Tuesday, May 19, 2009

Council Says It's Okay To Pocket Up To $1,000

It's an improvement but it still defies logic. It is an ethics ordinance, after all. The Indianapolis City-County Council agreed to a new ethics ordinance that will allow councilors to receive a financial benefit of up to $1,000 (it was $5,000) without disclosing and abstaining from participation in a vote that benefits the source of the financial benefit. One Democrat, firefighter Vernon Brown, voted against it, saying "you can't legislate ethical behavior any more than you can legislate Christian behavior" according to the Star's Brendan O'Shaughnessy. Brown would know. As the story notes, a city ethics ordinance applicable to city employees bars them from participating in any decisions that bring a financial benefit to them.

Councilor Ginny Cain, a non-practicing lawyer who chairs the Ethics Committee, said the council decided to lower the threshold due to public reaction to the $5,000 threshold. "Our point was there should be transparency without being tedious," Cain said Monday evening before the vote. "But we're trying to keep it from becoming a fishing expedition. It gives us a little cushion so we don't have to watch for every little $10 thing."

One councilor, Mary Moriarty, brings up another point that needs addressed. "Mary Moriarty Adams, a Democratic member of the ethics committee, said setting a threshold on benefits would allow council members to vote on several issues where they have received perks for years," O'Shaughnessy writes. "For instance, council members receive free airport parking." Why the hell should city councilors get to park for free at the airport? They should pay like everyone else. It's the same thing with free tickets to events at Lucas Oil and Conseco Fieldhouse. Councilors should pay like everyone else. That's one of the reasons people on the council have such a warped perspective on the CIB. They love the CIB because it gives them free tickets to Colts and Pacers games. As a consequence, they are incapable of fulfilling their duty to scrutinize the CIB's budget and other activities.

The council also approved the refinancing of those variable rate interest rate bonds the water company issued a few years back that could cost taxpayers as much as $90 million in prepayment penalties. There will be no investigation. The council simply says to move along, there's nothing to see here. The original bonds were issued as fixed rate bonds of approximately 5%. That's how it was sold to the City-County Council. Without asking any questions, in 2005 the City-County Council went along with the plan to refinance most of the water company's debt with variable interest rate bonds backed by interest rate swap notes. By doing this, the water company initially cashed out over $40 million that Bart Peterson wanted to hand out to political contributors for capital projects. The short-sighted move aided his re-election effort but screwed the water company users royally as interest rates jumped from 3.5% to 9.5%. Now, the prepayment penalties will be rolled into the old debt, piling up even more debt. A water company the city purchased for a little more than a half billion dollars (approximately double its real value) will ultimately wind up carrying a debt of close to $1 billion. That's why your city water rates will be hiked by double digits this year and for years to come.

13 comments:

indyernie said...

What you didn't hear last night is anyone from the CC mentioning Peterson's name. You also didn't hear that at this time Indy is paying 17.5% interest on these bonds. Joe's Quick Loan and Check Cashing could have provided a better arrangement for Indianapolis then this Peterson Plan.

Shorebreak said...

If I were a city leader in a position to profit from these kinds of deals, I'd be enthralled with the performance of IPS. It would provide me with a lot more leeway to line my pockets with limited criticism.

I have a great suggestion for the city: provide more free handouts. It'll make Indy residents more supportive of you, even when you're actions are blatantly self-serving and/or criminal. Maybe you could outfit city vehicles with coolers and warmers and have employees hand out hot dogs and drinks as they go about their work.

If you can find a way to make that happen, you could line your pockets to your hearts content. Sell it as a community service during tough economic times. You'd be the envy of every Roman senator. They never had it so good.

Shorebreak said...

Here's a thought - I believe that the citizens of Indianapolis could make a case that would enable the contracts to be renegotiated.

