Thursday, April 30, 2009

Agenda For May 1st Emergency Meeting of Capital Improvement Board

Today it was announced that the Capital Improvement Board of Marion County (CIB) will meet in an emergency session at 11 a.m. on Friday, May 1, at the Indiana Convention Center.

Being the resourceful person I am, I obtained a copy of their agenda:


I. Introduction

Self-congratulation for hard work of board members the last few months
II. Bob Grand - General Doom and Gloom

Doom and gloom that the failure of the CIB bailout will devastate the convention business and hospitality industry.
III. Pat Early - Fate of the Pacers

Pleads that giving the Pacers $15 million more is critical to dowtown convention business.
IV. Anne Lathrop - Idle Threats

Suggests that the lack of a taxpayer-funded bailout will mean Conseco Fieldhouse and Lucas Oil Stadium will have to be shuttered.
V. Bob Grand - Special Session

Grand says that the Special Session is the last chance to save the CIB. Repeats doom and gloom and dire threats.
VI. Adjournment

2009 Indiana Legislature - Local Winners & Losers

With another full day ahead of me working on a response to summary judgment, I have to keep this short. Some quick winners and losers from a local perspective.


Indianapolis City-County Republicans. They have, for now, avoided a certain majority-ending vote to raise taxes, a vote that likely would spell the end of many of their political careers.

Governor Daniels. He came across as fiscally responsible. His argument that stimulus money should not be used for regular expenditures is exactly correct.

Liquor lobby. They stopped the statewide alcohol tax increase and the Marion County tax increase.

Blogger Gary Welsh. More than anyone, this man man tirelessly and in extraordinary detail has exposed what's going on in this city, including all the fraud associated with the CIB mess. Welsh won a huge victory last night when the CIB bailout mess went down. Bob Grand says that Welsh's blog is not widely read. He should try going over to the legislature during a slow day, standing in the back of the room and watch legislators browse the internet to see what web sites they go to. He'll find legislators read Welsh's blog all the time. Don't think for a second that at some level that does not impact decision-making.


Senator Luke Kenley. He immediately jumped on board to try to raise taxes to bail out the Capital Improvement Board (CIB), then found people fleeing the ship. Then he failed to get a budget through.

Indianapolis Mayor Greg Ballard. Believe it or not, I'm almost tempted to put him in the winner column as the legislature's failure to give him the authority to raise taxes prevented him from doing the career-ending move of fighting for several tax increases. Still I doubt many people are going to forget his incessant fight to raise taxes in the face of overwhelming public opinion opposing those tax increases.

Capital Improvement Board. I would love to see a report on how much the CIB (and the City) spent unsuccessfully lobbying the legislature for higher taxes.

Bob Grand. As I've said before, Grand is not that well liked down at the General Assembly and he showed it this session. Runner up in this category is Joe Loftus.

Indiana Pacers and Indianapolis Colts. They were counting on tax increases so the Pacers could get their $15 million more and the Colts could avoid chipping in on a resolution. Now the odds of both those happening have decreased. If the legislature would only pass a bankrtuptcy authorization, the leverage the CIB has over the sports teams would increase dramatically.

Marion County GOP Chairman Tom John. He and Mayor Ballard have dragged the local Republican party into being the party of raising taxes for sports billionaires. That's an image that is going to haunt the Marion County GOP for years to come.

Some additional observations:

First, I don't buy into these claims that Indiana is the "worst legislature." The legislative process is by its nature ugly and inefficient. We in Indiana could do a lot better when it comes to legislative ethics reform. But I think you'll find problems in every state legislature. And don't even get me started with Congress.

Finally, you will rarely hear me talk about the terrible cost of a special session, which they now estimate at $12,000 a day. That is peanuts compared to the amount spent annually by this state. I would much rather have the legislature spend an extra day or two to get the budget right. It's not like the legislature is going to be spending another month in session. They'll work out a deal, come in for one or two days and pass the budget. What is in that budget will have a much, much greater impact on taxpayers than $12,000 a day for a special session. The important thing is to get the budget right.

Wednesday, April 29, 2009

The Mayor's "Artsy" Idea for the Indianapolis Colts

As I am busy working long hours responding to a lengthy motion for summary judgment, I thought I would steal the bulk of a column from Indy Tax Dollars, which reflects my thoughts exactly when it comes to such things as the unelected, appointed Capital Improvement Board funding the arts in Indianapolis as well as the suggestion that the Colts take over arts funding:
The Capital Improvement Board (CIB) has disbursed 3.1 million tax dollars annually to a variety of private civic organizations - the arts, Black Expo, etc.. How this fits into their primary mission we don't know, but we do think the elimination of these items would have been, in current conditions, an early and easy decision.

(We continue to believe, if these are indeed appropriate uses of public funds, that each such item ought to show up in the city budget, to be approved in the light of day by elected officials.)

Now that the Colts have told the city to get lost with reference to any contribution by them toward the solution of the CIB financial dilemma, the mayor's chief of staff has come up with a truly imaginative suggestion for leasing the situation.

He's quoted in this morning's paper (4/28/09) as saying, "If the Colts found it intriguing to help fund the arts or cultural tourism or Black Expo, that could be one way to move forward." Our first question is whether he is intimating that failure of intrigue by the Colts will mean continuance of this CIB generosity?

We've heard a lot about what great citizens the Colts are in Indianapolis. If so, wouldn't it be likely that they are already making substantial contributions to these and other organizations?

Frankly, it looks to us like the Colts are "intrigued" only by maintaining every dollar "negotiated" with the CIB. And it seems the relationship between the two organizations is very similar to our "negotiations" with our children when they are asked, "What would you like for Christmas?" Except, of course, we do have very real dollar limits on what we are able to give!

We fail to see how contributions to various civic charities by the football team is, in any way, a real "move forward" toward solution of a municipal agency's fiscal problems which have been years in the making.

Tuesday, April 28, 2009

Mayor's "Economic Development" Trip to Brazil; Is Indianapolis Planning on Growing Sugar Cane?

In a press release issued yesterday, Mayor of Indianapolis Greg Ballard announced that he was cancelling his economic development trip to Brazil in order to fight for higher taxes to bail out the Capital Improvement Board. Okay, he doesn't quite say that, but that is exactly what he is doing.

Supposedly the "objective of the Brazil trip is to create partnerships with Brazilian states and cities to help make Indianapolis a leader in alternative, renewable, and sustainable energy research, as well as a hub for alternative energy production and workforce development," according to Carolin Requiz Smith, Director of the Mayor's Office of International & Cultural Affairs.

One wonders if city officials spent any time at all investigating Brazil's very successful ethanol energy program. It is completely based on sugar cane, which is easily grown in Brazil's hot and humid climate. Sugar cane won't grow in Indiana, and can only grow in a few places in the United States. That leaves the United States using corn for its ethanol program, which has been a disaster. Corn-based ethanol costs a ton of energy to produce, requires a considerable amount of water, and is very inefficient. Even if all of the United States' corn crop were used for ethanol it would barely make a dent in the United States energy needs. Diverting corn to our fuel tanks merely drives up food prices. Corn-based ethanol still exists only because of large government subsidies and the political clout of the beneficiaries of those subsidies.

Brazilian sugar cane is a totally different animal. It is very efficient to make ethanol out of sugar cane and there is little effect on the food supply. This is in direct contrast to corn-based ethanol. (See article by Washington Post on Brazil's bio-fuel program.)

One has to question the purpose of this trip and whether it is yet another junket taken by our mayor at taxpayer expense.

See also: Corn-based ethanol: A Terrible Idea Brought to You by Our Government (11/25/2008)

Sunday, April 26, 2009

Jim Irsay Again Gives Middle Finger to Indy Taxpayers and Colts' Fans

A few years ago, Jim Irsay, owner of the Indianapolis Colts, indicated he was hurting financially and said that eventually the city would have to look at replacing the RCA Dome with a bigger stadium that would increase his team's revenue.

The City and State did exactly as he wished, building Lucas Oil Stadium, soaking Indy taxpayers to pay for it. In the process, the Capital Improvement Board gave away nearly all the revenue off the building to the Colts. As a result, the value of the Colts' franchise increased dramatically making the already wealthy Jim Irsay even more wealthy.

