100 of assessed value,
and that the tax increase would be outside the property tax caps (so homesteads would pay up to 1% of gross assessed value PLUS up to $0.1474 per $100 of net assessed value)
that the total debt owed by all taxing units in Marion County secured by property taxes is $2,160,112,176,
that the maximum interest rate for the bonds would be 6.1.%,
that the maximum interest to be paid over the life of the bonds would be $830,478,858,
and that none of the preceding included the $120 million to be obtained through the Build America bonds (which is used to pay down interest) or the $150 million that Health & Hospitals has stashed away already for the project ???

What if they included in the referendum the very information they were required to publish in the public notice? Required to publish because it is pertinent information for the voters?.... What if they included that information in the actual referendum question?

At the end of the day I must assume that the reason they chose to be relieved of the onus of full disclosure in the referendum question, is that they were worried the public would reject their project due to the property tax guarantee for the repayment of the bonds.

Matt Gutwein, CEO of Marion County Health and Hospitals, Corp., says that they fully intend to repay with ongoing revenues, but are proposing bonds secured with property taxes because the interest on that type of bond is lower. That would be true if the bond buyers are reluctant to believe that the ongoing revenues are a sure thing for the next 30 years. Which of course begs the question, if savvy investors would reject the notion of an ongoing profit for Wishard, why should a savvy voter believe it?

But, anyway, what if full disclosure was the approach the Wishard folks had taken. What would the discussion then be? Well, I think it would be a closer scrutiny by the public of the cost figures, the proposed assortment of buildings, the amount of financial support Wishard should be getting from the IU School of Medicine, and how costs could be trimmed to simultaneously accommodate the needs of our County Hospital and be frugal with taxpayer dollars. Important points when you are the one who must repay the bonds with taxes you pay on your property. Not so important if you consider it all 'free'.

If H&H were to switch entirely to revenue bonds to finance the project, then no referendum would be needed. Looking at it the other way, if the outcome of the referendum is 'No', then H&H can still build its new Wishard campus, it just would have to switch to revenue bonds.

The County Hospital purpose fulfilled by Wishard is a very important one. It is an obligation, in my view, to be sure everyone can get access to medical care regardless of ability to pay. And, I do think it should be in decent facilities.

Here are the questions I would raise if the property tax issue were either fully disclosed or taken off the table:

What is the expected cost of each building?

Given the per square foot cost of the power plant is $1335.55, how much do you need that building? Will it generate efficiencies? If so, how long before the cost to build is recouped through the efficiencies? Would IUPUI or IU Medical School share in the utilities produced by the plant? If so, why are they not helping to pay for it? Would the plant generate energy through a green technology?

The 'faculty office building' -- who is it for? IU School of Medicine faculty? If so, why isn't IU helping to build that building?

In any case, why doesn't IU School of Medicine chip in for the cost of the new hospital or even pay an ongoing access fee for using it as a teaching hospital? They certainly gain from having new facilities to teach in and the faculty certain pull down added income by using the hospital and offices for a private practice on top of their teaching and/or research duties. IU School of Medicine charges tuition - why should they get the use of a teaching hospital for free?

Would you disclose the latest cost per square foot of comparable hospitals that were used for your projected costs?

How many beds would the new facility have and how many does the current facility?

Will the parking garage be just for patients and doctors, or would parking by University and/or School of Medicine personnel also be allowed. If the latter, why aren't those institutions chipping in for the cost of increased parking on their campus?

How does the Wishard role as the County Hospital include an outpatient facility? Perhaps I need an explanation of what indigent care is required and what care is provided for profit by Wishard. How much of the outpatient facility is for profit, and how much to fill a need that the other medical enterprises in town cannot fill.

Will the furniture and equipment in the current facility be moved to the new facility? Or, will it all be junked and all brand new equipment and furniture provided by the project? How much of the total cost is represented by new furniture and equipment?

And last but not least, the project you are proposing would increase the total Marion County debt secured by property taxes, by a whopping 33%. Is it wise to have so much debt or for so much of it to be encumbered by just one project?

Those are the questions that would come to me about this project if Gutwein and Co., weren't out there selling a referendum legally required because of bonds secured with property taxes, all the while saying they will not raise property taxes to repay the bonds. I think we deserve honesty from our government, even if it means they won't get their pet project built. At the end of the day, it isn't their government or their project, it is ours.

Wishard Referendum - Role of Legislature and Added Information

I want to take a short detour into the actions of the Legislature, that in the 11th hour of the last night of the 2009 Special Session, gutted the democratic process inherent in a referendum. Representative Bill Crawford and Senator Luke Kenley are the two names that arise most often as the major players in the special law written for Wishard. Whoever the players were, shame on you.

