Wednesday, September 30, 2009

Indianapolis Taxpayers Make Jim Irsay a Billionaire

The Indianapolis Star reports that Indianapolis Colts owner Jim Irsay now has accumulated wealth of $1.1 billion landing Irsay on the Forbes list of the 400 richest Americans. Irsay's ranking is 347th.

Irsay owes his wealth almost entirely to the greatly increased value of the Colts' franchise, which is due to the sweetheart Lucas Oil Stadium agreement. That lopsided agreement also landed the Capital Improvement Board, and by extension, the Indianapolis taxpayers, deeply in debt.

How has Irsay repaid Indianapolis taxpayers for making him a billionaire? Last year during negotiations on the CIB bailout, Irsay refused to contribute a penny to helping taxpayers avoid tax increases and having to borrow money because of the lopsided Lucas Oil Stadium deal. Earlier in the year, when the east side of Indianapolis was hit with a tornado and the southern part of the state experienced floods, Irsay contributed a whole $50,000 (barely enough money to rebuild even the cheapest home destroyed in the twin tragedies) to relief efforts. Irsay even made that $50,000 contingent on the public kicking in an equal amount.

Irsay has to be the most arrogant, unappreciative owner in the NFL. Fortunately for Irsay, he has Peyton Manning and a Super Bowl quality team that more than erase Irsay's public relations gaffes that border on the legendary. That day will not last forever.

The Upcoming Wishard/Health and Hospital Medicaid Fraud Investigation?

When I heard about it, I didn't think it passed the "smell test." During the last few years, Health and Hospital Corporation of Marion County has purchased or leased scores of nursing homes throughout the State of Indiana. HHC-MC is a municipal corporation which is supposed to be operating within the boundaries of Marion County/Indianapolis. Why is it involved in the nursing home business in counties two to three hours removed from Marion County? Further, why is HHC-MC engaged in a complicated lease agreement that ultimately results in the facilities being run by American Senior Communities?

This morning Gary Welsh of Advance Indiana writes about the Medicaid fraud investigation of St. Francis hospital and the agreement St. Francis entered into to admit guilt and repay millions. He then suggests the reason for the smell emanating from he HHC-MC nursing home deals, which explanation I have emboldened.:

This case is against St. Francis is peanuts compared to the potential case the federal government could pursue against the Marion County Health & Hospital Corporation. HHC has concocted a scheme to bilk the federal government's Medicaid program out of potentially hundreds of millions of dollars. Under the scheme, HHC is leasing a chain of nursing homes across the state of Indiana from Eagle Care, Inc. HHC, in turn, leases the facilities back to American Senior Communities, a for-profit nursing home company. Creating the illusion that these facilities are owned by a county hospital providing indigent care, HHC is able to get reimbursements from Medicaid at about double the rate other nursing homes receive. While an average nursing home collects close to $4,000 per resident per month, HHC is collecting about $8,000 a month for those same residents according to figures Carl Moldthan of the Indianapolis Taxpayers Association obtained from HHC. It is these revenues that HHC is relying upon to finance at least $38 million a year it anticipates will be needed to pay debt service on the bonds.

It's only a matter of time before other nursing homes start complaining to the federal government and the Justice Department steps in and reviews HHC's Medicaid reimbursements. Further, the Obama administration has already stated it will find more than $600 billion in Medicare and Medicaid cuts over the next ten years to help pay for his health care plan. If the government puts a stop to this scheme, HHC will have to turn to Marion County property taxes and levy new property taxes to make up the difference. It will not need approval from Marion County voters to do this if voters approve the November special election referendum. That referendum will allow HHC to pledge property tax revenues to finance the bonds. It's a house of cards just waiting to fall. And when it does, Marion County property taxpayers will face one of the largest tax increases in history.
Welsh's explanation provides the rationale for HHC-MC to be in the nursing home business. The municipal corporation is leveraging its status running a county hospital for indigents to obtain more Medicaid dollars from the federal government.

Welsh also suggest an additional motive for the feds to start looking at HHC-MC's nursing home business. Other companies running nursing homes are going to start complaining to the feds about HHC-MC's use of its charity hospital status to get larger Medicaid reimbursements.

It is those Medicaid reimbursements that provide the income HHC-MC claims will allow it to repay the bonds being issued to build the new Wishard Hospital. In the end though, the taxpayers are the ones backing up those bonds with their property taxes. If the feds swoop in, which is very possible, the taxpayers are not only going to be stuck paying back those bonds through property taxes, but they are going to be on the hook, thanks to HHC-MC, for the inevitable repayment of Medicaid funds, similiar to what St. Francis is facing.

It is unfortunate that the Indianapolis Star, the administration of Indianapolis Mayor Greg Ballard and the Indianapolis City-County Council have not made the effort to stand up and ask tought questions about the horrific liability facing taxpayers.

Doug Rae's Supporter Fires Back; The Rubberstamp Mentality of Indianapolis Board Members

Several months ago I was watching Animal Control Director Doug Rae appear before a committee explaining his vision of animal control. Later I watched him again in another committee meeting. In an administration filled with so many appointees lacking experience in their jobs and who are unwilling to give the Mayor independent advice, Rae stood out as an exception. Rae brought incredible experience to the job and tackled his job with enthusiasm and and creativity not seen from the traditional political appointees who have occupied his position.

I forgot my rule of Indianapolis politics though. Creativity and innovation (unless it involves finding a way to put more taxpayer money in the pockets of politically-connected contractors and law firms) is not rewarded in this city. Rather what they look for is people who will be rubber stamps for what certain folks in power want.

Enter the picture Warren G. Patitz who has a letter to the editor in today's Indianapolis Star. Patitiz was chairman of the Indianapolis Animal Care and Control Advisory Board. Last week he was dismissed by Mayor Ballard because of his outspoken support of Rae. In the letter to the editor, Patitz defends Rae's philosophy which shows more compassion to the stray animals than showed by previous directors who turned the center into little more than a euthanasia center. Rae believes a priority should be the adoption of the animals, not killing them.

In terms of politics, what I found the most interesting is this comment of Patitz:
The advisory board should be composed of people with knowledge of the laws and history of animal welfare issues in our community, and public safety should use the board's advisory contributions instead of silencing it, as is current policy.
Amen. Amen. Amen. That is the way these boards are supposed to operate. Even though they are made up of appointees, they are supposed to offer independent advice to the Director and to the public. Board members like Patitz are not supposed to simply be a rubber-stamp for the Mayor or the Council, or whoever else might have appointed that board member to that position. If Board members feel their duty is to be a rubber-stamp, then they need to resign their position because they are not doing their job.

The rubberstamp mentality of board members though is part of the political mindset in Indianapolis. Nowhere is it more evident than on the Capital Improvement Board. Not one member of that Board has ever questioned the idea of picking up $15 million in annual operating costs on Conseco Fieldhouse a building, a building in which the Pacers, i.e. the Simons, receive 100% of the revenue. Not a single CIB member has ever questioned whether the contract would require such payments or what the actual penalty would be if the Pacers were to try to exercise their early opt-out charge. Not one CIB member will ask CIB President Bob Grand or Executive Director Barney Levengood a tough question, the same questions that people in the community are asking and continue to ask.

What would happen if a CIB member started asking tough, thoughtful questions at a meeting? He or she would undoubtedly meet the same fate as Patitiz.

Returning to Rae, I have held off blogging on the matter because I figured there had to be some other reason why administration officials like acting Public Safety Director Mark Renner have targeted Rae. That reason, beyond the public explanation, though never surfaced. Now Mayor Ballard has clearly crossed the line by firing Patitiz because he, as chairman of an ADVISORY board, dared speak out in support of Rae's approach to animal control. Independent thought? Not here in Indianapolis and not in this administration. Indianapolis voters deserve better from their boards than rubberstamp politics.

Tuesday, September 29, 2009

$elling the $ity; Mayor Ballard Proposes Selling Off City Utilities

It is something that I as a Republican reflexively want to support. After all, isn't the private sector more efficient than the public sector?