Fast forward a couple more years and the situation is exactly reversed. Does Jim Irsay and his Colts organization return the favor and agree to tweak its contract which would eliminate the need for taxpayers to face additional taxes in the midst of the worst recessions since the Great Depression? Nope. Today, the Indianapolis Star reports on an interview with Jim Irsay in which he arrogantly and falsely declares that the Colts already contributed $100 million to the construction of Lucas Oil Stadium and that his team was not about to pay a dime to help the CIB out of the hole. In the article, Irsay and the Colts organization again give the finger to the taxpayers of Indianapolis, many of which are die hard Colts' fans.

How many times does it take before the Mayor, the Governor, legislators or anyone on the CIB finally stand up to Jim Irsay, the two bit bully?

A Second Term for Mayor Greg Ballard?; The Future of the Marion County GOP Rests on Finding an Alternative

I still remember November 6, 2007 when the numbers started rolling in and we realized that Greg Ballard was going to be the next Mayor of Indianapolis. We Pike Township Republicans had gathered at the bar on Lafayette Road called Bada Boomz. It was one of the highlights of my time in the Marion County Republican Party. The people of Indianapolis had elected someone who pledged to change the country club politics of the past 30 years. The next four years would be an opportunity for Ballard to reshape the political landscape and reinvigorate the Marion County Republican Party so it could reemerge as the dominant political party in the county.

It is funny how a certain moment in our lives is viewed favorably, only to be viewed later, as history passes, as a time when things started to go wrong. In the days that followed his swearing in, many of us Indianapolis Republicans have gone from being baffled by Ballard's political moves, to hoping that he would "learn" in office, to becoming deeply disappointed in his performance.

This past week, Ballard went from being a deep disappointment as Mayor to being an unmitigated disaster for the Marion County Republican Party. Appearing before a conference committee, Mayor Ballard argued that he be given authority to raise numerous taxes. This from the man who was elected promising that he wouldn't raise taxes to fix problems.

Let's review the first 16 months or so of Ballard's time in office:

  • Advocates raising numerous taxes to bail out the Capital Improvement Board
  • Refuses to do any sort of review of the CIB regarding what went wrong or modify their operations. Instead Mayor Ballard's solution is to simply give the CIB yet more money.
  • Refuses to stand up to Indianapolis' professional sports teams and without question agrees to pick up $15 million of operating costs on Coseco Fieldhouse even though the Pacers get 100% of the profit from events at the building and the CIB is deeply in debt.
  • Has engaged in an extremely disingenuous campaign to promote the bailout incredibly arguing that raising hospitality taxes so that Indianapolis has nearly the highest hospitality taxes in the country is actually good for Indianapolis' hospitality industry and the convention business.
  • Has abandoned completely any real ethics reforms.
  • Has appointed numerous individuals with major conflicts of interest to various boards, including Bob Grand, as President of the CIB.
  • Started soliciting city contractors and want-to-be contractors for political contributions immediately after his upset win in the Mayor's race.Has awarded no-bid contracts to firms that appear to be little more than our version of Illinois' "pay to play politics."
  • Has allowed a large downtown law firm, Barnes & Thornburg, to dominate his administration, even allowing two partners for the firm, Bob Grand and Joe Loftus, to sit in on regular staff meetings.
  • Has appointed people to key positions in City Legal, and other positions in his administration, who have little experience.
  • Advocated creation of a Chinatown in Indianapolis. No sure how eh expected to get people of Chinese descent to start living in a segregated community in Indianapolis.
  • Is using taxpayer money to defend Democrat Mayor Peterson's post-election loss revision (of dubious legality) of a 22 year old contract that let Democrat Susan Williams and her Indiana Sports Corporation walk away without paying taxpayers $6 million for abandoning Pan Am plaza early.
  • Did not intervene with the Indianapolis Airport Authority to stop the hiring as CEO, John D. Clark, III, who had numerous ethical problems at Jacksonville, including attempting to prevent public officials from reviewing his operations at JAA and gross wasting of taxpayer money on limousine rides, exotic trips, first class airline fare, lavish hotels, etc. Considering how the state gives away money, he and Randy Tobias probably saw nothing wrong with Clarks' activities.
  • Has taken on city gun owners, defending one of the most restrictive gun return policies in the county, again of dubious legality, and has even suggested that city gun owners should be registered.
  • Appears to believe his office entitles he and his wife to travel the world at taxpayer expense.
  • Strong arms and retaliates against Council Republicans who won't support his agenda 100% of the time.

Those are just a few things that I thought of off the top of my head. I'm sure there are plenty more.

It is one thing for Mayor Ballard to throw his own political future under the bus. It's quite another thing to drag down the Council Republicans with him as well as the future of the Marion County GOP. Republicans desperately need an alternative to renominating Greg Ballard for a second term in 2011.

Saturday, April 25, 2009

Speedway Letter Writers Miss the Point

Today's Indianapolis Star brings with it two letters to the editor from Speedway residents supporting redevelopment of their town:

Speedway mustn't stay stuck in neutral
Many residents cheer on new town plan

These letter writers are missing the point. Those people upset about the Speedway redevelopment plans are not against redevelopment at all. What they are angry about is the elected officials passing the buck to an appointed Speedway Redevelopment Commission filled with members with conflicts of interest and who have made decisions without involving the community before those decisions are made. Trotting out decisions made behind closed doors for a dog and pony show is not the same thing as bringing in the community during the decision-making process where residents can have genuine input into plans and a consensus can be formed.

All of the residents of Speedway should have had the opportunity for input into these decisions before they are made. Instead of making them a partner in this project, the SRC, and the elected officials who have dropped the ball in not overseeing this project, have turned Speedway into a town bitterly divided against itself.

Friday, April 24, 2009

Marion County Prosecutor Carl Brizzi Leaves Real Estate Crime Victims Out in the Cold

WRTV now has done four stories on these schemers.

April 24, 2009: Man Who Hasn't Paid 21 Judgments Back in Business
April 24, 2008: Call 6 Investigation: Land Contract Buyers At It Again
November 29, 2006: Court Records: Men Failed To Pay For 22 Homes Over 12 Years
November 29, 2006: Companies Related To Steven Harris And Joseph Stanley

Despite ripping off numerous people, the Marion County Prosecutor's Office refuses to prosecute claiming they haven't broken any criminal laws and it is only a civil matter. As a lawyer, and someone who has worked a lot in the area of real estate, I thought I would point the Prosecutor's Office toward statutes that can be used in a prosecution.

IC 35-43-5-3 Deception

(a) A person

(2) knowingly or intentionally makes a false or misleading written statement with intent to obtain property, employment, or an educational opportunity;…

commits deception, a Class A misdemeanor.

IC 35-43-4-2
Theft; receiving stolen property

(a) A person who knowingly or intentionally exerts unauthorized control over property of another person, with intent to deprive the other person of any part of its value or use, commits theft, a Class D felony.

However, the offense is a Class C felony if the fair market value of the property is at least one hundred thousand dollars ($100,000).

IC 35-43-4-3

(a) A person who knowingly or intentionally exerts unauthorized control over property of another person commits criminal conversion, a Class A misdemeanor.


If there is any question whether what they are doing is exerting "unathorized control over property" here's the definition:

IC 35-43-4-1
(a) As used in this chapter, "exert control over property" means to obtain, take, carry, drive, lead away, conceal, abandon, sell, convey, encumber, or possess property, or to secure, transfer, or extend a right to property.

(b) Under this chapter, a person's control over property of another person is "unauthorized" if it is exerted:

(3) by transferring or encumbering other property while failing to disclose a lien, adverse claim, or other legal impediment to the enjoyment of that other property; (Note: the 21 judgments are liens)

(4) by creating or confirming a false impression in the other person; [or]

(6) by promising performance that the person knows will not be performed;

(c) As used in this chapter, "receiving" means acquiring possession or control of or title to property, or lending on the security of property.


