Monday, June 8, 2009

Taxpayers Spend Millions to Subsidize Indianapolis Downtown, Inc.; Meanwhile Non-Profit Corporation Hoards Cash and Pays Lavish Salaries

Indianapolis taxpayers pay the non-profit corporation, Indianapolis Downtown, Inc., a yearly subsidy in excess of a million dollars. Indianapolis Downtown claims as its mission to improve downtown and has a well-done website which supports that statement. Many activists would question that commitment and instead allege that the million dollar subsidy turns the organization into nothing more than a shill for the administration’s projects, regardless of whether those projects benefit downtown or the taxpayers. Recently, Indianapolis Downtown publicly took a position in support of the proposed public-private partnership arrangement to build apartments east of the city-county building, a project that will enrich Tadd Miller, a politically-connected developer, and cost taxpayers millions of dollars.

Indianapolis Downtown, Inc. is also the sole stockholder in Indianapolis Downtown Marketing, Inc., which claims that it focuses on improving business conditions and coordinating promotional events in downtown Indianapolis. For brevity’s sake, the former will be listed as “IDI” and the latter as “IDM.”

While the 2008 returns were not available, an examination of the corporations’ 2007 income tax forms (publicly available due to their non-profit status) shows they pay lavish salaries and are hoarding cash in investments while at the same time begging for handouts from our local elected officials.

President of IDI, Tamara Zahn, was shown on the 2007 report as making a $185,000 salary, along with an additional $13,284 given to her employee benefit plan for compensation of nearly $200,000. Vice President of Real Estate Development Terrence P. Sweeney makes approximately $88,500 in combined compensation while Vice President of Marking/Communications, Julia Watson, pulls down nearly $108,000. Molly Williams, Vice President of Finance/Administration, makes over $89,000

The report also lists the compensation of the highest paid employees at IDI. In 2007, Fredric E. Laughlin, Director of Management Services, made approximately $89,000 while Anne Maschmeyer, Beautification Manager, made nearly $70,000. Henry Bosworth, coordinator of the Bike Patrol was paid $51,400.

The most shocking part of the tax returns showed IDI and IDM hoarding cash in investments. On their 2007 tax return, IDI had $2,039,650 in mutual funds, $4,299,107 in equity mutual funds, and $396,946 in money market funds, for a total of $6,735,703 in publicly traded securities. IDI also has $447,840 put away in real estate investment funds and reported an unrealized loss on investments of $167,572. IDI has so many investments that the corporation’s investment fees alone were an astonishing $31,326 in 2007.

IDM meanwhile had $793,000 in fixed mutual funds, $1,662,800 in equity mutual funds and $136,746 in money market funds, for a total of $2,592,546 in publicly traded securities. IDI had also socked away $172,255 in real estate investment funds and reported an unrealized loss on investments of $86,163.

The Indianapolis City-County Council and the Mayor's Office need to immediately take Indianapolis Downtown, Inc. off the government dole. Given the millions the corporation has decided to stash in investments rather than use to improve the city, the corporation is hardly in need of more taxpayer money.

Note: Documentation as to nonprofit corporation tax records can be found at http://www.guidestar.org/ Registration is free.

16 comments:

jabberdoodle said...

Indianapolis Downtown, Inc. refers to itself as IDI.

Great job pulling this information out an giving it a wider audience. Public records are only so good as long as they are viewed.

Thanks for airing these salaries, especially Zahn's, and maybe even more importantly, the hoarding of cash.

Paul K. Ogden said...

Thanks, Jabber. I changed the "ID" reference to the more commonly used "IDI."

Yes, I think the hoarding of the cash is most astonishing, though the salaries are far too high also.

I love how these non-profits sometimes try to falsely promote themselves as "charities." Susan Williams of the Indiana Sports Corp. always tries that with the media. Very few nonprofit corporations are charities though. Just because a corp. is nonprofit doesn't mean the corp doesn't pay lavish salaries and waste money.

jabberdoodle said...

