Fitch Bond Rating Release On IMS Bonds Sheds More Light On The Deal

The Indiana media's coverage of the mechanics of the $100 million public subsidy for improvements to the Indianapolis Motor Speedway has been less than informative. A press release this week from Fitch Ratings announcing an AA+ rating for the bonds provides more information than previous news reports have offered about the deal. Along with issuing its second-highest rating to the IMS bonds, the credit rating agency also reaffirmed the state's AAA bond rating.

The bonds are described as "limited obligations" of the Indiana Finance Authority ("IFA"), which are paid from biennial appropriations made to the legislatively-created Indiana Motorsports Commission ("IMC"). The high bond rating assigned to the IMS bonds is instructive. It's based entirely on the state's current financial and debt situation and has nothing to do with the continued economic vitality of the Indianapolis Motor Speedway ("IMS") as a going concern.

According to Fitch, IMS will lease to IFA any part of its facilities on which improvements are being made with the $96 million derived from the bond proceeds. IFA will, in turn, lease the facilities to the IMC, the state entity responsible for carrying out the improvements to the IMS, which will then lease the facilities back to the IMS. The IFA and IMC have covenanted to obtain state appropriations of $7 million annually to repay the bonds, which will have a 20-year maturity cost of $140 million.

Fitch's rating is unaffected by the fact that the proceeds of the bonds are being used for a privately-owned facility. "IFA has strong incentive to seek appropriations for this project given the demonstrated state commitment," Fitch says. "In three consecutive legislative sessions the general assembly approved legislation for this transaction. Each of the legislated changes enhanced protections for bondholders and deepened the state's commitment to the project." Fitch notes the currently biennial budget includes a $14 million appropriation to cover debt service on the bonds.

IMS has pledged to pay $2 million annually to IMC to cover the $40 million difference between the amount the $100 million authorized by the legislature and the $140 million needed to cover the 20-year bond obligation. The state will also credit the IMS for taxes and fees collected from the special taxing district it has created to encompass the speedway and surrounding areas. After 30 years, the IMS pledges to guarantee any shortfall in the difference between the $140 million and the annual $2 million in payments it made to the IMC, plus a credit for taxes and fees paid into the special taxing district. It's interesting that the bonds have to be paid off in 20 years, but a determination of a shortfall between revenues generated from within the special taxing district and the $140 million won't be made until a decade later.

Indiana Motor Sports Commission Approves $90.5 Million In IMS Improvements

During the 2013 legislative session, Indiana lawmakers authorized the state to issue up to $100 million to finance improvements to the Hulman-George-owned Indianapolis Motor Speedway, which they say are needed at the track to remain competitive, and which they cannot afford to make without taxpayer assistance. More than 18 months had passed since Gov. Mike Pence signed that legislation into law and appointed members to a newly-established Motor Sports Commission without any action on approving any finalized plans to put in motion the process of issuing bonds to pay for the improvements until this week.

Advance Indiana has obtained a copy of a resolution the Indiana Motor Sports Commission approved at a hastily-called meeting held yesterday afternoon. Through the adoption of the resolution, the Commission gave its blessings to the Indiana Finance Authority moving forward with the issuance of bonds to support at least $90.5 million in improvements at the IMS. The largest expenditure is for seating improvements estimated to cost $32 million, which are not scheduled to be completed until the 2016 running of the Indianapolis 500. The plan also calls for technology improvements costing $20.5 million, fan experience improvements costing $16.5 million and track and facility improvements costing $19 million. Some of those improvements were already undertaken by the IMS in 2014, including a new scoring pylon and road course improvements.

Improvements slated to be done by the end of this year include concession and restroom improvements and new fencing. Most of the improvements are slated for completion sometime in 2016. Those include: penthouse and suite renovations; fan entertainment deck; new video boards; WiFi installation; Pagoda Plaza improvements and expansion; Georgetown Road Gateway & Plaza improvements at Turns 1 and 4; looking-branding and way-finding; parking improvements; and Victory Circle & Media Center renovation. Several other projects are dependent on the availability of bond proceeds, including: South Vista Entertainment Deck; North Carousel; Tower Terrace suite remodel; additional WiFi; expanded Georgetown Road Plaza and improved pedestrian flow and other unidentified facility improvements.

Interestingly, none of the identified improvements say anything about ADA compliance. You may recall that former U.S. Attorney Joe Hogsett entered the act before the IMS went to the legislature seeking approval of a $100 million public subsidy by announcing he had pulled off the shelf a dusty ADA lawsuit filed by Indianapolis attorney Greg Fehribach more than a decade ago and announced a settlement agreement he had reached with the IMS under which it agreed to make improvements to make the track ADA compliant and to pay a fee to Fehribach for very little work on the long dormant case. People who attend the track annually knew improvements had been made over the years to satisfy ADA requirements, but it made for good made-up press at the time to set the stage for later events. Also missing from the plan are the addition of any track lights. Speedway officials said at the time it needed to spend millions on new lighting in order that the Brickyard 400 could become a night race because its summertime schedule made temperatures too hot for fans to weather the race. IMS officials told the Motorsports Commission last year when they unveiled their preliminary plans it had decided not to add lighting to the track.

State officials claim taxes paid by the IMS will cover the cost of the debt service on the bonds issued to make the improvements, which is being funded in large part through a new 10% ticket tax paid by fans on the purchase price of their tickets. The IMS is supposedly a losing proposition so you can't pay state income taxes on a business that's not making any money, right? Sales taxes generated by the IMS would be insignificant. As I previously reported, federal tax laws obtained by the wealthy track owners allow them to write off capital improvements that make to their tracks over a 7-year period, another fact our useless sports-happy media neglected to discuss when this huge public subsidy was being discussed. The IMS says taxes it generates annually will amount to at least $5 million a year to cover debt service on the bonds.

