Tuesday, February 10, 2009

The Magic Act that is the CIB: Watch the Magician's Other Hand

Yesterday the Capital Improvement Board claimed to much fanfare that the Board was trimming $6 million from its budget. Included in such cuts were the such nifty items as leaving adminstrative positions unfilled, cutting back on security, and delaying maintenance.

As always, Gary Welsh over at Advance Indiana lifts the curtain to reveal the the dog and pony show that is the CIB:

=>As is it always seems to be the case, things are not as they appear. The CIB's 2009 budget is $110.2 million, which is $20 million over the CIB's 2007 budget, the last year it operated before the opening of Lucas Oil Stadium, a budget increase of 21%. The 2009 budget contained an astounding 75% increase in salaries from $12.4 million to $21.8 million. The CIB says it had to add 52 full-time employees since it opened Lucas Oil Stadium. That translates into an increased cost of over $180,000 per employee. The CIB's 2009 budget also added in an additional $2 million for advertising, utility costs nearly doubled to $8.1 million, repairs and maintenance costs tripled for the new stadium, topping $3.6 million. There's even $4.2 million in additional money for land and building alterations, renovations and repairs.

=>To pay for this higher budget, the CIB is drawing down more than $25 million from its reserves; otherwise, the CIB projects its revenues in 2009 will actually be over $8 million less than they were in 2007. Part of that relates to $4 million less in food concessions and $6 million in suite license fees given up to the Colts franchise. Tax receipts from the food and beverage tax, the innkeeper's tax and car rentals are expected to grow close to $4 million.

=>So what about this so-called $6 million in budget cuts? Barney Levengood told the Board that he would find the savings by cutting $1.1 million in salaries and benefits, $2.3 million in maintenance and repairs, $2.1 million from a combination of advertising cuts and utility, legal and insurance savings, and $250,000 from supplies (the supplies line item was also doubled in the 2009 budget).

=>But are these really cuts? Or did the CIB intentionally inflate its 2009 budget in anticipation of this day when it would have to make its case to the public to raise taxes to bail it out of this colossal financial mess, which I contend was intentionally planned by the CIB's leaders. The CIB knew it had no revenue stream to pay higher costs associated with the new stadium because of the sweetheart deal it negotiated with the Colts. Yet, the CIB went forward with the stadium plans anyway. Contrary to the efforts of some apologists for the Peterson administration, a downtown casino never factored into the equation because the proposal never gained currency in the legislature. The CIB has already conceded another $15 million in subsidies to the Pacers to match the Colts' sweetheart deal even before sitting down to negotiate a new lease agreement with the Simons. Notice that the taxpayers are always told about long-term leases secured by these deals but are never told about the clauses which allow for those long-term leases to be opened up and renegotiated by the team's owner in a much shorter period of time.

The Indianapolis Star trumpets in its sub-heading in today's printed version of the Indianapolis Star that "Board that Runs Stadiums Won't Seek Property Tax Hike to Plug Deficit." In the article, Bob Grand, President of the CIB, said he was ruling out lobbying for higher property taxes as a potential solution. Don't think for a second that that quote is an accident. Grand knew it would be picked up the Star and made a part of the story. Grand's comment though is extremely disingenuous. He knows the CIB has never been funded by property taxes. One wonders why he did not publicly rule out federal and state income tax increases to cover the CIB too, which taxes also do not fund the CIB. Grand is like a magician. He wants you focusing on one hand, while not watching what the other hand is doing. You will notice he did not rule out increasing those very taxes and fees which actually fund the CIB. According to the Indianapolis Business Journal, the Mayor Ballard's administration is behind the scenes lobbying for higher taxes for the CIB. Again, it is the same thing with Bob Grand. He thinks he's the smartest guy in the room and that everyone is so stupid they will believe him no matter what tale he spins.

It should be noted that part of the $43 million shortfall ($50 million if you accept the IBJ's figures), still includes an additional $15 million the CIB plans to give to the Indianapolis Pacers, who are owned by Herb and Mel Simon, Grand's clients. Again, Bob Grand, contrary to his promise to recuse himself in matters that involve his clients, the Simons, is in the middle of CIB discussions about how to give the Simons' Pacers millions more in taxpayer money. Grand has no problem, supposedly, cutting back on security or low-paid staff members, but when it comes to pulling the plug on giving $15 million more in taxpayer money to his wealthy clients, well that is not on the table.

It is time for leadership from the Mayor. He needs to take control of the CIB and start asking for accountability from the Board, including asking for more than a few resignations. The City-County Council likewise needs to get actively involved and start demanding full disclosure from the CIB on everything. The secrecy with which the CIB has historically operated, needs to be relegated to the scrapheap of history. Even though the CIB works for the taxpayers, it is clear that the taxpayers are low on the Board's list of priorities when it comes to making decisions. That needs to change.