Today's Indianapolis Star announces that the administration of Indianapolis Mayor Greg Ballard is taking bids from private companies to partner with the city in operating the city's water and sewer systems. The Star reports:

About two dozen companies, including Citizens Energy Group, have expressed interest in owning or operating the systems, which city leaders said could generate as much as $400 million to build roads and sidewalks and make other improvements while potentially protecting customers from large rate increases.

Citizens offered $1.6 billion to acquire the water and wastewater utilities, according to a letter the company sent to city officials last week. So far, it is the most detailed proposal made in response to a July request by city officials.

That request asked companies to propose ways they could generate savings by operating the utilities. The city in turn would charge the companies an upfront payment for the right to that business but in most cases would still own the utilities.

Aside from Citizens, proposals from companies such as Veolia, United Water and CH2M Hill were too preliminary to carry a specific financial offer.

Most of the proposals would generate savings in two ways:

Reducing operating costs such as billing, vehicle fleets and facilities by combining the water and wastewater utilities.

Building future improvement projects at a cheaper price.

By 2025, the city expects to spend more than $4 billion to make upgrades to the water and wastewater systems. Those improvements are expected to increase
water rates by 112 percent and wastewater rates by 427 percent during that time

Under those projections, today's average water bill of $28.07 would increase to $59.64, and the average sewer bill would go from $19.89 to $104.83 during the same period.

Robert Vane, Mayor Greg Ballard's deputy chief of staff, said the mayor's goal is to help reduce those future costs by either partnering with private companies or signing off on Citizens Energy's acquisition of the utilities. He said it was too early for Ballard to offer a specific goal for how much future increases could be reduced.


What is not clear from the article is that the administration undoubtedly intends to offer a long-term lease or management contract will undoubtedly span decades. That long-term lease or management contract generates up-front cash that can be used for much needed infrastructure repairs. A long term lease would be necessary for a company to qualify for IRS tax credits which treats long-term lessees as "owners" of property making them eligible for tax breaks.

This is not privatization. Privatization envisions private companies operating in a competitive environment. If they don't do the job well, government can contract with another company to provide the service better. Handing companies long-term contracts to lease or manage assets is to give them a government-sanctioned monopoly over the provision of services. Getting out of such contracts are difficult at best. Additionally, elected officials, who have usually received substantial political contributions from these contractors, aren't inclined to offer strong oversight over the performance of the contract. Remember FSSA and the IBM contract? It was legislators who forced the Daniels' administration to take a closer look at the contract. Initially the Daniels' administration greatly resisted the oversight and was harshly critical of Republican legislators who raised the issue.

The Ballard administration bills the possible lease or management of city utilities as a sort of public-private partnership. The term "public-private partnership" should strike fear in the heart of every Marion County taxpayer. Too many times those partnerships are about putting money in the pockets of politically-connected companies and large law firms who then kick back money to elected officials in the form of political contributions. It is always the taxpayers who end up footing the bill. Lucas Oil Stadium and Conseco Fieldhouse are but two examples of public-private partnerships which have profited the private while costing the public more and more every year.

Can this administration be trusted to do these deals correctly and in the best interest of the taxpayers? Frankly, given the benefit of hindsight, I'm not sure any administration of the past three decades should have been trusted to do what is best for the taxpayers. Unfortunately Mayor Ballard is no different than his predecessor on this score, and may well be worse. Until Indianapolis can get a handle on the privatization and public-private partnerships schemes that look and smell like little more than Illinois-style pay-to-play politics, this idea needs to be shelved.

Monday, September 28, 2009

State to Funnel Weatherization Funds Through Builders' Group

Over the weekend came news that a builder's group was to receive half of Indiana's $133 million in federal weatherization funds. WTHR reports:
Indiana is drawing fire for a decision to funnel half of its federal weatherization funds through a startup program that has no experience in such programs.

The Indiana Builders Association will receive nearly half of the $132 million the state is receiving through the American Recovery and Reinvestment Act to weatherize more than 30,000 households, The Journal Gazette of Fort Wayne reported.

Citizens' advocates such as Common Cause Indiana have criticized the move, saying the politically active group has been a contributor to Gov. Mitch Daniels' gubernatorial campaigns.

The builders' group says it is capable of administering the grant funds despite its lack of experience."

Common sense tells us that this program is so large that it cannot be done conventionally," president Dennis Spidel said in the group's September newsletter. "That is why it was opened up to other nonprofit organizations like us."

The association's members come from the housing industry and work to educate the public and policymakers about regulations that allow Indiana residents to own homes.

The weatherization program will provide energy-saving items such as programmable thermostats, insulation, new furnaces and hot water heaters to residents who qualify.
Mike Hannigan Jr., the Indiana Builders Association's program administrator, said the group is collaborating with experienced community action groups and expects to begin work on more than 500 homes in a few weeks.

Retiree Gerri Mann of Fort Wayne is eager to see how weatherization helps her gas bills, which had crept up to $200 a month in her mobile home.

Mann's 30-year-old furnace was replaced and new insulation was installed through a Community Action of Northeast Indiana program in August.

Mann said she was surprised how extensive the work was for the amount of money spent."I never expected it all," she said.

The stimulus program gives Indiana 11 times the amount of money normally spent on annual weatherization programs
This story highlights a problem government faces - how to distribute government grants. In the past it was a government agency designating who would receive the funds. Privatization though has often shifted that responsibility to the private sector. In Indianapolis, a web of private non-profit organizations came into being simply to to take government funds and to distribute those funds to their "stakeholders." In carrying out this responsibility, the non-profits pay their officers and employees lavish salaries and benefits, far above what government employees who used to distribute the funds received. After subtracting out administrative costs of the non-profit, very little is left from the original grant.

Every time you add a level of administration, there are costs. When that level of administration is a private sector non-profit, there needs to be considerable oversight to ensure that public funds are distributed efficiently and not absorbed in unnecessary administrative costs. Unfortunately government officials often do not want to provide that oversight, especially when those non-profits are also political contributors. That is why "good government" groups like Common Cause are right to be concerned.

Friday, September 25, 2009

Wishard Breaks Promise of No Property Taxes For New Hospital; Proposes Borrowing $703 Million To Be Paid Off By Property Taxes

Pat Andrews over at "Had Enough Indy" reports on the bonding resolution adopted by the Health & Hospital Corporation of Marion County.

Let's recap. During the special legislative session to deal with the budget, lobbyists for Health and Hospital Corporation of Marion County had inserted into the budget language that would allow HHC-MC to submit a referendum question in a special election this November for the purpose of borrowing money to build a new Wishard Hospital. Originally, HHC-MC's lobbyists tried to do it through a simple petition but their efforts were rejected by Chairman of the Senate Finance Committee Luke Kenley who insisted that HHC-MC at least submit the question to the voters regarding borrowing money for the hospital.

HHC-MC, however, had other ideas. Instead HHC-MC wrote a referendum question that didn't mention a new hospital or how much the he municipal corporation intended to borrow money to pay for the project. Below is the referendum question:

"Shall the Health and Hospital Corporation of Marion County, Indiana, issue bonds or enter into a lease to finance safe, efficient and functional facilities for the Wishard Hospital project:

1. to allow Wishard to provide access to care for all residents of Marion County, including people who are seniors, poor uninsured or vulnerable regardless of their ability to pay; and

2. to allow Wishard to provide specialized care, including to victims suffering from traumatic injuries or severe burns; and

3. to allow Wishard to work with colleges and universities including Indiana University School of Medicine, Ivy Tech Community College, and the Purdue School of Pharmacy, to teach future doctors, nurses and other healthcare professionals in Indiana?"
Over the past few months Matt Gutwin, President and CEO of HHC-MC and Dr. Lisa Harris, CEO of Wishard have been making the rounds assuring anyone who would listen that the hospital would not be paid for with tax dollars.

