Saturday, February 14, 2009

Here We Go Again

The bankrupt Capital Improvement Board of Managers plan to ask other good corporate citizens who plunked down a $75 million investment to help finance the $320 million Circle Centre Mall for the Simons, along with the rest of the taxpaying public, to forgive debt when it comes due in 2017. This comes after those same investors were asked a little more than a decade ago to redirect their dividends from their investment to the Capital Improvement Board to help pay for Conseco Fieldhouse. Since 1997, those investors have sent $34 million to the CIB in the form of a loan. Instead of paying off that debt when it became due in 2007, the CIB pushed payment back another decade and is only paying interest on the debt. The IBJ's Cory Schouten has the complete story on this latest outrage here.

Let's revisit the Conseco Fieldhouse deal that led to this debacle. "Under a plan negotiated by then-Mayor Stephen Goldsmith in the mid-1990s, other sources included $50 million from a special “sports tax zone,” $10 million each from Eli Lilly and Co. and the General Assembly, and $57 million from the Pacers, which are owned by the founders of Simon Property Group," Schouten writes. Now get this, the CIB refused to tell Schouten whether the Simons ever made good on their $57 million contribution. The Simons, however, were allowed to pocket $40 million for the naming rights. The CIB had originally planned to use its reserves to pay off the loan from the Circle Centre investors, but the construction of the Lucas Oil Stadium forced those reserves to be tapped to meet that shortfall.

As to Circle Centre Mall, the taxpayers are still on the hook for $229 million in bond debt. The Simons have only paid about $15 million in rent. The City stopped collecting rent from the Simons after it was determined the project was in danger of losing its tax-exempt status. We're paying off the bonds through a TIF district that covers most of downtown, revenues that are diverted from other governmental uses. While the Simons were generous enough to allow us to keep the revenues from the parking garage we built, the City diverted that revenue to give $25 million to a wealthy campaign contributor of Bart Peterson's to build the Conrad Hilton.

What has happened in this town over the last couple of decades is just beyond belief. We have a handful of self-dealing elites who have seized complete control of your government and are diverting your tax dollars to bankroll their own private projects. And they think they are such successful businesspeople. These people need to be locked up in prison for the rest of their lives for what they've done to us instead of being patted on the back and handed out civic awards for a job well done. When will you say enough is enough? I know we thought we took our city government back when we formed a grassroots effort and elected Greg Ballard over Bart Peterson in 2007 in an upset victory, but Ballard brokered a deal with the insiders days after his election and signed over the keys to our City to them before he was ever sworn into office. Now we're back at square one.

Note that the Indianapolis Star was among the corporate investors in Circle Centre Mall which agreed to divert its dividends to the CIB to help finance Conseco Fieldhouse. The Star is owed $2.6 million. Others include JP Morgan ($6.3 million), Conseco ($5.3 million), AT&T ($4.2 million), National City ($3.2 million), Duke Energy ($3.1 million), Safeco ($3.1 million), AUL ($2.8 million), IPALCO ($1.1 million), Farm Bureau ($527,000), KeyBank ($527,000), LDI ($517,000) and Clarian ($516,000). Anyone else see the irony in financial institutions that are holding debt that also received some of the $700 billion in TARP bailout funds? What the hell is a nonprofit hospital doing investing in Circle Centre Mall and then loaning money to the CIB?


Downtown Indy said...

I've known for a long time about the land-lease problem downtown, and how it continues to stymie development (financial institutions won't lend readily if the building owner doesn't own the land on which they build). I did NOT know that the Simons' held those leases for the mall properties! This explains all the corporate 'sponsors'. And I didn't know the Simons' weren't paying their lease on the mall, either!

What 'private investment downtown' are they talking about downtown? The big partnerships that came in a bought up all the parking garages and lots, so they could triple the parking rates for monthly parking and charge $20-40 for event parking?

It's so sad that a lot of people continue to believe this sham, this Ponzi scheme, is providing economic benefit.

But still, when the scam artists hold out there hands for more, an endless supply of sympathizers appear, wringing their own hands and imploring taxpayers to help them out.


Sean Shepard said...

It might be more accurate to suggest that self-dealing elites have taken control of the political parties that are generally found in power.

Voters are given choices outside of the usual suspects; but, routinely prefer to vote as though making a bet instead of voting for smaller, honest, transparent government.

People need to quit dressing up in a colored wig and body paint when they go vote for their favorite 'team' (of plunderers) and start voting based on what's best for their economic interests.

"If I give you a 45% chance at lethal injection a 50% chance of the electric chair and a 5% chance of escape, what are you going to vote for? The electric chair because you're likely to win?" - Michael Badnarik

Gary R. Welsh said...

Several years ago when I was working at a big law firm in town, a bond lawyer for the firm who worked on all of these deals tried to tell me that no property tax revenues were being paid on the mall because it was publicly-owned property and was being financed with tax-exempt bonds. I told him he was mistaken in that belief because even government-owned property must be taxed if it is being leased to a private business for a for-profit use (I knew that from my days working at the Illinois legislature as a revenue analyst). After arguing with me for ten minutes, this bond expert left, only to return an hour later to tell me I was correct. I couldn't understand how someone who was supposedly a public finance expert couldn't grasp that basic concept. In actuality, if the federal government ever really decided to enforce our laws on what bonds qualify for tax-exempt status, you would see a lot of these bonds lose their tax-exempt status. It is a major fraud that is being perpetrated on the American taxpayers.

M Theory said...

Excellent reporting Gary. People are contacting me regularly now about a protest.

I keep hoping Mayor Ballard will take a stand on the side of the taxpayers, but I'm about out of hope.

It is time we take back our city.

Unigov said...

Another excellent report.

It's gotten to the point that I don't even read the IndyStar online any more, though it's free, because it stopped being a newspaper. I learn more with a quick visit to Advance, Ogden, Abdul, etc than I ever could from reading a month's worth of the Star.

I've been trying to think up the next video project, but I can't focus - my eyes just keeping getting wider and wider every day from the criminal doings downtown.

Gary R. Welsh said...

The IBJ is running circles around the Star on these issues; however, Mickey Maurer completely undermines the work of his excellent reporting staff by becoming the enablers for these very people who are screwing us over by editorializing in favor of more bailouts and handouts to the downtown elites. I guess at the end of the day, the advertising revenue is just too important to him to risk alienating them.

Diana Vice said...

Well, Gary, YOU are running circles around the IBJ AND the Star. Too bad you aren't paid for your efforts. What you are doing is a great public service to taxpayers, and I admire you for it.

Gary R. Welsh said...

Thanks, Diana. It carries no financial reward. That's for certain.