Councilor Brian Mahern has suggested that a payment-in-lieu of taxes should be paid on CIB facilities that are used exclusively for for-profit purposes. I've never understood how either the Fieldhouse or Lucas Oil Stadium qualified to be exempt from property taxes when both are used exclusively for the benefit of businesses operated by the state's wealthiest businessmen. Presumably, Mahern would like to see the CIB pass the cost of the PILOT on to the two billionaires, but the CIB is not about to do that. Instead, it would have to pay the costs from its bottom line, which it again says would threaten its solvency. The Indianapolis Star editors naturally come to their defense in an editorial today:
Less than four years ago, the Capital Improvement Board -- the agency that operates Lucas Oil Stadium, Bankers Life Fieldhouse, the Indiana Convention Center and other Downtown attractions -- faced a $47 million budget deficit. The gap between expenses and revenue was so severe that the Indiana General Assembly stepped in to rescue the city with loans and the go-ahead to increase taxes so that the CIB could avoid bankruptcy.
The bailout worked. The CIB is on track to end this year with $67 million in reserves.
But now there's a new threat to the agency's long-term solvency, and that danger is coming from inside city government.
City-County Council Vice President Brian Mahern and other Democrats have proposed raiding the CIB's accounts with a new fee intended to help the city better manage its own strained budget. Mahern wants the city to use the additional revenue to pay for a police recruit class and to retain the homestead property tax credit.
Although it's unclear just how much money Mahern hopes to pull from the CIB, the homestead credit alone accounts for more than $8 million in annual revenue.
Can the CIB afford to give up that much without cutting its grants to arts programs, Indiana Black Expo and Visit Indy, which works to attract new conventions to the city? That's doubtful.
As CIB President Ann Lathrop noted Tuesday, the agency has built up reserves in part because it has large loans that will come due in the next few years. That starts in 2017 with $33.7 million that the city owes to private investors that helped initially with funding for Circle Centre mall and later Bankers Life Fieldhouse. By decade's end, the CIB also must repay $18 million that the state handed over in 2009 to keep the agency solvent.
Another $22 million from the CIB's cash balance already has been designated for capital projects in the city-owned structures it operates.
In short, the agency's balance isn't nearly as plump as it might first appear. If the City-County Council cuts into it for short-term gains, it's likely to lead to deeper problems in the future.
This trial balloon should be deflated quickly.Who didn't see this one coming? The CIB threatens to cut off funding for Indiana Black Expo and the arts, neither of which it was established to fund in the first instance, to pressure councilors not to approve Mahern's PILOT plan, but I digress. Meanwhile, a city council committee voted down a plan by the Ballard administration that would eliminate the homestead tax credit that benefits homeowners, which the mayor says is necessary to avoid further cuts in public safety spending. And this is the same mayor who got elected five years ago railing against higher property taxes and promising to make public safety job one.