Here is a breakdown of proposed $90.5 million in track improvements:

DESCRIPTION	ESTIMATED COST	COMPLETION DATE
Seating -Penthouse renovations -Suite renovations -Fan Entertainment Deck	$32.0 Million	2nd Quarter 2016 2nd Quarter 2016 2nd Quarter 2016
Technology -Video Boards -Scoring Pylon -Wi-Fi	$20.5 Million	2nd Quarter 2016 3rd Quarter 2014 2nd Quarter 2016
Fan Experience -Concession improvements -Restroom improvements -Pagoda Plaza improvements -Georgetown Road Gateways -Look-Branding & Way-Finding	$16.5 Million	4th Quarter 2015 4th Quarter 2015 2nd Quarter 2016 2nd Quarter 2016 2nd Quarter 2016
Track & Facility Improvements -Road Course -Fencing -Parking improvements -Victory Circle & Media Center	$19.0 Million	2nd Quarter 2014 4th Quarter 2015 2nd Quarter 2016 2nd Quarter 2016
Pre-Construction Costs	$2.5 Million

The list of pay-to-play contractors being cut in on the improvements at the IMS include: Browning; Hunt Construction Group; CSO Architects; Browning Day Mullins Dierdorf Architects; Populous; AJP; and American Structure Point. The law firms getting a cut of the bond work include Barnes & Thornburg and Bingham Greenebaum Doll.

Federal Tax Credit Renewal Could Provide Huge Windfall To Indianapolis Motor Speedway

Corrupt members of Congress are currently considering legislation to reinstate a favorable tax credit originally written into federal law in 2004 that allows the owners of motorsports track facilities like the Indianapolis Motor Speedway to write off capital investments they make in their facilities over just 7 years as opposed to the traditional investment write-off period of 15 years. The Senate Finance Committee has already voted to reinstate the special tax break. The last time Congress re-enacted the tax break, the revenue impact on the federal budget was estimated to be about $78 million.

According to the National Journal, NASCAR is complaining that the tax break is being referred to as the NASCAR Tax Break since it benefits the owners and not the sanctioning body. Laying that aside, one has to wonder whether the IMS actually will have any federal tax liability in the coming years. Indiana taxpayers have been forced to gift $100 million to the IMS to make improvements. Ten days ago we learned that at least a quarter of that amount was recently invested by the IMS in a new solar farm completely unrelated to the track, which carries with it its own set of special federal and state tax credits.

Will the IMS be allowed to claim the special tax write-off benefits that are actually paid for by Indiana state taxpayers if the federal tax credit is reinstated? It's just another aspect of motor sports funding that was completely ignored by state lawmakers and Gov. Mike Pence when they decided to give the Hulman-George family a $100 million gift in consideration for the campaign contributions and free tickets the IMS and its owners shower on them. There is no such thing as equal treatment under the law as supposedly guaranteed by the U.S. and Indiana Constitutions when our courts permit Congress and state legislatures to write tax laws to benefit their campaign contributors at the expense of the rest of us.

Ballard Claims To Be Hit By Debris From Crash At The Start Of The Inaugural Grand Prix

Officials at the Indianapolis Motor Speedway allowed Mayor Greg Ballard to wave a ceremonial green flag to kick off the inaugural running of the IndyCar Grand Prix today, which was won by Simon Pagenaud. The attendance for today's race was embarrassingly small as evidenced by the empty stands. Debris was sent flying after pole sitter Sebastian Saavedra's car was struck from behind at the start-finish line by Carlos Muniz and Mikhail Aleshin when Saavedra's car stalled at the waving of the green flag. Ballard was standing in the pit area near the start-finish line waving the ceremonial green flag when he claims he was struck in the elbow by flying debris.

A review of the video shows that Ballard started waving the green flag wildly for media photographers after the cars had already started to move. Ballard continued waving the ceremonial flag even after the official flag man began waving the yellow flag oblivious to what was transpiring in front of him. The best view of Ballard can be found in the video above starting at 6:00. No visible debris struck Ballard from that video angle, but he nonetheless was transported to the infield emergency center for treatment of his supposed injured elbow, which was later revealed to be a very minor injury. A cameraman told WRTV he saw what appeared to be small pieces of debris fly in Ballard's direction. He just as likely threw his elbow out waving the flag like a dufus, but it makes for better media to make yourself a victim of a crash at the Speedway. There were at least a dozen people surrounding Ballard, none of whom were struck by debris. Ballard later tweeted:

Thanks everyone for well wishes & the great #IUHealth &@IMS staff for checking me out. Watching the rest of the race from home.

— Mayor Greg Ballard (@MayorBallard) May 10, 2014

WISH-TV photo 

This video uploaded to YouTube offers a better view of Ballard waving the flag and then holding his elbow:

Pence's Picks For Motorsports Commission Look Like Mark Miles' Handpicked Choices

I had absolutely no confidence that Gov. Mike Pence would select any one with any independent judgment to serve on the Indiana Motorsports Commission, which will have responsibility for doling out up to $100 million in taxpayer dollars to the Indianapolis Motor Speedway, and the appointees he named to the Commission today lived up to my worst fears. It looks like Hulman & Company's CEO Mark Miles scratched out his choices on a piece of paper and handed them to one of his aides and Pence simply rubber stamped his picks. They are:

• Tom Kelley, the founder of Kelley Racing, which ran an IRL team at the Speedway from 1998 to 2004. He also operates several car dealership up in the Fort Wayne area.
• Tim Clauson, a vice-president for the Rotary Corporation, a supplier of outdoor power equipment parts. He co-owns a USAC racing team with his son, Bryan, who raced in the 2012 Indianapolis 500 for Sarah Fisher's team and finished 30th.
• Earle Goode, former Chief of Staff and Director of the Department of Administration in the administration of Gov. Mitch Daniels where all sorts of corrupt shenanigans went on to steer state building leases to Johns Bales and company.
• Ryan Kitchell, another crony of former Gov. Mitch Daniels from Eli Lilly who served as Daniels' budget director and now serves as VP & CFO at IU Health.