I looked up a couple of CDCs, the Indianapolis Neighborhood Resource Center and such. When folks are there to help real neighborhoods and real people, they don't pump up their importance and they take much more modest salaries for the work they do.

IDI's self-importance is embarassing, as is Zahn's salary. These salaries should be considered during budget time - or at least some time during the year. To my knowledge, nobody in City Government looks at those things.

No wonder Zahn and the CIB's Levengood have stayed for so many years. Salary can't be matched.

Paul K. Ogden said...

Jabber,

Honestly their write-offs for work done for the city seem to be unusually small. In other words, very little of their money is actually going to benefit the city. I didn't get into that, instead choosing to focus on things that were more concerete and objectionable - salaries and investments.

Baloo said...

One that should be investigated is Henry Bosworth. He holds a full time job at the Marion County Sheriff Department, a full time as Police Chief of Homecroft Police Department, and a full time as director of bike patrol for IDI...

Man 3 full time jobs, when does he sleep????????????????????????

Patriot Paul said...

Is there any oversight body who has the responsibility to see the receipts; not just a one page numbers crunched recap?

jabberdoodle said...

There is no oversight -- not even a one page summary -- of IDI's income and expenses. The money is sent from a variety of City Departments or agencies in non-compete contracts and/or grants awarded. The total for 2009 was $1.1M.

Patriot Paul said...

Jabber, sounds like we need an independent investigation of yet another body that gets streams of revenue deliberately designed for confusion.

jabberdoodle said...

Patriot - I don't see why we can't pull all of their duties in-house. Save money and get a shot at real accountability. Even if we only save half, that's a lot of money back in the City's budget what with the tax caps maxing out in 2010. And with no current oversight, there is no way of knowing how deep the savings really are.

If you've got an itching for an investigation, try the ICVA. In 2007, then Prez Robert Bedell was halling down a scant $320,522 not counting benis. In total, 5 employees accounted for $847,520, again not counting benis. The CIB is required by law to pass on a hefty fraction of the innkeepers tax revenues to the ICVA. No bidding. No evaluation of the job they are doing for the money. No real oversite. Nice job, if you can get it.

Citizen Kane said...

The rank and file in the city are (have been for many years) sick of this rip-off also. They basically get paid those lavish salaries so they can ask city workers to do things for them.

Downtown Indy said...

Anyone remember the big stink back in March, when somebody scribbled with chalk on the sidewalks, directing people to the new Scotty's Brewhouse?

Funny thing, last week I was down in the mile square and son of a gun, every corner of every intersection has a foot-square advertisement for the Fever along with some text beside it that resembled chalk writing. But I think it was either paint or a plastic applique. It looks fairly permanent, certainly much more so than chalk.

But nary a whimper from the code enforcement folks.

jabberdoodle said...

Actually Downtown -- inquiry was made last week to Code Enforcement and it turns out the applied vinyl signs are legal. The Indiana Fever's advertising agency, Publicus, was issued a permit to have these signs from May 18 to June 8.

This sort of sign should be discussed thoroughly when the sign ordinance is finally reviewed. But, since it is now legal, permits must be issued when the requests meet all code and safety standards.

copper said...

You obviously have no conception of how non-profits work. "Hoarding" cash in investments? Are you serious? All responsible non-profits save money in endowments. And yes, these endowments are invested, as they are a major way that the non-profit earns income. It reduces the amount of money they have to raise each year. The Indianapolis Museum of Art gets about 75% of their annual operating budget from their endowment income. If they had spend every penny they'd ever gotten instead of "hoarding" it, they would have to raise that money every year instead of earning it themselves. As for the lavish salaries, many people don't agree with nonprofit executives earning large salaries, but it's true that if you want them to be well run organizations, you need to pay enough to attract qualified people to run them.

StanleyMarcusMalone said...

What copper stated above was dead on. This is a non-profit organization that manages their expenses well.

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