So much for those promises. In a resolution adopted today by its Board, HHC-MC indicated that it would be borrowing up to $703 million dollars and that "all or any portion" of the $703 million in bonds would be paid for with property taxes. Additionally, according to the resolution, HHC-MC isn't floating the bonds at all. Rather the Indianapolis-Marion County Building Authority will be borrowing the money and will lease the facility back to HHC-MC. Since HHC-MC is a corporation and I don't believe the Building Authority is, that would mean taxpayers would not at least enjoy the protection of HHC-MC's corporate status. In the face of a financial meltdown, at least in theory, HHC-MC could declare municipal bankruptcy and have legal obligations to repay the bonds discharged. For the Building Authority to do that, the entire City of Indianapolis would have to declare bankruptcy.

Is anyone really surprised that HHC-MC reneged on its promise and intends to pay for the new hospital with property taxes?

See Advance Indiana's last blog post on the issue by clicking here.

Fred Glass Takes Over IU Football Program

The Indianapolis Business Journal is reporting that IU Athletic Director Fred Glass is cutting back on senior staff in his office and has personally taken over the operations of the IU football program.

Glass ran the Capital Improvement Board while Mayor Peterson was in office. At the CIB, he signed the sweetheart deal with the Colts to use Lucas Oil Stadium, a deal that gave away almost all the revenue off of the building to the Colts and left the CIB with a huge operating deficit. It is a deal that is almost universally criticized today, by Republicans and Democrats, as unnecessarily lopsided.

Why IU would hire Glass after his mismanagement of the CIB is a mystery.

Nonetheless, there is a silver lining. IU's football program has historically been so bad that it would be tough for even Fred Glass to make it any worse. I'm sure though that won't stop him from trying.

Thursday, September 24, 2009

Perry Township Trustee "Moonlights" With Full-Time Position With City

Previously on this blog, I wrote about Henry (Hank) Bosworth, who is probably best known for his work as a high-ranking official in the Marion County Sheriff's Department, but who has two other jobs.

This morning, I present the case of Gary Coons, the elected Perry Township Trustee. In that role, he make $51,520, not counting benefits. Recently, he has taken a second job with the city administration, as public safety liaison with the Department of Public Safety. In that role, he is expected to work 8:30 a.m. to 5 p.m., 40 hours a week minimum. Translation: It is a full-time job. He is now a salaried city employee, making $64,000 with benefits.

How is Coons going to do his work as a well-paid, elected township trustee when he is a full-time city employee? We Republicans rightly screamed about Monroe Gray's questionable work with the Indianapolis Fire Department during the 2007 campaign. How is what Bosworth and Coons doing any different? Why didn't the City officials require Coons to resign as trustee if he were going to take a full time job with the city? Has anyone read the ghost employment statutes over at City Legal?

A Possible Redistricting Strategy for Indianapolis City-County Council?

As I have noted on this blog previously with citations to the law, Indiana law is crystal clear that that the Indianapolis City-County Council cannot redistrict in the nearly one year window from November 8, 2010 to the day after the 2011 election. The new census data will not be available until well after November 8, 2010. No other dates - filing dates, primary dates, etc. - matter.

However, there is another strategy that could be pursued that would be legal, albeit highly controversial. That $290,000 budgeted for redistricting in the 2010 budget (a similar amount is budgeted for 2011) could be taken and the maps redrawn before November 8, 2010 using OLD census data. (They would then have to redistrict for the 2015 elections using the new census data.) Then the 2011 elections could be run using the new maps with the old data.

That's the only way of reconciling the budgeted amount for redistricting with the law that clearly prohibits redistricting in the year before an election. However, it would also mean administration officials and council leaders are misleading councilors and the public regarding the real purpose behind the money that's been budgeted for redistricting.

Wednesday, September 23, 2009

2009 Payouts by Indianapolis/Marion County To Law Firms

NOTE: According to later information I received, some of the payouts below actually were in 2008 and some of the 2009 payouts were not been included in the total.

According to city/county records, 2009 (thus far) payouts to law firms exceeding $40,000 include the following:

Barnes & Thornburg $784,500
Bingham McHale $250,00
Bose McKinney $222,100
Stewart & Irwin $116,607
Taft Stettinius $159,420
Locke Reynolds (now Frost Brown) $109,000
Baker & Daniels $85,000
Krieg Devault $55,000
Tabbert Hahn $40,000

Note: These do not include payouts by municipal corporations. For example, Health & Hospital Corporation employs Barnes & Thornburg which is paid out of its budget.

Barnes & Thornburg is on course to probably top an incredible $1 million in legal fees for 2009 from the city/county. So much for that claim by B&T Managing Partner Bob Grand to a Star reporter in December of last year that B&T only had legal contracts with the city worth a couple hundred thousand dollars. At the time, the reporter asked me for my response and . I told him rand was not being honest about ALL the legal services contracts B&T has with the city and county, and pointed to specific B&T contracts that I knew about and that Grand had not disclosed to the reporter. I said at the time the contracts were not in the $200,000 range, but were closer to $700,000. The 2009 payout records showed I even underestimated how much the city was paying Grand's firm.

Right before the election I talked to candidate Greg Ballard. He promised me that if elected he would stop the practice of handing out city legal work to big law firms that charge inflated legal fees while running up huge, needless bills on the taxpayers. I guess Ballard was as serious about that campaign promise as the one he made about not raising taxes.

Tuesday, September 22, 2009

Giving Partisan Legal Advice To The Council; Council Republicans Ignore Law That Prohibits Redistricting Within a Year of Municipal Election

The job of attorney for the Indianapolis City-County Council should be giving objective legal advice to council members. When fair legal interpretations get tossed aside in favor of partisan politics, counsel attorneys do a disservice to their clients. Unfortunately that has happened with the last two attorneys for the council, Democrat Aaron Haith and Republican Bob Elrod.

Last night was Elrod's turn.

Councilor Joanne Sanders introduced a measure to transfer $290,000 budgeted for 2010 for redistricting to the parks department's budget. (A similar amount is appropriated for 2011.) She argued that the statute did not allow redistricting before the 2011 election. Republican Councilor Ryan Vaughn asked for legal advice from the Council's attorney, Bob Elrod.

Elrod remarked that the council could redistrict "any time they wanted, except right before an election." He then went on to say that the council could redistrict before the 2011 election even though the census data won't be out until early 2011.

Either Elrod never read the redistricting statute, or more likely, he chose to ignore it.

Here is what the redistricting statute says:

IC 3-11-1.5-32

The legislative body of a municipality may not change the boundary of a district established under:
(1) IC 36-3-4-3; (This is the Indianapolis City-County Council)
(2) IC 36-4-6-3;
(3) IC 36-4-6-4;
(4) IC 36-4-6-5;
(5) IC 36-5-1-10.1;
(6) IC 36-5-2-4.1; or
(7) IC 36-5-2-4.2;

after November 8 of the year preceding the year in which a municipal election is to be held and before the day following the date on which the municipal election is held except to assign territory to a municipal legislative body district in an annexation ordinance.
Translation: There is nearly a year window between November 8, 2010 and November 3, 2011 (the day after the election) when the Council is forbidden from redistricting. It is not just "right before an election," as Elrod claims.

A lay person off the street with a high school education could interpret that section without a problem. Yet Barnes & Thornburg's attorney Ryan Vaughn apparently cannot. Where too are the other attorneys on the council, Bob Lutz and Barb Malone? Why aren't they pointing out the obvious - that the council cannot legally redistrict for the 2011 election. It's a shame that it takes Sanders, who as far as I know doesn't have legal training, to correctly interpret the statute.

In the end, this $580,000 of taxpayer money set aside for redistricting (an amount that is extremely excessive given what it costs to redistrict other political bodies) is going to end up in the pockets of a politically-connected company to draw up the maps and a politically-connected law firm, most likely Barnes & Thornburg, to defend them. Of course, any redistricting before the 2011 election will end up with Republicans losing the court case and the maps being thrown out. Why exactly are we Republicans going down this road, unnecessarily wasting taxpayers money on a futile, not to mention illegal, cause?