Gov. Pence could not have gone more out of his way to deliver a big middle finger to the taxpayers of  this state with these appointees. He has essentially given the Hulman-George family a rubber stamp Commission that will do whatever Mark Miles asks them to do. What a joke.

TV Ratings For The Indianapolis 500 The Lowest Ever

Well this is disappointing. Despite putting on one of its greatest racing shows in many years, TV ratings for the 97th running of the Indianapolis 500 were lower than ever. ABC's live coverage of the race drew a 3.8 rating. From the Star:

The Indianapolis 500 drew a 3.8 overnight rating on ABC Sunday afternoon, it’s lowest since the race began airing live in 1986, according to a story on sportsmediawatch.com.

The number represents a seven percent drop from 2012 (4.1) and is down 12 percent from 2011 (4.3). The previous low was a 4.0 in 2010 and this is the fifth consecutive year the event has earned less than a 4.5 rating.

Pre-race coverage earned a 2.0 overnight on ABC, up from 1.9 last year.

The website used ratings numbers from ESPN.

The race is not broadcast live in the Indianapolis market; however, a rebroadcast that aired during prime time on WRTV last night drew a 9.3 rating. That compares to the 17.3 rating the NBA playoff game between the Pacers and the Heat drew on TNT and the 7.7 rating NASCAR's Coca-Cola 600 pulled on WXIN-TV in the Indianapolis market last night.

UPDATE: Ticket prices for nearly 2/3 of the seats at next year's race will increase 15%. This is the first increase in nearly a decade. On top of the ticket price increase, a new admissions tax will be collected for the first time ranging from 2% to 6% depending on the price of the ticket.

Kanaan Earns More Than $2.3 Million For Indy Victory

IndyCar driver Tony Kanaan collected a check for $2,353,355 at the IMS' annual Victory Awards Celebration. The overall purse for the 97th running of the Indianapolis 500 topped $12 million. Second-place finisher Carlos Munoz, a rookie, collected $964,205 for his first appearance in the race. Ryan Hunter-Reay earned $583,005 for finishing third. Marco Andretti collected $469,755 for fourth place, while Justin Wilson earned $337,805 for his fifth place finish. The lowest amount paid to any driver who participated in the race exceeded $200,000.

Observant viewers couldn't help but notice who was spotted sitting behind Kanaan's table at last night's awards celebration during its live airing on WTHR-TV hosted by Dave Calabro. Yes, that was State Rep. Eric Turner, who sponsored the legislation that provided a $100 million taxpayer bailout for the IMS. One observer noted that the IMS ended the practice of inviting the teams' crew members to the annual awards celebration a few years back unless they worked for the winning team. Yet they invite this guy to attend? Hey, they were passing out checks. What do you expect? The Indianapolis Star previously reported how generous the IMS became in making campaign contributions to lawmakers prior to the start of this year's legislative session.

Tony Kanaan Gets His First Win At Indy

Indianapolis 500 fans were treated to one of the more exciting races in many years, with a record number of 68 lead changes and 14 different drivers taking turns leading today's race. A fan favorite, Tony Kanaan, comes out on top after capturing the lead with just three laps left before a caution light came out and aloud him to coast to victory, his first win at Indy after many years of racing. Rookie Carlos Munoz finished second, ahead of Ryan Hunter-Reay, Marco Andretti and Justin Wilson. Pole sitter Ed Carpenter finished tenth after leading more laps than any other driver at 37. It also turned out to be the fastest in the 97-year history of the race, averaging 187.433 mph. There were also a record number of cars still running at the finish, 27, beating a record 26 that had stood since 1911.

Added security for this year's running of the Indianapolis 500 made for much longer lines and waiting time to enter the track. Knowledge that coolers, backpacks and other carrying items would be subject to security checks didn't seem to deter people from toting what they normally take to the track with them on race day. According to the Star, fans were taking to social media to vent their frustration, some complaining of waits of 45 minutes or more. The 16th Street entrance we took today had only a 10-minute wait. I took the photo above about an hour prior to the start of the race along Georgetown Road to show just how long the lines were.

Check out the number of rows of seating that have been eliminated along the straightaway. Also notice all the handicapped seating area that went largely unused.

Never Let A Government-Created Terrorist Attack Go To Waste: Indianapolis 500 Will Rub Boston In Our Faces

The manufactured war on terrorism will take front and center at tomorrow's running of the Indianapolis 500. Shamefully, the Hulman-George family, fresh from celebrating their legislative victory of scoring one hundred million dollars in government subsidies to improve their race track, will allow 35 runners who were unable to finish the Boston Marathon this year when two explosions were staged near the finish line by those promoting the endless war on terror to make that final one-mile run before the start of this year's race. From WRTV:

Approximately 35 runners from the 2013 Boston Marathon unable to finish the race because of the bombings will complete the distance Sunday at the Indianapolis Motor Speedway.

Boston Marathon participants from Indiana, Ohio, Illinois, Kentucky and Michigan will run a half mile from Turn 4 to the Yard of Bricks on the IMS oval moments before the start of the 97th Indianapolis 500, an IMS spokesman said.

The run will take place between 11:55 a.m. and noon.

All of the participants in the ceremonial run at the IMS were stopped short of the finish line April 15 in Boston after two bombs exploded.