Also, at real estate closings, several documents may be executed under oath. Several of these have to do with the intent of the buyer to live on the property. Thus perjury could be involved:

IC 35-44-2-1 Perjury (a) A person

(1) makes a false, material statement under oath or affirmation, knowing the statement to be false or not believing it to be true


There you go. Now let's finally see some real estate crime prosecuted in Marion County.

Westfield Mayor Loses His Mind

Tip of the hat to Advance Indiana for, again, beating me to the punch on this story.

Westfield, Indiana has a population of 11,911 as of the 2006 census. But that small size doesn't defer the Mayor of Westfield, Andy Cook, from dreaming of having the same problems with sports development and debt that its cousin, the big city of Indianapolis, has. The Mayor of Westfield has proposed turning Westfield into the "Family Sports Capital of America."

The best investigative reporter in Indianapolis, Indianapolis Business Journal's Corey Schouten reports:
The mayor of Westfield announced plans this morning to build a $60 million youth sports complex with a 4,000-seat multipurpose outdoor stadium, indoor sports facilities, and fields for baseball, soccer, softball and lacrosse.

The sports facilities would anchor a 1,500-acre development by locally based Estridge Co. along Towne Road between 146th and 161st streets. The project, called Symphony, already features the Wood Wind Golf Club.

All told, the sports component and clusters of retail, hotels and residential development around it would require a public and private investment of $1.5 billion,

Mayor Andy Cook said.The city hopes to attract an unaffiliated minor-league baseball team to play in the outdoor stadium, and also hopes to lure the YMCA as a major tenant. YMCA of Greater Indianapolis has only one branch in Hamilton County, in Fishers.

The ultimate goal is to turn Westfield, a bedroom community without much of an identity, into the “Family Sports Capital of America.” The city has a population of more than 20,000 people.“

This is a public-private venture which will clearly put Westfield on the map,” Cook said in a statement. “We are in the process of working on creative funding mechanisms as we truly believe that we are bringing forth a tourism component benefiting the entire state.”

The mayor is lobbying state officials to create a tax-increment finance district so the city can collect tax revenue to pay for the public portion of the project. The city also is working with the Hamilton County Convention and Visitor’s Bureau to create a Family Sports Advisory Commission that would coordinate the development.

Cook admitted the plans are ambitious, particularly in such a rough economy, and he offered no timetable for the project to get under way. But he said the city would be ready to move fast once the economy turns.

More than 45,000 people visited Hamilton County in 2007 for sports events, pending nearly $7 million, the visitor’s bureau said. The new facilities could increase that figure “many times over.”

Yeah, after seeing the problem Indianapolis has had with subsidies for its sports teams and arenas, why wouldn't you want to run out and spend $1.5 billion on this project? Okay, even assuming the new population figure of 20,000 is true, the $1.5 billion public-private partnership investment totals $75,000 per resident of Westfield. Yes, Mayor Cook's project has success written all over it. (That was sarcasm.)

By the way, we Marion County residents are beginning to learn that when our elected officials start talking about "public-private partnerships," we need to hold on to our wallets. Too often the term means public officials giving taxpayers money to their campaign contributors in the form of corporate welfare.

Thursday, April 23, 2009

Jim Irsay and the Indianapolis Colts: Arrogance Unparalleled

Do the Colts have any clue that the team's email to season ticket holders today probably just killed any chance of a bailout? Is Jim Irsay really that clueless?

When I read it I was stunned. I knew Irsay and the Indianapolis Colts had an arrogant streak, but never in my wildest imagination did I expect the team capable of issuing such a loathsome communication the team had to know would be picked up by media outlets. We taxpayers turned the Colts' franchise from one of the poorest in the league to one of the wealthiest. In return, this email shows the organization has nothing but unrelenting contempt toward Hoosiers, and their own fans. who the team apparently thinks are a bunch of idiots.

We won't even get into the lies about the Colts supposed $100 million contribution and the team not asking for a larger stadium. Oh, and yes, and let's not talk about how the Colts' organization makes such a great contribution to our community. I especially appreciate the fact after Hoosiers lost millions of dollars in last year's floods and the tornado, the Colts stepped forward and gave a whole $50,000, assuming, of course, the public matched their generous contribution.

The Capital Improvement Board is like the annoying, nerdy kid in school who got on your nerves. Then when you see the big class jock (the Colts) picking on the helpless kid, you want to go beat the stuffing out of the jock. The Colts showed zero appreciation for the State of Indiana or the CIB for sticking it to taxpayers in order to give Colts the sweetest of sweetheart deals. The CIB stuck their neck out for the Colts and Pacers again, and what appreciation have the teams shown? The Pacers claimed they had nothing to do with the additional $15 million the CIB has included in its budget for operation costs and now the Colts do this FU press release.

So the Colts don't think the Lucas Oil Stadium contract can be "renegotiated?" Really? You don't say. The legislature next week needs to take HB 1604, strip out the CIB bailout, and instead insert language authorizing the CIB to file bankruptcy. Then let's see if the Colts does not want to rethink the team's position on renegotiation before a bankruptcy judge latches onto the contract. At the end of the day, Jim Irsay will have wished he took the deal that only cost his team $5 million.

Here is the email sent to Colts' season ticket holders:

Dear Colts Fans:

Much has been reported and communicated about the Colts over the past several months, including several statements which have been either misleading or simply untrue. We would like to set the record straight by sharing with you facts of the Colts’ financial contributions to the State of Indiana and the City of Indianapolis and the club’s significant investment in the building and on-going operation of Lucas Oil Stadium.

First and foremost, the Indianapolis Colts have not sought in the past, nor is the club currently seeking, any special favors from the CIB, the City of Indianapolis, or the State of Indiana. The Colts never asked for a new stadium. In 2004, the City of Indianapolis approached the Colts about the possibility of a new stadium, not the other way around. The City’s need for an expanded convention center and desire to accommodate the NCAA for future Final Fours prompted its exploration of a facility to replace the RCA Dome. At no time did the Colts threaten to leave Indianapolis or otherwise “hold the city hostage.”

The Colts negotiated in good faith with the State and the City and eventually entered into a development agreement with the Indiana Stadium and Convention Building Authority (ISCBA), governing the construction of Lucas Oil Stadium, and a lease with the CIB, governing the Colts’ use of the stadium.

The Colts made a 30-year commitment to the community. Those written agreements, signed nearly four years ago, committed the team to this community for the next 30 years with no option to renegotiate, regardless of any financial downturns that might arise.

The Colts agreed to take the risk and responsibility to achieve financial success in Indianapolis. The new agreements also removed the financial guarantees for the Colts that existed in our RCA Dome lease that could have cost the city tens of millions of dollars on a regular basis. In essence, the risk of financial success in a small market has been shifted from the city solely to the Colts.

The Colts have been meticulous in meeting and, indeed, often exceeding the requirements of those agreements. We have contributed over $100 Million to the construction of the facility and it is simply untrue for anyone to suggest we don’t have “skin in the game.”

It is also important to note that, from the very beginning, Lucas Oil Stadium was designed to be a multi-use facility to accommodate many users, not just the Colts. Already, the stadium has successfully hosted many events having nothing whatsoever to do with professional football and many more are already scheduled for years to come. While we are immensely proud to be able to call Lucas Oil Stadium our home field, the fact of the matter is the Colts only use the stadium a maximum of nineteen days a year; and the facility is available for use by virtually anyone else the remaining 346 days.

Second, the Colts have been engaged in extensive dialogue, based upon facts and equity, with those leaders who are working hard to find a solution to the CIB funding shortfall. Jim Irsay has personally met with Senator Luke Kenley and Mayor Greg Ballard to discuss these matters. Our representatives have also been in frank, open, and continuing communication with the CIB and the financial leaders of the state legislature since this issue began to emerge early last winter.

Third, our understanding of the CIB’s history is that the CIB’s budget shortfall is neither new nor unexpected. In fact, only a relatively small portion of the predicted shortfall can be directly attributed to the increase in actual maintenance and operations expense required by Lucas Oil Stadium. What is particularly puzzling is that the shortfall appears to have only become a crisis when the CIB concluded it might be obliged to assume all the operating costs of Conseco Fieldhouse to avoid an early termination of the Pacers' lease.