Lucas Oil Stadium - Downtown Development Not Developing

Over at the Indianapolis Business Journal, writer Sam Stall has an excellent article about the fact that anticipated development around Lucas Oil Stadium, has not been happening as projected. It is an interesting article - one that belies the notion that professional sports drives development.

Stall writes in part:
Not long ago, developers seemed to vie for every square inch of open ground in the vicinity of the just-completed Lucas Oil Stadium.

A gaggle of midsize hotels were in the planning stages. A Dallas-based firm investigated purchasing a section of South Meridian Street property (including
the lot upon which Shapiro’s Deli sits) for a retail and residential project.

Even more dramatically, a $480 million development called Legends District-SoDo was slated to pack some 500 hotel rooms, 200 condos, a 3,400-seat theater and 175,000 square feet of retail space into the shadow of the football stadium. For a while there, downtown’s far-south side seemed set to become a “destination” neighborhood.

What a difference a couple of years—and the worst economic downturn in decades—makes. These days, the entire neighborhood has been pushed, if not into a financial deep freeze, then at the very least to the back of the crisper drawer.

According to Abbe Hohmann, senior vice president and principal at the Indianapolis office of Colliers Turley Martin Tucker, the area suffers from the same triple whammy faced by most development “hot spots” these days: no available credit for projects, a terrible economic environment, and an excess of existing construction stock in practically every category.Also, there’s little demand for the retail, residential and entertainment envisioned for the area, Hohmann said.
While Hohmann puts the blame on the economy, Tim Dora, partner, in Dora Hotel Co., which owns several properties, including a parking garage and two new hotels, near Lucas Oil Stadium, offers a contrary view.

“They thought they’d hit the lottery. I don’t think that was the case.”


[He] is somewhat more circumspect about the area’s prospects, economic recovery or no. He never thought Lucas Oil Stadium could be a reliable engine for a retail and residential renaissance.“

"Some of it had to do with comparable projects like United Center in Chicago. If you look at how it impacted the neighborhood around it, you really didn’t see anything like what was talked about here,” Dora said. “Even Conseco fieldhouse, if you look at how it impacted the surrounding neighborhood, it doesn’t seem like it was really the stimulus for any of that [development]. What’s around Conseco happened on its own.”

Indeed, he thinks the presence of a massive sports venue—and the massive crowds and traffic snarls it generates—hardly qualifies as an attraction.“

It’s almost more of a negative than an asset for most commercial uses,” Dora said. “Just because of the periodic traffic and noise and crowds. If you lived there, I don’t know if the tailgating is going to turn you on, or having people crawling all over your place 10 nights a year.”

Between Dora and Hohmann, it appears that Dora better understands the nature of professional sports stadiums. The fact it these stadiums are never the development tool the promoters claim they would be when sold to the public, with taxpayers and not the private sector, footing the bill.

Pan Am Politics: How Mayor Ballard Continues to Fall on the Sword for Bart Peterson

Thanks goes to Gary Welsh for his excellent write-up of the decision in the taxpayers' favor and against the City's attempt to dismiss the Pan Am lawsuit.

I write more to discuss the politics of Pan Am. But before I do a quick summary of what happened is in order.

In 1985, the City agreed to GIVE an entire city block to the Indiana Sports Corporation for development. The only "cost" to the Sports Corporation was that they build and maintain a public plaza for 30 years, i.e. the Pan Am Plaza. If they wanted to abandon the plaza requirement and sell the property before that 30 year period ran, they would have to pay taxpayers $3 million dollars, adjusted for inflation, which in today's dollars constitutes $6 million.

By 2007, the Sports Corporation was tired of dealing with the cost of maintaining the plaza, including the fountain, and let it fell into disrepair. In late December of 2007, after Mayor Peterson had lost the election, a non-descript resolution was slipped into a batch of resolutions considered by the Metropolitan Development Commission. The resolution simply discussed reducing the size of the plaza requirement. It did not mention how much it was being reduced from and did not mention the $6 million penalty. The effect of the resolution was that it removed the significant plaza burden on the property and allowed the Sports Corporation to sell it without paying taxpayers a dime.

One would think the politics of this would be simple. This was done by the lame-duck Peterson administration on the way out of office. It benefited the Sports Corporation, led by Susan Williams a former Democratic member of the Indianapolis City-County Council. It was a chance for Mayor Ballard to point out the shenanigans of his predecessor and take a stand for taxpayers. He could have sat down and negotiated a settlement that could have recovered some of the funds for taxpayers.

Instead Republican Mayor Ballard fell on the sword, taking all the blame for the 11th hour maneuver of Bart Peterson's folks. Worse yet, his administration has expended substantial City Legal resources now in an extraordinary effort to go after taxpayers in an attempt to dismiss the action before discovery, a process that might reveal the real players behind this deal that enriched insiders and cost taxpayers millions.

The underlying political reason for Mayor Ballard's failure to defend taxpayers in the Pan Am case is that there is an elite group of insiders (corporations, non-profits, big law firms, etc.) who effectively run this city and profit at the expense of taxpayers. For the past 30 years, it has not mattered if the Mayor is a Republican or Democrat or which party controls the Indianapolis City-County Council. At the end of the day, it is the insiders who run things and profit from the decisions that are made.

But it does not have to be that way. Mayor Ballard came into office promising to be a new type of mayor, one who would bring an end to country club politics in Indianapolis. Given how his upset victory happened, he owed no one anything. Instead of taking advantage of that situation, he has turned over his administration to the city's elite probably more so than any mayor in the past 30 years. At least with Mayors Peterson, Goldsmith and Hudnut, you knew there was a strong personality on the 25th Floor who could put a stop to the insider profiteering at taxpayer expense if the Mayor wanted to exercise his political clout. With Mayor Ballard, however, you get the impression he has has completely turned the 25th Floor over to elite insiders and that Mayor Ballard is, at best, a figurehead who is trotted out to put a face on the administration.

Taxpayers deserve a mayor who will stand up for them and not always side with the corporate elites of this city. Greg Ballard has clearly proven he is not that person.

Monday, September 21, 2009

R.I.P. Marion County Law Library?

Today's Indianapolis Star brings a story about the possible demise of the Marion County Law Library. The new budget proposed by the mayor does not have funding for the law library.

Tucked away in a corner on the third floor, the law library serves two types of patrons, pro se litigants and attorneys. The article only focused on pro se litigants, but as a user of the facility myself, I often see attorneys in the library. While most legal research can now be done using on-line databases, sometimes an attorney needs to access the books to find cases from other jurisdictions. Also, research on-line can be spotty, causing attorneys to overlook key cases.

What concerns me though is the loss of the law library to the pro se litigant. When I'm at the library looking through the books, I often see the librarian assisting people who can't afford an attorney but need a form or two filled out. The library provides a valuable assistance to those pro se litigants. With the high cost of legal fees and unemployment in the double figures, the numbers of people who can't afford legal services is rising.

These people have to go somewhere to get legal help. Ryan Vaughn, a Barnes & Thornburg attorney, who heads the City-County Council's public safety committee is quoted in the Star article: "It would be healthier for the system as far as efficiencies if we had more lawyers doing pro bono work."

First, I would point out that not every law firm makes millions of dollars a year from taxpayers that they can simply dispatch associates to do pro bono work. Our small law firm often works with lower end clients who often struggle to pay attorney's fees. We end up writing off a lot of time for these clients, but at the end of the day our firm still has to pay the associates' salaries, the light bill, the phone bill, etc.

Indiana's voluntary pro bono system, that Vaughn advocates, has never worked, never come even remotely close to meeting the needs of those who can't afford our legal system. Those people are not going to suddenly have legal services open up to them them with the closing of the law library. Marion County courts have historically referred people asking questions about filing forms to the law library. The librarians there have always showed incredible patience in dealing with these clients as they attempt to find the right forms. Now those pro se litigants are going to be dumped directly into the court system without any legal guidance.