The referendum law for large capital projects requires the following wording:

"Shall ________ (insert the name of the political subdivision) issue bonds or enter into a lease to finance ___________ (insert a brief description of the controlled project), which is estimated to cost not more than _______ (insert the total cost of the project) and is estimated to increase the property tax rate for debt service by ___________ (insert increase in tax rate as determined by the department of local government finance)?".

The midnight insertion for Wishard provides that they can use the following wording:

"Shall the Health and Hospital Corporation of Marion County, Indiana, issue bonds or enter into a lease to finance (insert the description of the project)?".

The additional specifics must be provided in a legal notice that links the project information to the referendum. Of course, few people will see or read the legal notice. It has been provided at HadEnoughIndy previously. Unlike with other referenda, nowhere is the total cost of the project required, just the amount of the bonds that will finance the deal. So, as Matt Gutwein, CEO of the Marion County Health & Hospitals Corp., likes to brag about, there is a savings account with $150 million that H&H has managed to squirrel away. According to the Wishard project website, that $150 million will also be spent on this project and add to the bonded amounts that require disclosure and which were disclosed not to exceed $703 million. That website, by the way does not describe the project at all - no number or uses of the buildings - nothing - not even the artist renderings Gutwein has been hauling around the County. http://www.wishardfacts.org/ check it out, its just a PR piece.

Required of all referendum questions, is specific details, including per square foot charges, that are to be posted on the State Department of Local Government Finance website. The per square foot charges listed there for the Wishard project are:

Hospital building and ambulatory clinic - $635.96 (estimated).
Administrative office building - $286.43 (estimated).
Parking garage - $56.69 (estimated).
Central utility plant - $1,335.55 (estimated).

The per square foot information would be far more valuable if there were also an estimate of the total square footage of each structure. But, even the above information has value.

The 'central utility plant' has received very little attention. The only question I have heard posed, but not answered, was if it was going to be based on 'green' energy. Given the cost per square foot, renewed efforts to gain clarification of its purpose and usefulness, especially since there is access to electricity from more conventional sources, should be undertaken.

The Administrative office building is listed on the artist rendering, available through the IBJ, as 'Faculty Office', as in an office building for IU Medical Instructors. So, a good question is, why should Marion County taxpayers be on the hook, either through proceeds of its Health & Hospital Corp. or through increased property taxes, for a building to benefit the IU Medical School? Which, by the way, is contributing nothing to the project, either for construction or for ongoing operations, even though it is a vital asset as a teaching hospital for IU and provides its faculty with the opportunity to also have a private practice.

More questions to come in a future entry entitled "What If..." But, for this moment, lets not forget that the Legislature allowed our first public referendum to be watered down to essentially say "We do good works. Shall we continue?" Hopefully the democratic process promised by referenda will not be gutted for any future project and the rights of the voters will be held in higher esteem than shown for the Wishard project referendum.

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.

Buyer Supporting a Fake Charity

Congressman Steve Buyer is hip deep in supporting the Frontier Foundation, a charity whose mission is to provide scholarships for deserving Indiana students, but which has spent nothing on that mission since its inception in 2004; while it has managed to provide money for travel and food to assist in its fundraising.

Thanks to Jon Easter over at IndyDemocrat for bringing forward today, an expose' from the Journal & Courier of Lafayette, Indiana, by reporter David Smith - Rep. Buyer-linked foundation draws attention. This report evolved out of a report by USA Today (an IndyStar sister paper) titled Lobbyists unlimited in honoring lawmakers, which reported on the largess bestowed on charities with ties to Congressmen, and which exposed the Buyer / Frontier Foundation / lobbyist largess link. Sandra Chapman at Channel 13 (an IndyStar local sister media outlet) reported on Buyer's Foundation just last night, and other blogs have picked this story up, including MassonsBlog entries going back to June, 2009 (here, here, and here), TalkingPointsMemo, and now BlueIndiana, which links to Chapman's report. Will the Star be next?

Starting it all, USA Today reported:

Under ethics rules passed in 2007, lobbyists for the first time last year had to report any payment made for an event or to a group connected to a lawmaker and other top federal officials.

USA TODAY undertook the first comprehensive analysis of the lobbying reports and found 2,759 payments, totaling $35.8 million, were made in 2008. The money went to honor 534 current and former lawmakers, almost 250 other federal officials and more than 100 groups, many of which count lawmakers among their members.

The total cost is roughly equivalent to what the U.S. government spends to operate Yellowstone National Park each year.

Most of the money — about $28 million — went to non-profit groups, some with direct ties to members of Congress. In two cases, USA TODAY found, the donations to non-profits associated with a member of Congress came in response to a personal appeal for funds from the lawmaker.

Of Buyer's Frontier Foundation, Inc., in particular they reported:

Amgen also donated to the Frontier Foundation in honor of Rep. Steve Buyer, R-Ind., who is on the House panel that regulates the drug industry. The foundation, which provides college scholarships and once was headed by Buyer's daughter, received $385,000 in donations from pharmaceutical companies from 2005 through 2007, according to its IRS filings.