Fourth, the Colts believe recent criticism of its civic involvement to be unwarranted and unfair. We are extremely proud to have one of professional sports’ most comprehensive community outreach programs. While we are deeply involved statewide, we have not predicated charitable giving and civic involvement upon how much public acclaim the club gets in return. The Colts remain committed to that approach.

Fifth, the Colts’ commitment to the City of Indianapolis and the State of Indiana has also included providing an exemplary football team on and off the field. The club has invested heavily in recruiting players and coaches of which Indianapolis and the State of Indiana can be proud -- on game days and all the other days they make positive contributions to our communities. There are no more positive role models than Peyton Manning, Gary Brackett, and Jeff Saturday. We believe the Colts’ record in wins as well as community leadership speaks for itself. In anticipation of this weekend’s NFL Draft, the Colts are preparing to make multi-year and multi-million dollar commitments to the next generation of leaders like those three.

The Colts remain optimistic that a fair and equitable solution will be found that assures the fiscal good health of the CIB, an organization that is very important to the long-term success of Indianapolis and the entire State of Indiana. We hope, though, that the public discussions of the issues will be based upon facts.


The Indianapolis Colts

Legislative To Do List: Authorize the CIB to File Bankruptcy

The Indiana General Assembly is officially less than one week from concluding. There is one thing that the legislature conferees need to do - put into HB 1604, the budget bill, or some other bill an amendment to IC 36-10-9-6 (the powers of the Capital Improvement Board) that would authorize the filing of bankruptcy by the CIB.

Regardless of the whether that power is ever exercised, the Pacers and Colts need to know that is an option at the disposal of the CIB. That would send a clear, undeniable message to the professional sports teams, giving the CIB enormous clout to revisit the sweetheart deals the teams received. It would force the Colts and Pacers back to the bargaining table to help the CIB close the funding gap. The Pacers' extra $15 million needs to come off the table, and the Colts need to help close at least $20 million of the gap.

Unfortunately, given that the the CIB has historically played Santa Claus when it comes to giving away taxpayer money, I'm not sure Bob Grand and Company are capable of being hard-nosed negotiators. That's why in conjunction with the bankruptcy authorization, the Mayor would be wise to ask for the resignations of everyone on the CIB. A new CIB Sheriff in town, armed with a bankruptcy authorization, would quickly wipe the smirk off the Colts and Pacers' faces and force them into concessions.

Negotiations are all about leverage. It's time the Indiana General Assembly gives the CIB leverage that will not cost the taxpayers a dime.

Wednesday, April 22, 2009

Lies, Damn Lies and Law School Employment Statistics; The Sordid Truth Behind the Numbers

I missed it a couple days ago, but the Indiana Law Blog had a blurb on the rankings of law schools. According to U.S. News and World Report. Indiana University at Bloomington (which is now unfortunately called the Mickey Mauer Law School) went from 36th to 23rd in the rankings while my law school alma matter, Indiana University School of Law at Indianapolis fell from 68th to 87th.

Although the rankings are watched by law schools with fascination, the numbers unfortunately have as much credibility as those provided by Indianapolis' Capital Improvement Board.

Part of the rankings of law schools is based on employment numbers of graduates, both the average salary and the level of employment. Law schools have for years gone back and forth competing to see who can phony the employment numbers the most. If you want a good laugh, go to a practicing attorney and tell the attorney what the law school is claiming regarding first year salaries and unemployment figures.

My alma mater? Indiana University School of Law - Indianapolis claims in their 2007 report that over 96% of graduates have a full-time job within 9 months and the average salary for a first year attorney in Indianapolis makes an average of $75,000 a year. Wow. That sounds pretty good.

You have lies, damn lies, and then you have the employment statistics provided by law schools. Unfortunately too many people read those numbers and believe them rather than talk to actual practicing attorneys about what the job market is really like. Those law students borrow tons of money, sometimes in six digits, only to graduate finding jobs that pay $35,000 a year, that is assuming the new lawyer is lucky enough to even find a job. Law school debt is non-dischargeable in bankruptcy so the graduate is going to have that noose of debt around his or her neck for quite some time.

Several years ago, I asked for open records requests from IU-Indy regarding the data used to back up the employment numbers claimed by the school. IU refused to provide the documents - surveys of attorneys - claiming they are confidential. The objection was over broad...all the school had to do was redact the confidential information on the document.

Unfortunately, there is no audit of the data used by law schools to arrive at their employment numbers. The American Bar Association and U.S. News & World Report simply accept the phony numbers as valid. Any law school not playing the game of submitting inflated employment numbers is destined to see their school fall in the rankings.

I never did follow up on my open records request at the time I made it. I am hoping to some day this year clear my calendar enough so I can reissue the request and take it to court when Indiana University fails to comply. I am also interested in filing a class action lawsuit against the law schools for lying to admittees about job prospects in the legal profession. While it can be argued that the "buyer should beware" when it comes to taking the law school plunge, I draw a sharp line when it comes to schools engaging in deceptive and dishonest practices to induce people to buy their product - a law school education.

If you want to read a great article on what the job market is really like for attorneys, read this Wall Street Journal article: Hard Case: Job Market Wanes for U.S. Attorneys (9/24/2007). Remember this article was written during the middle of a strong job market with almost full employment.

I have also written previously on this subject: Mandatory Reading Before Going to Law School (12/3/2008).

Populists Battle For Control of Indianapolis Politics

While the battle rages on over the Capital Improvement Board bailout, few people appreciate the coming culmination of an era that this battle represents. For over three decades, Indianapolis city leaders have actively promoted public-private partnerships as way of improving the city. Both Republican and Democratic leaders in the city actively pursued the deals.

Now, three decades later, it is apparent that many of these public-private partnerships involved little more than taking taxpayer money and turning it over to corporate interests who in return showered politicians with generous campaign contributions. Recently, Corey Schouten of the Indianapolis Business Journal exposed how much the city has given to the Simons family, a major political contributor, usually to Democratic candidates. Even that excellent expose did not even scratch the surface regarding the enormous giveaways by city leaders over the past 30 plus years. Tax abatements, subsidies, money not collected on deals that were struck by the city - these are all tools by which city leaders have transferred taxpayer money to private coffers.

Has the city benefited from some of these deals? Undoubtedly. But the question with any investment is whether the return was worth the dollars invested. In this case, much of the focus is on the "how" public-private partnerships have been carried out. Too often these deals have been cut behind closed doors and represent not an attempt to advance the welfare of the city, but to enrich private individuals and the cost of the taxpayers.

Several months ago, Indianapolis columnist Matt Tully looked out at the Republican critics of Marion County Republican Chairman Tom John and Mayor Greg Ballard, and concluded those critics represented the conservative wing of the party fighting back against moderates. Recently though Tully's views regarding the clash seems to have evolved in a more accurate portrayal of what is going on. The battle over the CIB and what the underlying issues represent, does not involve conservative v. liberal, Republican v. Democrat or any of the traditional combatants we have seen square off in political skirmishes. The battle over the CIB represents the classic Political Science 101 face-off between competing political philosophies we in the academia refer to as "elitism" and "populism." After three decades of elitists controlling both parties so much so that it mattered little whether Democrats or Republicans won the Mayor's office or controlled the City-County Council, populists are fighting back. The CIB bailout is merely the straw that broke the proverbial camel's back.

The year 2007 represented the first emergence of populism on the Indianapolis political scene with Republican Greg Ballard vowing on election night that his success in the Mayor's race represented the end of the era of "country club politics" in Indianapolis. In the days that followed, populists, who worked tirelessly for Ballard, learned the big lesson between winning an election and winning a transition. Ballard immediately signed on to the very elitist agenda he campaigned against leaving his populist friends on the field of battle wondering what happened to their hard-earned victory.

But, alas, the battle of 2007 was only the beginning. The forces of populism have grown stronger since. The CIB bailout represents the perfect opportunity to coalesce the forces of populism against elitists who insist on pushing through tax increases to benefit their corporate benefactors. The push back from the people against the wishes of the city's elitist insiders has been unprecedented, sending them scurrying for answers that do not involve them biting the very corporate hand that has fed their political success.