“The tragedy last month in Boston still resonates with everyone, so we wanted to give runners the chance to finish the race in front of thousands of fans who will appreciate their persistence and determination,” said Doug Boles, IMS chief operating officer. “Everyone will remember the victims while also celebrating the strength and indomitable spirit of these special competitors as they cross the hallowed Yard of Bricks.”

IMS officials extended the invitation for runners to the Boston Athletic Association, which contacted those who didn’t finish the race in Indiana and surrounding states.

In Boston today, they held a re-running of the last mile of the race for the nearly 5,000 runners who were unable to compete the marathon this year due to the unforeseen events of the date.

As part of the keeping "see something, say something" high alert awareness campaign, bomb squads were called to the Coca-Cola lot at the Speedway today to examine a suspicious device that was emanating smoke. It turned out to be commercial grade firecrackers.

Speaking of staged events, listen to one of the announcers at the Indy Light series Freedom 100 race at the IMS yesterday say the spectacularly close finish between four of the cars competing was staged. Listen at the 1:30 mark where he says, "That looks staged, Mike. Look how staged that picture looks." Maybe it was.

Pence Ceremonial Signing Of $100 Million Bailout For Indianapolis Motor Speedway

Indianapolis Star photo

Gov. Mike Pence held a ceremonial signing of HB 1544 in his office today flanked by the bill's authors, State Rep. Eric Turner and State Sen. Brandt Hershman, and representatives of those counting the dollars the governor just took from your pockets and put in their pockets. IMS CEO Mark Miles has quite the smirk on his face thinking about how easy it is to tap public dollars to enrich one's self in Indiana. I even see Roger Harvey, former WTHR-TV investigative reporter turned influence peddler, standing in the back row behind the governor. Things are so bad in Indiana that even good journalists are corrupted by the system. This is not a moment that Gov. Pence should treasure. It flies in the face of the fiscal conservatism and personal responsibility he's spent the past few decades preaching to the rest of us, but it's good for campaign contributions and that seems to be all that matters to our elected officials anymore.

Star Sits On Negative IMS Story Until After Bailout Bill Becomes Law

This seems to be the predominate way the Indianapolis Star reports the news these days. If you have a good story that doesn't fit the narrative of your editorial page, just sit on it until reporting it will make no difference. Four days after Gov. Mike Pence signed into law the $100 million taxpayer bailout legislation for the Indianapolis Motor Speedway, supported by the newspaper's editors, it runs a story by motorsports reporter Curt Calvin announcing that the IMS has reduced seating capacity at the track by 10%.

Since last year’s Indianapolis 500, thousands of grandstand seats overlooking Turn 3 at Indianapolis Motor Speedway have been removed.

Gone, too, are several rows of seats on the front straightaway, reducing capacity at the venerable venue by another couple of thousand.

Those alterations follow the removal of the First Turn Terrace, a bleacher section that five years ago sat on the inside of Turn 1. It was torn down to extend the IMS road course.

The result of the changes means the May 26 Indy 500 will have the smallest seating capacity since 2000, the last time the Speedway had a major makeover.

In 2004, The Indianapolis Star inspected the world’s largest sports facility and counted 257,325 seats. Today, that figure is at 235,000.

That’s an estimated 11,600 seats removed in the North and Northeast Vistas, 5,136 gone in the Turn 1 infield and the loss of the low-row seats.

It adds up to nearly a 10 percent reduction in capacity, although IMS officials declined Wednesday to reveal the actual total, a closely guarded secret since Tony Hulman bought the facility in 1945 . . .

I guess the fact that IMS officials had already resigned themselves to smaller track attendance was of no importance to the Star's readers as lawmakers debated whether to give them $100 million in public subsidies to make improvements to the track. The odds are very good that any improved viewing stands will mean an even larger contraction in the seating capacity of the track.

Pence Disappoints With His Signing Of $100 Million Bailout Bill For The IMS

I thought Gov. Mike Pence would have the political courage to uphold the Indiana Constitution he took an oath to uphold by vetoing a clearly unconstitutional gift of $100 million to the Hulman-George family to make improvements to their Indianapolis Motor Speedway. Yeah, I know they call it a loan, but I'm not just another one of the sheeple who will believe that a gift becomes a loan just because corrupt lawmakers describe it as such in their legislation. By that measure, the CIB's $44.5 million gift to billionaire Herb Simon's Indiana Pacers was a loan. Here's the statement his office put out today after he signed HB 1544.

Governor Mike Pence today signed House Enrolled Act 1544 authorizing the Indiana Finance Authority to issue bonds to fund improvements at the Indianapolis Motor Speedway and creating a Motorsports Improvement Fund for loans to industry businesses across the state.

"The Indianapolis Motor Speedway has contributed to the life of our state for more than a century, enhancing the global reputation of Indiana,” said Pence. “The legislation I signed today makes a state investment that will further economic development in the motorsports industry while also protecting the interests of Hoosier taxpayers.”

Approximately 23,000 people are directly employed in the state’s motorsports industry with an average wage of $63,000. Thousands more are employed by motorsports-related companies that can be found in 91 of Indiana’s 92 counties.

Under this legislation, a newly-created Indiana Motorsports Commission and the Indiana Finance Authority will work together to create a sound, commercially-viable investment. The legislation includes provisions to protect the state’s investment, including a security interest in the Indianapolis Motor Speedway’s assets, an annual $2 million investment by the Speedway annually throughout the life of the bonds, and a corporate guarantee of the debt.

The legislation also creates a Motorsports Improvement Fund that will provide revolving loans to motorsports businesses across Indiana, including race tracks, race team owners, drivers, motorsports suppliers, and other qualified businesses. The Indiana Economic Development Corporation will administer the fund and ensure it makes commercially sound loans that support the development of the motorsports industry in Indiana. 

