Sunday, August 17, 2008

Praise For Stadium Financing

The Star's Bill Ruthhart touts the state construction financing plan for Lucas Oil Stadium, saying collection of taxes on food and beverage is outperforming state expectations. "On average, the group of taxes that fund the stadium have grown by 3 to 4 percent annually, far above the 1 percent the state is counting on, said Ryan Kitchell, director of the state's Office of Management and Budget," Ruthhart writes. "We're watching the revenues closely, but we are still confident based on the conservative growth assumptions for the finance plan," Kitchell said.

Ruthhart's story makes no mentions of the fact that the CIB is without a source of funding to pay for the operating and maintenance expenses for the new stadium. That's because CIB officials gave the lion's share of revenue-generating opportunities to Jim Irsay, who pays no rent or operating expenses. Irsay actually had the audacity to tell the people gathered at the stadium's ribbon-cutting ceremony that it's "The People's Stadium." Yeah, right. The IBJ last week reported that the CIB will be short $20 million during the stadium's first year of operation and plans to draw down a reserve fund to cover the shortfall.

Watch how this story follows through. The IBJ reports the financial gap on the local side. The Star reports on the financial success story on the state side. It's just a matter of time before the case is made to the public to allow the diversion of the extra tax revenues to pay for operating and maintenance expenses, breaking the promise to taxpayers to use those revenues exclusively to pay down the construction debt. That's exactly what happened with the RCA Dome and explains why we still owe as much on it as it originally cost to build--even as we prepare to demolish it to make room for the expanded convention center. And you can take it to the bank that is exactly what Bob Grand and his merry band of self-serving insiders have in mind to bail out the CIB's financial dilemma.

14 comments:

spooknp said...

The article stated that the surrounding counties contributions are capped at $5M and that the capped has been reached and the counties participating are getting more money back. It is going to be very, very hard for the state to go back on that promise. Mitch had to bribe the surrounding counties anyway with a .5% cut of the tax just so they would pass it. The surrounding counties need money. Something tells me that the state and Mitch won't be bailing out Marion Co./Indy anytime soon. If they need money, they need to jack their food and beverage tax another 1% or so, that is what they need to do.

What really ticks me off is how everyone said this was "Indiana's Stadium." I actually agree with that. Given the visitors from all over the state that use the stadium for IHSAA football finals, conventions, and to watch the Colts and the NCAA, the food and beverage tax should have been a state-wide tax. It would have been easy for them to get it passed: If your county doesn't pay into the fund, no high school from your county gets to play in the stadium. If such a high school goes to the IHSAA finals, they have to play at their school or the school of the other team. Had they done this, the taxes would likely have had only been 1% for a handful of years. They could have also bribed these counties with a cut of the tax as well. Now Indy and Indy metro residents are paying the bulk of building a Taj Mahal that people from Wayne, Allen, Monroe, etc. get to enjoy.

roger61611 said...

I read that article this morning and almost threw up. The Star ceased to be a newspaper several years ago, now it's just one big PR machine.

Read Ketzenberger's articles and some of the other business "fluff". It reads like paid PR.

(The link to the Star story is broken btw.)

Bart Lies said...

Being off by a factor of 3 or 4 on the tax collection estimates makes me wonder how far off they were on estimates of how much money it is supposed to 'generate.'

Advance Indiana said...

I'm going to take a stab and guess that the original tax rate was based on what was estimated would be needed to cover the operating and maintenance expenses in addition to the construction debt.

bing said...

The one option that you have not considered as a repayment source for stadium operating expenses is a taxpayer owned parking garage next to the stadium as originally planned.

It appears the maneuvering by private interests to capture this last remaining stadium revenue source from taxpayers is holding it back.

Sean Shepard said...

AI - good post.

I wonder though, would we tolerate Eli Lilly demanding that the city build them a 60 story high-rise for a new headquarters under threat of them just moving to another state? As well as demanding we pay their water, electric and maintenance?

bing said...

Bob Grand hopes that filling the stadium with non-Colts events will cover operating costs.

Considering Fred Glass gave Jim Irsay control over the stadiums schedule and 50% of these non-Colts revenues, shouldn't Jim Irsay be required to use his Lucas Oil Stadium profits to promote the city and fill the stadium with profitable events and conventions?

Public private partnerships should benefit both parties.

In this deal, all I see is the public getting all the bills and the private party gets all the profits.

Advance Indiana said...

If past is prologue, Sean, the answer to your question is Yes.

Crizzle said...

Weren't the original Dome bonds re-issued to pay for Victory Field, Canal improvements, the Conseco Fieldhouse Parking garage, and upgrades to the Dome itself at various points? That being the case I think the requirement to pay down the debt with any additional tax revenue was a needed requirement.

HOOSIERS FOR FAIR TAX said...

Ir$ay is a hypocrite. He could care less about the people of this city...only that they pay the price to see those football games at his new Gladitorium.

And spooknp, it is not any better to blackmail the entire state than it is to blackmail Marion and surrounding counties. That stadium should have been 100% financed by Ir$ay and leased to the city to manage for Conventions when in not in use by the Colts.

Bart Lies said...

the 'free tours' actually involved $200K from the 'Stadium Authority' to pay for it (according to WTHR's reporting). TANSTAAFT.

Although people weren't actually allowed into the behind-the-scenes areas they hoped to see, by golly the souvenir shop and concession stands were in full operation.

Flynn said...

The Colts are a tenant in the new stadium. To give a tenant control over the stadium's schedule and 1/2the revenue from on-football events was an outrageous give-away by Fred Glass and the Peterson administration.

Advance Indiana said...

If Lucas Oil Stadium is truly the People's Stadium as Irsay proclaims, then he should have no problem paying rent and operating/maintnenance expenses as any other commercial tenant would be expected to do under a lease.

Concerned Taxpayer said...

"What really ticks me off is how everyone said this was "Indiana's Stadium.""

It's NOT Indiana's Stadium...it's IRSAY'S STADIUM.

We PAY for it, HE gets the MONEY.