While who wins this particular battle remains to be seen, the change in Indianapolis politics is inevitable. The elitist, country club politics of the past three decades, which has dominated both the Republican and Democratic parties in Marion County, has worn out the city's welcome mat. Change is a coming down the road. The control of the elite corporate interests over the parties' machinery will not be loosened without a fight. But make no mistake about it, the fight is on and Indianapolis politics will never be the same.

Tuesday, April 21, 2009

CIB Rushes Forward to Pay $17 Million Loan Not Due Until June, Defaults on Outstanding Bonds

The extent to which officials at the Capital Improvement Board will work to protect their taxpayer-funded bailout being derailed is discussed by Gary Welsh of Advance Indiana:
WRTV's Norm Cox has an interesting item he posted on the Capitol Watch Blog today:

"One idea that’s been floated in the last twenty-four hours is already dead. Rep. Ed DeLaney, (D) Indianapolis, and several of his colleagues proposed a stop-gap measure yesterday that called for, among other things, the state treasurer to delay collection on a $17 million bill the C.I.B. owes for issuing fees on the stadium bonds. Somebody should have called DeLaney before the news conference. The C.I.B. already paid that fee yesterday morning, a few hours before DeLaney spoke."

Okay, so the CIB rushed to repay a $17 million loan from the state that it was not obligated to repay until June. Did the CIB even consider asking the state to defer its payment reobligation? That is precisely what it did with $36 million in debt owed to the Circle Centre mall investors. The consequence of paying off the loan means the reserves of the CIB fall below a level required as security for bondholders. In effect, the CIB's actions are a deliberate attempt to further exacerbate its financial woes in the closing days of the legislative session to force through the $48 million tax and spend plan it wants. Remember, this is the same CIB which knowingly went forward with a lease agreement with the Colts to manage and operate the state-owned and constructed Lucas Oil Stadium knowing that it didn't have the money to pay those expenses. Simply put, you can't trust the CIB. These people will do anything to get what they want. It's time to hold these people accountable for their gross misconduct.

Undoubtedly, officials at the supposed cash-strapped CIB heard about the alternative plan afoot that might interfere with their proposed bailout so they they rushed forward to pay a loan from the state that was not even due yet. There should be little doubt now about the political game the CIB is playing. This transparent political stunt gives further credence to Councilor Ed Coleman's call for Bob Grand, President of the CIB, to resign.

Indianapolis Refuses to Provide Public Records Relating to Winning Super Bowl Bid

So Indianapolis city government is refusing to provide public records related to its successful Super Bowl bid. Considering the tradition of city leaders giving away the public's money to corporate interests, it leaves one suspicious that the reason for refusing to allow public scrutiny is that it probably was not that good of a deal for the public and would not stand up to scrutiny.

Below is Mr. Clarke Kahlo's letter:

Re: Comment on DPW's proposed IRTIP Amendment- Des. 0900281— Monument Circle Pedestrian and Circulation Study for the 2012 super bowl- $328,300

Dear Mr. Cunningham and other City and MPO officials,

This is to express my opposition to this proposed expenditure for the NFL’s super bowl.

The principal reason is that neither the City of Indianapolis (Mayor’s Office) nor the Central Indiana Corporate Partnership), despite a total of five requests since August of 2008, has seen fit to publicly disclose the records pertaining to the city’s bid (and, more particularly, the specific public commitments made) to host the NFL-sponsored football game and related commercial festivities in 2012. My requests to the city were initially directed to Mayor’s Office Communications Director Marcus Barlow. He declined to disclose, citing his opinion that the bid package and associated subsequent agreements are not public records. He was subsequently succeeded by Robert Vane who received my written public records request in late December of 2008. Mr. Vane initially acknowledged that the requested materials are indeed public records and that he would search and disclose them. However, that has not yet occurred.

Such lack of transparency and apparent secrecy is an affront to the citizens and taxpayers, especially in the current context of the imminent fiscal collapse of the Capital Improvements Board caused in part by the under-estimation and under-reporting of the true operating costs at Lucas Oil Stadium, and the resultant on-going deliberations about how to capture additional revenues from the public to close the CIB's budget crisis.

If the City is unwilling to publicly disclose the complete agreement with the NFL (and all other parties), I believe that any studies and other costs of planning and preparation should properly by born by the private entities (e.g. the NFL, the CICP, the ICVA, the Indiana Sports Corporation, the hospitality industry, and perhaps others) which are planning and sponsoring the event.

Last August during budget review, when I commented to the Metropolitan Development Committee about the excessive, and perhaps duplicative, public monies (more than $1 million) proposed to support the budget of Indianapolis Downtown, Inc., I was advised by Councilor Jackie Nytes that it is very impotent for Indianapolis to be able to demonstrate that it is a “super bowl-worthy city”. Yet the likely majority of Indianapolis residents are fed up with the high level of subsidy, and apparent mismanagement of funds associated with the promotion of private sports corporations at publicly-funded venues. They also believe the city should be just as livable and accommodating for the residents as it is being made for the tourists, sports fans, and conventioneers.

Relatedly, there is academic authority that the projections of municipal revenue from super bowl games are highly inflated. The following (in bold text) is a public comment which was posted recently on The Indianapolis Star. If the conclusion is accurate, we should be more carefully scrutinizing all proposed pblic costs. economists have undertaken independent estimationsof the economic impact of the Super Bowl. Philip Porter suggeststhat practitioner bias, measurement error, and local constraints on(hotel) capacity may cause the actual net economic impacts to bezero. Robert Baade and Victor Matheson find the actual economicimpacts of Super Bowl XXXIII in Miami were approximately onetenth that predicted before the event. They speculate that the netimpacts of the Super Bowl generally range from $21 million to $32 million. study says that since 1970 the Superbowl has a negative sum ROI. It also states the SB is 90% likely to provide zero economic impact or actually cost the host city. Both basically say at best the ROI of the SB is 1/10th of what is claimed. The NFL inflates #'s to get cities to bid and build new venues.4/5/2009 10:40:48 PM

A final comment pertains to the Soldiers and Sailors Monument. Considering that the City sees fit every year to turn the Monument into a giant (“world’s tallest”) holiday lighting display, perhaps we shouldn’t be overly concerned with the issue of trivializing the Monument, which is operated by the Indiana War Memorials Commission. Nevertheless, it would be troubling for this citizen (one of whose family antecedents is memorialized at the Monument) to see a high level of NFL or other commercial advertising and adornment on the property. Please note that there’s also a constitutional prohibition (in Article 15 of the Indiana Constitution, as follows ) against sale or lease of the property which should be honored.

"...Section 9. The following grounds owned by the State in Indianapolis, namely: the State House Square, the Governor's Circle, and so much of out-lot numbered one hundred and forty-seven, as lies north of the arm of the Central Canal, shall not be sold or leased..."

Thank you for your consideration of the above.

Clarke Kahlo

Indianapolis Mayor Greg Ballard's Failed Leadership

This morning's Indianapolis Star brings with it an op-ed piece by Tom John, Chairman of the Marion County Republican Party. In the piece, Tom John points in detail that Indianapolis Mayor Greg Ballard inherited significant problems from former Mayor Bart Peterson and that he has exercised strong leadership in trying to clean up those messes.

Well John has it half right.

Mayor Ballard absolutely did inherit problems from former Mayor Bart Peterson. The left over problems from the Peterson administration include the Capital Improvement Board and water company messes. John rightfully accounts for them. Then his piece falls apart when he claims that Mayor Ballard has risen to those challenges.

I have been involved in some of those left over Peterson issues. First came a situation last year when we noticed that the CIB was giving away public property in the RCA Dome to a private company, the Indiana Sports Corporation. We filed a lawsuit on the matter. Although the CIB never even bothered to put that decision in writing when it was made and it was undoubtedly done during Mayor Peterson's administration, Mayor Ballard fell on the sword for Mayor Peterson and then CIB President Fred Glass, defending the deal.