“Our administration is committed to protect the state’s investment and to further economic development in this industry throughout the state,” said Pence. “I am grateful for the work of the members of the General Assembly on this legislation.”

Representative Eric Turner (R) authored HEA 1544, and Representative Steve Braun (R) co-authored it. Senator Brandt Hershman sponsored the legislation.

Now watch the lobbyists for the Hulman-George family get to handpick the members of the newly-created Indiana Motorsports Commission. If we had a real federal prosecutor in this town, a grand jury would have already been convened to hear evidence of all the corrupt acts that occurred to pass this awful piece of legislation.

$100 Million Bailout Legislation Allows Hulman-George Family To Sell IMS

The taxpayers of Indiana get to finance $100 million in new improvements to the Indianapolis Motor Speedway owned exclusively by members of the Hulman-George family. If the family decides it wants to sell the IMS at any time in the future based on a substantially higher market value thanks to the gift from Indiana taxpayers, it is permitted to do so and the new owners can receive the benefit of the generous gift unless a five-member commission made up of appointees of the Governor decides there is not good cause for the sale of the IMS. Last-minute changes to the bailout legislation approved by the General Assembly removed a provision in the House-passed version that would have barred a sale of the IMS as a condition to the granting of the $100 million gift; otherwise, the IMS owners would be compelled to repay the "loan."

Don't believe the news reports that call it a loan. Remember the CIB called the $43.5 million it gave to billionaire Herb Simon's Indiana Pacers a loan. They count on the sheeple being too stupid to figure out that a transfer of money from one entity to another without any real obligation to repay is a gift, not a loan. Assuming Gov. Mike Pence signs this horrible piece of legislation into law, I have no faith that anyone who represents real taxpayers will be appointed to sit on the 5-member commission. Look at the members of the Indiana Stadium and Convention Building Authority. It includes corporate executives from Wellpoint, Eli Lilly, Cummins, former Lt. Governor John Mutz and Barnes & Thornburg lobbyist Joe Loftus. It's a political cronies dream made in heaven. The Indiana Motorsports Commission will be no different. Only people handpicked by lobbyists for the Hulman-George family will get to serve on the Commission.

Sponsor Of $100 Million Giveaway To IMS Prefers Taxpayers, Not Gaming Industry Pay For Subsidy

State Sen. Mike Young is such a nice guy. He first offers an amendment to a vehicle bill in the Senate to provide $100 million to the privately-owned Hulman-George family to make improvements to their Indianapolis Motor Speedway using state tax dollars that was rammed through the Senate in a matter of days with virtually no public discussion. This, of course, came on the heels, of the Hulman-George adding two prominent rent-a-civic leaders, Mark Miles and Jim Morris, to be a part of their corporate leadership team, hiring a team of lobbyists, including former lawmakers, and showering lawmakers with campaign contributions and free tickets to IMS events.

Young acted like he was becoming physically ill after the House Ways & Means Committee proposed tapping the state's two racinos owned by Centaur Gaming, whose principals have several key lawmakers in their back pocket, along with former lawmakers lobbying on their behalf, as the source of funding for the $100 million giveaway. Now that SB 91 is in conference committee, Young, who says he has nothing to do with the gaming industry, isn't about to link his legislation to the industry now, so he'll make state taxpayers foot the bill instead. The Star's Mary Beth Schneider reports on the progress of Young's unprecedented tax giveaway to one of the state's wealthiest families:

House and Senate lawmakers today began negotiating a final version of legislation to help the Indianapolis Motor Speedway finance improvements.

But one thing that won’t be in a rewritten Senate Bill 91: Taking money from the racinos.

The House Ways and Means Committee Chairman Tim Brown, R-Crawfordsville, had linked the Speedway bill to the racino bill by taking money from the racinos to help the motorsports industry.

Sen. Mike Young, R-Speedway, said this morning that he would not agree to that change at all. Instead, he said, he preferred leaving the measure as it came out of the Senate, with the state contributing up to $5 million annually for 20 years to the Speedway. He said he was open to the House language, which made that a loan.

However, some lawmakers have said that is hardly a typical loan, as it is paid back by the state crediting the Speedway for the growth in sales and income taxes generated on the track’s property. The House version also includes a ticket fee.

The only thing for certain is that ordinary taxpayers will get the short end of the stick. The rich and powerful who pull the lawmakers' strings always get what they want. Why do they even pretend to represent us? On that point, the Star's editors have a good idea for legislation concerning financial disclosure by lawmakers, which means it will never see the light of day:

One obvious answer to the rampant promotion of personal interests in the Indiana General Assembly is greater transparency.

Report all outside income and financial ties. Make clear exactly whom campaign contributions and other gifts come from, and stop allowing influence-seekers to hide their activities under surrogate names. End the insulting practice of letting meals bought by lobbyists for legislators go unreported unless they cost more than $50.

Common sense and basic ethics. Yet there’s no sign of movement into such sunlight, despite a flurry of media attention to the ingrained coziness between lawmakers and special interests.

Nor – and this may be the key – is there much embarrassment about conflicts even when they’re exposed.

Two egregious examples made the news last week.

The coal industry won protection, at the expense of consumers, thanks to two legislators who hold high-level jobs in coal and the railroads that haul it.

A lobbyist for a company seeking a multimillion-dollar state contract got help from her father, a House leader, just a week after the governor placed a hold on state aid the lawmaker reportedly helped obtain for his son’s company.

In both instances, the elected officials insisted they were objective stewards of the public’s will and wouldn’t dream of acting out of personal interest.