Here's why: Elected officials were granted authority based upon their stated committment to fairly and honestly represent Indianapolis voters and taxpayers. The water contracts signed by the city are not representative of the wants or needs of the voters/taxpayers. Therefore, the contracts are invalid because contrary to the wants and needs of the community, the water company has become an unnecessary burden based upon decisions made by an educated leadership who did not convey the potential outcomes to the voters.

The Indianapolis Water Company is a clear case of abuse in which residents are held responsible for decisions that were made by government that are contrary to the best interests of the people. Since the contract can only be fulfilled by billing the people, who rely upon the water system for basic, critical needs, the contract should be lawfully declared null and void and subject to renegotiation under terms that are amenable to the best interests of the voters/taxpayers.

Is there a lawyer out there who can file the case? I doubt you'll have trouble finding plaintiffs.

Advance Indiana said...

Shorebreak, There was significant evidence that the water company (through Veolia) engaged in fraudulent billing practices to help cover its financial mismanagement. A lawsuit was brought on behalf of the ratepayers and, as I recall, tossed by a judge on the grounds that the ratepayers didn't have standing to bring a suit.

Dana said...

I see that the rules of operation set forth in the Roman Senate all those years ago are still in operation.

Meanwhile, you can see what this gets us, every time you drive in on the south side of Indy, and that monstrous bloaty-hog of a stadium barn catches your eye for ten minutes of drive time (on a good driving day).

But a barn is for sheeple, and that's what we have here. Limbaugh-lovin', reality-TV watchin' sheeple.

HOOSIERS FOR FAIR TAX said...

I want the city council to appoint Gary Welsh to the CIB board!

HOOSIERS FOR FAIR TAX said...

I have a much lower rate of interest from JP Morgan Chase Visa.

Advance Indiana said...

Melyssa, I've explained this to you before. You cannot be appointed to any board or commission in this city unless you are a certified member of the insiders club or someone over whom they have financial control. They aren't interested in the service of honest, independent-thinking citizens. If they can't control you, they don't want you.

Patriot Paul said...

The public, including several bloggers and the responses to the original $5,000 limit, brought alot of attention to this issue. Bringing it down to $1,000.00 is like taking one slice of pizza while leaving the rest, or robbing a bank witha legal limit of $1,000.00 and letting the bank keep the rest. Using public office for personal gain is Graft, yet they are legalizing corruption on a per vote basis. The article gives the impression the council members are to police themselves and does not state the penalties if they get caught.

Paul K. Ogden said...

HFFT,

I would concur with Gary. They do not want independent thinkers on important boards like the CIB. They want people who will rubberstamp whatever the powers to be decide.

Can you imagine a CIB board member openly challenging Bob Grand or Pat Early on their "assumptions?" That person would be removed from the board the next day...if he or she lasts that long. It's the same reason Ed Coleman got the cold shoulder when he started asking questions about the CIB's operations.

I know said...

AI said,"Melyssa, I've explained this to you before. You cannot be appointed to any board or commission in this city unless you are a certified member of the insiders club or someone over whom they have financial control. They aren't interested in the service of honest, independent-thinking citizens. If they can't control you, they don't want you."

You got that right!

Advance Indiana said...

Paul, Alan Kimbell on the waterworks board is a perfect example. Beurt SerVaas asked him to serve on the board because of his many years of work for the Indianapolis Water Company prior to its purchase by the city. When Kimbell started raising too many questions about the Veolia deal and talking to the media about his concerns, John Mutz, who chaired the board, actually proposed and passed a resolution that barred Kimbell or other board members from discussing matters to the media and others outside of their meetings. Obviously, the resolution violated Kimbell's free speech rights but Mutz was trying to make a point. You aren't allowed to second-guess us if you're going to sit on this board. Kimbell resigned from the board in protest.

guy77money said...

The Water Company was originally sold to NIPSCO because they could no longer float more bonds and keep the dividend on the stock high enough to attract investors to buy the stock. There was no such thing as variable (well at least no one would issue them for a utility at the time) bonds and fixed rate was the only way to go. Who would have thought at the time that the bonds would once again cause major problems with the utility.