Buyer, who has worked on health policy in Congress for years, helped kill a provision in 2007 opposed by drug companies and broadcasters that would have imposed a three-year ban on advertising new drugs, congressional records show. Consumer advocates, including the Consumers Union, pushed the measure, arguing that aggressive drug pitches unduly sway patients to seek treatment from drugs before their safety records have been established.

During debate by a Commerce subcommittee, Buyer co-sponsored an amendment that stripped the advertising ban from a larger bill overhauling the Food and Drug Administration.

In an interview, Buyer said "there is no connection" between his legislative actions and donations to the foundation. "I'm not an officer. I'm not a board director," he said of his role in the non-profit. "Do I help the foundation? Yes, I do. Do I help other charity groups? Yes, I do." He referred other questions to foundation officials.

The charity's IRS filing covering the year 2007, the most recent available, listed Buyer's daughter, Colleen, as its unpaid president. Stephanie Mattix, listed as the group's paid secretary/treasurer, is executive director of Buyer's political action committee, Storm Chasers, according to Federal Election Commission filings.
Mattix and Buyer told USA TODAY that Colleen Buyer had left the group and referred questions to its president, Brenda Olthoff. Olthoff did not respond to e-mails and calls. Colleen Buyer did not return telephone calls.

The National Association of Broadcasters contributed $25,000 in honor of Buyer to the foundation last year. Amgen donated $15,000. "I don't think there is a link between a specific vote on drug legislation and contributing to kids going to college in Indiana," says Dennis Wharton, the broadcasters' executive vice president. "We look at where we think it's a worthy cause." Davenport, Amgen's spokeswoman, says the gift matched the company's "philanthropic mission to improve education."

David Smith, Journal & Courier, brought out the twist that Frontier Foundation hasn't actually spent any of its money on the scholarships that are purported to be at the heart of their mission:

A nonprofit foundation associated with Rep. Steve Buyer, R-Monticello, has been
quietly collecting hundreds of thousands of dollars in donations for the primary purpose of helping students pay for college.

But the foundation, which enjoys tax-exempt status, has yet to award its first scholarship after six years in existence.

Until this year, the operations of the Frontier Foundation operated under the public radar. People in Monticello's Twin Lakes High School, which keeps a file of scholarship resources from 55 local organizations, had not heard of it.

Information about Frontier Foundation emerged in the limelight earlier this year, triggered by a 2007 federal law that required companies to report, for the first time, contributions made in honor of members of Congress.

USA Today went through the documents and compiled a list of who received the most in honorary donations in 2008.

Buyer was 13th on the list with $192,225. Two of those donations, totaling $35,000, went to the Frontier Foundation.

Frontier Foundation's donations over the years have come primarily from organizations with stakes in legislation moving through committees on which Buyer sits.

Those include the pharmaceutical, health insurance and tobacco industries -- which have a stake in bills that go through the House Subcommittee on Health -- and the telecommunications industry. Bills affecting the latter go through the House Subcommittee on Communications, telecommunications and the Internet.

Attempts to reach Buyer for comment were unsuccessful. His press secretary referred questions to Frontier Foundation and said there was no connection between Buyer and the foundation.

"It's not Congressman Buyer's foundation," press secretary Anjulen Anderson said.

Buyer has several indirect connections, however. The foundation shares an office with his district office in Monticello, or at least did as of June 8, 2009, when it filed its most recent IRS Form 990 tax report. The Form 990 is an annual report certain federally tax-exempt organizations must file.

That report listed Buyer's daughter, Colleen Buyer, as president, and his finance director, Stephanie Mattix, as secretary-treasurer.

I took a look at the IRS Form 990s available at GuideStar.org, and found some more interesting information. In 2008, the Frontier Foundation, Inc., took in $117,633 and spent $63,711. Of the money spent, $55,827 is listed as 'Disbursement's for charitable purposes'. Of that, $16,411 went for salaries (not bad), $7,114 for fundraising expense, $52 for postage, $3,822 for meals, and a whopping $22,002 for travel for fundraising. Now $600 was spent on some awards, but no scholarships.

Back to David Smith's report:

In July 2004, Frontier Foundation Inc. sent out a letter, from Buyer's office, soliciting donations of $25,000 for each foursome at an Aug. 31, 2004, outing at Fenway Golf Club in Scarsdale, N.Y. Buyer's name was listed at the top as "honorary chairman." His daughter, Colleen, was listed as a board member.

So, who knows if the 2008 expenses were for a golf outing. But, it is outrageous that a slush fund for travel and food expenses can continue to masquerade as a charity to support Indiana scholars. We need to overhaul our campaign finance laws and plug the loopholes that allow these obvious frauds from being perpetrated to buy votes in Congress.