The Public Always Loses When Government Picks Winners And Losers

The inequities of the government taking tax dollars and picking winners who receive those tax dollars at the expense of everyone else has reached epidemic proportions. The Obama administration has used hundreds of billions of dollars in so-called federal stimulus spending for this purpose over the past four years. The problem, albeit on a smaller scale, is no better at the state and local level.

Corporate cronyism raised its ugly head to an unprecedented level when the Indiana Senate unveiled a plan to give up to $100 million to the Indianapolis Motor Speedway to make improvements to its privately-owned race track. Although that plan easily passed the Senate, the House raised questions about the deal. The House Ways & Means Committee Chairman Tim Brown echoed the concerns raised by this blog that the Hulman-George family may intend to sell the track and is simply using the infusion of state tax dollars to increase the selling price of the track.

Another plan working its way through the legislature would allow Indiana's two horse race tracks, which are currently allowed to operate slot machines at their tracks known as racinos, to operate full-blown casinos with live dealers and table games. Actually, some lawmakers professed shock to learn the racinos were already operating table games at their racinos electronically without live dealers despite their understanding that the legislation they approved a few years ago only permitted slot machines.

The House is now pondering a blending of the legislation sought by the IMS and the racinos, which would use revenues generated by the racinos to help pay for the IMS subsidy. House Speaker Pro Tem Eric Turner (R-Cicero) and Rep. Brown said "the changes are aimed in large part at easing concerns that the legislature is helping a private business able of taking care of itself" according to the Star's Mary Beth Schneider. How ironic Turner would share such a concern. We just learned yesterday that a business controlled by Turner's family was set to receive $375,000 in economic incentives from the state to move its headquarters within Hamilton County from Cicero to Carmel. That's the same business that was the beneficiary of $7 million in revenue bonds approved by the Indianapolis City-County Council last year to build a long-term care facility on the city's east side. The plan suggested by Brown and Turner is highly convoluted, and it's not at all clear to me that at the end of the day it still doesn't involve taxpayers being asked to foot the bill to help chosen private businesses. Here's how Schneider explains the deal:

Under the plan laid out this morning by Turner, $10 million annually from slot machine revenues at the state’s two racinos would be set aside to help motorsports. Half of the money — $5 million annually for 20 years — would be treated as an interest-free loan to the speedway, paying off bonds issued by the Indiana Finance Authority for the renovations . . .

The other $5 million annually from the slot machines would go to the Indiana Economic Development Corporation for a “motorsports development program and fund” which would make loans available to any of the other tracks or motor sports businesses in Indiana.

A new motorsports district at the Speedway would still capture any additional sales and income taxes generated beyond what already is raised within it to pay off the loan.

In addition, a new ticket fee would be added to major events at the Indianapolis Motor Speedway to help pay off its loan. Tickets costing less than $100 would have a 2 percent charge added to them; tickets of $100 to $150 would be 3 percernt more expensive; and tickets of more than $150 would have a 6 percent admissions charge. That, Turner said, is expected to raise $1 million annually.

The Speedway’s loan would remain outstanding until paid through the increases in sales and income taxes, plus the ticket fees. And if the Speedway was ever sold, the state could recoup its money then.

To sweeten the deal for racinos and win support from the 11 other casinos, SB 528 was changed to let them avoid taxes on up to $3 million in free-play coupons the first year and up to $5 million the next.

If I follow correctly, the plan is to use tax revenues generated by racinos to provide an interest-free loan of $5 million a year to pay off up to $100 million in bonds issued by the state of Indiana for use by the IMS. Another $5 million would be set aside from that same source of revenues to fund state loans offered to other motorsports-related businesses within the state. There would still be a motorsports tax district created that would capture sales and income taxes generated by the IMS to help pay off the loan. A new ticket tax will be levied on events held at the IMS that will supposedly generate $1 million annually. The IMS' loan would remain outstanding until its repaid through increased sales and income taxes, along with the new ticket tax; however, the IMS would repay the money it is loaned if the IMS is ever sold. A special tax break worth $3 million a year the first year and $5 million thereafter would be awarded to the racinos. Did you follow that? It's complicated.

A Shelbyville lawmaker where one of the racinos is located is not at all happy with the plan laid out by Brown and Turner.

“I think it’s the most egregious example of government overreach I’ve ever seen in my seven years here,” said Rep. Sean Eberhart, a Shelbyville Republican whose district includes the Indiana Grand Casino at the Indiana Downs racetrack.

“Show me another example of where we’re forcing one private industry to subsidize another private industry,” Eberhart said. “That’s exactly what we’re doing here.”

Apparently Rep. Rip Van Winkle just woke up. I've lost count of how many times government has picked winners and losers in this state just this year alone, let alone this past week. And it's only Tuesday.

Former Chief Justice Pens Bizarre Column In Support Of $100 Million IMS Subsidy

There are many ways a former chief justice of the Indiana Supreme Court can give back to the state which gave him so much, but arguing in a public newspaper that it's "a smart move" for Indiana taxpayers to publicly subsidize up to $100 million in improvements for the Indianapolis Motor Speedway doesn't make the list. That's precisely what retired Chief Justice Randall Shepard does in an opinion column in the latest edition of the Indianapolis Business Journal.

Shepard has no doubt "the General Assembly is on the right track in moving legislation to bolster the track and the jobs it helps create," citing a highly-questionable economic impact study recently released by a think tank with which he is now affiliated at Indiana University. Seemingly struck by amnesia, Shepard raises Indiana's infamous Internal Improvements Act of 1836, an ambitious series of roads, railroads and canals financed by the state that ultimately resulted in the state going bankrupt, as an example of why the public's money should be invested in the IMS.

