Tuesday, August 29, 2006

Star Wants State To Bail Out City For Bad Stadium Deal

The editorial writers at the Star want the state to bail out the Marion Co. Capital Improvement Board of Managers and the City of Indianapolis after it was learned that they failed to negotiate a lease deal with Jim Irsay that covered operating costs for the Lucas Oil Stadium. The Star writes:

State Sen. Luke Kenley, R-Noblesville, makes a valid point that the various Central Indiana hotel, restaurant, ticket and car rental taxes enacted to build the stadium were not represented as a discretionary funding source for day-to-day operations. The first obligation is to make sure construction is covered. But Kenley and other state leaders are wrong to toss off the looming shortfall as the city's problem when, after all, the state took control of the stadium as part of the financing process.

Kenley's position is absolutely correct, and the Star's is wrong. The state only assumed responsibility for construction of the facility because it is funded by a tax levied on the entire region, not just Marion Co.; it was up to the city and the Capital Improvement Board to ensure a lease agreement that provided adequate revenues to cover the stadium's operating costs. As the Star's Sunday story pointed out, other cities have required team owners to pay for the stadium's operating costs, or they have used concessions and other nongame events to cover those costs. That included the $121.5 million naming rights sold to Lusas Oil! The CIB chose to give away those revenue sources to Jim Irsay. That's their mistake, and they should be tasked with going back to Jim Irsay and saying, "we screwed up."

It's about time the taxpayers' interests prevailed over the interests of Jim Irsay. He can cough up the extra dollars. Remember Fred Glass, you represent the taxpayers, not Jim Irsay. Now do the job you failed to do right the first time.


Sir Hailstone said...


Bart Simpson was so worried about making sure the Colts didn't leave for Los Angeles that he gave away the farm to keep them.

Yes we love them now but if we slide back to the 2 and 3 win years in the early days of the Indy Colts will we love them then?

Anonymous said...

Mr Governor couldnt play in the sandbox and had to take the toys away for himself. Now governor diapers is crying because he has to care for it, too, and didnt think it through. Like every other republican he'll just blame everyone else for his shortfalls.

Sir Hailstone said...

*yawn* More inaccuracies of the Left-wingers.

The state took over the CONSTRUCTION of the new stadium. That was the exchange for receiving tax money from outside Marion County to fund its construction. Would you trust Mayor Bart with YOUR tax money if you lived outside Marion County? No. I don't trust Bart with my tax money and I live in Marion County.

The operation of the stadium is still up to the CIB (an appointed board of the City). Because Mayor Bart gave away the farm to keep the Colts here he's now not able to keep the place running. If Mayor Bart wanted to keep everything for himself he'd just raise Marion County taxes to pay for it. He didn't and he thought the other counties would bow down and open up their wallets to Mayor Bart. Bzzt! WRONG!

Anonymous said...

Hailstone, you're either completely ignorant of the facts, or you're a liar.

Mayor Peterson wanted to install Pull-Tabs to pay for the stadium and convention center.

The right-wing biblidoits said no, and Mitch pushed the tax hike.

Now, he can't keep the stadium under budget...

Sir Hailstone said...

Pull-tabs were just the beginning. Like Bart's mentor King Richard II, he really wants a casino in downtown Indy.

Anonymous said...

If taxpayers’ interests were to truly prevail, both city and state governments would stop the practice of providing taxpayer funding to enrich private industry.

Sir Hailstone said...

Truth be told: Yes, and no. Taxpayers supporting ~100 employees, over half of which are millionaires NO.

Enticing an industry that would employ thousands [for example Honda] - YES!

Oh sure in a utopian world enticements wouldn't be needed. However this is reality and there's many more cities and states than there are valuable employers.

Anonymous said...

>Mayor Peterson wanted to install Pull-Tabs to pay for the stadium and convention center.

Bart Peterson did exactly what some of us expected. He proposed a "solution" that he knew had absolutely no chance of passing. Then he walked away and said, "Take it or leave it." As everyone knew would happen because the issue has been debated over and over and over again already, the legislature rejected the idea. So Bart blamed the failure of his proposal on the Republicans.