I spoke on the elimination of the library at the public safety meeting hearing the budget. I advocated at the time that the county look at the local law school as a resource for keeping the law library open. The weakness of a law school education, including that provided by IU Law School at Indianapolis, has always been the failure to provide students with practical experience in the practice of law. The law school could provide the library resources for the county law library as well as second and third year students who, under direction of a professor, could assist pro se litigants in finding the correct legal forms. Judges at the city-county building could provide those students with courtroom experiences that furthers their practical legal education. I would venture to say that a semester of being in such a program would provide more real life legal experience than three years of law school.

Until pro se litigants disappear, which will be never, the county needs to keep the county law library open. A creative approach like using the law library as part of a law school practicum could fill the need.

Friday, September 18, 2009

Airport Board Considers Privatizing Parking, Shuttle Services

The Indianapolis Business Journal reported today that the Indianapolis Airport Authority Board considered today at its monthly meeting the possible privatization of the Airport's parking garage and shuttle service. The IBJ reports:

The Indianapolis Airport Authority agreed at its monthly meeting this morning to explore turning over management of the airport’s parking operations to an outside company.

Using a private operator for parking could bring in between $350 million to $500 million in additional revenue over the length of a 50-year lease for the cash-strapped Indianapolis International Airport, authority spokeswoman Susan Sullivan said. Sullivan emphasized that estimate was “very preliminary.”

The airport is facing a budget shortfall because of fewer flights as well as higher costs from the new, $1.1 billion Weir Cook terminal that opened last year. The airport now pays a mortgage on the terminal of about $40 million a year.

“Even if we issue requests for information, there is no commitment to act on them,” Sullivan said. “This is not something we would enter into lightly.”

Fewer than 15 percent of the nation’s midsize airports manage their own parking operations, she said.

The airport has 100 employees dedicated to parking services. Any privatization agreement would need to ensure the workers kept their jobs, Sullivan said. Parking fees account for about 50 percent of the airport’s $76 million in non-airline revenue. Total annual revenue at the airport is expected to be $127 million in 2010.

The authority voted last month to raise airport parking rates Sept. 1. Garage parking rose from $16 to $18; long-term parking from $11 to $12 and economy-lot parking from $7 to $9. Express valet parking also rose, from $18 to $20.

Bottom line is that the Airport Board overbuilt and is now scrambling to find the resources to cover CIB-type operating deficits that loom in the future. To close the inevitable gap, the Airport Board is looking at using the long term (50 years) privatization contracts to generate substantial upfront revenue.

This is something I have preached about before. To work, privatization has to be about instilling market competition into the delivery of services. Handing a company a long term contract to provide a service not only does not instill competition, it creates a government-sanctioned monopoly. Insulated from market competition by the long-term privatization contract, the service provided by these monopolies inevitably declines.

You have additional problems with privatization. The privatization of services has unfortunately become a cash cow for politicians seeking to shake down private businesses for contributions. Not coincidentally, big political contributors win the lion's share of government contracts.

A related problems is that politicians, greased with campaign contributions, generally have no interest in properly overseeing and enforcing privatization contracts won by a major campaign donor. Vendors have little to fear about intervention from the public sector should the services they provide prove to be subpar or they violate the terms of their contracts. Generally it takes incredibly severe contractual problems, like what happened with FSSA, before politicians will intervene.

Privatization can be done the right way and done the wrong way. Handing out a 50 year contract to provide parking and shuttle services at the airport is definitely the wrong way.

The Administration Strikes Back, Defends Not Collecting $10 Million In Rights of Way Fees from Telecoms

Yesterday the Ballard administration struck back with a defense of its plan to eliminate the staffing of the TVSA, including the executive director, in a claim that they are just providing duplicative services that are no longer needed. In a memo, apparently circulated by head of the Office of Corporation Counsel, Chris Cotterill, six "myths" about the TVSA are listed. While the supposed myths about the TVSA are easily addressed, what I found most remarkable was No. 6 on the list:
Myth 6: Agency pursuing right-of-way fees on par with video provider revenues for private use of public assets. Pursuant to State law, City would likely receive more than $10 million a year if enforced.

Fact: This idea has been considered by the current and previous administration and has been soundly rejected. In effect, TVSA proposes to institute a tax on companies that will pass that cost on to consumers. We need not pay $157, 000 for ideas rejected year after year.
This is in law what one would call an "admission." The City admits that is is intentionally foregoing $10 million in fees that the city could be collecting from telecoms for use of the public rights of way. There is an additional admission as well. In the last line, the administration effectively admits that the TVSA is being targeted not because of duplication of services, but because the Executive Director, Rick Maultra, continues to press for the City year after year to collect these rights of way fees from companies like AT&T, who Joe Loftus, administration insider, represents.

It certainly is interesting that the administration would suggest that private companies should be able to use the public rights of way without paying the public like they do in other cities. What is further interesting is that this administration, which has no problem rushing to increase taxes to pay for yet more giveaways to billionaire sports owners, claims now to be defending the lowly consumers.

If these telecoms could simply pass along all the rights of way fees to the consumer, why would AT&T representatives feel the need to make calls to councilors to try to persuade them to eliminate Maultra's office? If what the administration claims, that the telecoms could just pass through the 100% cost of the rights of way to consumers, those telecoms would simply not care what happens. But it is apparent that they, including AT&T, care quite a deal whether they have to pay these rights of way fees.

The claim of the 100% pass through of business expenses is in itself a myth and is contradicted by the administration's own suggestions regarding how the city can raise money. Recently suggestions have been made that the administration may sell off the naming rights to public assets in an effort to raise revenue from private companies. By the administration's logic employed in the telecom debate, those companies would just pass along the cost of the naming rights to consumers. But the administration officials do not make that argument with respect to naming rights, probably because they know it is false.

Any way you slice it, this debate would not be going on at all were it not for the fact that Joe Loftus, who is special counsel to the Mayor and lobbyist for the City, also represents AT&T, which is adamant it does not want to pay the rights of way fees that Maultra wants them to pay. Loftus has clearly used his clout behind the scenes, and enlisted OCC's Chris Cotterill, in a highly conflicted and quite likely unethical effort to use the budget process to try to eliminate the person who continues to insist that AT&T pay the public if it is going to use public assets.

One would hope that Mayor Greg Ballard himself would step in and pull a plug on insiders within using their positions within the administration to aid a private client. In an administration supposedly committed to improved ethics over those exhibited during the Peterson administration, these conflicts of interest have no place.

Thursday, September 17, 2009

Ballard Insider Uses City Position to Promote Interest Of Telecom Client While Costing Taxpayers Millions

One of the most powerful political operatives in the city, Joe Loftus has held high-level positions in the last two Republican administrations. During the 1990s, Loftus, a partner at the politically-connected law firm Barnes & Thornburg, served as the City’s legislative lobbyist and as senior deputy Mayor. In the administration of Greg Ballard, Loftus is the city’s lobbyist at the Statehouse and acts as the administration’s special counsel.

Although employed by the city in the 1990s and today, Loftus has never stopped representing his private business clients, even when the interests of those clients appear in direct conflict with his taxpayer-funded roles with the city.

In the 1990s, while lobbying for the city and serving as deputy mayor, Loftus was also the chief lobbyist for Ameritech. While serving in yet another public role, as the Mayor Goldsmith’s appointee to the Cable Franchise Board, Loftus tried to eliminate the city’s cable agency which had local regulatory power over the cable TV providers at a time in which Ameritech was considering entering the Indianapolis market place to provide video service. Loftus also championed the privatization of the City’s TV access channels (‘Channel 16’). As it turned out, the only solution was to leave the station alone, unless it was to sell commercials as suggested by those entities participating in the Request for Proposal process.

Fast forward to 2007. Newly-elected Greg Ballard assigned Loftus the responsibility for setting up his administration. This responsibility included hiring the attorneys at the Office of Corporation Counsel (OCC). Not surprisingly, many of those attorneys, including the head of OCC, Chris Cotterill, came from Loftus’ firm, Barnes & Thornburg. Although Loftus told a reporter during the transition he would not take a position with the city, in fact it is later reported by the Indianapolis Star that Loftus makes a combined $115,000 as lobbyist for the city and to act as the administration’s special counsel. In addition, Loftus’ law firm Barnes & Thornburg was paid $211,000 to lobby for the city in 2008.

