Sunday, May 31, 2009

CIB's Plan B

I awoke to find the newest Brendan O'Shaughnessy Indianapolis Star article on a possible Capital Improvement Board bailout, which O'Shaughnessy, for some reason, has started referring to with the spin term "rescue." I thought there were some interesting developments in the article.

Afterward, I went to Advance Indiana to find Gary Welsh's take on the subject. While Welsh, as always, hits on a number of interesting points on the article, I have a slightly different take.

First, we continue to get dishonesty from the CIB folks. Obviously CIB President Bob Grand has a Plan "B" and open government behooves that it be shared with the public. Grand though doesn't share it because he prefers to concentrate on the proposed shakedown of taxpayers as the solution. Another part of the dishonest CIB public relations campaign is revealed when Ryan Kitchell, director of the Indiana Management and Budget, noted that if the CIB could no longer operate Lucas Oil Stadium, the State would quickly take it over without interrupting schedule events. Weren't the CIB folks talking about LOS getting shuttered and events having to be canceled? The fact that the CIB has an agenda which does not involve telling people the truth is yet more reason to investigate the operations of the CIB and demand reform. I totally agree with Welsh that we should not simply accept the CIB's word on things, such as the claim that the Board is $47 million in the hole. The Board's leaders don't exactly have a track record of being open and honest with the public.

I would note that near the end of the article, David Reynolds, the city controller, does trot out the dishonest spin about having to put convention events on hold if the bailout doesn't go through.

Second, it was interesting to me that the state folks did not seem opposed to taking over the operations of LOS from the CIB, even sort of expected it to happen. That of course has been Welsh's suggestion all along. He had proposed that the CIB simply give LOS back to the State since the state building authority actually owns the building.

Of course, even the removal of the LOS headache still would leave the CIB in a claimed $27 million hole, which of course includes the $15 million annual charge for the CIB, without even taking a vote, agreeing to pick up the Pacers expenses of running Conseco Fieldhouse.

My choice, bankruptcy, was also discussed seriously for the first time. I thought it very significant that Deputy Mayor Paul Okeson said that "bankruptcy is an option" as a backup for the CIB. Never before have I heard an administration official make that common sense proposal.

The article talks at length about Senator Mike Delph's suggestion regarding Chapter 9 bankruptcy for CIB. He quite validly points out that it putting the BK option on the table changes the balance of power from the Colts and Pacers to the Mayor and the CIB. The CIB/City would be in a position to extract common sense concessions from the teams or face having a BK judge rewrite the contracts. While it's true that the teams could walk away at that point, those teams are unlikely to get the sweetheart deal they got in Indianapolis from other cities, especially in today's economy. It would rather be in their best interests to engage in reasonable concessions that would allow the CIB to make more off the buildings in order to cover operating costs.

There is, however, a problem with Sen. Delph's use bankruptcy at the very least as a negotiating tool proposal, a proposal I strongly support. The problem is who would be negotiating with the Pacers and Colts to extract concessions. I would have concerns with the current CIB leadership being involved in negotiations. These are the people who, after all, decided to pick up all $15 million of the Pacers' annual operating costs for Conseco Fieldhouse (a building on which the Pacers get 100% of the revenue) at a time when the Board claimed to be in a $32 million a hole. I would add that a Pacers spokesman has said the team didn't even ask the CIB for the money. Yet the CIB and Indianapolis Mayor Greg Ballard still insist on going through with the plan to pick up the $15 million annual operating cost.

In short, the City and CIB's leaders, under both Democratic and Republican administrations have proven themselves to be dreadful negotiators when it comes to the professional sports teams. While Bob Grand, may or may not have what it takes to be a tough negotiator, his personal self-interest is not to protect the interests of taxpayers, but rather to continue the CIB corporate welfare gravy train that not coincidentally will directly benefit his client, the Simons, who own the Pacers.

Finally, I do note with amusement the continued argument by the leaders of the Indianapolis Convention and Visitors Association that the uncertainty over the bailout is being used against Indianapolis in marketing materials produced by other cities. I would love to see those alleged marketing materials. Nonetheless, even if they do exist, do the leaders of the ICVA , the CIB, and Mayor Ballard not realize that raising taxes even further, giving Indianapolis nearly the highest combined hospitality tax in the country, will be even a better marketing weapon for those cities to use against Indianapolis?

Addendum: I do love the headlines the editor used for the article:

CIB has no 'Plan B' should it go broke
President says he's too busy finding a solution to agency's financial ills

9 comments:

Jon said...

I think that the option of giving LOS back to the state changes the dynamics of the CIB problem. One, we will find out the true operating cost of LOS and two we remove the CIB from control of LOS. I also would agree that under a bk option the problem is who redos the existing contracts.

Paul K. Ogden said...

Jon,

I am not worried about a bankrtupcy judge redoing the contract. It might not get to that though as it would force the sports teams into renegotiation. The problem is that the city/CIB people are so bad at negotiation. I'd want someone else involved in the negotiation than the current people who seem unconcerned about the taxpayers.

Are you saying that we'd get honest answers from the State that we're not getting from the CIB? Okay, we all know that is true.

Ed Coleman said...

It is funny how Mike Delph is credited with suggesting bankruptcy. I could have swore I was the first elected official to recommend it.

jabberdoodle said...

If the CIB doesn't get any of their requested money and LOS revert to the State, and any bankruptcy proceedings would not include the Colts.

I hesitate to accept the easy-breezy attitude that the State could 'easily' take over LOS operations. Funds are woefully tangled with other obligations of the CIB and reconfiguring those moneys would take legislative action, I would think. Or be part of a bankruptcy process????

I'm not speaking against these options, just pointing out that no matter what direction is taken, the path is messy.

As for an interesting article on the convention business (some particulars, some general information), I'd recommend a fun read:
http://www.nashvillescene.com/2009-04-23/news/nashville-s-big-bet-on-the-dying-convention-business/

Flipper said...

Paul,
I think we should demand that Bob Grand and Pat Early resign. You would think a lawyer and a CPA could see this mess ahead of time. Oh I forgot. They had to give out huge raises to there core group of crooks.
Oh don't forget Barney Livengood and his handsome salary.

Indy Student said...

Paul,

The SIB has a board meeting June 6. However, I've been checking the CIB website almost daily for about a month, and both the scheduled Board Meeting and Finance meeting were canceled pretty much at the last minute (though the board meeting was replaced with a City Council one).

Maybe you'll be able to find out ahead of time if the board meeting happens, becuase I'd like to be there.

Paul K. Ogden said...

Indy Student,

The CIB at least is now putting their meeting notices on the internet which is an improvement. Of course, they still don't see fit to put them on the regular council.

Ed,

I just realize you're the Rodney Dangerfield of Indianapolis politics. You do the heavy lifting and get no respect.

Jon said...

Actually as far as the CIB is concerned plans A-Z are all the same, more taxes and more taxes.

HOOSIERS FOR FAIR TAX said...

Ed, I documented your bankruptcy suggestion on the HFFT blog.

When I see Sen. Delph again I plan to let him know you suggested this first and to ask him to include your name when he mentions it.