On the cost-cutting drawing board: Renegotiating operating contracts for its venues, suspending all grant payments and potentially selling assets. It also will ask the state for help making a $27 million bond payment that comes due in September.
It was not immediately clear how much money the various tactics would free up to cover the gap. But the Indianapolis Convention & Visitors Association certainly won’t receive the additional $3 million it had requested for tourism marketing.
ICVA chief Don Welsh said the CIB’s financial mess could strain the organization’s efforts to attract conventions and events.
“The longer this goes unresolved, the longer our competitors will hold this against us,” he said today.
Legislators failed to take action on a bill that would have allowed Indianapolis to raise hotel, car rental and ticket taxes to help fund the CIB, which oversees Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center.
Olson's story discusses the problem the CIB faces in paying off a $27 million debt obligation which comes due in September. Inexplicably, the CIB rushed last month to pay off a $17 million loan from the State of Indiana that was not due until June, further exacerbating its financial plight. Observers believe the State would have agreed to a deferral on the loan repayment if it had been requested. The CIB's suggestion that it might consider the sale of assets is interesting. The biggest asset driving the CIB's costs is Lucas Oil Stadium. The State of Indiana, not the CIB, owns the stadium. If the CIB can't afford the cost of operating the stadium under its lease agreement with the Colts, logic would dictate that it return the stadium's control to the State of Indiana and remove its most onerous financial burden. The CIB claims it costs $20 million a year more to operate LOS than the RCA Dome. Observers, including the Colts, have expressed doubt about the size of that figure. To many, the CIB is deliberately inflating that figure to heighten its financial predicament.
Making matters worse, the CIB has unilaterally renegotiated its lease agreement with the Pacers before the two parties even sat down at the negotiating table to discuss the lease agreement. The CIB foolishly agreed to pay $15 million a year in costs the Pacers claim they are paying to maintain Conseco Fieldhouse. Again, observers tell me that that number is grossly inflated and ignores expenses the CIB has been paying over the past decade that it has not been contractually obligated to pay. Others believe that the Pacers' claim that the franchise is losing $30 million a year and has lost $200 million over the past decade is patently false. The Pacer official making those claims is Jim Morris, the former Indianapolis Water Company executive who help sell the City of Indianapolis on the idea of purchasing the water company for more than double its actual value. Taxpayers are now strapped with a water utility that is carrying close to $1 billion in debt. Water rates will have to be increased exponentially in coming years to cope with the burdensome debt. Morris retired from the water company after its purchase and walked away with more than $6 million under the terms of his separation agreement.
Morris told WTHR the Pacers also want to discuss revenues the CIB gets from the Virginia Avenue parking garage. "The Pacers are not asking for help for the team. That's our responsibility to operate the team, but the team does not have the financial capacity to operate the building," Morris said. "Morris said there were at least a dozen other issues it needed to address, including the revenue the city now gets from the Virginia Avenue garage."
On that parking garage on Virginia Avenue, the IBJ's Olson indicates that the CIB is considering shortened hours of operation for that garage. Earlier, the CIB had proposed raising parking rates on all CIB-controlled parking spaces downtown by 20%. The Senate-passed bailout for the CIB included an option to allow the CIB to collect a surcharge on parking in Indianapolis to help finance the CIB's supposed shortfall. After the bill's passage, CIB officials and lawmakers said the inclusion of the parking surcharge was a drafting error.