As he did in the 1990s, and now as an agent of the Ballard administration, Loftus is using his position to block the efforts of the city’s telecom agency, now called the Telecom and Video Services Agency (TVSA), to enforce compliance of the video TV providers regarding benefits to Indianapolis available under state law. This includes Loftus’ client, AT&T (the former Ameritech) which now provides video service in certain sections of Indianapolis.

The executive director of the TVSA, Rick Maultra, has advocated, on behalf of the City, petitioning the IURC for enforcement of several non-compliance issues against the video providers. These issues include the funding for the government and educational access channels, the connection to AT&T of the educational access channels and other City benefits that would cost the video providers millions of dollars long term. Such pursuit of compliance is consistent with Indiana law. The video providers, like AT&T, have certain provisions under the State law to abide by for using public assets for private gain. The catch is that it is up to any given city to petition the IURC when violations occur, which requires the City’s legal department’s involvement. AT&T, does not want to pay the fees and Loftus is more than willing to do the bidding for his client, even though it costs taxpayers millions of dollars that the city desperately needs.

To press the issue of the video providers not complying with the State video Franchise Law, Maultra needs the assistance of the attorneys in the Office of Corporation Counsel; attorneys appointed by none other than Joe Loftus. Loftus hired Logan Harrison, a Barnes & Thornburg attorney, at OCC and assigned him the responsibility of representing Maultra and TVSA. Harrison reports to Cotterill, the City’s Chief Attorney. Both Cotterill and Harrison have virtually declined all assistance to Maultra’s office in his efforts to enforce compliance of matters regarding Bright House, Comcast and particularly AT&T.

As head of the OCC, Cotterill has the chief responsibility to screen complaints filed under the City’s new ethics rules. Nonetheless, Cotterill has immersed himself in a situation involving an almost certain conflict of interest. At best, Cotterill is deliberately turning a blind eye to a conflict of interest involving the person who hired him, Joe Loftus. At the worst, he is directly involved in a plan to use OCC to aid Loftus’ client, AT&T, by putting up a firewall to protect AT&T against the compliance pursuits of the Telecom & Video Services Agency.

In 1998, Maultra was working with the City-County Council to pass a right-of-way ordinance that would have brought tens if not hundreds of millions of dollars to City coffers. The premise, which is used by many cities around the country, is that if a private entity is using a public asset for private gain, then the City should be compensated for that use. While this was being studied and discussed by the City-County Council, Loftus, as chief lobbyist for the City under Goldsmith and Ameritech’s (AT&T’s) chief lobbyist, pursued and got passed HB 1376, which reduced the City’s ability to be compensated for right-of-way use. Little surprise that the passage of such a law greatly benefited Ameritech, one of the chief users of the City’s public right-of-way.

Fast forward to the present Administration. Given the City’s financial shape and need to augment funding to repair the infrastructure, Maultra circulated the right-of-way idea to City Legal and the Mayor’s Office. At a minimum, he had hoped the City would at least pursue the present State law that Loftus got passed which would be recovery costs only for wear and tear by streets cuts. At best, Maultra had hoped that the State law, given the circumstances in which it was passed and the Ballard Administrations’ appearing before the State legislature to address its financial woes, could be repealed. Perhaps the timing might be such that the legislature would embrace such a non-taxpayer solution to the City’s problems by attaching what are essentially user fees. Pursuit of right-of-way compensation sounds like a more profitable idea than allowing private companies to put their names on public assets.

By the summer of 2009, Maultra’s efforts had made him a top target for Loftus. The proposed 2010 budget released by the Ballard administration showed Maultra’s executive director position and assistant at the tiny TVSA being eliminated, which considering how small the agency is, virtually eliminates the office. However, the fact TVSA produces more revenue than it costs to run the office, belies the elimination of the positions as some sort of cost-cutting measure. Rather it almost certainly was a naked power play by those in the Ballard administration, i.e. almost certainly Loftus, to eliminate the person knowledgeable and responsible for exacting compliance of the video providers, all of which benefits greatly the video providers and particularly Loftus’ client AT&T. For that Maultra had to go.

If there was any question who was behind the effort to eliminate the executive director position, it was answered during the days leading up to the Administration and Finance Committee meeting to hear the presentation of the budget. Representatives of AT&T called to lobby councilors in support of the elimination of Maultra’s position. What the Ballard administration, i.e. Joe Loftus, apparently did not count on was that Republican at-large member Barb Malone would cross over to vote with the Democrats for an amendment to restore funding for the executive director position. Councilor Ryan Vaughn, a Barnes & Thornburg attorney, and whose law firm represents AT&T which was making calls supporting the elimination of Maultra’s position, did not even bother to identify his conflict at the council committee meeting or abstain from voting.

Councilor Ed Coleman, who was at the committee hearing in a non-voting capacity, noted that the Controller’s Office gutted the 2009 accomplishments of the budget that was sent to the City-County Councilors as they consider the Agency’s fate. Such accomplishments included discovering a missing franchise fee check from AT&T for $182k and the Agency discovering the cable industry was attempting to pass legislation at the state to transfer 2% of the franchise fee responsibility to the satellite providers. The Agency caught the legislation and advised OCC and the Controller’s Office. The legislation later died and the Controller’s Office estimated the cost savings to the City was $1.5 million a year as a result.

Unfortunately the saga may not have ended with the committee vote. Behind the scenes, Ballard administration officials are busy making calls trying to line up a floor amendment for Monday’s full council meeting, an amendment that would once again eliminate the telecom agency executive director position, the person most knowledgeable about the State law and the legal compliance issues affecting Loftus’ client, AT&T.

Loftus has a history of twisting the arms of Republican council members to get what he wants and has often been described as ruthless in dishing out retaliation when council members vote against his wishes. Hopefully though, the Republicans on the council will have the backbone to stand up to him. The move to eliminate the executive director of TVSA should be seen for what it really is – a Ballard administration insider using his position behind the scenes in an ethically-challenged effort to aid the insider’s private legal client by getting rid of the city's chief compliance watchdog. It is an effort that the council should soundly reject on Monday.

Council Committee Bestows $1.25 Million More On ICVA, Does Not Ask For Accountability From Organization

This morning the Indianapolis Star reports that the Municipal Corporations Committee of the Indianapolis City-County Council last night passed an amendment moving $1.25 million from the
the Capital Improvement Board's renovation fund to the ICVA's budget. Part of the renovation money was originally designated to replace existing carpet in the existing convention center to match the expanded facility. Now that replacement will be delayed.

According to the Indianapolis Star, Welsh reported that the money will be used to draw convention business to Indianapolis through efforts such as calling on clients and offering discounts. He said at least $500,000 more would be needed to carry out the group's marketing plans for next year, which include promoting Indianapolis as a leisure destination.

The IVA's use of "discounts" to lure convention business was first identified by Gary Welsh of Advance Indiana. The underreported story is that taxpayers are subsidizing many of the hotel rooms in the city when they are provided at discounted rates to convention goers. This situation will undoubtedly increase with the increase in the city's hotel tax, giving Indianapolis the highest combined hotel and sales tax in the country.

The council committee meeting again demonstrates a lack of due diligence by council members. Not a single question was asked about ICVA's operation and whether the organization is spending its money properly. Many ICVA officers and employees pull in six figure incomes. The vast majority of ICVA's budget goes to salaries and benefits. Don Welsh's annual salary is approximately $400,000. He has already indicated he intends to use additional money to hire yet another six figure sales person. In most sales job, you live or die with commissions, succeeding only when you bring in more business. But this is the ICVA. ICVA sales people receive comfy six figure salaries regardless of how successful they are in their jobs.