In steps Daniels, who offers a State solution. But he also tells Bart, if the State is going to bail you out, then the State is going to control how we do the bailing. Bart, at first, balks. Then he realizes, "oh s**t, if I pass on this then it's my turn again to offer a solution. And I don't have a solution." Game of chicken: Mitch 1, Bart 0.

But uh oh. Now Bart's people realize that they didn't plan for how to run the darned thing after the State helps them build it. So, what to do? What to do? Oh yeah! The same thing Bart always does! Blame someone else. In jumps his crony coolaid drinkers and, voila, we have another contraversy. Blame Mitch! Blame Mitch!

But what if Daniels had not saved Bart's butt in the beginning? One of two things: 1) No deal, no stadium and another Mayflower trip for the Colts. Bart gets blamed. The City has a new hole in the ground - or in this case, above ground - and Dems are in trouble. 2) The City makes a deal at higher cost than the financing available through the State and these higher costs get added onto the same problem that Bart and his buddies are facing today.

This is Bart's problem. But like so many other people who bail Bart out, I have an idea! Let's revive the pull-tab idea - but rather than pull-tabs, let's just tax the pea-shake houses. Don't even worry about changing the law. President Gray has already declared that enforcing the laws against pea shake houses would be racist. So let's just tax them instead! Nothing racist about that, is there?

Bart and Monroe -- the Future of Indianapolis. Oh, yeah!

Anonymous said...

Hailstone, ever think about getting the heck out of that storm you've been standing in...

When and if, would you mind pointing me to one bit of support for your supposition that Honda chose their location based on a NFL franchise proximity. Which if even had it been even a remote consideration, still; that criteria still would not justify the use of tax dollars to enrich private industry.

Anonymous said...

AI, you could stop this inaccurate nonsense by getting a copy of the interworking agreements between the CIB and state, as well as the lease agreement. Public records. The lease is thick...I've read it.

But then, that wouldn't generate as many hits to the site.

It's the state's problem because their power-hungry legislators, Hinkle-Murphy et al, seized control of the funding process.
The lease was already mostly-negotiated when that occured.

I'm not in favor of corporate giveaways like this, but I am in favor of factual reporting. Try to get the facts right, please.

Gary R. Welsh said...

Anon 6:14, you need to get your facts straight. Nobody questions that the CIB had pretty much negotiated the lease agreement with the Colts prior to the legislature deciding to create a state-run authority to oversee the construction of the project. But once the legislature had spoken and the Governor signed it into law, the CIB knew what it had to work with. Instead of renegotiating the terms of the lease before construction was commenced, they said the hell with the Gov. and the legislature, we'll take our chances on getting the law written the way we like it before the stadium begins operating. This is the worst stadium deal in the country--bar none--from the standpoint of the taxpayers. We're heavily subsidizing Irsay's low-income producing franchise so that his profit is comparable to that of other more successful franchises. The CIB decided we must do that or risk losing the Colts to another city. I ask to whom? Irsay spent years peddling the Colts to LA and they told him to get lost. The fact is that there isn't another city out there that can support a franchise that is in the market to compete with Indianapolis. We held the cards, not Irsay. But we negotiated as if we had a gun to our heads. That's why our taxpayers are subsidizing this franchise more than other cities are subsidizing theirs'. The whole idea of giving a multi-million dollar subsidy to someone who is already given a monopoly on under federal law is reprehensible. We need to scale back this subsidy to derive the revenues for operating the facility. I'll be damned if they fool us again like they did with the construction of the original stadium. Remember, they told us that this is just a temporary tax, it will go away once the bond debt for the dome is paid for? Didn't those funds wind up being used for operations? Did that tax ever go away?

Anonymous said...

Gary, you're flat wrong on this one.

The Governor DEMANDED that he take responsibility for this deal because he wanted to give the mega-millions worth of construction and financing contracts to his friends.

The Governor stepped in and DEMANDED that the deal be cut his way and his people get all the perks and all the praise.

