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.


jabberdoodle said...

I'd have to interpret this differently. The Legislature was not considering any effort to cover the $17 million loan from the State Treasurer and the $26 million for a cash reserve to support the CIB's bonds - until the group of Representatives suggested using Township reserves. Their announcement came after the payment evidently. The payment was due in June, so, yes its a full month early. If the State Treasurer wants to postpone the payment date, it can just return the check.

From all that I have heard, the cash reserve issue arose because the bond insurer's rating tanked in the bad economy. That is different from the $17 million, repayment of which came from an emergency maintenance fund, and not from a bond cash reserve fund.

Downtown Indy said...

Whatever their objective, it's absurd to thnk they'd prepay 2 months early without some ulterior motive. At the least, they give up whatever interest that money would have produced over that period of time.

Paul K. Ogden said...

I'm with DI. Paying two months early suggests strongly there is an alternative motive.

Jabber, the official announcement came after, yes. But you don't think information regarding what they were doing leaked out beforehand that triggered the CIB going forward and making the payment? I doubt the announcement at the press conference was the first notice the CIB officials had.

jabberdoodle said...

I guess I'm not going with you on this one. I looked at the archived tape of the April 14 meeting of the CIB where they voted on this early payment. It was a resolution proposed from a finance committee meeting held on April 9. Getting too thin a thread for me.