Next we learned that during the final week or two of Mayor Peterson's administration, after Mayor Peterson had lost re-election, a resolution was sneaked into a pile of resolutions considered by the Metropolitan Development Commission. The resolution changed a 22 year old agreement between the City and the Indiana Sports Corporation. The effect of the change, which is at best of dubious legality, was that it allowed the ISC to sell the property without paying the City a $6 million payment for early abandonment of the Pan Am plaza.

What has been Mayor Ballard's response to these last minute shenanigans regarding Pan Am? He has steadfastly defended the alteration of the 22 year old agreement to the point where he is using taxpayer funds to fight taxpayers who are seeking to recover the $6 million for the city that the ISC walked away with.

Mayor Ballard inherited one of the most restrictive gun return policies in the Midwest, and which is of questionable constitutionality. What was Mayor Ballard's response when it was challenged? Not only has he defended it, he has also suggested that Indy gun owners should have to undergo registration. Someone should tell Mayor Ballard that taking on gun owners is not a good move for a Republican.

Then you have the situation with the CIB. The CIB is in a deep financial hole because of the sweetheart deals negotiated with the Pacers and even more so with the Colts. Although we have or will be left with the cost of maintaining and operating Conseco Fieldhouse and Lucas Oil Stadium, we have given away to the Pacers and Colts almost all the revenue associated with the buildings.

What has been Mayor Ballard's response? Has he used the occasion to demand concessions from the Pacers and Colts to close the gap? Absolutely not. First, Mayor Ballard accepts without question that city taxpayers should give $15 million more to the Pacers, even though as demonstrated in the analysis of the Pacers' contract by Corey Schouten of the Indianapolis Business Journal, the team has almost no leverage to force the City to pick up the $15 million in operating costs as the team would have to pay an enormous penalty for cancelling the contract.

Instead of demanding concessions from the teams, at the threat of CIB bankruptcy if necessary, Mayor Ballard proposed a whole host of tax increases, including many hospitality taxes. And what is the spin he uses? It is extremely disingenuous. He claims that the CIB bailout is not about the sports teams at all, even though demonstrably the deficit is almost entirely due to the Pacers and Colts giveaways. Mayor Ballard says it is about downtown and the convention business. He talks about 66,000 hospitality workers in the Central Indiana area. Mayor Ballard ignores study after study that says that investing in professional sports is a bad investment.

Mayor Ballard talks about dominoes falling. Apparently he has not considered that increasing hospitality taxes further, which increases will put Indianapolis at the top of the cities when it comes to such taxes, might actually hurt the convention business, tourism and those very hospitality workers he claims to be trying to help. Now if you want to talk about falling dominoes, try raising taxes and see what effect it has on the city recruiting convention business.

What is to be made of the direction of Mayor Ballard's administration? On election night, Mayor Ballard talked about the end of "country club" politics in Indianapolis. That was the last we ever saw of the populist Greg Ballard. He was ushered off the stage by Republican insiders who have been deeply involved in the City's penchant for corporate welfare, which both parties have eagerly signed up to promote. Mayor Ballard, or a stunningly accurate look-alike, then reappeared after the election as the antithesis of the populist candidate Greg Ballard, zealously defending corporate welfare at every opportunity, even when doing so turns his back on the very taxpayers and activists who helped him get elected.

As a Republican, I have strong feelings about Mayor Ballard's rejection of his populist roots in favor of the country club politics which has dominated Indianapolis since the 1970s. This isn't the 1990s. There is no longer anything close to a Republican majority in the county. Mayor Ballard and party leaders like Tom John though had a golden opportunity to cement a new Republican majority in the county by embracing a more populist approach to governing and supporting good government/ethics reforms. Instead they rejected that approach, and went down the road of supporting yet more corporate welfare and raising taxes to do so. Mayor Ballard's administration, filled to the brim with appointees with enormous conflicts of interest not the least of which is President of the CIB and attorney for the Simons, Bob Grand, belies the Mayor's campaign promises of running a more ethical adminstration. My Marion County Republican Party will be paying a heavy price for years to come because of Mayor Ballard and his new-found country club friends selling out the very principles upon which the Mayor was elected.

Monday, April 20, 2009

Speedway - Redevelopment Done Wrong

Today's Indianapolis Star contains an excellent lengthy piece discussing the proposed redevelopment of Speedway.

While the article contains a good discussion of the debate regarding whether to redevelop Speedway and the plans of the Speedway Redevelopment Commission, I think missing from the article is an explanation why some residents oppose the plan. It is an explanation that is going to sound familiar to those following the debate regarding the Capital Improvement Board.

The engine driving redevelopment in Speedway is the quasi-public Speedway Redevelopment Commission. The SRC like the CIB is filled with people who have a conflicts of interest and who may personally profit from redevelopment in Speedway done a certain way. What has raised the residents' ire is that on so many occasions the SRC has made decisions behind closed doors and then trotted those redevelopment plan out to resident "dog and pony shows" where they supposedly take feedback. But it is not real feedback. The plans in fact are finalized plans that have been reached before public input.

The SRC is proposing using taxpayer money to build a racing theme park type atmosphere which they believe will attract people to the racetrack 365 days of they year. I don't know if any market studies have been done, but I find it highly doubtful out-of-town people are going to trek out to the track for racing attractions when there is not a race coming up, even during warmer weather. This is going to be even less so during cold weather, which in Indiana could last 5-6 months. Although supporters of the racing theme park point to Daytona, Florida, as an example of success, there is considerable question whether Daytona's Racing Park is indeed succeeding. Nonetheless, there is a big difference between Florida's winter and Indiana's.

Something else downplayed in the article was the effect of closing of roads, including Georgetown Road near the track, for the project. Georgetown Road is a major thoroughfare. If people want to see the effect of closing a major road, they ought to drive out to Southwestern Avenue and see what has happened to the traffic on that road after Eli Lilly was allowed to build a building in the middle of the street, making it impossible to drive straight from downtown to the southwest side. I've ridden my bike on the road. Southwestern Avenue is a five lane thoroughfare that now has so little traffic on it coming out of downtown that you could lay down on the road and take a nap during rush hour.

While the Georges are touted as examples of good corporate citizen, the racing park will help the Georges expand the Speedway to capture more business from previously private vendors around the track. Eminent domain ,and the tax dollars that go with it, should not be used to enrich the owners of the Speedway.

Finally, I should say that I have talked to the residents upset over the Speedway Redevelopment project. They are actually in favor of redevelopment. They do, however, have a problem with redevelopment made without public input and which is not sensitive to the current residents and business owners of Speedway. Most of the Speedway redevelopment dispute could have been avoided if the SRC would have simply been open and upfront about its plans and taken genuine public input at a stage when they were still sorting out the various options. Then the residents could have been made a partner in the redevelopment plans, instead of vocal opponents. Hopefully that will be a lesson learned for our public officials.

Sunday, April 19, 2009

Attorney General Zoeller Warns of Mortgage Fraud Scheme

I am so delighted to see Indiana Attorney General Greg Zoeller continue to turn around things in his office as it comes to real estate regulatory issues. I had been very critical of his predecessor Steve Carter whose efforts in this area were lackluster, to say the least.

Recently, Zoeller warned of a mortgage fraud scheme that many of us in the regulatory scheme and real estate industry have suggested needs to be addressed. The Indianapolis Star reports:
Indiana's attorney general is warning about a mortgage fraud scheme in which criminals exploit a loophole in state law to transfer the ownership of properties.

Attorney General Greg Zoeller said the thieves aren't interested in the property they steal, but in using their "ownership" of a property to obtain a fraudulent loan. Once they get the money, they disappear with it and leave the true property owner with the debt.

"The actual homeowners, through no fault of their own, are at risk of losing their home to foreclosure," Zoeller said. "Correcting the problem and clearing the cloud off the title could cost the homeowners thousands of dollars."

Zoeller joined the Indiana Recorders Association and the Association of Indiana Counties in Indianapolis on Thursday to publicize the scheme. He explained that Indiana law does not allow county recorders to demand proof of identification from customers who are recording deeds and other notarized documents.