You must remember that all the Mayor could do was say "yes, sir" ... "yes, sir" in a most pathetic way. It was almost embarassing the way the Governor made the Mayor cower and beg and submit to his every demand for control.

Any now Daniels and Kenley have the gall to say "oh, we aren't responsible for this."

WHAT? This is crazy!!!

Gary R. Welsh said...

Straight Shooter, we can argue until we're both blue in the face as to whether the Governor's and the legislature's actions in setting up the state authority was the right move for the construction of the stadium. But that's a completely separate deal from the lease CIB negotiated with the Colts. With the creation of the state authority, the only new player at the table from the private sector was the law firm of Ice Miller. Bingham-McHale would have handled the legal work on behalf of the CIB as it has done from its creation, but once the authority was created, the Guv gave that legal work for the stadium authority to Ice Miller, which essentially resulted in at least twice the legal fees than would have otherwise been incurred. Klipsch would have managed the project, even if it had been left witht the CIB. The architects and contractors were lined up (informally) long before this project came to fruition--no big changes here after the state took over.

Anonymous said...

I think I know the answer, but how much money have the Hullman's asked from the city or the state to help the run the track????

Yeah, I thought so...

If you want to be honest with yourself, Indiana residents do not have the income to support a football stadium which is why they weren't selling out when they were winning!!!!

The people here do not make the money to afford parking, tickets, food and all that other good stuff in addition to supporting their families.

Irsay had Bart by the short hairs and Bart didn't have the cajones to call the bluff.

Anonymous said...

In real estate development, and stadium construction, negotiation of the lease before the facility is built is standard operating procedure.

My facts are correct, regardles show many times you trumpet otherwise.

Get the lease Gary. Read it.

It's the least you can do.

It's not a perfect document, but this messup is the state's fault.

Gary R. Welsh said...

Anon 6:10, what the lease says is irrelevant. I've read the law, and it is absolutely clear that the dedicated revenue stream is to be used only for retirement of the debt on the stadium and not operating expenses. The law trumps the lease.

Anonymous said...

Just out of curiousity, what's the opposition to a Downtown Casino (perhaps in Union Station)? Not my idea, but one I can support.

For those that say crime will go up, two things.

1 - Study after study have indicated in major urban areas, crime doesn't go up, but actually down in the immediate area of the casino.

PS - The Colts have been sold out for four years, all games in the regular season were sold out months ago.

2 - Revenues could be used to build the judicial taj mahal that so many people want.

Additionally, a casino, coupled with Conseco Fieldhouse, the Lucas Oil Stadium, a newly expanded convention center, Circle Center, the Conrad, and a new "flagship" hotel would make Indianapolis THE convention city in the country, as well as a bigger downtown draw for the three races out at the Speedway.

Anonymous said...

Please post a link to the law, Gary.

Gary R. Welsh said...

The citation to the statute creating the stadium authority is I.C. 5-1-17. You can link to it by clicking here: http://www.in.gov/legislative/ic/code/title5/ar1/ch17.html

Anonymous said...

Thank you! Very helpful.

Anonymous said...

I tried cut and paste, and direct-typing, won't go....

Are you sure you got the correct cite?

Anonymous said...

I got it. Operator error. Thanks.

I read the law, and Gary's right. Although the state is not precluded from assuming some/all of the operational costs, in any sort of agreement, the CIB is directly and legally responsible.

It's irregular in the real estate world, but it's the law.

Exact cite of the pertinent lines:
IC 5-1-17-13-(b)-(11)-(B).

All prior words hereby eaten.

Anonymous said...

When I looked at the pertinent line Anonymous 2:16 referenced it read:

IC 5-1-17-13-(b)-(11)-(B)

"(B) the authority has no responsibility to fund the ongoing maintenance and operations of the capital improvement;"

CIB is the 'authority'--please explain.

Gary R. Welsh said...

If you want a complete legal analysis of the law, you're going to have to pay for it. Maybe Ice Miller's available.

Anonymous said...

