Friday, October 04, 2013
City-County Council Chooses Subsidizing Pacers Over Funding Cops
The people running the longest-running Ponzi scheme in Indianapolis history, otherwise known as our Capital Improvement Board, are quite blessed by the combination of the feeble-minded and corrupt who predominantly populate our Indianapolis City-County Council. The budget hearing of the CIB before the Municipal Corporations Committee this week reflects just how shallow the discussions become when it comes to discussing our local government finances.
In case you've been asleep, the CIB plans to increase its budget by close to 40% next year, and it's currently running about a $90 million operating budget surplus that will still be about $57 million at the end of next year and about $90 million the following year. Councilor Frank Mascari (D) attempts to understand why the CIB is not paying off the $34 million note it owes to the Circle Centre Mall investors, who allowed their dividends from their investment in the mall to be used to help finance the construction of Banker's Life Fieldhouse, or the $18 million it took out with the state of Indiana when it cooked its books to make it appear that it was going broke in order to trick state lawmakers and city council members into approving tax increases, state subsidies and the state loan. Former CIB President Bob Grand and the board's current president, Ann Lathrop, cooked up that scheme as a ruse to come up with money to fund subsidies for Herb Simon's Indiana Pacers, which coincidentally was represented by Grand's law firm. Remember how the council assured everyone that there wasn't any money for the Pacers included in the CIB bailout?
Suspending disbelief, Lathrop attempted to claim with a straight face that it was necessary to maintain these large cash reserves in each of the upcoming years at this level in order to ensure that it would be able to pay of the $34 million note to the mall investors, and two, $9 million payments remaining due to the state of Indiana in years 2019 and 2020. She gave the impression the CIB was at risk of defaulting on this debt if there was any effort made to divert any of its reserves for other purposes, such as shoring up the city's problem in funding public safety. It's currently setting aside $5.6 million a year in a sinking fund to pay off the mall investors' note in 2017, and it plans to continue that sinking fund in order to have money to pay off the state's $18 million loan in years 2019 and 2020. Lathrop brags that one of the reasons the CIB's budget reserves are so flush is because it found a one-time savings of $20 million by refinancing old bond indebtedness. Yet, despite these huge cash reserves, she says it would be imprudent to pay off early the debt owed to the mall investors or the state. The mall owners have demonstrated their lack of concern about when they're paid on at least two occasions when it added many years to the maturity date for its notes. It's not like the Gannett-owned Indianapolis Star, one of the note holders, is making money off the CIB's Ponzi scheme while planning to relocate its offices into space in the mall formerly occupied by Nordstrom. Paying interest on debt you could pay off when you're sitting on such large cash reserves is more prudent? Please.
Lathrop is well-schooled in disinformation so some translation is required. What she can't tell you straight up is that the CIB plans to give even larger subsidies to the Pacers than the current $10 million a year it's been giving to them for the past four years, and it wants additional money set aside in reserve for other future endeavors, such as hosting another Super Bowl or building a new facility for the city's new professional soccer team, Indy Eleven, which is owned by Mayor Ballard's bag man, Ersal Ozdemir. The 2014 budget includes $11 million for an additional subsidy to the Pacers, plus another $10 million in unspecified improvements to Banker's Life Fieldhouse. Since these subsidies have begun, Herb Simon's Pacers have been paying none of the operating and maintenance expenses needed to run the Fieldhouse as required under the terms of their original lease agreement, which allows the Pacers to use the facility rent-free and retain all of the revenues the facility generates. Hey, it costs a lot of money for a billionaire to keep a younger wife happy, but I digress.
Councilor Mascari lamented the fact that nobody from the Pacers organization is even asked to come before the council to explain why they need to receive multi-million dollar subsidies annually. Councilor Aaron Freeman (R) dressed down Councilor Mascari for suggesting that the problem with the CIB's budget had anything to do with the Pacers. Incredibly, he suggested that the CIB had a legal obligation to pay all of the expenses for operating the Fieldhouse since it owned the building, notwithstanding the original lease. Freeman explains that he has a law office and has to pay all of the expenses and this is no different. He says we could lose the Pacers and be stuck paying all of the expenses, which is exactly where we are today with them using the Fieldhouse.
Well, first of all, Freeman doesn't own the building where his law office is located. Freeman is an employee of the law firm of Voyles, Zahn and Hahn, which leases space from another law firm which owns the building. Coincidentally, Freeman's law firm boasts on its website that it has represented a number of "Indiana sports greats," which includes Colts and Pacers players, but I'm sure that doesn't influence his views towards the CIB offering generous multi-million dollar subsidies annually to the billionaire owners of the Pacers and the Colts who employ his law firm's multi-millionaire clients. Furthermore, the Pacers' lease agreement requires them to pay a huge penalty if they break their lease by moving their team to another city. They would actually be doing the CIB a big favor financially if they packed their bags and left town so we no longer had to pay these absurd subsidies to them. The CIB could at least generate some revenues to offset the costs of maintaining the damn building from concerts and other events like other cities with publicly-owned arenas without an NBA team do. See Kansas City's Sprint Arena, for example.
These budget discussions are absurd and embarrassing. It's like taking candy from a baby. Most of the council members either lack the intelligence to grasp and comprehend what's being told to them, or they understand what's being told to them and have ulterior motives for going along with this racket. For some, getting free tickets to the Pacers and Colts games is all it takes to buy their votes, and the CIB has plenty of tickets available to them on demand, along with plenty of free food and drinks. My councilor, Vop Osili, was only concerned about why the CIB and its vendors didn't employ more minorities. He operates an architectural engineering firm, which benefits from government set asides for minority contractors. Is he going to complain about how much money the CIB is spending? Of course not. Don't forget that these same people are looking to punish you because there's not enough money in the budget to pay for public safety. Chew on that is they vote to saddle you with higher taxes.