This initiative during Indiana's earliest days ultimately proved a financial disaster due to the failure o the Wabash and Erie Canal. The canal was a case old technology being overtaken by new techniques (like railroads), and the weight of its debt eventually carried under the state government itself.

The canal's failure and the state's bankruptcy were so dramatic that they overshadowed the fact that other elements of the Internal Improvements program put in place valuable assets that help advance the state's economy to this day: Michigan Road, U.S. 150 across southern Indiana , multiple rail lines in central and southern Indiana, to name a few.

Shepard cites the success of some of those public transportation endeavors as "a need to examine what we've come to call "public-private partnerships." "Is there likely to be sufficient benefit to the public to warrant the government support at stake?" he asks. He says it's a question that "regularly" gets asked these days, such as "when the City-County Council overwhelmingly voted to move forward with certain tax incremental financing districts to boost inner-city commercial districts and residential neighborhoods."  "I suggest that the discussion of this proposal is an example of public policy being well conducted," Shepard concludes.

The discussion of the Internal Improvements Act of 1836 in the context of a $100 million public subsidy for the Hulman-owned Indianapolis Motor Speedway could not be more inapposite. Those public improvements at least involved public transportation projects, even if they did involve privately-owned businesses. Shepard also cavalierly brushes over the financial debacle that the reckless public works project brought about, which drove the need to conduct a constitutional convention in 1851 to rewrite the state's constitution. Many provisions were written into that document to ensure that nothing like that occurred again, a number of which judges have gone out of their way to undermine and, once again, place the state's finances at risk.

Indiana judges permit the General Assembly to allow municipal corporations, for example, to skirt the strict debt limitations imposed by Article 13 of the 1851 constitution (i.e. 2% of taxable property) by creating unelected coterminous municipal corporations, such as airport authorities, capital improvement boards, library districts, etc. whose debts aren't counted against the municipal debt of the municipality of which they serve as an alter ego. A provision in Article 11 of the state's constitution prohibiting the state from extending its credit or loaning money to a private corporation has simply been read out of the constitution by Indiana judges who view it as an inconvenience to enforce.

Given the history of Indiana judges to undermine the tough but necessary reforms enacted by the delegates to the 1851 constitutional convention and approved by the state's voters, I guess it shouldn't come as a surprise that one of our state's top former jurists would argue that giving $100 million of public tax dollars to a sports-related business owned by one of the state's wealthiest families is a worthy public undertaking. One still holds out hope that such persons would put their talents to use advocating for more public-worthy changes needed in this state to ensure the enactment of fairer laws that treat its citizens for purposes of taxation more fairly and uniformly. Certainly it's not too much to expect that persons like Shepard would at least refrain from advocating for the continued enactment of special laws that benefit the few wealthy and privileged among us to the detriment of the many.

IMS Brings Back Tony George To Defuse Rumors Of Planned Sale

As I've discussed previously, it's no secret that the Hulman-George family is working on a succession plan for the family's businesses with the 78-year old Mary Hulman-George not getting any younger and the removal of her only son from any management role in the organization at the insistence of his sisters, who had grown increasingly alarmed that his mismanagement of the IMS had squandered hundreds of millions of dollars and was putting their inheritance at risk. The Mark Miles-inspired plan to convince Indiana lawmakers to go along with state financing of up to $100 million in improvements at the IMS has brought to light concerns first raised on this blog that Miles' end game is simply a way of inflating the value of the race track facilities in preparation for a sale to outside investors.

During a hearing this week before the House Ways & Means Committee, Miles insisted the family has no plans to sell the IMS, but he can't deny there is no viable family member ready to step into a serious role managing the family's business affairs with Tony George out of the picture. Miles' assurances weren't enough for the Committee's chairman, State Rep. Tim Brown (R-Crawfordsville), who said he wants to see language amended into the bill that would require the IMS to repay at least some of the state-funded improvements in the event of a sale. That's not what Miles wanted to hear. True to his manipulative nature, Miles showed another card he had up his sleeve. The IMS announced tonight that Tony is back in the picture as a member of Hulman & Co.'s board of directors. Fox59 News reports:

The stay away from the Board of Directors of Hulman and Company lasted just a few months for Tony George.

On Friday night the company announced that George was added to the Board of Directors of the company.

George had resigned from the board in October of 20112 citing an “appearance of a conflict of interest.” Many believe that was due to George’s attempt to acquire IndyCar from the company but nothing has yet to come of those efforts.

Along with the addition of George, Hulman and Company re-elected the ten members who were on the board last year.

George has a long history with the company having served as it’s President and CEO from 1989-2009, overseeing the Indianapolis Motor Speedway along with IndyCar.

Notwithstanding Miles' latest handiwork at creating false imagery, Brown's initial instincts are spot on. He needs to hold the IMS' feet to the fire and insist on recovery of the state investment if the family simply turns around and sells the IMS after using the money to increase the bottom-line value of their largest asset. That's the least lawmakers owe to the state's taxpayers if they're going to give their approval to this unprecedented investment of public funds in a privately-owned sports facility.

Not As Miles Planned, House May Include "In Event Of Sale" Clause In $100 Million IMS Giveaway Legislation

It's no secret that the Hulman-George family, which owns the IMS, is in the midst of some serious estate planning these days with the only suitable family heir Tony George now ousted entirely from the family-run business and his elderly mother Mary Hulman-George not getting any younger. Although Hulman & Co. CEO Mark "Rent-A-Civic Leader" Miles says the family has absolutely no intention of selling the IMS, it doesn't take a rocket scientist to figure out that the move by state lawmakers to force Indiana taxpayers to finance $100 million in improvements to the race track will increase its bottom line value to a potential buyer. Miles' assurances aside, House Ways & Means Committee Chairman State Rep. Tim Brown (R-Crawfordsville) tells the Star he plans to include an "in the event of sale" clause in the legislation to allow the state to recoup at least some of its investment in the IMS if that happens.