"Criminals are exploiting a loophole to fraudulently transfer ownership of properties in an effort to steal money from lenders," Zoeller said during the announcement.
A deed only has to be signed by the seller. With the forged deed recorded, the new "owner" can apply for a mortgage. The title company will do a search to ensure the person is in title, and the recorded deed will satisfy that requirement. The person then walks off with the money from the mortgage. Or, what they can do which is not addressed in the article, is turn around and sell the property for cash.

I saw the latter happen first hand last year. I had a client who had the same man forge his name on two quit claim deeds for rental properties he owned. The deeds transferred the properties to the man's company. He then turned around and sold them for cash, at a reduced rate. One of the new, innocent buyers, went out and sunk a bunch of money into rehabbing the property. The forger was reported to the Marion County Prosecutor's office by my client, but the office had no interest in prosecuting him. (It never ceases to amaze me that stealing a loaf of bread is prosecuted, while stealing a whole house is not.) The forger actually showed up in our civil quiet title lawsuit. He did not deny the forgery, but rather suggested what he did was okay because the properties were not being maintained.

In 2007, when I was head of the state's Title Insurance Division, we had several meetings with other regulators and people in the real estate industry where we discussed addressing Indiana's mortgage fraud problem by requiring more information on the deed. Right now the buyer does not even have to sign the deed. Neither the buyer or seller's actual address has to be listed. The title company used does not have to be on the deed. Unlike in many states, Indiana does not require the actual sales price to be on the deed, which would often be a red flag to a fraudulent transfer. Our meetings produced a great deal of consensus on what should be on a revised deed. Unfortunately, Attorney General Steve Carter's office was not interested in participating in that reform group's efforts.

While this additional information on the deed might not eliminate fraudulent transfers, it would make the real estate transfer more transparent, giving valuable information to regulators and prosecutors investigating mortgage fraud. However, we still need county prosecutors who are much more willing to go after white collar crime, like mortgage fraud, than is currently the case. Attorney General Greg Zoeller and other regulators can assist in that effort by making the expertise of their office available to local prosecutors who want to prosecute mortgage fraud.

I applaud Attorney General Greg Zoeller's continued efforts to improve his office's real regulatory efforts.

Saturday, April 18, 2009

Pacers Did Not Ask For $15 Million More From CIB - CIB Offered

Indianapolis Business Journal's Cory Schouten has an excellent take this morning on the city's giveaways to the Simons, which by his conservative estimate totals $400 million since 1995. See Simon Says, City Does.

For Gary Welsh of Advance Indiana's analysis of the Schouten's article and the impact of the giveaways see here.

My favorite part of the article though is the Pacers' respresentative who says the team did not ask the Capital Improvement Board to pick up $15 million in operating costs, but that the CIB simply did that on its own. (I might add without a public vote.) That was a mighty generous thing to do, especially when the CIB was already running a $32 million deficit.
Greg Schenkel, the team’s vice president of corporate relations, said discussions about additional funding for operation of the fieldhouse were initiated by CIB, not the team, and that the $15 million annual figure also did not originate with the Pacers.
Unfortunately, given the CIB's delight at giving away taxpayer money to professional sports franchises, I almost believe Schenkel. The Pacers seem to be well represented on the CIB.

Friday, April 17, 2009

CIB-Colts Contract Outrage: Audited Financial Statements

The Colts are entitled to get from the CIB audited financial statements done by an independent public accounting firm. The CIB, however, has no right to ask the Colts for an audited financial statement. I'm also wondering why the public and the elected officials, including our legislators, are not being being provided with these audited financial statements that are required under the contract.

SECTION 8.14. CIB Financial Statements. Notwithstanding the fact that suchfinancial statements may be generally available to the public upon request, CIB shall provide to Club as soon as available but in no event later than one hundred eighty (180) days following the end of each of CIB’s fiscal years during the Term, two (2) copies of its annual audited financial statements (including its balance sheet and statements of revenue and expenses), which shall be
certified by the independent public accounting firm that performed such audit.

CIB-Colts Contract Outrage: Taxpayers Are Responsibile for $5.5 Million in Repairs/Improvements at 56th Street Facility

Thanks to the CIB-Colts Contract, we taxpayers are on the hook for $5.5 million dollars whenever the Colts want to make repairs or improvements to their taining facility on 56th Street.

SECTION 8.24. Training Facility Maintenance Obligations. CIB shall reimburse Club up to a maximum aggregate amount of Five Million Five Hundred Thousand Dollars ($5,500,000) for any and all costs and expenses incurred by Club after the date of this Agreement and prior to the expiration of the Term or the termination of this Agreement in connection with the maintenance of, or improvements to, the Training Facility that Club performs or causes to be performed, in Club’s sole discretion. CIB shall reimburse Club for such costs and expenses incurred by Club, which reimbursement shall be made by CIB to Club no later than the 15th of the month following the month in which CIB is in receipt of an invoice therefor from Club, along with invoices or other reasonable supporting documentation of such expenses, assuming that CIB receives such invoice on or prior to the 25th of such month (or if CIB receives such invoice after the 25th of the month, CIB shall pay such amount to Club no later than the 15th of the second following month). So long as the Training Facility has not become reasonably unusable as a training facility for a professional football team as a result of Eminent Domain or other change in Law, Club shall maintain the location of the Training Facility at the current location during the Term. At Club’s sole discretion and option, and as permitted by Law, Club may require that any such improvements and/or maintenance be performed or procured directly by CIB.

Mayor Ballard's Campaign Promise to Not Raise Taxes

I guess the Mayor wasn't serious about his promise to get things done without raising taxes. My thanks to the Indianapolis Times who found the video.

Thursday, April 16, 2009

Indianapolis City County Councilman Ed Coleman Calls for CIB President Bob Grand to Resign

I guess it takes being freed from the pressure of your own party's caucus to speak freely and honestly. Today during an Indianapolis City-County Council meeting to discuss the funding crisis faced by the Capital Improvement Board, at-large member Ed Coleman, a former Republican turned Libertarian, called for Bob Grand to resign as President of the CIB.

It is about time an elected official stood up and said what everyone else has been thinking about Grand and his operation of the CIB. Kudos to Councilor Coleman.

Let's examine the situation. The first issue faced by the Capital Improvement Board when Mayor Ballard was elected was how to deal with the Pacers' request to renegotiate their contract to operate Conseco Fieldhouse. Unbelievably, Mayor Ballard appointed Bob Grand as President of the CIB, even though he is the attorney for the owners of the Pacers, Mel and Herb Simon. Supposedly Grand was to recuse himself on all matters relating to the Pacers.

As an attorney, there are conflicts that are so big that, under the Disciplinary Rules, they can't be waived. Grand's affiliation with the Simons is comparable to one of those conflicts. The Pacers and Colts are far and away the biggest issues dealt with by the CIB. Then you have the fact that the current budgetary crisis of the CIB is very much intertwined with the Pacers' situation and their request for the CIB to pick up $15 million of the operating costs. Grand is not recusing himself as to any of those discussions despite the fact the Pacers' situation is deeply involved in that crisis and how it plays out directly impact Grand's clients, the Simons.

Somewhere in the backroom, CIB officials made the decision, without public input and without a vote, to give the Pacers $15 million more by picking up their operating costs on a building in which the Pacers get 100% of the income. It is inconceivable that Bob Grand was not involved in those backroom discussions.

Bob Grand told Councilor Coleman that he is the best man for the job. Yet tonight when asked questions regarding the operations of the CIB and how comparable cities deal with similar shortfalls as faced by the CIB, Grand had no answer at all. While one can expect a learning curve in his position, it is apparent that in his 16 months on the job as President of the CIB, Grand has learned very little.

The City of Indianapolis deserves the head of the Capital Improvement Board to be someone without serious conflicts of interest and competent to do the job. Bob Grand has shown he is neither. The time has long past for Mayor Ballard to ask for Grand's resignation. Part of any deal should involve the reorganization of the CIB, including the removal of Bob Grand as President. Thankfully we have a Councilor who is not afraid to speak the truth.