I have reported on the ICVA's fiscal irresponsibility previously:

In its 2007 tax return, the ICVA showed revenues of $12,159,994 almost all of which came from taxpayers. For an organization allegedly starved for cash, the ICVA had $1,549,267 stashed in mutual funds and equity securities. The organization paid out salaries of $4,326,029 and provided benefits worth $692,734, for a total employee expense of $5,018,763. Thus employee expenses make up an incredible 41% of its budget. And that is not counting other overhead expenses. As with numerous non-profit organizations funded by Indianapolis taxpayers, most of the tax dollars get swallowed up in overhead.

As far as individual officer salaries at ICVA, former ICVA President and CEO Robert Bedell pulled in $353,777 in salary and benefits. Reportedly, the new ICA President/CEO Don Welsh makes substantially more. It is a safe be that his combined salary and benefits total over $400,000. According to the 2007 report, Alfred Bennett, V.P. Sales made $142,579, Matthew Carter, V.P. Strategic Development made $143,343, Mary Huggard, V.P. Communications and Development pulled in $144,637, and James E. Wallis, V.P. of Administration and Technology, made $136,858. Those are just the officers. Obviously the top employees are also pulled down substantial sums of money.
Near the end of the article, Star reporter Francesca Jarosz notes that the ICVA plans to "continue discussions with the city, private businesses and arts and cultural groups in hopes of finding more dollars. Welsh said he's optimistic -- even in tough economic times -- that the group can come up with additional funds."

I can only guess that having "discussions" somehow produces more revenue because the CIB and ICVA are all the time talking about having "discussions" with groups like the Pacers and the Arts Council to hand out more money when they have none. Nonetheless, I thought it was the CIB which was, for some reason, in the business of bestowing money on arts and cultural groups, a practice that has been curtailed since the CIB ran out of money. Now it appears that the ICVA wants to take over the CIB's job as benefactor to the city's arts and cultural groups.

Does anyone else see a big shell game being played by the CIB and ICVA, using taxpayers money as the prize?

See also a couple excellent posts over at Indy Tax Dollars:

September 16, 2009, A Necessary Look Back
September 7, 2009, "PINCHING PENNIES"

Tuesday, September 15, 2009

City-County Ethics Code - Putting The Fox In Charge Of The Henhouse

I had the opportunity to watch the City-County Ethics Commission meeting held yesterday which is posted on the city's website.

The meeting consisted of the head of the Office of Corporation Counsel, Chris Cotterill, instructing the Commission on the application of the new Ethics Code. I have complained about Cotterill's appointment before. He had only five years legal experience when appointed to the head of this very important city agency, and had zero litigation experience. (Yet that didn't stop him from instructing the Commission on "pleading standards" and discussing litigation.) Although he mentions in the meeting having worked in the prosecutor's office, as far as I can tell that experience must have been as an intern while in law school. Cotterill received his position because he was a Barnes & Thornburg attorney and Joe Loftus, a partner at Barnes & Thornburg who is also on the city's payroll, was the person Indianapolis Mayor Ballard allowed to staff City Legal. I would assert that Loftus gave Cotterill the position not because of his experience, but because of his inexperience. Inexperienced attorneys are easier to manipulate and control.

While the revisions in the Ethics Code are an improvement, what is troubling is the complaint process. Ethics complaints have to be filed with the Office of Corporation Counsel, which acts as a "filter" for the ethics commission. The problem with that structure is that attorneys are trained not to be objective adjudicators of the facts, but rather advocates for clients. Many ethics violations could also involve legal violations which mean lawsuits against city employees or agencies. Does anyone believe the Office of Corporation Counsel is going to aggressively and fairly pursue ethics complaints when the information gathered and the conclusions reached could lead to legal action against their clients, i.e. city agencies or city employees?

The problem with this setup is evidenced by a comparable situation in government. Years ago, the Indiana legislature passed a notice of tort claim law that required individuals, prior to filing lawsuit against government, to notify government. The idea behind the law was that it would allow government to reach quick resolutions of cases, pre-litigation, and save the taxpayer money. But instead of channelling the notices to a more objective, judicial type body, the notices get funnelled to attorneys for the government who are advocates for their government clients that the individuals are threatening to sue. I don't know that I have ever seen the Indiana Attorney General's Office conduct an actual investigation of a tort claim and I certainly have never seen the AG do anything but deny liability. Same thing with Indianapolis . The Office of Corporation Counsel always denies liability with respect to tort claims notices.

With regard to the ethics code, you have the additional problem that the Office of Corporation Counsel is part of the problem. Is there any doubt that the Barnes & Thornburg dominated Office of Corporation Counsel would ignore ethics violations such as conflicts of interest that involve clients or attorneys of the law firm? Certainly there doesn't seem to be any effort on the part of the Office of Corporation Counsel to root out the severe conflicts of interest which exist in the Ballard administration.

The Ethics Code revisions are a good idea. Putting the Office of Corporation Counsel in charge of being the gatekeeper to the Ethics Commission, however, is a little like putting the fox in charge of the hen house. No good can come of it.

See also:

Thursday, September 25, 2008, Recommendation to Indiana General Assembly - Drastically Modify or Repeal Notice of Tort Claim Requirement

Monday, September 14, 2009

Indianapolis Star Notes Funding Cut For Indianapolis Downtown Inc.

In an article appearing in today's Indianapolis Star, writer Francesca Jarosz notes the $500,000 cut in funding for Indianapolis Downtown, Inc., a non-profit corporation set up to promote Indianapolis. IDI not only receives a subsidy of over a $1 million, but also receives $600,000 subsidy from the Indianapolis Bond Bank. It is not clear why the Indianapolis Bond Bank is in the business of subsidizing a non-profit corporation. Previously I have reported on fishy consultant contracts awarded by the Bond Bank to John Dillon, while Dillon was President of the Bond Bank Board. Dillon walked away with hundreds of thousands of taxpayer dollars as a consultant on the water company deal and the construction of the convention center and Lucas Oil Stadium.

While Jarosz's article does exaggerate IDI's efforts, I think she does a good job of balancing the fact that this "pass through" of taxpayer dollars is costly to taxpayers. Zahn's $200,000 salary is noted as well as the fact that IDI has stashed away $7.7 million in assets. The true balance of the article comes with the comments of community activist Pat Andrews:
Pat Andrews, vice president of the Marion County Alliance of Neighborhood Associations, said some of the services IDI provides, such as promoting Downtown, is done by other groups such as the ICVA and the Indiana Sports Corp. Others, she said, could be done more cheaply by city employees.

IDI President Tamara Zahn earns about $200,000 a year, while the group's four other top executives make from $85,000 to $104,000 per year.

"At the end of the day," Andrews said, "they're getting pretty exorbitant salaries to duplicate the efforts of other people and for more money than the city can do on its own."
Unfortunately the article also contains an irresponsible comment from Roland Dorson, President of the Greater Indianapolis Chamber of Commerce:
This does not put the city in an advantageous position," said Roland Dorson, president of the Greater Indianapolis Chamber of Commerce. "Along with the benchmark cities, we compete globally with places like Melbourne or Vancouver.
It's about our brand -- how do we continue to promote that?"
It should be noted that Dorson has also promoted the continued irresponsibility of the Capital Improvement Board as well as additional tax increases on businesses to pay for that irresponsibility, including the Council voting to give Indianapolis the highest combined hotel/sales tax in the country. One wonders how well Dorson is representing his constituency.

Although presented with an ideal opportunity to note IDI"s inefficiencies and lavish spending on salaries and benefits, Paul Okeson chief of staff to Indianapolis Mayor Greg Ballard, instead notes the "important partnership" the City has with IDI and suggests that the continued funding of tax dollars to IDI would continue if the economy were in better shape.

Asking that groups like Indianapolis Downtown, Inc. and the Arts Council of Indianapolis, Inc. be responsible stewards of taxpayer money, is not "shortchanging" Indianapolis. We should not be simply handing over money to these organizations and then doing no oversight whatsoever while those organizations pay themselves lavish salaries and benefits. Nonetheles, IDI should not be receiving any tax dollars. IDI's funding should come from the downtown businesses it purports to help. Most likely though those businesses would see IDI for the bad investment it is if asked to fork over significant dollars to support the organization.