Downtown Indy said...

They are talking about getting Black Expo to make concessions, too.

Fact is, anything and everything will be 'on the table' for covering the shortfall. Everything, that is, except the real problem - which is the Colt's lease deal.

You and I both know that it will come down to a tax increase. Bob Grand will eventually tell us that they looked at and trimmed 'everything we could' but ultimately raising taxes was the 'last option available to us.' He will make a pretend-apology and that will be that.

Patriot Paul said...

No business buys and constructs property and then assigns a constantly changing board based on political election cycles with an ever changing appointees for its membership. That in itself is a receipe for disaster. Added to that the competing and conflict of interests, and you have what we see today: a 'grand' mess. The government decided to go into business for itself with $ signs in their eyes, and got an eye opener how tough it is, especially when run by political hacks. Is there a remedy available to dissolve the whole board and start over, including the option to keep the sports and sell the loosing properties to private enterprise?

Anonymous said...

The Indy Star has posted the CIB budget and Colts contract on the Internet.

Lawyers, Accountants, and Bankers take a look and see what you think it will take to solve this problem.

Detailed CIB Budget (Not CPA Audit)

Colts Lease Agreement(Not Signed)

Public Records Requests:

All we need now are copies of audits and contracts with amendments between the CIB, Indiana Stadium and Convention Building Authority, Pacers, Colts, Indians, Indianapolis Convention and Visitors Bureau and city/state.(i.e Colts & State Agreement on revenue sharing on parking)

Anonymous said...

One more thing:

Follow the money and influence-

Listing of Campaign Contributions, Lobbying Registration Forms, & business relationships lists for team owners, players, & board members of CIB and Indiana Stadium and Convention Building Authority.

Matching these to key people involved in making any real decisions should be very enlightening.

M Theory said...

Oh boy...a revolt is brewing!

Why not put you and Welsh on the CIB board? The mayor would fall out of favor with the elites for sure, but there are far more of us than there are elites.

I've been thinking about this a lot lately. I think the only way the Mayor can save himself at this point is to put you two lawyers on that board, give you full access to the CIB records, and let you two report to the People what's going on.

I'm not sure the mayor is politically astute enough to realize that there are many networked people within the Marion county GOP who want this crap to end.

These bad boys are going to cost our mayor his job unless he gets back to his roots (the people who got him elected) very quickly!

Downtown Indy said...

Anyone know what happened to the bruhaha about parking 'near' the stadium? That was talked about early on, and the question was whether a parking garage would have to be built. (This goes back the Hurst land-grab days).

I recall they thought $10-15 mil would be required to provide the lease-required parking spaces.

But this seems to have disappeared. Maybe it got resolved and I missed the notice?

If not, there's another 'shoe' waiting to be dropped, isn't there?

Anonymous said...

Just thought I would post this link for you to look over: http://blogs.wishtv.com/category/jim-shellas-political-blog/

Given the poll results do you still stand by your earlier prediction that the Guvs popularity will sink this year? Why or why not? I know this is off topic but I am doing a report for school and need your input.

Thanks Paul

M Theory said...

http://www.youtube.com/watch?v=_uBXk5dcc1s Found this little YOU TUBE jewel that exposes the CIB for what it is...a public private partnership designed to enrich the already rich elites at the expense of the taxpayers.

Downtown Indy said...

Jimmy Irsay's thoughts on stadiums:

"The Wilfs can't put $600 million into a stadium. That's never going to happen," Irsay said. "You'd never make it back in five lifetimes."

Downtown Indy said...

The NFL is in cahoots with their teams, KC promised a superbowl IF they get a retractable roof!

Paul K. Ogden said...


They going to open that retractable roof in KC in early February? Why would the NFL insist on that?

Thanks, Melyssa. I'm not optimistic at all there is any way of saving the mayor. Unless we can somehow deprogram him I think the cause is lost.


Anonymous said...

Capital Improvement Board Chair Bob Grand will appear at 2 o'clock tomorrow afternoon (Feb. 11) on "Afternoons With Amos" on WTLC-AM (1310).


Downtown Indy said...

Dang it, work gets in the way... Who listened and what did ol' Bob have to say? (as if I can't guess)

Anonymous said...

Apparently the CIB uses the same accountants as the Federal government because they use the same flawed logic. To wit, they raise their budget 20 million and then make a big deal about cutting 6 million from their budget. In my book that still plus 14 million more than the prior year and an increase of 14 million isn't a cut.

Downtown Indy said...

I think that's the same way the calculate 'gain' - spend a billion and rave about making 100 million.