The Problem With the Indianapolis Mayor Ballard's Proposal to Raise Rental Car Taxes

Anyone who has ever rented a car knows how excessively those cars are taxed. As part of his Capital Improvement Board bail-out plan, necessitated by the overly-generous Lucas Oil Stadium lease for the Indianapolis Colts and the apparent capitulation by the CIB on picking up the $15 million a year operating cost for the Conseco Fiedhouse for the Indiana Pacers, Mayor Greg Ballard has proposed raising the already high rental car taxes by 2%. This, we are assured, will only affect visitors to our city.

The claim did not ring true. I have rented a car several times from Indianapolis rental car firms. Sometimes my car is in a shop, or I want a newer, more reliable car for a lengthy, several day trip out of state. The presumption behind the tax increase proposal - that rental cars almost always involve out-of-towners renting a car in Indianapolis - seemed wrong.

It turned out my suspicion was correct. According to the National Business Travelers Association, most of the car rentals by NBTA members are actually from their local market. Further, a study by the Brookings Institute shows that increased rental car taxes dramatically affected their choice on car rentals. So much for the notion that an increase in rental car fees would only affect out-of-towners. Those rental car tax increases will affect local consumers and local businesses far more than advocates of the tax would like to think.

See: Taken for a Ride: Economic Effects of Car Rental Excise Taxes (2005)

Indianapolis City-County Council Democrats Propose CIB Plan and Fully Embrace Taxpayer Money Going to Subsidize Colts and Pacers

Any thought that the Democrats would stand up for Joe and Jill Taxpayer and against giving more tax money to billionaire professional sports team owners was quashed yesterday when the Democratic members of the Indianapolis City-County Council announced their plan to bail out the Capital Improvement Board.

At the outset, it should be noted that the Democrats' plan starts with the bailout pegged at $47 million dollars. That means the the Democratic caucus, like the Republican Mayor Ballard, is conceding that they will agree to pick up the Pacers' $15 million cost of operating Conseco Fieldhouse. As a result of that concession, taxpayers would pay for the operation of Conseco Fieldhouse while giving 100% of the revenue from the building to the Pacers. It should be mentioned that the Pacers are owned by the Simons, the major contributor to Democrats in the State of Indiana.

Then the Democrats disingenuously propose the bailout involve a new Indianapolis casino, which I am sure they know has zero chance of passing the General Assembly. They also propose expanding the downtown sports district to include the to-be-built Marriott. Like the casino proposal, you're talking about revenue years down the road. The expansion of the taxing district also amounts to diverting tax revenue that would otherwise go into general revenue that could be used for other purposes like filling potholes, fixing bridges, etc.

Finally, the Democrats finish where they should have started - asking the Pacers and Colts to contribute more money to help out the CIB. Their request matches those of the other proposals: $5 million each, which demonstrates a lack of originality, if nothing else. Of course, the $5 million from the Pacers would be after giving them $15 million more per year by picking up their operating costs at Conseco Fieldhouse. Nonetheless, as with the Mayor's proposal, as with Senator Luke Kenley's proposal and now the Democrats' proposal, the $5 million from each team amounts to nothing more than a request. No party yet has demanded that the Colts and Pacers make the contribution a contractual obligation they would have to meet every year. We lawyers call it a red flag when a party does not want to put in writing part of a deal.

While I can begrudgingly understand my political party, the Republican Party, for favoring wealthy business owners like the Simons and Irsay, for the Democrats to do so, while pretending to care about working men and women, is particularly distasteful and smacks of the worst sort of hypocrisy. Democrats, in particular, should be demanding concessions from these sports teams so that taxes don't have to be raised, taxes that will fall heavily on the low paid hospitality workers who will lose jobs when the City jacks up hospitality taxes. If the Pacers and Colts are not willing to negotiate voluntarily, the CIB should ask a bankruptcy judge to rewrite the deals.

The problem of a lack of revenue for the CIB is precisely because of bad deals it made with the Pacers and the Colts that gave away nearly all the revenue from Conseco Fieldhouse and Lucas Oil Stadium. Tweaking those deals, voluntarily if possible, or, if necessary, under the direction of a bankruptcy judge, would result in the infusion of millions more into the CIB's coffers. If the Pacers and Colts decide to exercise their out in the contract for bankruptcy, so be it. Contrary to the spin of Mayor Ballard, losing the professional sports teams would not effect the convention business one bit. Event planners don't book their conventions in Indianapolis so their members have a chance to go to a Colts or Pacers game. With regard to the Colts, there is little chance they would leave anyway given the facility we built for them and the sweetheart deal they have that couldn't be duplicated anyplace else, especially not in today's economy.

As I've noted previously, the academic studies overwhelming demonstrate that professional sports is a bad investment for local government. Yet Mayor Ballard, the Indiana Senate and the Democrats on the Indianapolis City-County Council ignore all the studies, insisting that average taxpayers shell out yet more of their money to dig the CIB out of a financial hole that is due almost completely to the CIB giving away the store during negotiations with the Pacers and Colts. We'll soon hear if the Republicans on the Council ignore public opinion and follow the same course.

Wednesday, April 15, 2009

Indiana Senate Inserts No Bid Contract Language Into House Bill 1254, Creates Loophole for More Pay to Play Politics

Political activist extraordinaire Diana Vice, author of the blog, Welcome to My Tea Party, alerted me to changes made by the Senate to House Bill 1254. The changes appear to indicate that any local government unit, which would include cities, towns, school districts, even the infamous Capital Improvement Board, could enter into no bid contracts to renovate or repair existing buildings as long as that contract did not exceed $400,000.

Of course, the $400,000 limit doesn't mean too much. For any project in excess of $400,000 all they have to do is divide it up into more than one project to evade the cap.

Nonetheless, do we really want to open the door yet further to pay to play politics in Indiana? There is already a strong connection doing business with government entities and the contributions they make to candidates. For example, Mayor Greg Ballard's 2008 contributor list is a who's who of companies doing business, or wanting to do business, with the City of Indianapolis. House Bill 1254 would simply make a bad situation worse? Why isn't the legislature protecting taxpayers?

The Need for Political Competition - Reforming Indiana's Redistricting System

During the last couple weeks, we have witnessed politicians turn their back on the will of the people to an extent I have never seen in my years in politics. There has been a loud rour of protest against people having their taxes raised to to bail out the Capital Improvement Board and to give yet more tax money to our professional sports franchises. Yet despite that clearly expressed opposition Indianapolis Mayor Greg Ballard, Senator Luke Kenley and the Indiana General Assembly is poised to do exactly that. Time will tell if Mayor Ballard can convince the Republican mjority on the Council to enact the tax increases. If he is success full, he will undoubtedly ensure the Republicans return to minority status after the 2011 election and the keys to the 25th Floor are turned back over to the Democrats.

At the same time Mayor Ballard and the Indiana Senate were turning their backs on the will of the people on the CIB matter, the Indiana Senate approved Senator Mike Delph's Senate Concurrent Resolution 95 which would establish a legislative study committee that would explore changes to Indiana's current redistricting which assures that most elections are not competitive. The two events are not unrelated.

When I ran for the Indiana House in 2000, not a single incumbent lost in the House or in the Senate. We are talking 125 races and not a single challenger was able to defeat an incumbent. Although some of my reform-minded friends, mistakenly I believe, point to the need for public financed elections as a way of leveling the playing field between challengers and incumbents, that is focusing on a symptom and not the disease. The disease is that legislative districts are deliberately drawn to be non-competitive, so that a Republican or a Democrat will win. If they were competitive much of the money problem would be resolved. Contributors do not want to give money to people they think do not have a chance win. A legislative challenger in Indiana has a very small chance of winning.

The connection between the CIB issue and the Senator Delph's bill is that our elected legilators do not fear the wrath of voter outrage over the CIB matter when they are in noncompetitive districts. By the time the general election arrives, most have their re-election sewn up. Many do not even have competition in November.

While SCR 95 would only establish a summer study committee to consider the issue of Indiana's current redistricting system, it is a step in the right direction. I join the Indianapolis Star in endorsing its passage so that Indiana can work toward truly competitive elections.