Wednesday, July 29, 2009

No, Council, the Pacers $15 Million Is Still On the Table; Harold Hill Appears Before Council Committee Asking for Money

Yesterday, the Rules and Public Policy Committee of the Indianapolis City-County Council approved the proposal to raise the Marion County hotel tax, giving Indianapolis the highest combined hotel/sales tax in the country. Although Chairman Bob Lutz several times tried to characterize the measure as just being about raising one particular tax, the fact is it is the first required step in a program to raise two other taxes, the tax on rental cars and the admissions tax.

During the debate the issue of the Capital Improvement Board picking up $15 million in operating costs on Conseco Fieldhouse, a building in which the Pacers Sports and Entertainment Group gets 100% of the revenue, was discussed. For months, the CIB has been telling this it is is a done deal, zealously incorporating that $15 million in its $47 deficit figure.

Chairman Lutz a couplte times last night said the CIB had now taken that off the table. Other councilors, including President of the Council, Bob Cockrum, apparently suggested the same thing at a meeting in Decatur Township.

That is simply is not true. Council members are getting played, which is made possible by the failure of councilors to ask tough, direct questions and put any concessions in writing.

I was at a Pike Township town hall meeting hosted by Councilors Jose Evans and Mike Speedy last week. CIB's representatives at the meeting were CIB executive director Barney Levengood and CIB board member Dorothy Henry. Like at the council meeting, Levengood and Henry attempted to skate by the Pacers $15 million question without answering it. Unlike the council committee meeting last night, in Pike the audience would not let them off the hook. They kept asking follow-up questions. Levengood and Henry eventually conceded that, yes, the $15 million Pacer subsidy was still part of the package and that the CIB intended to go through with it. Councilor Mike Speedy seemed stunned. I think he had been led to believe the CIB had dropped the idea.

Last night, a councilor asked about the Pacers $15 million. Anne Lathrop, head of the CIB's finance committee, answered that she did not include the $15 million in her calculations. In a later question, she answered that the Pacers had not FORMALLY asked the CIB for the $15 million.

To council members that was the end of the story. That meant the issue was no longer being considered.. When Sean Shepard, Libertarian representative, mentioned the issue, Chairman Lutz attempted to correct him, saying the CIB had taken it off the table. But the CIB representatives have never said that.

Let's examine what Lathrop said. She chose her words carefully, and words have consequences. She said the Pacers had not FORMALLY asked for the money, but they were talking with the team. Folks, the 10 year anniversary of the Conseco contract does not happen until later this Fall. It is at the 10 year anniversary that the Pacers have the right (if they can cough up $50 to $125 million ) to cancel the contract and move, therefore providing at least a theoritical opportunity to negotiate for better terms.

When Lathrop said the Pacers had not FORMALLY asked for the money, she was referring to the fact that the 10 year anniversary had not happened and thus they could not, FORMALLY, consider giving the Pacers $15 million. Yet Lutz and other councilors took that to simply mean the whole thing was no longer being considered.

There is a way to make sure. Put the ban on the CIB giving the Pacers $15 million more into the proposal. Make it a condition of any tax increase that the CIB does not take on $15 million more in debt by picking up the Pacers' operating costs at Conseco. If the CIB has truly taken it off the table, the Board will agree to it. My guess is the CIB will not because it most certainly is not off the table. Again, the council is getting duped.

Unfortunately, our councilors are not as skeptical as they need to be. They watch a glossy presentation and assume they are being provided accurate information, often praising the presenters for their candor. Again, last night we heard about those 66,000 hospitality jobs that are supposedly threatened if we don't raise taxes . (Only in bizarro world is increasing taxes that hit visitors particularly hard somehow going to lead to more tourism and convention business.) That 66,000 figure is a central Indiana figure! Most of those jobs have nothing to do with the downtown foot traffic caused by the convention business or the sports venues.

Welsh's presentation last night included that Lucas Oil Stadium has been booked for 69 events this past year. I think a building like that only being used 69 times out of 365 days to be under-utilized, yet even the claimed 69 events is a misleading number. What the CIB and ICVA are doing is including anything that happens at Lucas Oil Stadium in their event figure. So if your company decides to have a 20 member sales meeting at Lucas Oil Stadium, using one of the conference rooms at the facility, that is considered in the 69 total. Of course that sales meeting could have been held just about didn't need to have constructed a several hundred million dollar retractable roof stadium to host the sales meeting.

Barney Levengood reminds me of Robert Preston's character Harold Hill from the 1962 movie version of the Music Man. Hill comes to town posing as a boy's band organizer and takes money from townsfolk to buy musical instruments and uniforms. Hill then skips town with the cash.

Unlike Hill, Levengood is not alone in his mission to extract more money from the wallets of the townsfolk. He has other powerful allies throughout the city, other Harold Hills who also make a nice living off of taxpayer money. The council needs to be a lot more careful before they raise taxes and hurt the convention/tourism business because yet another Harold Hill says he needs the money.


Downtown Indy said...

I think our Councillors know they will be squashed like a bug if they challenge the Grand Plan (yes the pun is intended).

Some may fear they will be relegated to doing the equivalent of KP duty for their law firm with no hope of advancement.

All around, my sense is they are protecting their phoney baloney jobs. Harrumph!

M Theory said...

DI, I am wondering what is being promised to them behind closed doors in exchange for their "yes" vote.

Downtown Indy said...

On the 68 days utilization, they state it cost either $7k or $9k on non-game days (forget the correct amount but that's not critical to my thought).

I would be amazed if any of these small 'events' get billed that much money. Thus, every 'event' they rent to is a net loss. OK, so it's money they would not otherwise take in but it's a loss.

HOWEVER, as Councillor Lutz made a point to state for the record last night, all that revenue goes to the Colts anyway. So it doesn't pay for any of the non-game-day costs for the facility.

But it always comes down to that - the reason the building is a money pit is because nearly all the income goes to Jim Irsay.