See also:

Monday, June 8, 2009 Taxpayers Spend Millions to Subsidize Indianapolis Downtown, Inc.; Meanwhile Non-Profit Corporation Hoards Cash and Pays Lavish Salaries

Tuesday, July 7, 2009 Indianapolis Downtown, Inc. Picks Taxpayers' Wallets While Patting Itself On The Back

Saturday, September 12, 2009

Libertarians And The Fight For Political Reform

On a nice quiet bike ride into work this morning, I began to think about the two party system and the one knocking loudly on the door, the Libertarians. This column is mostly about the local Libertarian Party and my view of how to advance reform in local politics.

First, I don't think you will find a brighter, more energetic group of local political activists than Libertarians. I don't think that is an accident, but a product of how the parties operate. Speaking of what I know best, the Marion County GOP leadership has for years all but discouraged intellectuals from rising to the top in the party and openly suppressed those with independent thoughts who might challenge the Old Republican Guard. My outsider observation of the Democrats is that they operate pretty much the same way. When it comes to Libertarians though, the party actively recruits educated intellectuals who are independent-minded.

What has played a role in the suppression of intellectualism and independence locally is the slating system used by the Marion County Republican and Democratic Parties, a system which you will find virtually no place else in the country. Although billed as a way of allowing local party workers to pick candidates, in fact it gives party leaders an extraordinary opportunity to dominate the candidate selection process, a process which in virtually every place else in the country is done by the party primary electorate. The last thing party leaders wants is elected officials who are independent and who will display anything but lockstep support for whatever they want done. While a few independent-minded individuals sneak through every now and then, chiefly by remaining quiet about their proclivities during the candidate selection process, those few are dominated by the many elected officials who are little more than rubber-stamps for leaderships' agenda.

Having said the positives about the Libertarians, let me now address the negatives. Libertarians have a sometimes unrealistic belief in the virtues of the private sector. I think they often look at things through rose-colored glasses, advocating policies that would work in a perfect world, but don't work in the real world. For example, during the 1990s, I was a fan of privatization. I thought the private sector could always provide sector could provide services more cheaply and more efficiently than the private sector. What I completely missed was how privatization would become politicized, a method by which politicians could leverage campaign contributions from contractors who were then rewarded with government contracts, which are often long term and have no oversight. Many privatization schemes fall short of instilling any sort of competition into the delivery of services, the very purpose of privatization. In fact in many cases, the contract simply guarantees a private monopoly over the delivery of public services.

In a similar mode, we have seen the rise of non-profit groups that exist solely for the purpose of acting as a distribution center for government funds. One thinks that the private company could distribute that money more efficiently than government bureaucrats. What we see instead are the non-profits paying executives and top employees six figure salaries. Very little taxpayers dollars trickle down to the target of the grants. Once again,the private sector is not always better than the public sector.

Yet another example is CEO pay. In the ideal world, CEO pay reflects the market and if a CEO is getting paid more than he or she is worth, the shareholders wil throw the CEO out of office. In the real world though CEOs pay is determined by Boards of Directors, made up of people who are also CEOs and in corporate management. It is a "I scratch your back, you scratch mine mentality" to CEO pay that has allowed even CEOs whose companies are going bankrupt to walk away with millions in compensation.

Government regulation doesn't always stifle the marketplace; government regulation in fact can enhance the marketplace. In the foregoing example, a securities rule restricting Board of Director membership to non-corporate management types, would empower stockholders to actually do what Libertarians expect those stockholders to do: remove CEOs not earning their pay.

In other situations, government regulation can enhance competition by providing for a level playing field that allows the market to flourish. In my old job as manager of the Title Insurance Division were were faced with the situation where some title companies would ignore the law while others would comply. In many situations though the law simply was not clear about what was or was not allowed. By crafting new rules we were able to provide a black and white regulatory framework where title companies knew the rules and they would be enforced. The marketplace was enhanced by good regulation.

Libertarians are right though to treat government regulation with suspicion. Most regulations are not designed to enhance the marketplace. They too often add cost to doing business and limit, not enhance, competition.

Locally, the Republican and Democratic Party would be well-served to encourage more bright, independent-minded folks to be active in the two parties and to advance. Libertarians though respond that that will never happen - the leadership of the two parties won't allow it. They are right that the Old Guard of both parties won't voluntarily give up power. But the power of the Old Guard is fading and, for Republicans, it is set to expire on November 8, 2011.

Libertarians take the position that the two parties will never reform and the only way to effectuate reform is to work outside the two-party system. While that is a legitimate argument for better or worse the two-party system is hard-wired into the brain of the electorate. Although well-meaning folks often with good ideas, the baseline Libertarian vote has hardly advanced over the past 25 years. To the consternation of my Libertarian friends, I have long said that the best way to bring about reform is to fight within the traditional two parties to take over the party machinery. While that's undoubtedly a difficult fight, at least success promises a chance to advance to the general election winner's circle, a place that Libertarians have historically been shut out of.

Friday, September 11, 2009

David Lawrence Of Arts Council Continues to Mislead Council

At the Parks Committee meeting on Wednesday, the Arts Council again misled councilors into approving the organization's continued abuse of the taxpayers.

The Arts Council is a non-profit corporation that was set up for the City to funnel arts money through. During his presentation, President and CEO of the Arts Council David Lawrence continued to spread the lie that his organization has very limited "administrative expenses" - only $368,000 he claimed.

Pure nonsense. According to the Arts Council's 2007 tax return, administrative costs for the Arts Council are nearly 57% of what the Arts Council takes in. Administrative expenses on the return total $2,784,836. This includes $1,038,608 spent on salaries and benefits for their 19 employees. The former President of the Arts Council, Greg Charleston alone pulled down $170,391 in compensation. The Arts Council, which is constantly claiming poverty, reported nearly $10 million in accumulated assets on its 2007 return, money those starving artists are not seeing.

What Lawrence has done is take the taxpayer money from the Parks and estimated administrative costs just for that pile of money. It is an extremely disingenuous approach. If someone hands you money that is restricted, that simply frees up unrestricted money to be spent on things like salaries and benefits of Arts Council officers and employees. No additional money is spent on the worthwhile project for which the restricted money is intended.

During Lawrence's testimony he also indicated that the Arts Council does not make the decision regarding what artists get the grant money funnelled through the Arts Council. Rather Lawrence indicated that, in order to avoid things like conflicts of interest, that decision is farmed out to national arts group or groups. Undoubtedly one of them he was talking about is Americans for the Arts, whose President and CEO, Robert Lynch was reported making $654,848 on its 2007 tax return. Six other officers of Americans for the Arts are reported as making $145,653 or more. Americans for the Arts has $160 million stashed away in accumulated assets. Some of that money undoubtedly includes tax dollars from Indianapolis.

If the Arts Council is not making grant decisions but simply ratifying what groups like the Americans for the Arts decides, why does the Arts Council exist at all?

As I have said before, countless times, non-profit groups like the Arts Council and Americans for the Arts exist not to promote artists, but to promote themselves. They pay their executives and top employees lavish salaries, using taxpayer money extracted from elected officials by guilting them that the money is needed for the poor, starving artists. It is nothing more than a con game that victimizes taxpayers and artists alike.

See also:

Thursday, July 30, 2009, David Hoppe of NUVO Criticizes Arts Bureaucracy

Sunday, July 5, 2009, Arts Council of Indianapolis Misleads Parks and Recreation Committee Regarding Its Administrative Expenses

Saturday, June 27, 2009, Americans for the Arts Exposed

Saturday, June 27, 2009, Nuvo's David Hoppe Warns of "Arts Crisis"; Promotes More of Our Tax Dollars Going to Wasteful Indianapolis Arts Council

Wednesday, June 10, 2009, Playing the Starving Artist Role to Grab Our Tax Dollars; The Real Financial Story Behind the Arts Council of Indianapolis, Inc.