I read the law twice, and no, I doubt Ice Miler's available...too busy doing Scrivener's Affadavits for the Lawrence Utility takeover. And, of course, defending Carl Drummer's silly zoning applications.

It seems to me the legislation says the state's stadium authority's board is not obligated to fund ongoing maintenance.

Unusual, but that's what it says.

I can't believe the city's lawyers let this slip by. But, I bet we find the money for it somewhere.

It was still a ruthless power grab by a few legislative Republicans, and it empowered a new, undisciplined and inexperienced board to oversee a huge capital project.

Shouldn't have happened, but it did.

So all the cheeseburger-eatin folks in Hendricks County, where a food and beverage tax helps pay for the construction, don't have to pay for its maintenance. The doughnut counties have gotten off on the cheap for decades...one more example.

I say we set up the gates and makes the rear-ends pay a toll.

Gary R. Welsh said...

There was no slip up on the part of the city. They knew it was in there and opposed it. That's what they were told they were going to have to live with. And as I explained previously, the city said the hell with them, we'll just get the law the way we want it before the stadium is built. God forbid they ask Jim Irsay to give up a few million dollars.

Anonymous said...

Maybe I'm thick, but I don't understand the relevance...why would the city purposely rig the outcome? It makes no sense.

You have inside knowledge of the negotiations?

Anonymous said...

This is the way government in Indiana operates. In every government that I have dealt with, maintenance is the last thing they think about. They just want to build the shiny palace to blind the populace. They tend to forget that they will have to maintain what they build. I've sat in on the meetings where council members are bewildered by the requests for more money to maintain the shiny new objects. It would be hilarious if it was not so sad.

This is just business as usual - Misallocated resources - There is such a thing as opportunity costs. We don't have the financial or political will to do the tough things, so we build shiny new objects and pretend we have done something. That is all Bart Simpleton has done in this case.

I also disagree that giving money to Honda is a good thing. Just check out their profits last year. Toyota's profits are double that. There is no reason to subsidize a wealthy company. Every study known to man indicates that companies do not locate because of financial incentives. But they surely are not going to decline the giveaways; and they don't. Just because government provides them does not mean they provide any worthwhile benefit.

Anonymous said...

The Mayor just said, on Abdul's radio show, that the state knew this shortfall was there all along.

Typically, in past CIB deals (Victory Field, Convention Center expansion, etc.), a cushion was built into financing, along with fees from users, and a small bit of miscellaneous income, to fund ongoing operations, year-to-year.

When the entire financing function was jerked form the city (CIB), the Mayor indicates he told the state this was a shortfall. Their answer: "We'll fix it in a year or two."

I'm a huge fan of the Mayor's, but frankly, neither side acted in our best interests here. But, in the Mayor's defense, when your typical scenario is jerked away from you, and your only alternative is "take it or leave it," it changes things.

I still believe in the stadium. It is a tremendous economic development tool, and will be used by millions of non-Indy residents over the next 40 years. Band concerts and competitions, conventions, and athletic events (no less than four Final Fours).

Can't user fees cover some of this shortfall? When the NCAA uses it for a Final Four, do they pay anything? Good Lord the tickets are already expensive...what's another buck or two for maintenance?

Or have we promised everything to everyone, thus nothing is left?

Gary R. Welsh said...

That's called spin from Bart-the same man on the local news a couple of days ago talking about closing parks and not paving streets in response to his latest budget mess. He can always find money for his rich buddies. He expects the rest of us to pony up to pay for these subsidies while he cuts our basic services. Where's the outrage?

Anonymous said...

Again, I don't udnerstand why the city would purposely forego maintenance cost discussions...only to have it come up later, as it is now. Just so they can smack Mitch's guys around? If you think that's the case, then you haven't paid attention to this Mayor for six plus years. Not his style at all.

Nobody wins in this argument. It's like smacking your hand with a hammer because it feels good when you stop.

It's not necessarily Bart-spin...but it's not good government, I'll give you that.

Anonymous said...

The Star is lying. Once you figure that out every thing makes sense.