Following a hearing on the measure in the budget-writing House Ways and Means Committee, Chairman Tim Brown, R-Crawfordsville, said the bill may be amended to let the state get back its money in the event of a sale of the historic home of the Indy 500.

“I think we’re going to look at some sort of financial interest,” Brown said, describing it as “kind of like a lien on a mortgage.”

“The bottom line is that by doing this bill it increases the asset value of the Speedway,” Brown said, and the state should have some way to recoup its investment that made that possible . . .

“We are not considering selling it. We are not positioning it to sell,” IMS spokesman Doug Boles said. “The (Hulman-George) family is committed to the Indianapolis Motor Speedway. It’s been in their family for 68 years, and there is no consideration whatsoever to change that.”

Fine, then call their bluff, Rep. Brown. Require the IMS to repay the entire amount of state-funded improvements if the family sells the IMS during the next 20 years. Don't allow yourself to be played by Miles, whose primary aim is the millions he personally hopes to make if this deal goes through as planned. We're still wondering the size of  Jim "Rent-A-Civic Leader" Morris' bonus for winning $43.5 million in taxpayer subsidies to date for billionaire Herb Simon's Indiana Pacers.

Pence Skeptical On $100 Million Tax Giveaway To IMS

Gov. Mike Pence is thinking out loud, at least, like a true fiscal conservative in questioning a legislative plan to give up to $100 million in state tax dollars to the privately-owned Indianapolis Motor Speedway to make improvements to the track and related facilities. State Sen. Mike Young sprung the legislation in the Senate near the end of action for bills in the first house, leaving virtually no opportunity for public debate, before the Senate rammed the legislation through on a bipartisan, 37-12 vote. The IMS doled out more than $100,000 in campaign contributions in the lead-up to the introduction of the unprecedented public subsidy as the IMS moved to add "rent-a-civic" leaders like Mark Miles to its management team. WTHR has more on Pence's comments:

The state's top political leader is voicing concerns about a plan to offer financial help to the Indianapolis Motor Speedway.

Governor Mike Pence told reporters Wednesday that he has reservations about the way IMS bill is crafted. Pence is concerned that it provides little private investment opportunity.

The state Senate approved the $100 million plan in a 37-12 vote last month. The Speedway already spends $5 to $15 million annually on maintenance and is facing competitive pressure from newer facilities.

Hulman & Co. CEO Mark Miles and IMS President and CEO Jeff Belskus went to the Statehouse to ask for financial help in February.

With $100 million in bonds, the Speedway will add lights to allow night racing at the historic track. It will also renovate the stands, upgrade facilities and install high-tech video boards.

Lighting the track, as well as grandstands and parking lots, could cost as much as $20 million. Building renovations and track upgrades could cost as much as $30 million. Another $10 million would be spent to make the Speedway compliant with the Americans with Disabilities Act.

The money would be essentially taken out as a lump sum loan and paid back over 20 years. A special taxing zone at IMS would provide $5 million a year. Another $2 million annually would be paid by the Speedway . . .

Let's be clear. There is nothing in the legislation that requires the IMS to contribute $2 million annually; any contribution the IMS makes to these improvements are at its discretion. The only recourse bondholders have for repayment of the bonds issued under the legislation is to capture up to $5 million a year in taxes the IMS pays to the state. If the state revenue contribution is inadequate to cover repayment of the bonds, the bondholders have no recourse against the IMS because the proposed state law bars them from protecting their interest with any lien or mortgage on the IMS.

During a House Ways & Means Committee hearing this morning on the give-away, the IMS' Mark Miles told lawmakers the Hulman-George family has no plans to sell the IMS. “There is absolutely no intention to sell it,” he said. “We're not doing things to get it ready to sell. The family fully expects to keep this business their business.” Yeah, as if he's going to admit their true intentions out loud to lawmakers. I wonder if Miles carefully parsed those words so that a new owner that included Tony George as a successor owner would make his statement true.

IMS officials are once again touting an economic development study it had prepared, which claims the IMS contributed $510 million to the local economy annually and generates 6,200 jobs. The IMS and IndyCar series actually have a relatively small number of full-time employees. As everyone familiar with IMS events knows, the IMS relies heavily on volunteers from not-for-profit groups to provide concession and parking staff on race day. Nonetheless, it claims the IMS and related sports businesses generate annual compensation to employees of over $235 million. It claims 200,000 out-of-state visitors spend $145 million combined at the IMS' three annual race events.

IBJ's Schoettle Unloads On IMS Officials For Damaging Leaks

The IBJ's Anthony Schoettle seems to have turned from being one of the biggest cheerleaders for Indianapolis Motor Speedway officials to one of their sharpest critics overnight, if his post on his "The Score" blog is any indication. Schoettle unloads on IMS officials and, in particular, its new CEO Mark Miles, for a steady stream of media leaks he argues threaten to sink IndyCar and the IMS. Schoettle says IMS officials have only themselves to blame for rumors continuously popping up that the IMS and IndyCar series are for sale by the Hulman-George family.

Schoettle's blog post today comes after someone leaked to the AP a confidential Boston Consulting Group report, which urges Hulman & Co. to retain ownership of the IMS and IndyCar series and provides a blueprint for their successful future. Schoettle insists his musings aren't merely sour grapes because the report got leaked to the AP instead of him, or the leaking of the $100 million IMS bailout legislation earlier last month to the Indianapolis Star instead of the IBJ. He argues the steady drip of leaks from the IMS is harming the Speedway and the IndyCar series.